A Mixed Week

The Indian stock market experienced a mixed week🧋, marked by a late surge on Friday that helped mitigate the third consecutive weekly loss. The Nifty 50, a key benchmark index, closed marginally lower at 0.44%, reflecting cautious investor sentiment amidst global economic uncertainties and inflationary pressures🫷. Sectoral performance was varied. For instance, the banking and financial services sectors outperformed, driven by positive earnings and optimism surrounding policy reforms. Conversely, the automotive sector faced headwinds due to weak demand and rising input costs, leading to a significant decline.

India’s largest IPO likely to see a weak debut!

India’s largest IPO by far, Hyundai Motor India, has managed to secure a full subscription on the final day (Friday) despite a slow start. Despite concerns about weakening auto demand and a broader market downturn, investors were drawn to the IPO and drew bids of more than twice the shares on offer. The company planned to raise ₹27,870 crore💸.

That said, this IPO was mostly driven by institutional demand, with qualified institutional buyers (QIBs) bidding for 6.97 times the shares on offer. Retail individual and non-institutional investors were less enthusiastic and subscribed to only 50% and 60% of the shares, respectively.

This apart, the IPO's grey market premium dropped below 1% on the last day (Friday), indicating a flat listing on October 22📆. The IPO was entirely an offer for sale (OFS) by Hyundai Motor Company, with no fresh issue of shares. Experts attributed this to a last-minute increase in the price band and various concerns, such as valuations raised about the IPO.

India’s trade deficit narrows in September

The trade deficit in India narrowed in September due to a decline in non-oil imports, particularly gold🪙. Exports held steady in September, with growth driven by engineering goods, electronic goods, and chemicals, while gems and jewellery declined.  The services trade surplus remained stable, with a slight increase in September compared to August.

While the trade deficit narrowed to a five-month low, led by a slight rise in exports year-on-year, a sequential decline indicates that the momentum may not be sustained. Concerns about the overall external balance remain due to volatile commodity prices, geopolitical tensions, and global monetary policy😟. Additionally, stimulus measures in China may weigh on the Indian rupee.

While the import volumes are expected to decline due to a slowdown in domestic economic activity, an uptick in commodity prices may offset this reduction. Overall, the Indian economy faces external challenges, and it is important to closely monitor import trends and global🌎developments.

Conclusion

Market sentiment may remain weak as investors wait and watch⏳. With the majority of India Inc set to report its Q2FY25 earnings, any disappointment could lead to market correction in the coming weeks. This, apart from geopolitical tensions, uncertain US election outcomes, and the RBI's cautious stance on inflation, could have an impact🏦. The recent comments from Bajaj Auto about weak festival sales have further fuelled concerns.

Source: Livemint, MoneyControl

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