Bank Policy Tuesday: Keeping lasting promises

The SLR slough off has finally come. It was in the works for years, while Raghuram Rajan was still working out the logistics in U Chicago 15 years back and will finally bring down India’s required reserves to 23% levels over the next 5-6 quarters. That promise is not something that happens every other day. It is also a recognition that India can keep its superior positioning for growth only so much more without exports that lack quality and loans that still seem to be going bad well into the take off period for growth and also a recognition that India needs to be very careful.  The repo rate is down to 6.75% and will probably not have many more rate cuts but likely still the Repo rates will touch 6% at the top of the cycle giving impetus for bank rates to come down steeply and India 10 year yields should now come down from that 7.74% plateau that is not helping anyone plan growth.

The repo-reverse repo corridor is the narrowest as bond rates refuse to catch up with the lower inflation and a tamped down forecast in line with RBI plans for a target 4% inflation in the near future (Urijit Patel recommendations) setting a decade of solid growth but with FinMin refusing to do much else but wait on the RBI guv to do the needful apparently. This time again the RBI has gone ahead and led the markets to the direction of change with a steep rate cut and if banks still feel queasy about manipulating lending rates and bringing credit back, it would hurt everyone.

Amazingly enough even with the sense of urgency in the steep cut, most indicators are healthy including the fisc forecast for FY2016 with a buoyant market for IPOs. India of course is as always at the growth take off point , better off than all other emerging markets including China, Sensex according to the ET only down 6% in one month compared to 16% cut in the MSCI Emerging Markets Index.

Goldman Sachs’ retail bank ideation is alive and well

After a furtive foray in insurance they had to back out of and some CDs floating in the market, GS has bought over deposits from GE, taking on a new avatar as an online bank apart from a lending business for online lenders earning 8% NIMs proved the advantage of retail funding regardless of the rates environment.

Breakingviews: Goldman bets on the bank, Thomson Reuters: Reuters Insider

Reuters’ breaking views:

Goldman Sachs has agreed to buy GE capital’s online banking platform and sixteen billion dollars of deposits. Now this deal, on one level he seems to make some sense but it’s also swapping one too big to fail risk for another.  Well let’s look at why it’s a good idea for Goldman to do. Since the financial crisis everyone has been worrying about how to fund standalone investment banks so those that usually rely on wholesale funding (bond markets).Right, capital markets. But the more deposits you have, the less you rely on Capital Markets funding

Bank Policy Tuesday: There is one more rate cut in this Fiscal

After the rate cut on Jan 15 and a SLR rationalisation taking RRR to 25% the Central Bank in wake of CPI and GDP data holding up a nascent recovery ( GDP modified to 6.9% on new base year hiding a few but showing better traction to results data from the last three quarters) and lending rates may precede south earlier than the next rate cut before the policy announcements now scheduled in the next fiscal on the first Tuesday of April.

Stock picks wise, I still prefer ITC and Bajaj Auto in FMCG/Durables and IDFC in Financials as October 2015 is the set date for it converting into a bank with ICICI Bank looking like the first to post a lending rate cut int he private sector as the banks increasingly become more responsible for the continuing spate of restructuring and NPAs because of the higher lending rates

India Morning Report: Markets go below 8500, again the DLF push ? & !

DLF judgments seem to really decide speculator and investor sentiments together and adverse judgments against the erstwhile Market Cap leader for India is sooner or later liable to become a transparent weakness of the India story though one shudders to think that someone in Gujarat may already consider another smaller group to be dLF’s equal in this light ( from the days of India’s jugaad) Meanwhile, it might be good to catch up albeit delayed on the new supporting role in India’s super power story with China suffering badly in exports and being at least 2-3 times more sensitive to import fluctuations , with their direct link to consumer stories we have avoided despite an equal interest of global Consumer majors. That also translates to our slow consumer story in India as we have frequently detailed in 2010 and 2011.

However that may be consumer cyclicals esp non discretionary incl FMCG and autos are definitely hoping for a better deal on the bourses and the end of this correction is also not more than another 150 points ont he nifty which nowadays should have reduced to 200 points on the Sensex from the early expected 250-300 which in terms of indices supports and resistances will decide whether the next support is broken too.

Stay invested in ICICI Bank, HDFC Bank, Yes and IDFC. (There is no real trade yet in Yes when it settles lower , too few shares and decided by one guesses too few brokers – market makers keeping it in play) A big short on Maruti from us for a new year celebration..

