New Rating for Micro Caps Means Retail Investors’ Risk Appetite Remains the Same

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(Bloomberg) — Before the trading day begins, we bring you a roundup of important news and events that are likely to shake up the markets. Today we look at:

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• LG IPO
• Hospitality boom
• Gold Rush

Hello, this is Chiranjivi Chakraborty, a financial reporter in Mumbai. We’re off to a rough start to the day, with Asian markets providing a bit of positive momentum, as investors grapple with the ongoing political crisis in South Korea. While the Reserve Bank of India’s policy review failed to lift investor sentiment last week, the focus will soon be on the upcoming government budget. Foreign investors are back and that should keep the bulls optimistic.

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LG Electronics joins the IPO frenzy

India’s secondary market may have cooled off in recent months, but the market for first-time equity sales remains hot. LG Electronics Inc. is the latest to join the trend, with its Indian subsidiary filing for an IPO with the market regulator. It joins the likes of Hyundai Motor India, Swiggy and Bajaj Housing Finance, which have seen strong demand for major listings. This week, the startup market will face another test as Vishal Mega Mart launches one of the biggest IPOs of the year.

Hospitality is at the forefront, but Indian hotels are on the decline

Shares of Indian Hotels edged higher on Friday, outperforming their struggling peers this year. However, the stellar rally has made the stock unattractive to new investors. Nuvama, while active in the tourism sector, has downgraded the stock to ‘underperform’ due to valuations that exceed historical estimates. The brokerage remains bullish on the sector, expecting an increase in corporate travel, holiday demand, and an increase in business and social events in the second half of the financial year.

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The gold rush is unlikely to stop

Growth in gold-backed loans remains strong, as unsecured lending – a key area of ​​concern for the central bank – has declined. However, during the RBI’s policy briefing on Friday, the central bank did not signal a specific warning about gold lending as it focused on maintaining orderly business conduct. According to IDBI Capital, the number of loans for gold and jewelery has increased by more than 50% since last year, driven by high prices of the precious metal and the cautious approach of lenders. This growth boosted the shares of major player Muthoot Finance, which holds about 200 tonnes of gold, according to its website. That exceeds the combined reserves of Brazil and Pakistan.

Analyst actions:

• Lloyds Metals & Energy Newly Rated InCred; PT 1,476 rupees
• City Union Bank Cut to Add at ICICI Securities; cost PT205
• Federal Bank Cuts to Downsizing at Avendus Spark; cost PT209

Three good lessons from Bloomberg today:

• Adani’s Troubles Will Give India Inc. Breathing: Andy Mukherjee
• Assad’s Fall Creates Power Vacuum, Worsens Middle East Turmoil
• The Big Take: Blackstone’s AI Bets Collide with US Energy Conditions

And, finally..

Risk appetite among India’s mom and pop investors has definitely returned after two months of market decline. The Bloomberg India Micro Cap index, which includes the country’s smallest stocks, hit a record high last week and is up more than 36% on the year. The strength in this category reflects improving sentiment among retail investors, who have poured nearly $17 billion into the market this year.

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—Courtesy of Ashutosh Joshi.

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