Billionz Multi-Asset Weekly Newsletter
Markets Search for Direction as Earnings and Macro Forces Collide
Global Developments: This time around Trump has not yet pivoted to a reconciliatory tone with Iran after an escalation and that keeps sentiment on the edge. US has struck Iran everyday for almost 2 weeks now. Ship Passage through SoH is nearly at a standstill. Houthi-Saudi clashes infact threaten to choke another key strait i.e. Bab-El-Mandab, resulting in further supply constraints. Tariffs are back! US has imposed 10-12.5% tariffs on most major trading partners for failing to stop use of forced labor in supply chains. ECB kept rates unchanged this week, as expected and said that policy would be decided on a meeting to meeting basis.We have the Fed, BoE and BoJ rate decisions next week. All 3 central banks are expected to keep rates unchanged.US Big Tech earnings have been in focus. While we are seeing a trend of revenue beats on strong demand, margin pressures are emerging on account of heavy Capex plans.
Global Equity Markets:
Domestic Equities :
- Domestic equities corrected this week, with the Nifty 50 down 1.9%, while mid- and small-cap indices also ended lower amid cautious investor sentiment.
- Valuations remain elevated despite the pullback, with the Nifty 50 trading at 19.8x trailing and 19.0x forward earnings, while mid- and small-cap stocks continue to command higher multiples.
- Q1 Earnings season so far has been encouraging, except in case of IT and energy. Financial secor earnings have been healthy.
- FPIs have invested net USD 2.8bn in domestic debt in July so far.
- FIIs remained net sellers while DIIs continued to provide support, with weekly flows at ₹7,182 crore (FII outflows) versus ₹8,638 crore (DII inflows).
- Stock-specific action remained mixed this week, with Data Patterns, Gujarat Fluorochemicals and M&M Financial leading the gains, while Bandhan Bank, Gallantt Ispat and CIE Automotive saw sharp declines.
Below are the graphical representations for how key benchmark indices performed this week& how sectoral indices performed this week:
Fixed Income
Global Rates: Global bond yields moved higher this week, led by Australia (+13bps), Japan (+10bps) and the US (+9bps), while China’s 10-year yield eased 1bp.
India Rates & Flows: India’s 10Y G-Sec ended at 6.82% (vs. 6.78% last week), OIS rates moved higher, and FPIs invested a net USD 2.8bn into domestic debt in July, supported by a marginal banking system liquidity surplus.
Real Estate:
- Blackstone-backed Kolte-Patil is set to appoint a new CEO, underscoring continued institutional confidence in India’s residential real estate sector.
- HDFC Capital and Primus Senior Living have launched a ₹2,000 crore platform to develop senior living communities across six Indian cities.
IPOs
- Primary markets remain active, with Indo MIM, Lohia Corp and Xtranet Technologies together raising over ₹5,000 crore in one of the largest IPO weeks of the year.
- Investor demand for these IPOs will provide an important gauge of market sentiment ahead of the August earnings season.
Private Equity & Venture Capital
- PE/VC activity remained healthy, with 17 funding deals completed during the week, led by investments in financial services, technology and manufacturing.
- BusinessNext, Raghu Vamsi Aerospace and Veriqus were among the largest fundraises at $40 million each, despite overall funding moderating due to the absence of mega deals.
Commodities:
Crude prices rallied sharply this week, with Brent rising 10% to USD 96.8/bbl and WTI up 8.3% to USD 89.3/bbl on supply concerns, while European natural gas surged 11%; precious and base metals also ended higher, led by silver (+4%) and gold (+0.9%).
What’s New in the World of Wealth Management
The biggest pipeline news of the week came from Coca-Cola India, which appointed JPMorgan and Citi as investment bankers to manage its upcoming domestic IPO, aiming to unlock value in its local bottling operations and scale retail distribution nationwide , adding another marquee consumer name to an already deepening mainboard pipeline that includes Jio Platforms, Manipal Health, and NSE. On the bond market side, the government approved NaBFID’s plan to issue Rs 20,000 crore of 10-year zero-coupon bonds, supporting long-term infrastructure financing through a specialised debt instrument, a significant development for India’s nascent project bond market and a direct enabler of capital recycling in roads, ports, and energy infrastructure. DIIs were net buyers of Rs 2,947 crore in the cash segment on July 23, continuing their role as the market’s bedrock support amid choppy global cues.
Our Views: What we Like?
Equities: Domestic equities underperformed this week. While Q1 earnings season so far has been encouraging, higher crude prices and resulting Rupee vulnerability and possible change in perception of political stability could be headwinds in terms of FPI flows. For now Nifty50 remains in 23600-24600 range. Break on either side could result in a 5% move in that direction. It remains a stock pickers market. While index is steady, certain sectors, themes are doing well such as battery/specialty chemicals, renewables, new age IT infrastructure.
Fixed Income: We expect the Yield on the benchmark 10y to be in 6.70%-6.95% over the coming few weeks. One can look to add duration on any uptick above 6.90%. 5y OIS can be received around 6.60%.
Commodities: Brent is likely to be headline driven. European Natural Gas prices are soaring as well and there are concerns around stock levels.Base metals have been steady. Gold and Silver seem supported around USD 3850 and USD 53 respectively and appear compelling to add to long term portfolios.
FX: We expect a 95.90-97.50 range for next few weeks. Exporters are advised to hedge cautiously only to extent of in-hand orders and through participating structures while importers are advised to buy on any dips.
