Asia Press Agency

Tag: market sentiment

  • Bain & Co.: M&A Activity Maintains Strong Momentum

    Bain & Co.: M&A Activity Maintains Strong Momentum

    Mergers and acquisitions (M&A) in India continued to maintain strong momentum in 2023, outperforming most of the past decade, according to a report by consultancy firm Bain & Co. Despite a global slowdown in M&A activity, Indian companies executed over 90 deals worth approximately $32 billion in 2023, demonstrating resilience and robust deal-making. This performance was slightly below the exceptional numbers recorded in 2022 when 109 deals valued at $118 billion were executed.

     

    Bain & Co.’s India chairman, Karan Singh, attributes this sustained momentum to the availability of attractive opportunities, favorable policies, and heightened activity in sectors with structural tailwinds. Over the past 18 months, one in every three deals in India was observed in sectors such as renewable energy, infrastructure, logistics, and manufacturing.

     

    For 2024, the outlook remains optimistic, with more than 80% of respondents in Bain & Co.’s annual M&A Practitioners’ Outlook Survey anticipating a continuation or an increase in deal activity. Market sentiment is bullish, and dealmakers expect positive trends to persist across various sectors.

     

    Vikram Chandrashekhar, a partner at Bain & Co., notes that in healthcare, for example, deal volumes have consistently grown over the past five years, and the momentum is expected to continue in 2024. He emphasizes the importance of disciplined diligence in the competitive market, stating that it can provide an edge in winning deals and setting the stage for value creation.

     

    Mid-market acquirers with up to $1 billion in revenue played a significant role in M&A transactions in 2023, accounting for nearly half of the deals. These mid-sized companies sought acquisitions to strengthen their market positions. Indian conglomerates also pursued acquisitions to reshape their portfolios and create new avenues for growth.

     

    Reliance Retail, for instance, made strategic acquisitions, including beverage brand Raskik and footwear and apparel retailer V Retail, along with a 51% stake in actor Alia Bhatt’s kidswear brand Ed-a-Mamma. Similarly, Aditya Birla Group’s agrisciences company PI Industries ventured into pharmaceuticals with global acquisitions.

     

    Globally, M&A activity faced headwinds in 2023, with a 15% decline to $3.2 trillion, the lowest in a decade. Factors such as high-interest rates, regulatory scrutiny, and mixed macroeconomic signals led dealmakers to adopt a cautious approach. However, the report suggests that 2024 holds promise, with companies eyeing assets that did not come to market in the previous year.

     

    Les Baird, a global partner at Bain & Co., highlights that a need for liquidity will motivate some sellers, while others will divest assets to reshape their portfolios. As interest rates stabilize, it is expected that the logjam in M&A markets will break, leading to increased competition for assets.

     

    India’s M&A landscape has displayed resilience and strength, bucking the global trend of a slowdown. The outlook for 2024 remains positive, driven by a variety of sectors and a favorable market sentiment that positions India as a key player in the global M&A landscape.

  • FIIs Extend Selling Streak on F&O Expiry Day

    FIIs Extend Selling Streak on F&O Expiry Day

    On Thursday, October 26, Foreign Institutional Investors (FIIs) extended their selling spree in the Indian stock market, marking the sixth consecutive session of losses. In contrast, Domestic Institutional Investors (DIIs) emerged as net buyers, infusing ₹6,558 crore into Indian equities. The data for the NSE (National Stock Exchange) revealed that FIIs cumulatively purchased ₹10,239.05 crore worth of Indian equities but sold ₹17,941.58 crore, resulting in a net outflow of ₹7,702.53 crore on Thursday. Meanwhile, DIIs injected ₹13,600.71 crore and offloaded ₹7,042.26 crore, resulting in a net inflow of ₹6,558.45 crore.

     

    The ongoing trend of FIIs selling Indian equities is attributed to several factors, including rising US bond yields and the strength of the US dollar index. These global factors have contributed to the bearish sentiment in the market.

     

    Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, explained that against the backdrop of weak global cues, investors opted to divest from Indian equities on the monthly Futures and Options (F&O) expiry day. This resulted in the benchmark Nifty closing below the 19,000 mark, with a sell-off observed in frontline banking, automobile, and IT stocks. Chouhan noted that investor concerns are related to ongoing geopolitical tensions in West Asia, economic uncertainties, and apprehensions about interest rate hikes, which have collectively led to a bearish stance being maintained for six consecutive sessions.

