Street Signs: Market's winning streak, new-age tech-listed firms & more

Advantage bulls as FPIs take the ‘short’cut

The market’s continuing winning streak — the longest in over two years — is underpinned by strong buying by foreign portfolio investors (FPIs). Risk appetite has seen an improvement in optimism that the US Federal Reserve’s rate-hike cycle may have peaked. Besides the fundamental factor, FPI inflows are also amplified by short-covering, believe some experts. In March, FPI net shorts in index futures had climbed to highest-ever levels, surpassing pandemic sell-offs. Further, the percentage of shorts in FPIs’ total share of open interest was more than 90 per cent ahead of the start of the April series. “Since the tide has turned, FPIs have been forced to cover their massive shorts. This has elevated both returns, as well as FPI flows. It could continue for some time,” says an analyst. After posting losses in the preceding three months, the National Stock Exchange Nifty is up 5 per cent month-to-date on the back of about Rs 9,000 crore FPI inflows. The Nifty last closed at 17,828. Technical analysts expect the index to face immediate resistance at 17,900-18,000, which, if broken, could decisively take the index beyond 18,200.

Investor red carpet for new-age tech-listed firms

New-age technology (tech) stocks seem to be regaining favour with investors. On a year-to-date basis, PB Fintech (PolicyBazaar) and One97 Communications (Paytm) have risen 29 and 23 per cent, respectively, against a 1.2 per cent fall in the S&P BSE Sensex. Market experts say bargain buying after a steep correction in these stocks and their dominant position in the respective industries they operate in are driving investor optimism. “Moreover, being listed players, they have better access to funds, compared to unlisted new-age tech firms. We are bracing for an era where access to easy funding will be curtailed,” observes an analyst.

Street checks in: Hospitality stocks open door to big events

The Street has turned positive on hospitality stocks amid visible tailwinds. The average room rate is 15-20 per cent higher than pre-pandemic levels. Analysts say hotels continue to follow the strategy of keeping rates at least 8-10 per cent higher than pre-Covid levels. For 2023-24, demand drivers, such as the government’s intent to leverage the Group of Twenty summit as a launchpad to boost inbound tourism, coupled with sports events like the 2023 ODI World Cup (October 5-November 19), may drive revenue per available room for hotels. However, any headwinds in the form of global macroeconomic factors and discretionary consumption slowdown may peril demand.