/ETMarkets Morning Podcast: FIIs send out bearish signals for market

ETMarkets Morning Podcast: FIIs send out bearish signals for market

Good Morning.

>> Vodafone Idea dials up new P/E players for funds
>> Perpetual bonds take a knock amid uncertainty over rule change
>> Startups’ plan to embrace special purpose acquisition companies hits RBI hurdle
>> FIIs cut future bets on Nifty, Bank Nifty to send out bearish signal

Hi there. Welcome to ETMarkets Morning, the show about money, business and markets. I am Sandeep Singh.

Let’s start with a quick glance on the state of the markets.

Dalal Street looked headed for positive start after the Monday mayhem. At least that’s what Nifty futures trading on Singapore Exchange are signalling. Stocks in the rest of Asia rose this morning after optimism over economic recovery drove US shares to a record in overnight trade. In currencies, the dollar gained as traders cut bearish bets on the greenback to four-month lows. Bitcoin slid below $ 54,000 level, after a weekend rally above $ 61,000. Crude oil prices eased slightly. WTI crude for April delivery fell 22 cents to $ 65.39 a barrel.

That said, here’s what else is making news.

SPACs or special purpose acquisition companies have hit a hurdle in their bid to enter India. Startup promoters’ new favourite way to list on the Nasdaq has come up against RBI’s old rule limiting how much money Indians can remit abroad. Many unicorn promoters in India are looking at SPACs for a Nasdaq listing. But since the deal will involve allotment of a foreign company’s shares to the startup’s promoters, RBI’s $ 250,000 limit on outward remittances under the Liberalised Remittance Scheme may become a hindrance. SPACs are listed entities set up exclusively to acquire private companies. After the acquisition, the private company, now part of a SPAC, goes public, bypassing the more demanding IPO route to listing.

Is RBI listening?

Perpetual bonds are taking a knock following last week’s regulatory fiat on valuing these debt instruments. On a day the shadow of rising US bond yields loomed large on traditional stores of value across emerging markets, perpetual bonds would have escaped the draining roller-coaster had Sebi, acting upon a centre’s ‘request’ last week, come up with a set of revised rules on valuing such debt. But Sebi’s silence had a loud impact: Yields on this variety of bonds sold by SBI and Bank of Baroda surged up to 103 basis points in the secondary market, marking the sharpest rise in perpetual yields since the new rule stoked concerns of valuation losses. Mutual funds are the biggest investors in these quasi-debt securities.

Well, they are proving to be the worst instrument to bond with!

FIIs cut their cumulative bullish bets on index futures — Bank Nifty and Nifty — by 5,191 contracts from Friday to 16,785 contracts on March 15. This could signal more pain for the indices in the forthcoming sessions as bounces could be sold into. The lowering of bullish bets was accompanied by their selling a provisional Rs 1,101 crore worth of shares in the cash market. Of the two indices, analysts expect the Bank Nifty to underperform Nifty going forward.

Read the signal and tighten your seat belt.

Pharma funds proving to be more worthy than individual pharma stocks. Data compiled by ET Intelligence Group showed top pharma funds have outperformed the benchmark pharma indices like Nifty Pharma and BSE Healthcare Index as well as most individual pharma stocks. Nippon India Pharma Fund, ICICI Prudential Pharma Healthcare & Diagnostics Fund, SBI Healthcare Opportunity Fund, Mirae Asset Healthcare Fund and DSP Healthcare Fund are the most popular pharma funds with the highest assets under management.


Chief executive Keki Mistry says HDFC and its unit HDFC Bank would evaluate a possible merger only when the regulator, that is RBI, provides some exemption on the mandatory liquidity buffers prescribed for banks. Without that, he said, the costs involved make any merger imprudent. Mistry says the biggest challenge to the merger is the cost of providing the CRR and SLR on the existing balance sheet… and more importantly the priority sector.

NOW Before I go, here is a look at some of the stocks buzzing this morning…

Vodafone Idea is believed to have dialled a new set of US-based private equity players, including KKR and Carlyle Group, to secure funding of around $ 2-2.5 billion through convertible instruments.

Tata Steel Europe’s executive committee has shrunk following the recent resignations of chief commercial officer Karl Haider and executive director of human resources Tor Farquhar as the search continues for a buyer.

Banks are staring at a potential Rs 6,000 crore write-off on their books after the Central Bank of India declared Walmart supplier Shri Lakshmi Costsyn’s promoter a wilful defaulter.

Hero MotoCorp, which recently crossed the milestone of producing 100 million two-wheelers, is aiming to make the next 100 million units by the end of this decade, said CMD Pawan Munjal.

Indiabulls Housing Finance has sold a property that belonged to Yes Bank co-founder Rana Kapoor on South Delhi’s Kautilya Marg for Rs 114 crore to a Delhi-based real estate developer

Do also check out over two dozen stock recommendations for today’s trade from top analysts on ETMarkets.com.

That’s it for now. Stay put with us for all the market news through the day. Happy investing!

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