The Federal Reserve’s overnight rate cut is anticipated to positively influence local stocks this morning, with some traders speculating that the Reserve Bank of India (RBI) may make a similar move at its scheduled meeting next month. Urban Co., fresh off a successful trading debut, is expected to remain a focal point, while tech giant Infosys might attract attention following a surge in its US-listed depository receipts. Investors are also hopeful for tangible developments in ongoing trade negotiations.
Asian Equity Fund Managers Favor India
More Asian fund managers report being overweight in the Indian market compared to those being underweight, according to a recent survey conducted by Bank of America Corp. This marks a significant shift from August, when India was ranked as the least favored market in the region; Indonesia now holds that position. Easing valuation concerns, coupled with governmental initiatives to bolster the economy, are counterbalancing worries regarding US tariffs. However, global fund managers remain net sellers of Indian stocks, having withdrawn over $4 billion in August.
HSBC Sees Potential in Indian Equities
In contrast to popular opinion, HSBC Research finds Indian equities to be undervalued. The report identifies two primary catalysts: the potential reduction of the 50% US tariffs negatively impacting growth, and the implementation of recent consumption-support measures alongside structural reforms. Despite these positive indicators, HSBC emphasizes that domestic investment alone will not suffice; foreign investment is crucial for meaningful share price appreciation. The report advises vigilance, indicating that a pivotal moment may be approaching, consistent with findings from the Bank of America survey suggesting that regional managers are beginning to re-evaluate their stance on India.
Shadow Lenders Face Challenges
In a shift away from equity markets, India’s shadow lenders are facing softer credit demand and increasing asset-quality risks. This trend is particularly evident in real estate and auto loans, with vulnerabilities extending from unsecured lending to non-prime secured loans, as outlined by analysts at Ambit. The firm remains optimistic about smaller entities like SBFC Finance, India Shelter Finance, and Can Fin Homes, while maintaining sell ratings on larger firms such as Bajaj Finance, Shriram Finance, Muthoot Finance, and Cholamandalam Investment and Finance Company.
Market Insights
As the Nifty Bank Index nears key resistance levels, its smaller counterpart has indicated a potential breakout. The Nifty PSU Bank Index confirmed a classic head-and-shoulders reversal pattern, reaching its highest level in over a year. This technical pattern often signals further upward movement, mirroring a recent surge in the Nifty Auto Index that saw gains exceeding 10%, highlighting the significance of such chart formations when supported by market momentum.
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Published on September 18, 2025
