Street signs: HDFC Bank's global balancing act, Bulls reign, bears retreat

HDFC Bank’s global balancing act: FPIs tilt the scales

HDFC Bank outperformed the markets last week, gaining 4.4 per cent, even as the benchmark indices ended flat. The gains were driven by optimism that the weight of the country’s most valuable lender would increase in global indices. This optimism hinges on foreign portfolio investors (FPIs) potentially reducing their ownership in HDFC Bank below 55 per cent during the April-June quarter. “If FPIs reduce their holding from 55.5 per cent to below 55 per cent, there could be a significant weight change from 4 per cent to 8 per cent, potentially leading to inflows of $4 billion,” said a note by Nuvama Alternative & Quant Research. HDFC Bank’s latest shareholding will be disclosed in the first half of July, with Morgan Stanley Capital International’s decision expected in the second week of August.

IPOs pop champagne as grey market premiums soar

Following strong responses to two initial public offerings (IPOs) that closed last week, grey market premiums (GMPs) have strengthened for three IPOs set to conclude this week, capping off a robust first half for the primary market. Stanley Lifestyles’ GMP has risen sharply from below 10 per cent last week to 45 per cent. The IPO of the luxury furniture maker was subscribed 1.7 times on its opening day last Friday. Meanwhile, the GMP for domestic spirits maker Allied Blenders & Distillers stands at 25 per cent, and for billets and bar maker Vraj Iron and Steel, it is about 10 per cent.

Market Animal Farm: Bulls reign, bears retreat, pigs prosper, frogs adapt

With the bulls dominating the market, the bears are feeling left out, but they find ample company in the jungle of markets. An Animal Farm-esque report by a leading analyst describes the current market state with frogs, pigs, and vultures. According to the report, frogs are enjoying themselves despite the overheated pond, as they have adapted to the rising temperatures (indicating excessive valuations). The pigs, rolling in riches, seem oblivious to the rising water levels in the pond, confident in their ability to exit before others (indicating their timing to sell at the market peak). Meanwhile, vultures (value investors) are not faring well and have migrated to other markets, particularly across a high and long mountain chain (indicating lower valuations in China compared to India). The report concludes, “Animals in a jungle know that there is only one king of the jungle (the jungle itself).”