(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:
- Small caps lead
- Buy the dip
- Fertilizer stocks
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. Traders will brace for a volatile session with the expiry of weekly contracts on the Nifty coupled with a selloff in Asian stocks. Nifty futures indicate a negative start that could accelerate later in the day. Volumes should improve as more investors return from holidays.
Record retail inflows boost small-caps
Individual investors in India poured a record 1.5 trillion rupees ($17.5 billion) directly into stocks in 2024. Small-cap shares emerged as the biggest winners, beating their large-cap peers for the second straight year. With local liquidity remaining strong, this trend could extend into 2025. That said, smaller firms will have to deliver strong earnings growth to justify their premium valuations. Investors will be less forgiving if the third-quarter numbers also fail to live up to expectations.
Market may remain ‘directionless’ in early 2025
Indian stock markets closed out 2024 with a whimper, despite a strong performance in the first three quarters. Kotak Securities predicts this “directionless” phase to persist through the first half of 2025, as investors fret about earnings growth, weak domestic consumption and President-elect Donald Trump’s trade policies. While the buy-the-dip strategy has worked well in recent years, providing support to the market, large gains look unlikely in the near term.
Fertilizer stocks in focus on subsidy hike
Fertilizer stocks rose on Wednesday ahead of the cabinet’s decision to increase subsidy for Di-ammonium Phosphate (DAP) — a widely used fertilizer. Paradeep Phosphates, Chambal Fertilizers and Rashtriya Chemicals were among the gainers. With the federal budget approaching, the sector could be in focus over the next month as investors anticipate farmer-focused incentives.
Analysts actions:
- Kotak Mahindra Raised to Buy at Jefferies; PT 2,120 rupees
- Coal India Raised to Buy at Axis Capital Limited; PT 470 rupees
- Infosys Reinstated Hold at BOB Capital Markets; PT 1,970 rupees
Three great reads from Bloomberg today:
- Pessimism Weighs on Asia Stock Traders Into 2025 on Tariff Risks
- How $10,000 Fared in 2024 Across a Range of Standout Investments
- Big Take: Here’s (Almost) Everything Wall Street Expects in 2025
And, finally..
Automakers have whittled down their inventory backlog, thanks to decent festive sales. However, the stock market remains skeptical about a sustained recovery in demand. As these companies report their December sales data, traders will watch the fine print closely to identify winners. For now, Mahindra & Mahindra’s 16% jump in sales appears to have satisfied investors, as the SUV maker continues to gain market share.
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--With assistance from Alex Gabriel Simon and Kartik Goyal.
©2025 Bloomberg L.P.