(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:
- Inflows set to grow
- Weak outlook for tech
- NTPC Green IPO
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai, where it’s all bright and sunny this morning. That’s a fitting backdrop for Indian stocks, which are set to follow global peers higher after the Fed’s decision to go big with its first rate cut in more than four years. There’s hope the start of the US easing cycle will spur global funds to increase their allocation to local shares, juicing India’s booming stock market.
Foreign inflows set to increase post-Fed cut
Foreigners have historically sold Indian equities in the month after a US rate cut cycle begins, but the full-year trend is positive, according to Citi. In all four cases studied, foreign inflows were positive over 12 months, aided by a weak dollar. Global funds have been net buyers for weeks, and lower rates could offer another opportunity to overweight India. Healthcare and staples performed well in the 12 months following US rate cuts, Citi said.
Tech stocks brace for weak September-quarter earnings
Software exporters’ earnings may remain under pressure ahead of the September quarter results season. The sector saw selling on Wednesday after Bloomberg News reported Accenture’s plan to delay staff promotions, signaling weak tech spending. With uncertainty growing, investors may wait for management updates before increasing positions. Nifty IT index has been a top performer since the June election outcome, driven by a shift to defensive stocks.
NTPC’s green unit IPO may spur more gains for sector
NTPC Green’s 100-billion-rupee IPO will attract a fresh wave of investors to India’s renewable energy stocks. As the green energy unit of India’s largest power producer, this share sale could trigger a re-rating for the entire sector. India’s renewable energy companies are leading global markets, with four out of the top five stocks on the Bloomberg World Energy Index this year coming from the South Asian nation.
Analysts actions:
- Tata Steel Rated New Hold at Anand Rathi Securities, PT 160 rupees
- ICRA Cut to Add at YES Research; PT 7,500 rupees
- ONGC Cut to Reduce at HSBC; PT 230 rupees
Three great reads from Bloomberg today:
- Fed Opts for Outsize Cut as Powell Seeks to Ensure Soft Landing
- Student Visas to Drop 10% in 2025 as Canada Curbs Migration
- Big Take: Xi Sparks a Crisis for Millions of China’s Top Workers
And, finally..
Companies are rushing to the local-currency bond market to capitalize on lower borrowing costs, which may drop further after the US Fed started cutting interest rates on Wednesday. Corporates have already sold an unprecedented 2.4 trillion rupees ($28.7 billion) of notes this quarter, setting the stage for the most July-to-September sales ever, data compiled by Bloomberg show.
--With assistance from Chiranjivi Chakraborty and Divya Patil.
©2024 Bloomberg L.P.
