Markets Espresso: The wait for mega IPOs, FIIs and the Monsoon!

Hello there! We're BACK! Vedanta now has five listed entities on the bourses, US and Iran have signed a peace deal, which very nearly fell apart within 24 hours itself, Crude oil prices from sub-$90 are now sub-$80, NSE filed its IPO papers for what could be India's largest IPO in history and within 48 hours, Jio Platforms filed its own DRHP for what could also be India's largest IPO in history. Amidst all of this, a hint of bad news pummeled IT stocks yet again. You may think all of these are events that transpired over a few weeks. Nope. All in a matter of five days! The above meme is proof of how we were all through the week, grappling with one headline after another!

Despite Friday's blip, the week ended with gains for the markets and the bulls have made one thing clear. No matter who outperforms or who doesn't, they do not want the Nifty to slide below the 24,000 mark, at least for now. For that, they own a profuse amount of gratitude to the Nifty Bank, which has done the heavy lifting all through the week. From last Friday until Thursday's close, the index had risen over 3,000 points. So, for next week, if the Nifty needs to move higher, we know where the bulls will be looking towards.

In every instance of the markets starting to show some signs of recovery, What is the first question that comes to everyone's mind? I'm sure you would have guessed the answer too, so here's a reward for you! But as "aadat se majboor" we are, we end up asking the same question to our battery of big market voices as well, hoping that the answer would sometimes be in the affirmative. Still guessing the question? Okay, here's your answer - When will FPIs return to the Indian markets?

Abakkus' Sunil Singhania's answer is music to our ears. He went on to say that FPIs would end up as net buyers of Indian stocks in 2026. This, after significant outflows seen through the first six months of the year! He expects the banks to do well as they've been a "big punching bag", while also citing some "dream valuations" for a lot of the smaller consumer discretionary companies. He likes renewables as a theme and expects data centre players to look at renewable energy as well.

The one thing you cannot argue with Nilesh Shah of Kotak Mahindra AMC though, are his analogies. He told us that when oil prices go up, India's "rahu kaal" begins, and therefore, the deal and the fall in oil prices is a big positive. However, he was not as optimistic as his friend Sunil Singhania, saying he is unsure of the FPIs returning as the mood during the recently concluded investor conferences was "quite poor". He too is of the opinion that financial services stocks will do well from here on, but also likes hospitals and hotels along with them. He prefers playing the capex theme through cement stocks.

Rahul Arora of Ashika Institutional Equities believes that the consumer discretionary valuations are very expensive currently but sees aviation and AlcoBev companies do well in the short-term. Among stocks, he prefers Britannia, Tata Consumer and Nestle within the staples pack, but Eternal is his preferred bit within quick-commerce, as he expects another 25-30% upside from current levels for the stock going forward.

Pankaj Tibrewal has a warning for you. In richly valued sectors and stocks, beware. Even the slightest earnings miss could trigger a big derating in them. However, he does see pockets of opportunity within the auto ancillaries, engineering products, EMS, chemicals and textile stocks. For IT? Well, a tactical trade at best, as he does not see meaningful growth over the next three to five years. Private financials, some pockets in Metals and home building products are also some places where he finds value going forward, along with the entire home improvement space.

But do expensive valuations necessarily lead to underperformance? Not really was Jefferies' answer. In a very interesting study this week, the brokerage highlighted eight sectors in the past 15 years that outperformed at various junctures despite valuations being significantly higher than their 10-year average. We've written about it and for those who want to watch what they said, here's a video as well.

Among all four newly listed entities of Vedanta, the Aluminium business has grabbed the spotlight the most. It already has two initiations this week, one from Citi and the other from Kotak, who expects the stock to rise to as much as ₹600. Our friend Nigel D'Souza, who knows the company inside out, did a wonderful deep dive into what is said to be the "crown jewel" of Anil Agarwal's demerged entities. You can read more on that right here.

Thank you for tuning in once again on what has been another action-packed week! The final full week of June is a truncated one with Friday being a holiday. If you liked reading us, do follow and subscribe and share it among your fellow market watchers as well! Before you go for your afternoon siesta, do not forget to say a prayer that the rains come, and they come soon! That is possibly the only dampener for a market that appears to be in recovery mode. Kaale Megha, Kaale Megha paani to barsao!