Bank stocks climb 1% making it best performing sector; Hyundai IPO in focus

Nifty futures signal a positive start on Friday, tracking gains in most other Asian markets. US equities fell overnight following hotter-than-expected core inflation that reduces the probability of a jumbo rate cut by the Federal Reserve at its November meet. The earnings season started on a sober note with software bellwether Tata Consultancy Services missing analysts’ profit estimates. 

Hyundai IPO in Focus

The excitement around India’s largest IPO is being dampened by evident weakness in demand for cars in India as well globally. Traders say the premium for Hyundai shares in the IPO grey market has halved over the last week to below 10 per cent. The closely watched IPO ‘s success will be crucial to how investors respond to subsequent public offerings.

 

Banks’ earnings outlook remains dim

Bank stocks had a good day on Thursday, climbing 1 per cent, making them the best performing sector. The bounce comes after a rough patch — a gauge of lenders fell 7 per cent in the previous six sessions — and may not sustain. Analysts at Elara aren’t very optimistic about the upcoming September-quarter earnings. They expect ongoing pressure on net interest margins, a possible rise in defaults, softer loan growth, and deposit growth that’s below trend.  

Another false dawn for steel stocks 

Investors betting that China’s stimulus bazooka would boost steel demand are disappointed once again. Not only has the package been underwhelming, but there’s also been an increase in steel imports from China, according to Systematix. Out of 10 analyst ratings on Tata Steel issued this month, only one is a ‘buy’.  JSW Steel fared slightly better, with three ‘buys’ ratings out of nine recommendations. 

Analysts actions:

Kotak Mahindra Cut to Hold at Nirmal Bang; PT Rs 2,048 

Cummins India Cut to Sell at Goldman; PT Rs 2,900 

ideaForge Rated New Add at IIFL; PT Rs 801 

Three great reads from Bloomberg today:

China Investors Expect $283 Billion of New Stimulus This Weekend

Tata’s Brother Among Contenders for Head of $165 Billion Group

Big Take: Uber, Lyft Use Loophole to Deny NYC Drivers Millions
 

And, finally.. 

Retail investors can’t seem to get enough of equity funds. In September, they poured a record Rs 245 billion ($2.9 billion) into recurring stock investment plans, showing that the move of households’ savings into stocks remains an entrenched trend. While foreign investors fret over expensive valuations, individual investors don’t seem to share the same concern.



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