Mutualfund Updates

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US Stocks Close Higher on Coattails of Tesla Rally: Markets Wrap

#USStocks

#globalmarkets

US Stocks Close Higher on Coattails of Tesla Rally: Markets Wrap

US stocks shook off warnings about cooling growth and data showing a slowdown in manufacturing to edge higher in subdued trading ahead of the Independence Day holiday.

In a shorted session that ended at 1 p.m. Monday in New York, the S&P 500 Index rose 0.1%, led by Tesla Inc. The electric-car maker jumped 6.9% after it reported record quarterly sales, helping lift shares of rivals and battery suppliers. Bank stocks, including Bank of America Corp., climbed. The Nasdaq 100 Index advanced 0.2%, holding onto gains after notching its best-ever first half of a year.

Investors are tempering expectations for stocks in the second half of the year after strong gains so far. While central banks have kept up their hawkish rhetoric, signs of moderating US inflation have fueled big gains across technology shares.

Still, if an economic slump fails to materialize and political crises can be averted inflation could bottom out at 3% before resuming a climb, according to Jim Bianco, president and founder of Bianco Research. That could mean more interest rate increases.

“If the inflation rate bottoms at three and starts drifting higher, the Fed’s going to find this unacceptable, and that two rate hikes that we have priced in for the rest of the year will happen, if not three,” Bianco said.

The manufacturing sector painted a grim picture as US factory activity fell to its weakest level in more than three years. Production and new orders data also suggested a pullback.

Traders will be looking to the upcoming earnings season and additional data, such as Friday’s nonfarm payrolls, for clues on the health of the economy.

“Whether the FOMC has one, two, or zero hikes remaining in its tightening campaign will be a function of the incoming data,” said Ian Lyngen, a strategist at BMO Capital Markets. He expects this week’s incoming data to have more impact on the Federal Reserve’s September rate decision than July’s.

“The Fed is on a glide path to another hike barring a dramatic shift lower in the realized data and/or a sharp tightening in financial conditions,” he wrote in a note.

Despite the positive start to the year for equities, there are signs of cracks beneath the surface. The US Treasury yield-curve inversion intensified, indicating investors expect Fed policy to rein in future growth. The two-year note’s yield briefly exceeded the 10-year rate by as much as 110.8 basis points, according to data compiled by Bloomberg.

“With both global and US stocks more than 20% above their October 2022 lows and a more challenging second-half outlook, we believe investors should position for more lackluster stock market performance through the remainder of the year,” Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management, said.

Nikolaos Panigirtzoglou, global market strategist at JPMorgan Chase & Co. said “stocks have done well in the first half because a US recession didn’t happen.”

The tech trade, he added, has turned into “a pain trade for institutional investors, causing them to capitulate. This first-half back drop creates vulnerabilities for the second half as it means if a US recession happens, there would be a rather abrupt market repricing.”

Meanwhile, US crude prices steadied around $70 a barrel after Saudi Arabia’s state-run news agency said the country will prolong its unilateral oil production cut by one month, keeping a lid on supply even as the market is expected to tighten. Its OPEC+ ally, Russia, also announced fresh curbs on exports.

Also in focus this week will be US Treasury Secretary Janet Yellen’s trip to Beijing, which kicks off on July 6, as the world’s two largest economies look to mend ties after a spate of bilateral tensions.

quick primer on the US Bank Stress Test

#globalmarkets

#USBanks

Global markets have been positive & one of the major reasons have been a good US bank stress test result. If you are not sure of what that is, here’s a quick primer on the US Bank Stress Test

*If you can’t click the link, try saving this number first*

https://twitter.com/kirtanshahcfp/status/1676062974870695936?s=46&t=AushGny_I_JiC4eBIfL4Yw

FPI buying hits 10-month high of Rs 47,148 crore in June; markets rise to record high

 #fpi

#markets

FPI buying hits 10-month high of Rs 47,148 crore in June; markets rise to record high*

Amid improvement in macroeconomic fundamentals, June emerged as the best month with strong foreign portfolio investors (FPIs) inflows in the last 10 months. The FPIs pumped in Rs 47,148 crore in Indian equities in June. This would also be the fourth consecutive month where FPIs have continued to end as net buyers in domestic stocks.

"Sustained FPI flows triggered by India's steadily improving macros have taken markets to record highs. The major reason for the sustained FPI flows into India is the reversal in FPI strategy," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Meanwhile, FPIs' investment stood at Rs 43,838 crore in May, Rs 11,631 crore in April, and Rs 7,936 crore in March. However, FPIs pulled out Rs 5,294 crore in February and Rs 28,852 crore in January. In the first half of 2023, they have pumped Rs 76,407 crore.