In relation to China, a.m., China equities continue to dominate FII attention and that does not take away from the economic argument we led with as equities do well only on low volumes despite integration and virtual opening up of Shanghai markets through HK and the real Economic snafu for the Yuan and China will be the continuing to slow down growth, while it actually hopes to grow higher imports as growing consumption is key in keeping growth steady while it corrects the reform direction, lending credence to India gaining a comparative advantage and another chance to catch up with big brother.

India Morning Report: Markets to consolidate 8500 levels into a ‘thing’ till the next break

The new Infosys starts the week below 2000 even as the Nifty tracks downward from the weekend levels and keeps its nose above 8500, Hero Honda paying for an intemperate rally as ITC hits 360 levels while ICICI Bank is up to 1480 levels. We have probably already mentioned we worry about the indiscriminate fillip to Maruti at a grade or two below investment grade at just 100k cars a month

The Sensex is stil below 29k at its highest away from the 30,000 peaks which will be reached at the firsat few evidenced statistics of the Recovery, inflows having stablised to a slow trot and also waiting without further profit taking and Coal and Power, Highway and other infrastructure ministries ( incl Railways) seem to be activated to the imperatives of garnering quick financial closure for stalled projects, again only IDFC a quality listing in the area with leveraging having destroyed GMR , Reliance Capital and JP associates listings. Any equity loading of infrastructure projects will definitely suffer from investors’ impatience for return on their risk capital and long term debt is more likely thru shadow banking channels than conventional bank loans or traditional risk equity

Bank acquisitions also seem a mile away and the energy stocks’ rally has been stunted by public ‘profiteering’ to finance extraneous fiscal deficits in new taxes even as demand hits a new level on lower prices. Really stock rallies on a 267 crore order (SPML Infra) is not a n opportune way for investorsor even speculators with many market accidents in the recent and not so recent past testimony to fall outs from such orders including our polaroid driving licence contracts and others while the Bangalore and Delhi metro seem to be the only good examples in EPC



India Morning Report: At the cusp of “Superpower-dom”, The new India Inc..

A land of loan waivers, high energy taxes and still a Rupees Trillion  in Divestment, Crude prices still falling and the markets waiting for another 6 months for a recovery probably does hint at a vital flaw why only Banks are left with potential to invest, being at the right place to take advantage of a cyclical uptrend. I am going to focus on the fact that less than 10% of representative Consumer companies are listed and only a few more together cover the branded market in India, and in verisimilitude, our infrastructure heroes have banked either too high on private debt or too early on equity and the lack of depth of these institutions could be troubling India also, given that markets already feel the lack of downstream Tertiary and Secondary segment businesses on the deep Financial markets of the country.

India debt remains in demand and yields are well on their way to the southern edge of the corridors, it is still time for investors to buy more yield in the Indian market, and consumer finance’ early rush bump on the statistics probably clouds the real potential ahead too pointing to a lull in the business models of these darlings of the market for a few months. India’s Defence spending challenges and the infrastructure quandary should probably be discussed together esp as the Rupee seems to hold its own , and this time not on advance investor flows and despite weakening export growth story having played out post high depreciation instances in the recent past. I would like to buying opportunities in banks with all pair trades taking Kotak/Indusind at the short end or all other trades taking SBI and PNB at the Long end of the trades

India Morning Report: Markets hope to close below 8500?

From where I stand, the next week seems more important to traders right now, so instead of a closing out on a good note sentiment, the markets should prefer to close at near bottoms as the two days of post poolicy trading have been nudging downwards, leaving some unfinished business before stocks start their upward march next week to new 8750 and 9000 marks or the first 30000 for the omnipotent sensex.

Bajaj Auto seems likely to join the up tick from 2500 levels with new launches and return of normalcy in exports probably required before the ticker trends back up. Bharti’s strongarm ways as the incumbent operator mkeep it on watch even as they seem to have more options in which they keep their paid spectrum at old rates and when they are asked to pay a difference the strain will show on the stock price.

ITC is back up with consumer brands and the good old tobacco business making a splash SBI is still at pre policy highs and IDFC is actually good for more buying and of course markets as indicated in the call auction, may still prefer to come back atoday and tomorrow to pre policy jitters with RBI having upgraded their policy stance in time for the recovered economy to boost credit at a 4% inflation target in the long term


India Morning Report: It’s the Divestment report that did it.

INR 82000 Crores as target and none the wiser for it, the FM has his task cut out in the remaining Fiscal, with Governor Rajan having been approved by the markets with much fanfare after he expectedly submitted to inflation being under control we would be ready to slide down from the 8% repo rate. The fixed income markets have indeed started down from 8% repo rate levels to the 7% barrier which is infact our reverse repo rate and recovery led investment would have come in by the time the rate cut happens, though the Governor promised a April date as the market saw it.

