(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:
- China vs India
- Hospital stocks in focus
- Tech stocks may struggle
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Nifty futures signal a firm start, tracking Asian market momentum. With China and Hong Kong markets shut for holidays, the past week’s euphoria in mainland Chinese equities has raised concerns that global investors may rebalance their portfolios, potentially shifting some money from India to China.
China rally to test India’s market appeal
The surge in Chinese equities has sparked concerns that global money managers may take profits from Indian shares to make room for China in their portfolios. Foreigners have bought about $11 billion of local shares in the September quarter, but according to Kotak Securities, it’s unlikely they’ll sell off a “meaningful portion” of these holdings. On the other hand, DBS Bank predicts that local equities may underperform their Chinese counterparts in the near future.
Policy, demographic winds favor hospital stocks
The rally in hospital stocks may sustain as widening insurance coverage and an aging population drive healthcare service providers to expand. According to Satish Ramanathan, CIO of JM Mutual Fund, another potential boost could come from state governments trying to align with the central government’s healthcare initiatives. “People will spend on healthcare at an unprecedented rate,” said Ramanathan.
Tech stocks may face October slowdown
After delivering their best quarterly performance in three years, technology stocks might face challenges in October, warns Motilal Oswal Securities. The brokerage believes IT companies’ revenue recovery for the September quarter may fall short of investors’ “elevated expectations”. It predicts revenue growth for top companies like Infosys and TCS to range from flat to 3% sequentially, which makes the sector’s 29 times 1-year forward earnings multiple appear expensive.
Analysts actions:
- Adani Energy Rated New Buy at ICICI Securities; PT 1,318 rupees
- PB Fintech Cut to Sell at JM Financial; PT 1,420 rupees
- Tech Mahindra Raised to Outperform at CLSA; PT 1,749 rupees
Three great reads from Bloomberg today:
- Powell Says Fed Not in a Hurry, Will Lower Rates ‘Over Time
- Israel Says It Has Begun ‘Targeted’ Ground Raids in Lebanon
- Big Take: Forecasting US Economic Future Under Harris vs. Trump
And, finally..
Indian equities are hitting new highs, but some investors, worried about stretched valuations, are shifting toward quality stocks. Reflecting this trend, the Nifty200 Quality 30 gauge climbed almost 13% last quarter, beating an 8% gain in the main NSE Nifty 50 gauge and a 6% rise in the momentum stock index. Sensing the change in mood, at least one fund house has launched a quality-focused fund.
--With assistance from Ashutosh Joshi and Chiranjivi Chakraborty.
©2024 Bloomberg L.P.
