IPOs to gain momentum, indices north-bound as Modi 3.0 looks at pushing reforms, production and jobs.
By MAHAVIR LUNAWAT
The growing momentum of new public offerings over the last two years has made India the second-largest IPO market in the world. With election results settled, our analysts predict the IPO wave will gain further momentum in the coming months.
We witness strong investor confidence in the market post-elections with the Modi government returning to power. A total of 24 companies are ready to hit the market in the next couple of months, aiming to raise approximately Rs 30,000 crore through IPOs.
Indian Market update: The Indian market experienced high volatility last week due to general elections 2024 final Results. It finally settled and broken short term range on upside as expected and trading at all time high levels. Short to medium term outlook remains positive for the market.
The upcoming Budget in the month of July will be a crucial event to watch out for in coming days.
On economic data front, The CPI eased to 4.75% in May from 4.83% in April, driven by softer prices in housing and clothing, and reduced deflation in fuel and light categories. IIP grew at 5% in April 2024, driven by robust growth in manufacturing sectors such as furniture, metal products excluding machinery, beverages, wearing apparel, and transport equipment, alongside gains in mining and electricity production.
SIP inflows rose at record high levels to Rs 20,904 crore in May from Rs 20,371 crore in April.
The BJP-led NDA government, under Narendra Modi’s leadership, gets into its third consecutive term with a focus on a 100-day action plan and the Viksit Bharat 2047 goals. Emphasizing infrastructure and private investments, key proposals include electric mobility, startup support, power distribution, hydropower policy, digital privacy, and Ayushman Bharat health initiatives.
Plans, crafted by bureaucrats and Niti Aayog, will undergo public consultation and ministerial discussions for implementation adjustments. The Indian government prioritizes key sectors for economic growth.
This includes enhancing manufacturing through policy continuity, fresh PLI schemes, and capital infusion to attract foreign investments. In infrastructure, there is optimism for increased project awards, particularly in road construction.
The extension of the Pradhan Mantri Awas Yojana (PMAY) aims to build 30 million affordable housing units, stimulating economic activity and promoting inclusive growth. Overall, these initiatives underscore the government’s commitment to fostering economic recovery and inclusive development across critical sectors.
The sugar sector remains in focus due to the government’s emphasis on increasing ethanol production, aiming for a 20% blending target by FY2025. This policy, highlighted in the BJP’s manifesto, benefits ethanol-heavy sugar companies. India’s real estate sector is optimistic at the start of Prime Minister Narendra Modi’s third term, urging for reforms to sustain growth and streamline operations.
Key priorities include tax rationalization, reduced approval costs, and streamlined GST structures. There’s a strong emphasis on affordable housing, infrastructure development, and regulatory simplification. Stakeholders seek continued government support through policy reforms and digital initiatives to enhance transparency and accessibility in property transactions, aiming to drive sector growth significantly in the coming years.
Global Market Update: US market trend remains positive for the week. It’s all trading at all time high levels. On economic data front, The US Non-Farm payroll added 272,000 jobs in the month of May as compare to 175,000 jobs in the month of April, driven by sectors like healthcare and hospitality, indicating broad-based growth in May, 2024.
CPI unexpectedly came down to 3.3% in the month of May from 3.4% in April, with lower prices in food and shelter offsetting higher energy costs. The Federal Reserve kept interest rates unchanged at 5.25%-5.50%, citing inflation concerns, and revised its projections to one rate cut in CY2024 compared to previous forecasts of three cuts in CY2024. The hawkish revision took place despite the softer-than-expected inflation data for the month of May.
Brent crude is trading around $82 per barrel. It’s trading in broad range amid a fear of economic slowdown & Geopolitical tension. The Federal Reserve’s signal of only one interest rate cut this year, could dampen economic growth and energy demand.
Although monthly report of EIA and OPEC+ continue to maintain their positive demand outlook for crude in this calendar year.
Additionally, geopolitical tensions in Gaza and the Red Sea contributed to market uncertainty and will act as support to the crude oil prices at lower levels. (The author is Managing Director, Pantomath Capital Advisors Pvt. Ltd.)
