IPO craze continues as Vishal Mega Mart draws strong demand

Indian stocks are set for a muted start with other markets in the region trading lower. The Nifty 50 has had a somber week, setting itself for a weekly loss after gaining for the previous three. With markets globally heading into holiday season, activity could slowly start tapering off.

IPO craze continues as Vishal Mega Mart draws strong demand

India’s equity capital markets show no signs of slowing down, edging closer to their 2021 peak of $21.8 billion in fundraising via IPOs. Vishal Mega Mart’s $944 million offering was snapped up in under two days, driven by strong demand from wealthy investors, even as institutional participation is yet to begin. Operating over 600 stores, Vishal targets lower-income customers via its brick-and-mortar format, a strategy that has challenged its much larger rival DMart, this year. Traders are anticipating a strong debut, with Vishal shares attracting a premium in the unofficial grey market.

Small-cap rally halts, bulls eye September peak

Small-cap stocks halted a 14-day winning streak on Thursday. While the pause was overdue, the Nifty Smallcap 250 index does not appear overbought based on the relative strength index — a key measure of market momentum. A crucial test for bulls would be the upcoming earnings season. After all, stock prices and liquidity cannot override fundamentals all the time.

Cash volumes recover as foreigners trickle back

Average daily turnover on the National Stock Exchange is recovering after falling to an eight-month low in November. This month, turnover was at 1.1 trillion rupees through Wednesday, up from last month’s average of 1 trillion rupees. The return of foreign investors would have encouraged some retail investors on the sidelines to resume purchases. Also, the rally in small caps could be a draw for options traders looking for a spot of action after the discontinuation of many weekly contracts.

Analysts actions:

• Dalmia Bharat Cut to Sell at BOB Capital Markets

Three great reads from Bloomberg today:

• Xiaomi’s 103% rally puts EV dark horse on brink of stock record
• World’s richest family is about halfway to a $1 trillion fortune
• Big Take: Human eggs are a premium commodity for a global market

The latest consumer inflation reading holds little immediate cheer for bond bulls, going by the slight uptick in the 10-year yield after the data release. Bets for interest-rate cuts have risen as the new RBI Governor Sanjay Malhotra is seen as being more dovish than his predecessor. Slowing economic expansion also supports the argument for rate reductions. But unless the December data shows signs of inflation cooling further, a rate cut at the February policy meet is not a given.