Meanwhile news of impending Divestment was good for Banks and the banknifty is likely not going south even as the market readies for another couple of quarters of low spending and low growth as sporadic investment projects undermine a secular recovery even as investment in Indian debt becomes de rigeur for Emerging Market investors who have already been prizing India for its equity market potential in the last months since October

Markets in general look to more news to cement bouncebacks in the rest of he stocks so it may come off still a s being disappointed by RBI and all that when it is indeed just failing to find head room in individual stocks while speculative grains may entice shorts specially the comeback in UB spirits and UB holdings on the back of investor victories are indeed suspect as are auto stories at 100klk sales in Maruti and 300k monthly sales in Bajaj or the corresponding flat number in GHero honda already generating scepticism in a highly sentiment driven market.

India Morning Report: A gentle let down on Policy day

Though of course, we miss going thru our specific brand of analyses, we will not be presenting a more detailed article on why Guv Rajan would not be presenting a rate cut and meanwhile also not able to educate the market sentiment on how the CEA Arvind Subramaniam will be effecting his first seminal recommendations on India’s way forward.

While IDFC and YES remain at investible levels SBI and ICICI Bank have responded to the “put me down gently” sentiment in the markets with the Banknifty watching the way down at 18500 levels higher by 20% from October series level a month ago. The sensex is likely down another couple of 100 points today after the policy release and while the hedged positive move will remain in HDFC Bank, Axis and SBI will not be much affected because of the change in valuation on the two candidates, while Kotak, having speculated much on its strongly speculative bid to buy another dead bank, will likely be the spearhead of a good short strategy to test waters this week, while the Nifty prepares ahead to make a comeback next week in Energy stocks and mid cap Pharma investments moving up on investor accumulation. Bharti and ITC join the cyclicals in correcting back to 350 levels whence another secular rally leg will be in play.

One wonders whether the Winter session has any rumors in store that can be absorbed by the markets today itself, or likely pressure on shorts can be built upon consolidating the judicial and legislative headline output in media, from the IPL and Dhoni’s way out to probably the white elephant that made us miss the taxt treaty with more downstream information on tax offenders

India Morning Report: The Bad GDP report passed on the previous turn

Markets will of course, still look to auto sales throughout the week esp to decide the fate of interest rate sensitives again positively till the RBI Governor brings down the house with another pass on the “rate cut” being nudged by the markets but with the Rupee likely to cross 63 in orbit within this week, bond yields can probably go on improving mid week from Thursday to lower levels just above 8% eventually before any rate cuts happen in response to pressures on inflation in 6 months from now.

The credit pick up cycle lags Foreign investor demand and other macroeconomic improvements markets keep forwarding to the Central Bank in vain hope.  Markets may well take in the news of 5.3% GDP growth and the coming Bank Rate review tomorrow in a move down to 8500 which would be well above the previous week’s starting levels.

Apparently deficit concerns have also been underplayed by the “responsible” and “effective” Government in place and that is a precursor to well timed large divestment programs till the end of the fiscal yet again. However equity markets are unlikely ruffled by such for more than the today and tomorrow sessions till after the Central Bank reports its reasons for expecting an improved policy stance from here, likely rewarding investors in tomorrow’s afternoon session. coming back to Auto sales, markets will likely penalise interest rate sensitives thoroughly in today and tomorrow to allow a fat bullish candle on expected sales data in Wednesday and Thursday

IDFC, ICICI Bank and Yes remain the top of the charts with HDFC and HDFC Bank holding one half of the down move and SBI and Axis showing up with minor corrections in the other till the bull move recovers in the latter half of the week. with consumer discretionary stocks again in the buy baskets esp. ITC and Bharti at 350 levels apiece

Nevertheless markets have moved strongly in the prior weeks to make 8750 a near probability in the new series and Crude keeps heading down to sub US producer costs at $60 levels and Indian exports may not have a good year on the other hand because of the continuing refusal to switch to newer markets to replace traditional strong markets in Europe which continues to suffer from a beat down, despite hopes of a QE later in the week on ECB policy announcements.


India Morning Report: News driven volatility for a price?

It looks like, there will be very little pf price discovery in these markets if we keep having these amplified news driven reactions like the one yesterday with ITC back at rally start levels and unlikely to be a short for anything more than 1-2 hours in an earlier edition of the markets from 2004 – 2011, yet ITC continues to be on watch for some period and will likely be nicely and squarely accumulated for the biggest move later.

Also that probably redefines Bajaj Auto and ITC both on defensive stocks for the coming decade and more. Bajaj Auto is hurting on another news driven (nigerian exports hit) bitsy yesterday and will likely rest lower for a similar binge as ITC near 2450 levels not 2250 levels when it last justified its run here.

