(Bloomberg) -- (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:
- US-China trade war
- Sell EM, buy US turning crowded
- Algo gurus
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Nifty futures point to a flat start with Asia trading flat to lower this morning. After sharp swings over the last month, it appears to be a stalemate as the market lacks triggers for a decisive move on either side. Sentiment for small and mid cap shares remains upbeat despite the holiday mood weighing on trading volumes.
India bulls eye relief as US turns into a ‘crowded trade’
Foreign investors resumed selling of emerging market equities last week, including Indian shares, while continuing to pour money into US assets. Of the 41 countries tracked by Elara Securities, only the US and Argentina saw positive flows for the week. According to Elara, this shift of capital to the world’s largest economy is now becoming a “crowded trade.” This is fueling optimism among bulls that foreign fund outflows from India may be nearing their end, with global investors likely returning to the country’s shores in the new year.
Bulls risk collateral damage from US-China trade war
A slowing economy, tepid earnings growth, and high valuations are not the only risks facing investors considering India. According to UBS Group AG’s Chief Strategist Bhanu Baweja, the likely falling out from an escalation in US-China trade tensions is as significant. If US tariffs weaken China’s currency, it could pressure the already-weak rupee as India works to maintain its exports competitiveness. Also, China may redirect its exports to other markets, including India, potentially hurting private sector investments as cheap goods flood the market.
SEBI’s proposed rule may expose ‘algo experts’
After imposing curbs on weekly options contracts, the market regulator has turned its attention to the use of algorithmic strategies by retail mom-and-pop investors. In a consultation paper, SEBI has proposed that brokers offering algo trading must get each strategy approved by the stock exchange. Market experts say that if this proposal becomes a rule, many self-proclaimed algo experts could be exposed, as they have so far been peddling basic market strategies as sophisticated solutions to gullible traders.
Analysts actions:
- Bajaj Housing Finance Rated New Add at IIFL; PT 125 rupees
- BEML Raised to Reduce at Elara Secs India; PT 4,190 rupees
- Larsen Cut to Reduce at Kotak Securities; PT 3,650 rupees
Three great reads from Bloomberg today:
- Big Take: Germany‘s economy is unraveling just when Europe needs it most
- Ambani, Adani both drop out of world’s elite $100 billion club
- Strong dollar, Trump risks shape top 2025 bets: Taking Stock
And, finally..
4.4 trillion rupees or $52 billion. That’s the chasm between what analysts see as the fair value for the Reliance Industries’ shares and their current market value. This gap is near the highest since June 2020, as institutional investors fret about the conglomerate’s rising debt and its ability to generate positive cash flows.
To read India Markets Buzz every day, follow Bloomberg India on WhatsApp. Sign up here.
--With assistance from Ashutosh Joshi.
©2024 Bloomberg L.P.