(Bloomberg) --
Before the trading day starts we bring you a digest of the key news and events that are likely to move markets. Today we look at:
- Pharma stocks sound alarm
- India bucks global deal lull
- Mutual funds’ record lending
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. Indian stocks look set to extend their winning run to a seventh day with the record high in a close proximity. The GIFT Nifty futures point to a bright start even as Asian stocks fall ahead of the all-important Jackson Hole speech by Fed Chair Jerome Powell.
Pharma stocks in caution zone after surge
Drugmakers’ shares have been on a tear but long-term technical indicators for the sector are signaling caution. The relative strength index — a key measure of price momentum — on the NSE Nifty Pharma Index is nearing 85 on the monthly chart, following a more than 30% gain this year. The last time it hit that level in 2015 and 2003, it was followed by a significant downturn. Although history does not always repeat, investors wary of heights might reconsider making fresh bets.
India defies global deal drought
Despite global deal-making slowing due to macroeconomic challenges and geopolitical tensions, India remains a bright spot. Globally, about 28,300 transactions were completed through July this year, down 16% from the same period last year, according to GlobalData. In India, the Adani Group founders plan to sell a small stake in Ambuja Cements for $500 million following a rally in the company’s shares.
Mutual funds lend record to shadow banks
Shadow lenders’ dependency on mutual funds has continued to grow as financial firms face challenges in securing deposits. Mutual funds’ debt exposure to such lenders via commercial papers and corporate debt surged to a record 2.2 trillion rupees in June, marking an increase of more than a third from a year earlier, according to CareEdge.
Analysts actions:
- APL Apollo Tubes Raised to Accumulate at Way2Wealth
- TCI Express Cut to Accumulate at SKP Securities
- Vinati Organics Cut to Sell at Dolat Capital; PT 1,630 rupees
- Vishnu Chemicals Rated New Buy at ULJK; PT 505 rupees
Three great reads from Bloomberg today:
- Adani Founders to Raise $500 Million From Cement Unit Share Sale
- India’s ‘Sweet Spot’ Lures Bond Funds Amid Global Market Turmoil
- Vibes-Heavy, Policy-Lite Kamala Harris Spurs Skeptics
And, finally..
While the rupee hit new lows against the dollar, it is still strengthening against other trading partners. The rupee’s real-effective-exchange rate has climbed to a six-year high, which may explain the central bank’s strategy of allowing the currency to weaken. This approach aims to correct some of the REER overvaluation and boost the country’s trade competitiveness.
--With assistance from Subhadip Sircar and Divya Patil.
©2024 Bloomberg L.P.