The market’s search for tradable predilections is noteworthy however, a characteristic of the more refined trader community now on strike and rotating through sectors, trends and even old PSU heavies rather smartly given the headroom for a recovery led big up cycle till 2020.

Cadila and Glenmark are in the mix again but the recent IPO added cyclicals (Prestige, Talwalkars, Page and Just Dial) or banks are likely transparently on down and out lists for the upcoming RBI non announcement, but unlikely to hurt the broader market more than to 8300 levels .

The SBI stock is buoyant after the split listing last Thursday, meaning it is trading for a considerable headroom but institutional traders are in position for the play and longer term holding the stock is ideally an answer. Markets should let the FI yields go below 8% but for the predilection to closely track the FM still leading better economic sentiment and the credit and profitability pick up seen yet, which will eventually let the market lead the yields down below 8%

India Morning Report: 8500 it is and without a break!

Call auction bidding has definitely been good for the markets, the 15 nminute pre-open allowing investors, brokers and analysts considerable space in gauging market direction all day esp in the liquid end of the market, i.e. the large cap stocks.

Banknifty is still riding the wave of good work in the sector with subdued response thru the rally’s initial 2nd rush whence it rested with the markets at 8200 odd, and is been a peach investment for those holding on. However, as you would also notice, it is not really a safe play anymore even after expiry or in the run up to expiry in these last 2 days and there is no reason for it to really move up or down from 18500 levels. Market plays near a more stable expiry again look to adding speculativce plays and that just increases downward risk in the markets. Especially as the FX and bond markets also enjoin under pressure and Rupee eats through some of the last few days gains for FIIs.

One suspects edgy shorts in PSU banks and the non performing Cap goods sector to get tested in the next series again as the slow recovery combines with ultra low volatilities to make opportunistic trades a mine  for intemperate incoherence

IDFC ICICI Bank and Yes remain great buy trades. HDFC Bank is a long term portfolio pick and SBI still has head room left in the immediate rally, pointing as I said to greater dividends for those who wait.

The rally looks to be safe till 8800 levels but for the big dull thud on December 02, which leaves 8300 levels still ont he radar precluding new trades.

India Morning Report: Insurance, GST and the Winter Session

Our morning report was something we wanted to title India is back on the high horse again with the index at 8500, and as you can see that sentiment inside has indeed keeled over, making wary investors challenged at every new level. One wonders ghowever if there will be a correction, and in the normal course without a parliament in session ( hardly gets in the way of governance, that, having democracy already entwined into the processes, Haryana indeed showed there is a simpler way forward without having any of these elected members entrusted with any active discussions at all. However, fun banking aside, the Parliament will meet in the winter session and some key implementation issue may yet not become a thorn in the market’s side given these are simple 5 year old discussions with a likely consensus, even for the hairbrained scheme of not implementing DTC at all, which is in fact not slated to be discussed at all.

It will be difficult for any Congress or non majority to ever make a comeback and the bureaucracy will take over implementation of the business at hand so investors are likely to just ignore the ?Heady heights marker? at 8500 as they should in which case, markets may merrily jog along to that 9200, 9500 or 10000 level prediction which has been placed by sell side brokers. Markets will not correct beyond 8350 levels this week

Banknifty has finally shown at 18,000 levels that it duly deserved the lions share of the $22 Bln in portfolio flows till October (CMIE) Real FDI is also a good $18 Bln in the year from April and is trickling in in good measure because of the confidence engendered by Modi’s pronouncements and as the slow recovery cycle forces RBI’s hand s markets are more likely to time a sizable correction with Raghuram Rajan’s refusal to ‘award’ the markets a rate cut later next week.

As we shortly mentioned in our holiday week pronouncements last week, the Kotak ING deal is abig mover in the markets and will never be a short candidate and yet that is never going to accrue to much in terms of benefits to any shareholders or proponents of the deal a marriage required to defrend the sluggish growth rate for both mature market models and the larger entity will chug along at much the same pace with 1400 branches and a credit book of two minions not likely to add to anything big on the overall. Not an industry shaler, no!

