(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:
- Hang Seng ETF
- Algo traders
- Clean power push
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Indian equities are set to track Asian market’s gains, fueled by China’s stimulus measures and expectations for more US rate cuts. Nifty futures topped the 26,000 level for the first time, building on Monday’s climb to a record.
Hang Seng ETF in demand as valuations soar at home
Indian investors fretting about high valuations at home are looking east for better investment returns. Assets managed by Nippon India Mutual Fund’s Hang Seng Index ETF have doubled this year, reaching 5.3 billion rupees by the end of August. The gauge, which has surged over 20% from its late-January lows, is trading at eight times one-year forward earnings. Their optimism seems vindicated after China announced a blitz of policy support.
Algo firms reap billions in profits, small traders take a hit
The Goliaths are winning in India’s $4.6 trillion equity-derivatives market, and the small guys are bearing the brunt. Foreigners and proprietary desks using algorithms made a whopping 588.4 billion rupees ($7 billion) in gross profits in the last fiscal year, according to SEBI. Meanwhile, 93% of individual traders ended up losing an average of 200,000 rupees, underscoring just how tough it is for retail traders to compete in this lop-sided playing field.
Clean power push to benefit utilities
India aims to achieve 500 GW of clean power capacity by 2030. However, due to transmission challenges, the government has shifted to using firm and dispatchable renewable energy (FDRE). So far, 15 FDRE tenders for 20.9 GW have been issued. Analysts at JM Financial note that the growing role of technology in these tenders is driving market consolidation and higher tariffs. That bodes well for firms like CESC, JSW Energy and state players that have potential for such expansion. The BSE utilities gauge is already up 40% this year.
Analysts actions:
- IIFL Finance Raised to Hold at HSBC; PT 540 rupees
- NRB Bearings Cut to Sell at NMV Securities; PT 221 rupees
Three great reads from Bloomberg today:
- China Unleashes Stimulus Blitz in Push to Hit Annual Growth Goal
- Fed Officials Leave Door Open to Another Large Interest-Rate Cut
- Big Take: Even the Arctic Is Catching Fire Due to Climate Change
And, finally..
Indian stocks are back on foreigners’ radar as global funds increase their bullish positioning following the US Fed’s super-sized rate cut that’s expected to boost flows to emerging markets. Global funds’ open interest reached a new peak of 9.7 trillion rupees ($116 billion) on Friday, and also plowed a net 140 billion rupees in the cash market, according to provisional numbers.
--With assistance from Rajesh Kumar Singh, Alex Gabriel Simon and Chiranjivi Chakraborty.
©2024 Bloomberg L.P.
