Market Bizzz

Muthoot Microfin has refiled a draft red herring prospectus for an IPO of Rs 1,350 crore with SEBI. The IPO consists of a fresh issue of shares worth up to Rs 950 crore and an offer for sale by promoters and institutional investors worth up to Rs 400 crore. The microfinance firm aims to use the proceeds to augment its capital base and meet capital adequacy requirements. Muthoot Microfin is the fourth-largest microfinance company in India and the third-largest in South India. ICICI Securities, Axis Capital, JM Financial, and SBI Capital Markets are the book-running lead managers.

According to Rajesh Palviya of Axis Securities, the Nifty has been experiencing strong upward momentum and could potentially reach levels between 19,350 and 19,400 in the coming week. The underperforming sectors have started to contribute, and market breadth has significantly improved. The Bank Nifty is also nearing its target of 45,000. In the auto sector, Maruti is expected to continue its momentum and reach a target of Rs 10,000, while Hero Moto and Bajaj Auto are also looking attractive. L&T, TCS, and Jubilant Food are the stocks to watch in the upcoming week.

The merger of HDFC Investments and HDFC Holdings into HDFC is effective on Friday. Commercial papers of HDFC Ltd will be transferred to HDFC Bank from July 7. Shareholders of HDFC will receive 42 new HDFC Bank shares for every 25 shares held. The merger is expected to create the world’s fourth-largest lender with a market cap of $172 billion.

The shares were issued at Rs 175 each, with the QIP opening on June 26. Foreign and domestic institutional investors, including BlackRock and Norges Bank, participated in the QIP. Aditya Birla Group chairman Kumar Mangalam Birla said this investment reflects the company’s commitment to its financial services business and the confidence investors have in its strategy and growth platform.

Warburg Pincus affiliate, Lion Meadow Investment, has sold a 0.3% stake in Bharti Airtel through a block deal, generating Rs 1,649 crore. Despite the stake sale, Airtel’s stock ended higher due to strong institutional buying. Several funds, including American Funds Insurance and EuroPacific Growth Fund, have acquired stakes in the telecom operator. Airtel’s African business is growing rapidly and has the potential for a separate listing, according to brokerage CLSA, which has a buy rating on the stock. In the March quarter, Airtel reported a YoY increase of 50% in consolidated net profit.

Asian stocks dipped on Friday as strong U.S. economic data increased expectations of higher interest rates, and concerns grew over the weakening yen prompting possible intervention by Japanese authorities. The MSCI’s Asia-Pacific index outside Japan fell 0.21%, while the Nikkei dropped nearly 1%. China’s manufacturing activity also contracted for a third consecutive month in June. The data painted a picture of a resilient U.S. economy, leading to expectations of further interest rate hikes by the Federal Reserve.

The yen weakened to its lowest level in over seven months, reaching 145 per dollar, raising speculation of possible intervention from Japanese authorities. The faltering economic recovery in China also put pressure on the yuan, which fell to its lowest point since November. Data showed a rise of core consumer prices in Tokyo and a contraction in Chinese manufacturing activity. The US dollar, on the other hand, gained strength in the second quarter, supported by expectations of further interest rate hikes by the US Federal Reserve. The euro and sterling also showed gains for the month.

Gold prices struggled for momentum in early Asian trading as traders awaited key U.S. inflation numbers. Strong data prints and hawkish comments from Federal Reserve officials have raised expectations of more rate hikes. Spot gold remained flat at $1,908.33 per ounce, while U.S. gold futures fell slightly to $1,916.40. The dollar index stayed near a two-week high, making gold relatively expensive for holders of other currencies. Investors are now predicting an 89% chance of a 25-basis point rate hike in July, which could discourage investment in non-yielding gold.

The Nasdaq closed slightly higher on Wednesday, supported by megacap stocks, while the S&P 500 and Dow closed lower after Federal Reserve Chair Jerome Powell signaled more rate hikes. Powell stated that he did not see inflation falling to the central bank’s target rate “this year or next year.” Despite Powell’s comments, investors remained confident due to signs of strength in the economy, with the labor market remaining resilient. The Dow fell 0.22%, the S&P 500 lost 0.04%, and the Nasdaq added 0.27%. Traders now see a 79.4% chance of a rate hike in July.