We remain positive on YES Bank, IDFC and ICICI Bank, HDFC Bank might start back again after discounting the premium coagulation from the merger revue out last month

The Rupee remains important to watch and with any stasis at even 8500 levels threatening the market from sleeping bears a currency rush to 64 in light of the stronger Dolla r all year and the continuing turn down in the Euro (and no downturn would be incorrect usage here) is likely to deepen the market blues and hurt some unintended parties again on the way down, but the traders are still in favor of the longs than trthe shorts, the correction again just around the corner as we reach another all time low for volatility this week

India Morning Report: I am getting giddy, its so high

As was apparent last week, markets are looking like they cannot handle the new levels again as at 8350, there is not enough results from the recovery in yet to brag about and thus till auto sales actually catch up even Banks could correct just a wee bit though a new range expected 4-6 weeks has finally been established. GAIL has again shocked everyone with a quick move south too giving the rally meme back to Indian Oil and / or ONGC

Cipla and Lupin have a flip side of the pair for a change with DRL setting new highs. In unlisted business away from the direct attraction germaine to Pharma stocks and more in line with the expectations of a stronger dollar all year, FDI inflows have sttrengthened into a consistent $2-3 Bln in new proposals every month. On ground, one is waiting for news of the infra and other capex projects’ take off to become firm gets for every investor to expect.

Update (week of 17-21 nov:) Banknifty has nevertheless moved up expnerating SBI of the baggage and not yet taking to the new hobby of rerating PSU banks as FDI portfolio additions tapoer to 50% from September, and the markets are ready to do the 8450 level ina nopther slow torment in the coming week. Kotak’;s end of the week soiree in announcing a ramp to 1400 branches though combines two stodgy players from the India’s failed credit led expansion decade by and it remains to be seen if Friday will indeed just pass the deal by as HDFC/HDFC Bank peters out to a reduction story and HDFC stands out while FIIs reactivate interest in the exMSCI index component.

India Morning Report: 8350 could be a watermark for the index

It has the distance from the previous highs which at 8200 never lasted for more than day or two on the indices. Given that the market may avoid big moves for now, it could take anytime between today and next Wednesday for a big correction as the futures indices plough forward without move in the underlying.

The PCR however is more than ready to keel over at the other extreme at 1.25 levels after starting up from a extreme value below 0.9. Apparently ( secondary off the shoulders from the TV behind me!) 600 points have run up on the Nifty (Udayan, morning show with LV on CNBC India ) .

The other mitigating factor on the correction however is the Rupee which gets stronger after Europe joins the QE buzz and we definitely trade much more with the Euro countries, and the Rupee Dollar could yet stay at 61 levels because of the stronger Dollar taking away any direct appreciation in the currency.

The bond markets in India are in demand however and the Currency will claw back a few points as investors double down on India debt and Private businesses like Pharma and old hobby horses in Private banks and infrastructure keep adding equity on tap.

The 8350 mark (8338 in closing yesterday would thus hold if corrections were indeed swift enough ( within November futures , 27 November being series expiry) I guess institutions would now seriously consider adding next and two month ahead series for bullish Put sells to lock in the future upmove and exit this trading range at maximum profit to a net short on the indices.

In line with comments from other hopefuls, I’d love it if the market draws all the way down to 8000 levels, after all its tiring to have to keep telling others they are not so good after all, which seems to be explicitly required in every leg of this rally segment

India Morning Report: All those who running with Auto now, we did warn you!

And of course we are going to miss this run if Hero and the M&M and other tractor makers really become that sustained bubble which saw a sudden interest in Excorts. The Oil trade is well and truly dead and so is apparently the Pharma export story,  giving in to some heady profit taking in Cipla, Lupin and I guess DRL getting a little bit in trading pairs showing a cycling thru of disinterested rally participants who’d rather get some real punch in the Economy before moving that big wheel. I guess these show if the Bank nifty would weaken in the new steed with 20 days still left and a festival shortened week not really part of any moves beyond 17200 on that index. I would stay with Yes, ICICI and IDFC and wait out the next ride to 8100 before getting on the traders’ strategies Glenmark and Cadilla remain buys with Cadilla reporting today.

Again what indeed would bring volatility back to these markets indeed.

Auto trade is a weak proxy for the falling Oil prices but not at these prices for 4 wheeler or two wheeler or the other stories with CV deamnd yet only negative and the first few plusesin the sector would barely cover the big tear in the wall.

India Morning Report: Thats a good jump to 8350 levels, dear!

Markets have taken us to heart and definitely like our analysis though with the inevitable liquidity issues and the affectation of a surprise as traders recover strength and get into a new orbit at 8350 levels

We were definitely wrong about the Banknifty’s capacity to move north in the 2005-2010 period and may have underestimated its power again as the Banknifty powers up the banking sector on good results. As a result the ecxpected rerating of PSU banks down remains undone, after the traders having waited out the entire advance from July 2013 to Modi’s elections and the PSU banks continue back for the last secular run of the rally to probably an overpriced momentume trade beyond 8750 levels but definitely not overheated at any level below 9000

IDFC trades higher again unexpectedly silent before Diwali and waiting out its reorganisation but apparently keeping its constituency apart form our followers also intact. They had bad results to show because of the infra slowdown for these two years

This could however also be only as the markets jettison auto salesbefore the recovery scycle gains strength and that means the markets would have a unique direction indeed in the next two mmonths as the Auto shares have a vertical over pricing gap from their election day levels whence they ran ahead on speculative interest.

