(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:
- Bajaj’s IPO
- Defensive plays
- Travel bug
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. While Asian shares are trading higher, tracking a rebound in US stocks, local equities may buck the trend this morning after outpacing most peers in the region Monday. Sectors like consumer staples, private banks and drug makers may be in focus as bulls turn to new leaders to take the market forward.
Investors eye big gains in India’s biggest IPO of 2024
Bajaj Finance’s home-finance unit’s $780 million share sale got an enthusiastic response from investors. Despite the large size, both small retail and wealthy individuals ensured the offering was sold out hours after opening on Monday. Retail investors have been betting on Indian IPOs this year, chasing the first-day ‘pop’, which has averaged about 30%. However, a study by the market regulator showed that most of these investors end up selling their holdings within a week.
Market volatility revives demand for defensive plays
Defensive stocks are back in vogue as investors look for a haven amid rising global volatility. The Nifty FMCG index hit a record high on Monday, while the index of state-run enterprises — previously driving the record rally — is nearing correction territory. ASK Wealth Advisors, part of the ASK Group, which oversees $10 billion in managed assets, suggests investors switch toward sectors with favorable risk-reward profiles. Consumer staples and banks are among them.
Indians catch the travel bug
Indians are traveling abroad more than ever, with the number of people taking two or more overseas trips increasing by 32% per year, according to a report. Rising incomes are fueling interest in luxury travel, leading to more searches for business-class flights and premium hotels. Jefferies prefers playing this theme through shares of IndiGo and GMR Airports, with target prices set about 10% and 17% higher, respectively, compared to Monday’s closing levels.
Analysts actions:
- SBI Raised to Buy at Batlivala & Karani; PT 902 rupees
- Canara Bank Raised to Hold at Batlivala & Karani; PT 99 rupees
- Coforge Cut to Underperform at Macquarie; PT 4,740 rupees
Three great reads from Bloomberg today:
- IPhone’s Camera Control Button Stands Out as Most Visible Change
- Goldman Trading Set to Fall More Than Expected With 10% Drop
- Big Take: Private Equity Fights Insurers for $15 Trillion Haul
And, finally..
Fears of a global economic slowdown are leading wealth managers in the country to recommend shifting investments toward larger stocks. The ratio of MSCI India to MSCI India Small Cap index has begun to recover from a record low earlier this month, as small companies continue to underperform larger peers. Whether this shift in preference endures or ends up as a mere blip will depend on small-cap stocks regaining their appeal.
--With assistance from Dave Sebastian.
©2024 Bloomberg L.P.
