(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:
- LG IPO
- Hospitality boom
- Gold Rush
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. We’re in for a tepid start to the day, with Asian markets offering little by way of positive momentum, as investors grapple with South Korea’s deepening political crisis. While the Reserve Bank of India’s policy review failed to lift investor sentiment last week, attention will soon shift to the government’s upcoming federal budget. Foreign investors have returned and that should keep the bulls hopeful.
LG Electronics joins the IPO frenzy
India’s secondary market may have cooled off in recent months, but the market for first-time share sales remains red-hot. LG Electronics Inc. is the latest to join this trend, with its Indian subsidiary filing for an IPO with the market regulator. It joins the likes of Hyundai Motor India, Swiggy and Bajaj Housing Finance, which have tapped the strong demand for large listings. This week, the primary market will face another test as Vishal Mega Mart launches one of the biggest IPOs of the year.
Hospitality boom ahead, but Indian Hotels downgraded
Indian Hotels’ shares scaled a new peak on Friday, outperforming its struggling peers this year. However, the stellar rally has made the stock less attractive to new investors. Nuvama, while bullish on the hospitality sector, has downgraded the stock to ‘reduce’ due to valuations exceeding historical averages. The brokerage remains positive on the sector, expecting a boost in corporate travel, festive demand, and increased corporate and social events in the fiscal year’s second half.
Gold rush unlikely to stop
Growth in gold-backed loans has remained strong, even as unsecured lending — a key area of concern for the central bank — has slowed. However, during the RBI policy briefing Friday, the central bank didn’t signal specific caution about gold loans as its focus remains on maintaining the orderly conduct of business. According to IDBI Capital, the value of loans against gold and jewelry has risen more than 50% from a year ago, driven by higher prices of the precious metal and lenders’ cautious approach. This growth has boosted the shares of top player Muthoot Finance, which holds almost 200 tons of gold, according to its website. That exceeds the combined reserves of Brazil and Pakistan.
Analysts actions:
- Lloyds Metals & Energy Rated New Add at InCred; PT 1,476 rupees
- City Union Bank Cut to Add at ICICI Securities; PT 205 rupees
- Federal Bank Cut to Reduce at Avendus Spark; PT 209 rupees
Three great reads from Bloomberg today:
- Adani’s Troubles Will Give India Inc. a Breather: Andy Mukherjee
- Assad’s Fall Creates Power Vacuum, Worsening Middle East Turmoil
- Big Take: Blackstone’s AI Bet Collides With US Power Strains
And, finally..
Risk appetite among India’s mom-and-pop investors is firmly back after two months of market declines. The Bloomberg India Micro Cap index, which covers the nation’s smallest-cap stocks, hit a record high last week and is up over 36% for the year. The strength in this segment reflects improving sentiment among retail investors, who have poured in about $17 billion into the market this year.
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--With assistance from Ashutosh Joshi.
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