India Morning Report: Life is but waiting at another peak

And probably just waiting for the sun to go down, another trek to 8200 completed as the Economy still has no redeeming inflows of great import and results above expectations from ICICI Bank were not really too great esp in linked quarter terms while on year comparisons brought in a 15% growth in net profit and an improvement in net margin

One ‘redeeming’ feature of yesterday’s rally was the coming out of ITC and Bharti from the near term consolidation zone around 350. IDFC in fact is the investment story of the day having operationalised the bank structure and survived an excruciatingly slow year in infrastructure. ICICI Bank in our view did great by finally jumping all Fee based income tby 27% on year to INR 27 Bln

YES Bank is obviously happy it has grown beyond our benchmark 30% increase in net profit in yearly comparisons and increasing NII again by One billion from Q1 to INR 8.5 Bln (INR 7.5 bln) in the quarter, Fee Income has also grown nearly 20% to INR 5 Bln and this is (to reiterate) sequentially from June of this year, a big jump given that most banks have been sufficing increasing the restructured portfolio and selling it in the onward quarter without growing credit portfolios

The increase in Topline has kept pace with increases in Capital during the period keeping the EPS ata reported 11.6 and making it a leading investment in this market up cycle. Understandably the Banknifty scaled the 16700 peak and the 1635- consolidation levels and is holding steady in Friday’s trading. However, the Banknifty should likely, rationally only see a rerating of the components post Results Thursday

India Morning Report: It’s Inadvertent, Indescribably inscrutable and a continuing interregnum yet

That means the benefits of having a Modi government for the next 20 years are already showing on RSS, Gujarat and yet not visible if coincident on the larger economy, leaving me puzzled why the markets jumped like they did on Wednesday. Regardless, we’d much rather wait for another Happy Thursday with ICICI Bank, IDFC and Yes Bank reporting thru the day today for September 2014, a good six months for all 3, for the banks because they come out of a growth rut as industry leaders with credit growth in below double digits in August and September and for IDFC as it drills down to its lower cost of funds becoming a shade better gaining on incoming competition as Infrastructure financing makes a comeback to the top acievement motivations of India Inc. Of course, Arvind Subramaniam int he meantime as our new CEA might have a few comparisons with the vastly superior governance out of China, but that we are indeed in Foreign policy terms now more conversant with the global world view than isolating ourselves, we have a better chance of recovery in the broader economy itself.

Meanwhile, another thing to remember during the day’s and November’s trading would be that ICICI Bank grows both Fee and Interest Income at equal or better pace than just focusing on Interest spreads/Jaws and NIMs whatever be the currency of the day for Loan interest income expected to grow a hefty 15% for the quarter and more for the half year

Bharti Airtel and Maruti also report on date. Markets will likely peak today by end of trading for a correction if the sentiment does not consolidate given the big earnings day for Dalal street.

India Morning Report: A Bond catch up makes yields 8.3% on the 10 year bond

Interest rates keep falling allowing banks to reduce interest rates on deposits with the liquidity situation easing. Any rate cuts in the RBI repo rate can be in contention only after the banking system starts cutting lending rates and the MSF corridor reverts on the lower side between the 7.5% repo rate and the MSF rate of 8%.

However, stock markets buoyed by the value correction witnessed on Monday ( and a partial resolution of the quandary proposed by us in the Monday report) SBM is announcing results this afternoon as we update late today stating a change in focus ( like it was yesterday’s Biryani) to retail even as stressed assets come back from 12% of book to just above 10%. Early days yet to talk of any recovery for the last SBI leg likely to be merged into the behemoth in the next two years. The Bank has only recently changed focus from bulk deposits, treasury deposits being a key risk for PSUs till 2012

LIC Housing Finance is a buy at corrections with YRES Bank still forming the core of high performing portfolios even as the broader sector becomes a pick and HDFC HDFC Bank and ICICI Bank join core picks, SBI having moved up to new levels recently a little out of breath from all the huffing and puffing, still trying to catch up in brand recognition with the new private sector winners. REtail assets may not last beyond this fiscal as winning memes for banks and NBFCs , India not exactly a mirror of other consumer finance led economies.

India Morning Report: Nifty above 8000, Banknifty ready to fall already?

