Mutual Fund Inflows, Moody's Growth Projection, and Top Stocks in Action Today

Thu, 12 Mar Pre-Open

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On Wednesday, Indian share markets witnessed volatile trading activity throughout the day and ended marginally higher.

The BSE Sensex closed higher by 62 points to end the day at 35,697. Hero MotoCorp and Reliance Industries were among the top gainers.

While the broader NSE Nifty ended down by 3 points to end at 10,449.

Among BSE sectoral indices, energy stocks gained the most, followed by telecom stocks and finance stocks.

Top Stocks in Action Today

Cadila Healthcare share price will be in focus today as the company's board has approved the transfer of Animal Healthcare Business to its wholly owned subsidiary Zydus Animal Health and Investments through execution of a definitive agreement.

Wonderla Holidays share price will also be in focus today as the company has decided to temporarily close the Kochi Park from March 11 to 20, 2020 in view of the emerging situation in the State of Kerala, consequent to the reported coronavirus cases.

Market participants will also track Mindtree share price.

Reportedly, Mindtree has signed an agreement with Realogy to support the company's continuing digital transformation initiatives over the next five years.

IPO Buzz

The initial public offer (IPO) by Antony Waste Handling Cell, which has been extended till March 16, stood at the half-way mark on Wednesday.

The issue by the solid waste management company saw bids for 24,09,500 shares compared with the issue size of 48,20,508 shares.

The price band of the issue has been revised to Rs 294-300 due to tepid IPO response because of the ongoing market rout and the mega SBI Card IPO.

The company proposes to utilize the net proceeds towards reduction of the consolidated borrowings of the company and general corporate purposes.

Further, the company expects that the listing will enhance visibility and brand image and provide liquidity to shareholders.

How this IPO sails through remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

In other news, market participants are keenly awaiting shares allotment in SBI Card IPO, the issue that received bids worth nearly Rs 2,000 billion.

The basis for share allotment is likely to be finalised today.

The recent steep fall in the secondary market has already tampered expectations of strong listing gains for the stock.

To know more the SBI Cards' IPO, the credit card industry, you can read one of Ankit's latest notes here: SBI Cards IPO: Apply or Avoid? (requires subscription).

From the Economic Space...

Amid coronavirus outbreak globally, Moody's Investors Service has slashed its growth forecast for India to 5.3% for 2020 from 5.4% estimated in February, as it expects the coronavirus outbreak to dampen domestic demand globally.

It said the virus outbreak has spread rapidly outside China to a number of major economies. The report said it now seems certain that even if the virus is steadily contained, the outbreak will dampen global economic activity well into Q2 of this year.

Moody's baseline forecasts assume that the number of cases would keep increasing globally and there would be travel restrictions through the April-June period.

Apart from supply chain disruptions, it also expects consumption and investment to be affected and prices of oil and other commodities to remain around current lows until the end of June.

Accordingly, Moody's has revised growth forecasts for G20 economies to 2.1%, 0.3 percentage point lower than the previous baseline. China's 2020 growth forecast has also been reduced to 4.8% from the previous estimate of 5.2%. For the US, growth of 1.5% is now expected, down from the previous estimate of 1.7%.

Further, Moody's has also analyzed the downside scenario of 'extensive and prolonged slump' in case of significant increase in coronavirus cases or increasing public fear that the virus will not be contained, and oil price stays around US$40-50 for 2020.

Speaking of gloomy economy, coronavirus fears, falling markets and crude oil prices, Ajit Dayal has written an insightful piece, sharing his views in the latest edition of The Honest Truth.

Here's a snippet from the article:

• Is the meltdown over?
  
  While the unravelling of the debt excess in the US and the developed world may have some more to play out, the question on an investor's mind in India is: Is the mayhem over and what should I do next?
  
  On the face of it, there is some interesting Upside Potential, or potential profit, if you were to buy the specific stocks now and assume, they get back to their past peak levels over, say, the next 2 to 3 years.
  
  With the help of either some jaadu mantar or some good policy.
  
  But there are some "bets" I would be very cautious about: Yes Bank, Reliance and the INR, for instance.

You can read his entire article here: The Market Gets a Viral Attack.

Equity Mutual Fund Inflows at 11-Month High

The mutual fund (MF) industry has seen a sharp uptick in equity flows in February, with equity schemes garnering over Rs 100 billion, climbing the highest level in 11 months.

As per a leading financial daily, February's flow is estimated to be 37% higher, at Rs 108 billion, than the previous month's tally of Rs 78.8 billion.

Both mid and small-cap funds have also seen sizeable flows. For mid-cap funds, the flows were Rs 18 billion in February, while for small-cap funds, the collections were Rs 12.1 billion.

Large-cap funds got the biggest share of flows at Rs 26.3 billion.

In February, redemptions had marginally reduced to Rs 139.9 billion, while gross flows increased 13% to Rs 247.8 billion.

According to industry executives, investors are showing greater maturity and refraining from pulling out funds at the first signs of weakness in the markets.

Meanwhile, credit-risk funds are showing signs of improved sentiments. In February, the outflows narrowed to Rs 6.4 billion, from Rs 12.1 billion in January.

For liquid funds, outflows were over Rs 400 billion as institutional investors pulled out funds for advance tax obligations, according to industry participants.

The banking & PSU fund category received Rs 32.1 billion of flows, while corporate bond funds drew sizeable flows of Rs 28.4 billion.

Short duration funds saw the largest share of debt flows at Rs 40.8 billion.

Speaking of mutual funds, here's what Tanushree wrote about it in a recent edition of The 5 Minute WrapUp...

• After a few hiccups in the first half of this fiscal, strong inflows into mutual funds have taken the industry's AUM to a new high.
  
  Can we call it a saturation point?
  
  Far from it!
  
  The total AUM of India's mutual fund industry is just about 13% of India's GDP.
  
  This megatrend of financialisation of savings has a long runway ahead of it.

This is one of the megatrends that will help what Tanushree calls the Rebirth of India.

She has identified the 7 best stocks that will profit from the Rebirth of India. You can read about these top 7 stocks here.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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