Kolkata: Amidst general elections, the primary market continues to remain vibrant as the highly anticipated IPO of Go Digit General Insurance goes on, aiming to raise around Rs 2,615 crore. This offering has generated significant enthusiasm among investors, reflecting the broader positive market sentiment. Next week, Awfis Space Solutions is expected to launch its IPO, targeting to raise around Rs 599 crore.
Looking ahead, the market is set to welcome several more IPOs, with expectations running high for their success, said Mahavir Lunawat, Managing Director, Pantomath Capital Advisors Limited. Lunawat said that the Indian market continues to trade in a narrow range. “We have seen sharp pull back from lower-end support levels.”
In the coming week, primary markets will witness heavy investor interest as several initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segment. The week will be critical from the domestic and technical point of view as investors will have an eye on global indicators and the latest corporate results, said Nilanjan Dey, Managing Director of Wishlist Capital.
Dey added “What's noteworthy is the robust domestic inflow, particularly with retail investors showing keen interest in equity markets. This surge in retail participation is empowering issuers to launch IPOs in May confidently.
The analysts outlined several factors that are leading to a vibrant primary market. They said the economic indicators depict the multifaceted influences shaping the Indian economy. India's Index of Industrial Production (IIP) recorded a notable annual growth rate of 4.9% in March primarily fuelled by robust activity in manufacturing sectors, including electrical equipment, transport equipment, metal products and furniture.
Additionally, there were moderate expansions observed in electricity output and mining. However, annual retail inflation (CPI) saw a slight easing to 4.83% in April compared to 4.85% in March, attributed to moderated housing and clothing prices and accelerated declines in fuel and light costs, which counteracted a rise in food and beverage prices.
The Wholesale Price Index (WPI) accelerated to 1.26% in April from a 1.53% rise in March, largely due to a faster increase in food and primary articles, coupled with a rebound in fuel prices and softer declines in manufacturing prices. Meanwhile, India's merchandise trade deficit widened sharply to $19.1 billion in April from $15.6 billion in March, propelled by a significant surge in imports, notably of gold, petroleum products, and electronics, outpacing the softer growth in exports.
Mutual Fund SIP inflows reached a record high of Rs 20,371.47 crore in April, surpassing the previous month's figure of Rs 19,270.96 crore. It continue to give support to Indian equity market against selling pressure by FII. JPMorgan Chase & Company has said it is on track to include India in its emerging market debt index from June.
“The market feedback so far had been largely positive, with the majority of its index clients already set up to trade in the Indian Government Bonds market. The estimated foreign inflows in the Indian bond market will be between $20 billion and $25 billion. Post-Election, mobile bill might increase by 25% because telecom companies are planning to raise tariff rates to improve profits after investing in 5G technology. This will be medium-term positive for the telecom service provider,” said Lunawat.
In 2024, Indian banks had a good year, but 2025 might be tougher due to stricter rules by RBI on personal loans and project financing. These rules could slow down lending and reduce banks' profits. Credit rating agencies predict credit growth of around 14% for FY25 as against 16% in FY24 for banks.
NBFCs' profitability is expected to moderate due to increased borrowing costs. The RBI has raised the risk weight of banks' exposures to the NBFC sector, leading to higher capital charges for banks. As a result, banks have raised loan rates for NBFCs to offset these additional charges. Additionally, funding costs for large NBFCs increased by about 50 basis points on average in fiscal 2024 compared to the previous year. This rise in borrowing costs will likely affect NBFCs' profits, despite the strong credit demand driven by robust economic growth, said Lunawat.
Hrishikesh Yedve, AVP technical and derivatives research at Asit C Mehta Investment Intermediates said that the Nifty opened flat on Friday in line with global cues. After an initial knee-jerk reaction, the index traded in the positive zone and settled at 22,466 levels. From a technical perspective, the index is maintaining a stronghold above the 21-day exponential moving average (21-DEMA), which is positioned at 22,320 levels. As long as the index holds above the 22,320 level, the rally could extend to 22,600. However, we are gradually approaching the previous resistance of 22,800, where the index has formed a bearish engulfing candle. Thus, traders are advised to take some profit off the table.”
“The Bank Nifty opened on a weaker note, but after initial nervousness, the index gained momentum and finally settled on a positive note at 48,116. Technically, the index has overcome the 21-day exponential moving average (21-DEMA) hurdle, which was placed near 48,050, indicating strength. Therefore, shortly, Bank Nifty might test the 48,500-48,700 levels,” he added.
"Throughout the week, markets largely exhibited a downward trend, signalling an emerging pattern where investors are opting to sell during rallies. This inclination stems from the domestic market's premium valuation and concerns surrounding the elections due to a lower voter turnout. Despite Q4 domestic earnings largely meeting expectations, there's a noticeable moderation in the overall earnings landscape,'' said Vinod Nair, Head of Research, Geojit Financial Services.
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