At 16500, any move in the Banknifty after the muhurat weekend in the new year, is likely to be downward adjusting for the market and given that markets have prima facie been using the last two weeks to complain of the overt existence of only banking and financial memes in the coming recovery and thence stock rally, it is unlikely that existing weighings of other index heavyweights will improve any better but yet there is no possibility in financial stocks taking the rally from these index highs and would need a correction in atleast the secular PSU Bank contribution (to the index)

That probably means markets will look very carefully at least in the morning session but still indices will probably find a way and the right stocks to move up to 8100 /8200 level without the Banknifty later during the day

Needless to stay HDFC And HDFC Bank led private bank stocks remain in focus in the recovery and even rough pockets like Kotak and Indusind which are not really catching a break despite trying will also beat the industry growth averages to be in demand with investors.

A correction in Pharma which set into select stocks even as Lupin and Glenmark come back on the up and up is probably interesting more for the perceived contributions of players within the sector, with old favorites again being identified more with DLF and the failed real estate speculators with Gold and Oil also remaining under a cloud affecting a certain class of high net worth investors even more than the cut in leverage on existing securities/promoters’ shares in hock with banks

The Foreign investor contribution to the market rise from here will likely be balanced by an equal participation from Domestic institutions and MFs however and the Economic data for October and November may well prove to be the turning point for markets as CPI follows WPI down and is expected to turn up again before the end of the fiscal but with real growth reappearing in infrastructure and manufacturing sectors.

This week’s kitsch headlines: refueling of investments in Power after the denouement of the Coal gate investments which failed to provide the apparently available support ecosystem in the sector. In other unlisted business, the Airbus JV with SIA and a 45% FDI proposal in India could be key

India Morning Report: Playfully yours, India Inc.

Happy Deepavali and a happy new year. It’s 2071 AD as most of you must have seen on a flash by on your TV screens.

Heromoto has come out ahead, that is definitely newer this Deepavali with heavy duty bikes making a return with Bajaj Auto but the market much bigger for the smaller bikes and split vertically between Hero and Honda.

But back to playing favorites and markets are way ahead just waiting and watching for growth pick up signs to come head first in the Banks and non Banking companies, HDFC Bank proving it as simple as pie and Kotak following in its steps today when it announces results in the late afternoon albeit at less than one third the rate at HDFC Bank in Net Interest income and even in Brokerage and Insurance, it not making an impact outside its exclusive Wealth club clients

Havell’s is still doing well, Jubilant Foods is not making a comeback despite both Jubilant And Talwalkars also managing a 20% clip of growth, while Page industries and the new local directory company Just Dial holding some aces in Mid Caps. Arvind Mills and Adani seem to be aces in the hole if you disregard any Small Cap/Large Cap/  preferences with some key investments making a difference for both Gujarat based groups.

Markets are going to run a bullish candle till 8200 levels and come back again in the next 5-7 sessions of trading including the short and sweet muhurat session. There is no reason for “Energy and Pharma to take a breather” (ET NOW) per se and they are likely to start a catch up with the bank sector for their own results with Glenmark not posting results next week but eagerly awaited while Lupin and DRL report on Tuesday and Wednesday and create some good trading mojo having bid their time,-

Follow our earlier posts to figure out what s wrong at PNB, and stay away again for another couple of quarters , engaging the other PSU alternative to SBI that is slowly and surley making a return to good profit. For those willling to duck out this rally again, Oil India and GAIL seem nice bets with the gas controversy seemingly behind us at a new $5.60 price

Futures markets are again seeing good traction after the jump day in volatility last week, however we expect Options only strategies to continue to outperform with PCRs starting up from 0.85 this time and 0.89 currently on way to 1.2 levels ( against 1.1 mostly at the top) so a lot of options at 8000 today and 8200 next week to sell and close. :p

Bank Earnings Season 2Q-FY2015: NII ramps up 23% to INR 5.5 Bln

Fee income growth as we have often remarked here remains at a standstill for the bank even as that creates a pressure on the topline as market sensitivities ensure the bank approaches a lending income based operating model, ramping up Interest income (NII) on lending spreads to INR 5.5 Bln for a $1.25 Bln quarter. With growth in deposits tamping down growth in Interest Expenses, NII has been boosted by increasing spreads on an already large base, with gross spreads for the Bank/HDFC at 226 basis points (not this quarter’s data) on any incremental borrowing over low cost deposits

The bank’s reported NIMs have moved up to 4.5% while Fee Income has crawled to 27% of Income at INR 20 Bln incl almost INR 2 Bln from recoveries on substandard loans declared in default, also a steady stream of income now , that we question but was a hefty INR 1.6 Bln in the year ago quarter as well, implying the Fee income was even lower including normal fees and commission of INR 15 Bln and Derivative and Revaluation/sale of investments of another INR 3 Bln