     

    In terms of market performance on Thursday, the Nifty 50 closed with a substantial loss of 265 points, or 1.39%, at 18,857.25, while the Sensex concluded at 63,148.15, down by 901 points, or 1.41%. Mid-cap and small-cap stocks also experienced losses, though to a lesser extent. The BSE Midcap index declined by 1.06%, while the Smallcap index saw a 0.32% decrease.

     

    During the six-day losing streak, both the Nifty 50 and Sensex recorded declines of about 5% each. Additionally, the combined market capitalization of companies listed on the BSE decreased from nearly ₹323.8 lakh crore to approximately ₹306 lakh crore.

     

    Vinod Nair, Head of Research at Geojit Financial Services, observed that Q2 results in the Indian market have fallen short of expectations, causing disappointments similar to those experienced in developed economies. He emphasized that the risks associated with a potential economic slowdown due to geopolitical factors and elevated interest rates are leading to a downgrade in earnings and valuations. Moreover, the influence of expiry-led volatility is intensifying selling pressure and prompting investors to exercise caution.

     

    As market dynamics continue to evolve, investors are closely monitoring global and domestic developments that could impact market sentiment and performance.

  • Indian Government Bond Yields Surge on Rising Oil Prices

    Indian Government Bond Yields Surge on Rising Oil Prices

    On Thursday, September 28, Indian government bond yields witnessed a significant surge, marking their most substantial single-session rise in 2023. This increase was attributed to several factors, including the relentless climb in oil prices, rising US Treasury yields, and concerns surrounding the possibility of another US government shutdown, according to a report by Reuters.

     

    The 10-year benchmark 7.18 percent 2033 bond yield closed at 7.2414 percent, a notable uptick from the previous session’s 7.1704 percent. This marked the most significant single-session rise since November 3, 2022.

     

    Market analysts have noted that the elevated US yields and soaring oil prices, combined with the looming threat of another US government shutdown, have collectively weakened overall market sentiment, creating a bearish mood. Yogesh Kalinge, Vice President at AK Capital Services, expressed the possibility of strong support emerging at the 7.25 percent yield level, as reported by Reuters.

     

    The consistent upward trend in US yields, particularly at the longer end, has been a contributing factor. The 10-year US yield has approached 4.65 percent, reaching a 16-year peak, driven by expectations that the US Federal Reserve will maintain higher interest rates for an extended period.

     

    September has witnessed the 10-year yield in India climbing by more than 50 basis points, impacting bullish bets and contributing to the shift in market sentiment. Additionally, the benchmark Brent crude oil contract has risen above $97.50 per barrel, marking its highest level since November 2022. This increase can be attributed to concerns about tight global oil supplies, exacerbated by a decrease in crude stocks in the United States. Analysts have pointed out that increased betting by market participants has kept crude oil prices higher in futures trading.

     

    These factors have effectively reversed the decline in bond yields that resulted from the bullish sentiment following JPMorgan’s recent inclusion of India in its emerging market debt index.

     

    Despite the challenges, India has maintained its plan to raise ₹6.55 trillion through bond issues in the October-March period. A maximum of ₹1.45 trillion will be raised through 10-year bonds, constituting 22 percent of the total borrowing, according to the report. This borrowing strategy aims to address India’s financial needs while navigating the evolving global economic landscape.

  • European Stocks Close Flat, Crude Oil Price Sky High

    European Stocks Close Flat, Crude Oil Price Sky High

    European stocks ended the day on a flat note after initially surging on the back of fresh Chinese stimulus measures aimed at bolstering the country’s struggling property sector. The pan-European STOXX 600 index closed at 457.96 points, paring gains it had made earlier in the session when it rose as much as 0.9%.

     

    China’s financial regulators took steps to support the property sector, including reducing down-payment requirements for first and second-time home buyers and cutting rates on existing mortgages. Additionally, China’s embattled developer, Country Garden, received approval from its creditors to extend the deadline for a key bond repayment.

