ETMarkets Morning Podcast: Why are investors turning to midcap, smallcap-focused ETFs


Good Morning.

· D-Street looks ahead for a major selloff
· 14,250 may prove make-or-break level for Nifty
· Covid surge casts shadow on govt privatisation plan
· Investors turning to midcap, smallcap focused ETFs

Hi there. Welcome to ETMarkets Morning, the show about money, business and markets. I am Sandeep Singh.

Let’s start with a quick glance on the state of the markets.

Dalal Street looked headed for another major selloff on Monday. Nifty futures on Singapore Exchange traded some 160 points, or 1.1%, lower at 14,458 in signs that Dalal Street was headed for another major selloff on Monday, as record high Covid cases at home and a mixed start to Asian markets is likely to hit investor sentiment. Most other Asian markets have had a mixed start to the day. Nikkei was flat, Hang Seng fell 0.17 per cent while Kospi and China’s Shanghai Composite edged higher. Wall Street indices saw second consecutive record closings as the US economy pulled out of a downturn. In currencies, the dollar steadied from a week of losses. But the Bitcoin tumbled the most since February over the weekend, after reaching a record last week as crypto exchange Coinbase Global went public. Crude oil slipped. WTI crude lost 0.5% to trade at $62.82 a barrel.

That said, here’s what else is making news.

Technical and derivatives analysts say Nifty is likely to find major support at the 14,250 level. Market sentiment continued to be weighed down by the record daily surge in coronavirus cases, but analysts believe big corrections are unlikely unless the index breaches the above level. Stock indices fell 1.5% last week and are down 7% since record high levels hit in mid-February. Technical analysts expect the broader index to face resistance at 14,900 and 15,000 levels.

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A strong surge in Covid cases has cast fresh shadows of uncertainty over the government’s privatisation drive and it is likely that some high-profile stake sales may get delayed. Many key stake sales in Air India, BPCL, Shipping Corporation and BEML are at an advanced stage are scheduled to be completed this financial year. But analysts say the second wave of the pandemic is likely to hamper the process as various stakeholders may prefer to wait till there are some signs of cooling down in infections.

Cost-conscious investors are gradually dipping their toes in funds that mimic midcap and smallcap indices as local asset managers expand their product offerings to meet the growing demand for cheaper products. Aditya Birla Sun Life MF launched a midcap and smallcap index fund this April, Nippon launched a midcap index fund in February 2021 and a smallcap 250 index fund in October 2020. Distributors said more fund houses are considering such launches. Motilal Oswal Mutual Fund, which was the first to launch midcap and smallcap index funds 20 months ago, has seen flows into these funds gather pace.

Dream Sports, parent company of IPL official partner Dream11, is in exploratory talks with investment banks for a US listing by early next year, joining the league of Indian tech unicorns preparing for overseas listings. Dream Sports may raise about $1.5 billion through the listing, valuing the company at $6 billion, an almost 40% increase from the fundraising round that concluded last month, said at least three people aware of the plans.

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A group of 28 lenders to Future Retail have approved a resolution plan to restructure the company’s existing debt under RBI’s special scheme for Covid-related stress. The restructuring is, however, subject to the nod of the KV Kamath-led expert panel. The resolution plan also includes the restructuring of Future Retail’s NCDs that are listed on the bourses. However, NCDs issued to certain trusts and US bonds, carrying an annual interest of 5.6% and maturing in 2025, will not be part of the resolution plan, Future Retail said.

Lastly, record fundraising through IPOs by Indian companies has sparked the interest of first-time foreign investors in the space, said a top investment banker. Historically, Asian and Indian funds have been the biggest participants in the country’s new offerings, but in the past few months investors from newer geographies have dipped their toes in the domestic IPO waters, said S Ramesh, CEO, Kotak Investment Banking.

NOW Before I go, here is a look at some of the stocks buzzing this morning…

Brokerages have maintained a bullish view on India’s largest private lender HDFC Bank even as the company’s profit for the March quarter missed consensus estimate.

Sikka Ports and Terminals, a Reliance Industries promoter group company, is likely to raise Rs 4,000 crore from a group of three large private sector lenders comprising Axis Bank, HDFC Bank and ICICI Bank.

Mid-tier IT services provider Mindtree said its new deals pipeline is at an all-time high due to strong demand across various verticals.

Jaypee Infratech’s lenders have asked NBCC and Suraksha group to improve their bid and offer more land parcels under an insolvency process to acquire debt-laden realty firm.

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Do also check out over two dozen stock recommendations for today’s trade from top analysts on ETMarkets.com.

That’s it for now. Stay put with us for all the market news through the day. Happy investing!



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