"January and February 2023 saw massive flows to China triggered by China's opening up after Covid and expectations of a revival in growth and earnings. The FPI strategy was 'Sell India, Buy China'," Vijayakumar said.

"FPI investment in India in January and February combined was negative Rs 34146 crores. This strategy was based on the view that China is cheap and India is expensive. This strategy proved to be a mistake since the prospects of China deteriorated, and that of India improved. The Chinese economy is struggling and growth is expected to be muted for many years to come," Vijayakumar added.

In the first half of 2023, S&P BSE benchmark Sensex jumped 3,913 points or 6.43% to end at 64,753. The broader NSE Nifty surged 1,084 points or 5.98% higher to end at 19,189.

Meanwhile, oil prices also tanked and remained below $75 a barrel in June and were on course for a fourth consecutive quarter of losses amid concerns over sluggish global economic activity and fuel demand.

"India's macros are steadily improving, and GDP and corporate earnings growth have the potential to improve further from here. So FPIs have reversed their strategy to 'Buy India, Sell China'. FPIs have invested Rs 47,148 crores in June on top of the Rs 43,838 crores in May," he said.

Vijayakumar further suggested, "FPI money is chasing performance and prospects. FPIs continued to invest in financials, automobiles, capital goods, and construction-related stocks."

Going ahead, Vijayakumar said, "Valuations in India are rich, from a short-term perspective. Therefore, even while continuing to invest in India, FPIs are likely to turn a bit cautious, going forward."

Hdfc- HDFC Bank Merger

https://www.businesstoday.in/industry/banks/story/hdfc-hdfc-bank-merger-to-be-effective-july-1-hdfc-to-be-delisted-july-13-deepak-parekh-387245-2023-06-27

Real GDP Growth Projectiond

#gdp

How Global Central Banks Are Deploying Strategies

 How global central banks are deploying completely different strategies 👇

https://twitter.com/fpaedutech/status/1669543534280736769?s=46&t=AushGny_I_JiC4eBIfL4Yw

Five Major Deals During USA Visit

 

India Bets On 3 Gs

#3Gs

#longterm

#foreigninvestments

India bets on 3 Gs to attract long-term foreign investments, says Nilesh Shah of Kotak Mahindra AMC.

Nilesh Shah, Managing Director at Kotak Mahindra Asset Management Company is bullish on the manufacturing sector in India.

He mentions that China+1 is pushing global sourcing to other countries including India.

Competitive companies catering to local and global markets will do well in the days, months, quarters and years to come, he feels.

India provides three Gs - better earnings growth, governance and green transformation which is likely to attract long-term FPIs, says Shah with more than 26 years of experience in the mutual fund industry.

*_Do you think US Federal Reserve is done with its rate hike cycle?_*

In our opinion, the rate hike cycle isn’t over in the US. There is a tug-of-war going on between US Fed and the market. Fed Chairman has indicated that there is a high probability of two more rate hikes in the rest of 2023.

The market is expecting one rate hike of 25 bps. Undoubtedly there is a consensus between US Fed and the market that the rate hike cycle isn’t over.

*_One sector where you have a super bullish view for the rest of the financial year, and why?_*

We are bullish on the manufacturing sector in India. China+1 is pushing global sourcing to other countries including India.

Companies which are competitive and cater to local and global markets will do well in the days, months, quarters and years to come. 

*_Do you think the foreign investors will turn out to be big net buyers in India this year?_*

In our opinion, FPIs are likely to be the best buyers of Indian equity. The three Gs are likely to attract long-term FPIs.

*_Can India surprise with 7 percent growth numbers in FY24?_*

In our opinion, it is a tall task. With a below-average monsoon staring at us, 7 percent for FY24 is likely to be a very difficult target. It will be nothing sort of a big miracle if we get that growth number.

*_Do you see any possibility of one more rate hike from the RBI in the rest of the calendar year?_*

In our opinion, the RBI is unlikely to raise interest rates in this cycle. They have been proactive in raising rates and taking out liquidity. Their well-timed action is likely to give them elbow room not to raise rates.

*_Is it time to be cautious while picking stocks, considering the market is fairly valued?_*

Caution is always important while investing as is courage. One always has to be cautious while Investing. Caution doesn’t mean not playing the game. Caution means you go to play with appropriate protection like pads, gloves, helmet etc.

*_Any big domestic or global factors that can bring volatility in the equity markets in the next year?_*

There are many factors which are likely to impact the market in the next year. Some of the factors which will have an impact are US Fed Pivot, The RBI Pivot, Central Election 2024, Corporate Results, Ukraine conflict, Energy Prices, Liquidity etc.