(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. Our markets are finishing the first half of 2024 on a high, and what comes next month is likely more of the same. First, the seasonality is in favor of the bulls — the Nifty has risen in July for each of the past 10 years, barring one. More importantly, the stickiness of the record local flows means downturns are not long drawn affairs. Investor risk appetite isn’t going away soon.   

Worry lines are getting deeper for equity derivatives market

India’s booming equity derivatives market has been a subject of pride as well as caution. At a notional turnover of $5 trillion, it surpasses the size of the economy. Yesterday, Sebi tweaked rules for derivatives, while the RBI emphasized the need to closely monitor risks emerging from this segment and take proactive policy responses.

Will the pharma industry audit restore investors confidence?

Pharma stocks in India have lost some of their investor appeal in recent years, struggling to maintain their position among the most sought-after industries. This decline is partly to due to quality issues plaguing the sector. To fix this, the authorities plans to conduct an an audit of drugmakers. We’ll have to wait and see if this move helps win back some of the lost investor interest in the sector.

Bond index gain comes at a cost for other countries

The bond market is set to welcome billions of dollar as JPMorgan adds our sovereign debt to its EM index today. While this move is good news for us, it will cause some ripples elsewhere, my colleague Malavika Kaur Makol notes. According to the US bank, while we might attract up to $25 billion, there will be significant outflows from other markets. South Africa could see about $4.7 billion leaving, Poland around $3.3 billion, and Thailand about $3.2 billion. 

Analysts actions:

  • Mastek Rated New Buy at Avendus Spark; PT 3,150 rupees
  • Mrs Bectors Food Rated New Buy at Sushil Finance

Three great reads from Bloomberg today:

  • ‘Volatile and Unpredictable’: Why Fast-Money Traders Like Trump
  • India Finance Is on the Brink of Its Breakout Moment: QuickTake
  • Hong Kong Stumbles in Its Own Key Test as a Global Financial Hub

And, finally..

With the post election dust settling, large-cap stocks are asserting their dominance. Mid-cap stocks are facing their worst weekly performance relative to larger companies since March. Smaller companies are also struggling, with small-cap stocks underperforming the Nifty 50 by the most since May. Investor preferences for larger names after a series of record highs is likely to ensure a period of outperformance from the big names, my colleague Chiranjivi Chakraborty points out.

 

--With assistance from Chiranjivi Chakraborty and Malavika Kaur Makol.

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