Street signs: Gold ETFs to gain traction, PLI may hurt battery firms & more

Gold ETFs continue to gain traction

Gold ETFs saw inflows of Rs 680 crore in April, taking the year-to-date flows to Rs 2,458 crore. Gold has bounced back about 8 per cent from March 2021 lows of close to Rs 44,000 per 10 gram and is trading at Rs 47,600, owing to correcting dollar and treasury yields. Concerns over inflation, uncertainty on account of the second wave of Covid-19, and geopolitical tensions in West Asia are expected to support gold in the short term, say analysts. "Gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns," said Himanshu Srivastava, associate director- manager research, Morningstar India.

Ashley Coutinho

PLI may hurt Indian battery players

Stocks of domestic battery players like Amara Raja Batteries and Exide Industries can correct. Analysts said these players may not be in a position to take advantage of the Rs 18,100-crore production-linked incentive (PLI) scheme for building factories to manufacture batteries locally, and boost EV adoption. Local players can lose out due to their lack of investments in battery cell technology. Original equipment manufacturers are likely to directly tie up with global battery cell manufacturers and set up factories in India. Kotak Institutional Equities noted that it expects "further multiple de-rating for these firms as EV penetration picks up in India." The spike in input costs and weak auto sales are also weighing on sentiment.

Sundar Sethuraman

  

MFs missing lump-sum investors

Even though equity funds witnessed net inflows for the second consecutive month in April, the MF industry is worried about lack of participation from lump-sum investors. Equity-oriented schemes saw net inflows of Rs 3,437 crore in April against Rs 9,115 crore in March, when flows had turned positive after eight months. The fear around the Covid-19 wave is the reason for many lump-sum investors waiting on the sidelines as they believe the equity markets may correct soon. Typically, lump-sum investors are HNIs who move money aggressively from debt to equity or vice versa based on market conditions.

Chirag Madia