(Bloomberg) -- Before the trading day starts we bring you a digest of the key news and events that are likely to move markets.

Good morning, this is Ashutosh, an equities reporter in Mumbai. Asian stocks are benefiting from US equities, which climbed to a fresh record overnight. With momentum now on its side, the Nifty 50 Index may make a dash toward 25,000 milestone in the days to come. 

HDFC Bank spurs optimism with potential $4 billion inflows

India’s top private lender might provide the benchmark gauge with much-needed support as equities trade near all-time highs. HDFC Bank’s latest shareholding data shows foreign ownership falling below a crucial level, allowing for a higher weight in MSCI’s emerging markets index, my colleague Alex Gabriel Simon notes. This could bring in as much as $4 billion into the company, likely boosting the stock by 10% in the coming days, according to Nuvama Alternative. The lender’s ADRs rallied more than 4% in New York overnight.

Banking stocks set to pass leadership baton to IT firms

It’s time for new leaders to emerge in the market, with Nomura favoring large-cap technology stocks, believing the slowdown in growth bottomed in the June quarter. Investors share this optimism, with a gauge of IT stocks hitting a three-month high on Tuesday. However, at 26 times one-year forward earnings and a 31% premium to the long-term average, there’s limited room for a major rally, my colleague Chiranjivi Chakraborty points outs. Tata Consultancy Services, Wipro, Infosys, and Tech Mahindra are among top gainers this week. 

Small caps regain favor as Kotak AMC resumes subscriptions  

Large-cap stocks have recently been favored by money managers due to their relative underperformance compared to smaller peers. However, small-caps remain appealing. On Tuesday, Kotak Mutual Fund resumed subscription to its small-cap fund after a four-month hiatus, citing reduced volatility and the benefits of the nation’s robust economic growth for smaller firms’ earnings.

Analysts actions:

  • Praj Industries Cut to Add at Centrum Broking; PT 791 rupees
  • Prestige Estates Raised to Buy at YES Research; PT 3,021 rupees
  • Tech Mahindra Cut to Reduce at Prabhudas Lilladher
  • Wipro Raised to Add at IIFL; PT 500 rupees

Three great reads from Bloomberg today:

  • Hedge Fund’s Secret Adani Short Revealed in Blow-by-Blow Account
  • HSBC Curbs Hiring, Reins In Banker Travel in Cost-Cutting Push
  • India Peak Heat Blunder Shows Data Challenge of Climate Extremes

And, finally..

Foreign investors sold nearly $60 million worth of Indian stocks on Monday, taking a break from the 15-day post-election buying spree, which was the longest in a year. The inflows helped reverse this year’s withdrawals that had reached $4.8 billion two days after the June 4 election result showed the ruling BJP losing its majority in parliament. 

 

--With assistance from Alex Gabriel Simon and Chiranjivi Chakraborty.

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