     

    Despite the initial optimism, Britain’s FTSE 100 fell 0.2%, Germany’s DAX edged down 0.1%, and France’s CAC 40 slipped 0.2%. The technology index in Europe gained 0.5%, with Dutch semiconductor equipment maker ASML seeing its shares rise by 0.8%. Miners added 0.6% after experiencing nearly a 2% increase due to a rally in iron ore futures, and automakers gained 0.3%.

     

    Danish drugmaker Novo Nordisk saw its shares rise by 0.7% following the launch of its weight-loss injection, Wegovy, in Britain.

     

    Investors are eagerly awaiting data on German inflation and euro zone gross domestic product (GDP) later in the week ahead of the European Central Bank’s policy meeting scheduled for September 14.

     

    In the absence of US markets due to the Labor Day holiday, Asian markets were lifted by the news of Chinese stimulus. Hong Kong’s Hang Seng index climbed 2.5%, while China’s Shanghai Composite added 1.4%. South Korean shares reached a three-week high, led by gains in battery makers, with the Kospi closing up 0.81%. Japan’s Nikkei 225 edged up 0.7%, and Australian shares gained as the central bank’s decision on interest rates approached.

     

    Gold prices remained steady, with spot gold trading at $1,939.61 per ounce. Meanwhile, crude oil prices rose to near seven-month highs amid hopes that Saudi Arabia and Russia would extend their production caps. Brent crude, the primary international contract, briefly touched $89 per barrel.

  • Domestic Equities Stumble as FIIs Invest and DIIs Sell

    Domestic Equities Stumble as FIIs Invest and DIIs Sell

    Foreign institutional investors (FIIs) made net investments of ₹3,370.90 crores in share purchases, while domestic institutional investors (DIIs) sold shares for a net total of ₹193.02 crores.

     

    During the month until July 21, FIIs made net purchases of shares worth ₹19,696.66 crore, while DIIs sold shares worth ₹10,196.92 crore. However, despite these investment trends, the domestic equities market experienced a downturn on Friday, breaking a six-day winning streak. The Nifty witnessed a continuous decline throughout the day and closed at approximately 19,745 levels after opening at a lower price. Several industries saw losses, with the IT sector facing the greatest setbacks, followed by FMCG and energy companies.

     

    While the overall market sentiments were mixed, the performance of broader indices, representing a wider range of stocks, played a role. Post the Q1 results, shares of Infosys and HUL witnessed declines. Another key index component, Reliance Industries (RIL), also experienced a downturn ahead of its Q1 results, which were anticipated later that day.

     

    The benchmark index, S&P BSE Sensex, dropped 887.64 points or 1.31% to 66,684.26. Similarly, the Nifty 50 index declined by 234.15 points or 1.17% to 19,745. During the past six consecutive sessions, the Sensex had gained 3.33%, while the Nifty rose by 3.07%. In the broader market, the S&P BSE Mid-Cap index declined by 0.26%, while the S&P BSE Small-Cap index rose by 0.13%.

     

    Major drags on the market included Infosys (down 8.18%), Hindustan Unilever (down 3.65%), Reliance Industries (down 3.19%), and TCS (down 2.68%). Market breadth was negative, with 1,615 shares rising and 1,773 shares falling on the BSE. A total of 126 shares remained unchanged. The NSE’s India VIX, which gauges market volatility expectations, declined by 2.54% to 11.49.

     

    Mr. Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services, provided daily market commentary, noting that domestic equities paused just before reaching the 20k zone. The Nifty opened lower due to selling in IT stocks after Infosys lowered its FY24 growth guidance. The Nifty closed with a loss of 234 points (-1.2%) at 19,745 levels. Broader markets showed mixed results, with the Nifty Midcap 100 down by -0.4%, while the Nifty Smallcap 100 rose by +0.7%. Except for PSU Bank and Auto sectors, all other sectors ended in the red, with IT, Consumer Durables, and FMCG being the major laggards. Investors are closely monitoring the upcoming policy meetings of the US Federal Reserve and European Central Bank next week, along with various macro data releases. As the result season gains momentum, there is expected to be a lot of stock-specific actions influencing the domestic equities market in the coming week. Investors will also closely follow the results of Index heavyweight Reliance and the Banking sector, with ICICI Bank and Kotak Bank announcing their results over the weekend.