The Nifty 50 has closed at a record high for the fifth consecutive day, indicating that the market is riding a strong wave of momentum. The positive global cues have set a risk-on mood, and there seems to be a continued appetite for this rally despite it becoming quite extended.
One of the significant indicators of the market’s high valuation is the increasing number of multinational companies selling stakes in their Indian units. Today, we have four major block deals lined up, including Vodafone’s substantial $2 billion sale of its stake in Indus Towers.
Over the weekend, Hyundai Motor also filed for an IPO for its local unit, joining other multinational companies like Whirlpool Corp. and British American Tobacco in cashing in on the high valuations. It’s clear that with mutual funds flush with cash and eager to acquire more shares, demand is not an issue for now.
However, this retail trading frenzy in equity derivatives has caught the attention of authorities. The RBI and the securities regulator are closely monitoring the equity futures and options segment, where trading volumes are alarmingly larger than the nation’s nominal GDP.
At a recent event, RBI Governor Shaktikanta Das emphasized these concerns, noting that Sebi has proposed new rules to eliminate low-turnover stock derivatives to curb market manipulation. Furthermore, local media reports suggest that a series of tweaks to derivative trading rules are being considered to address these issues.
India’s ambition to become Asia’s new growth engine after China is driving the creation of more overseas ETFs to invest in our stock market. Despite this, inflows into local passively-managed funds still lag behind those in China. Currently, ETFs in India hold about $88 billion in assets, compared to nearly $400 billion for those listed in China.
According to Bloomberg Intelligence Senior ETF Analyst Rebecca Sin, inflows to India ETFs could more than double to $15 billion this year, highlighting the growing appeal of local assets.
In analyst actions, FSN E-Commerce Ventures has been raised to a buy at Dolat Capital with a price target of 205 rupees, and Vedanta has also been raised to a buy at IIFL with a price target of 525 rupees.
JPMorgan Index Listing is set to fuel a $40 billion rush into Indian bonds, which is significant as we approach the addition of Indian sovereign bonds to JPMorgan’s flagship global bond index.
This marks the first major index to include the nation’s debt. Despite a bout of risk-off sentiment affecting emerging markets a few months ago, flows are returning as the go-live date at the end of this month approaches. Net flows into sovereign bonds have now reached $10 billion since JPMorgan’s announcement in September.
Another compelling read discusses the era of super-wild weather from Texas to Kolkata, indicating the global impact of climate change. Additionally, AI anchors are now delivering news to Indian farmers, showcasing the intersection of technology and agriculture in the country.
As we move closer to the inclusion of Indian sovereign bonds in JPMorgan’s index, the market continues to show resilience and an appetite for growth, driven by both local and global investor confidence. Stay tuned for more updates as we navigate through these dynamic market conditions.