The bank thus is ably rewarded for investing in additional Provisions on time growing Provisions of INR 4.55 Bln from under 4 bln in September 2013. CASA deposits have grown to INR 1.68 trillion with tha Bank growing Current accounts custom a bit faster again int he current quarter

The Topline has grown only 15% over the 6 months of FY2014 because of the Q1 slowness keeping them out of the reckoning despite a substantially higher than industry average and a go slow on credit by the bank after the KFA account last year in view of credit conditions. REstructured Loans have reduced after growing to 0.2% of advances in the previous quarter.

It has increased 200 branches(197) and 260 ATMs(259) so far since April 2014







India Morning Report: A flurry of results line the way for future assessment

Markets at an inflection  point, the new to-be investors are unlikely to be impressed easily with double digit topline growth even as Net Profit contionues to grow at 20% for the best of the best in the set of winning companies , including HDFC Bank which actually beat topline and bottomline benchmarks continuoiusly and is completing a technical merger uncapping a lot of value in the stock. Kotak Mahindra reports tomorrow with no real growth while HDFC also completes the reportage for HDFC -HDFC Bank tomorrow

PNB results will also move the markets but it is going to be very flat today, and news flow driven jumps though at the inflection point will not lock into any big moves this season as IIP and GDP show up the investment deficit

India Morning Report: The Perfect dust up to the perfect storm!

Here we are all happily along for the ride a week before Diwali, markets enjoying a respite with Banknifty smiling all the way on Friday and Pharma and Energy stocks responding to the new rush (having corrected in the profit-taking and decided a new list of winners) and diesel deregulation(which the Center can farm well in Modi’s stewardship as a great policy decision that brought down prices) PSU banks following the upswing of last week for a change at value levels, Bankex thus able to respond in kind on where Banknifty scored on Friday

The market ofcourse has no intention to go past 7950 unless it is to 8500 and the week’s other days would again see more consolidation than one sided trades, unless the predilection to make it a festival show of fireworks again wins in the market minus DLF minus other real estate and now with the bit traders selling on every 100 points till the reform story actually converts into a rush for India Inc and not just more resident funds getting locked up in the markets for years on end.

HDFC Bank and Infosys will have a great slice of fortune for the market ( aDeepavali gift in socio economic parlance)  so are definitely on select investor and speculator lists even as HDFC Bank gets refused on the FII limit in the transient period till it actually merges into a single stock.

India Morning report: Nifty after another midweek “holiday”, at below 7800

One’s economy has definitely reached a new level of Financing challenges when easy consumer credit at 10-30% (quite a range) becomes the mainstay of Financial services business expansion. That said, these are early days in the recovery andit is not probably a sign of worry yet despite consumption having kickstarted proceedings while we wait for investment to turnaround and all the discussion of stalled projects in infrastructure and non infra sectors. The FIIs have definitely flown out if they could and I still believe most of the new stock iof investments prima facie has no reason to leave or even indulge in more than perfunctory profit taking.

For me, this would be a great buying opportunity, my midcaps still restricted to recent IPOs and the 3-4 Pharmacos we have discussed led by Glenmark and yes Divislab has sold down and will be selling down further but is neither a short opportunity nor a buy. HCL and Tata results, we will venture, even for satta, good from far and far from good, though Micromax (unlisted) and a few other ecommerce investments like Snapdeal look juicy and in for a hot buzz when they do list on the exchanges

On year growth at HCL continues to consistently outperform the bigger industry peers but continuing to grow slowly on the Topline, while TCS consistently added in double digits to the Topline and bottomline, but really both showed that the best in IT sourcing has gone away and the safe annuity business a temptation  but far from the main draw of the Economy

The EPFO allocation in Equities in NPS os also increasing. And we have a new CEA, whose views on China’s Economic Dominance ( in his book Eclipse:..(2011)) are definitely another piece of the global jigsaw puzzle falling in place. Cheers to that!

India Morning Report: DLF down and out, Rupee moves below 61!

The DLF saga, not a corporate minion by any standard, will be the litmus test to judge India corporate governance. Despite being a real estate ( and censured/sanctioned for a under the table real estate deal in an obscure subsidiary – by product of a still elaborate going clean exercise before IPO) denizen, the company continues to enjoy much better brand equity and corporate governance reputation scores than a UB or many other blue chips in the India space comparable to Infosys. DLF plans to reduce balance sheet debt are definitely hit for the next couple of years. (the SEBI action expressly bars themn for 3 years)

However that may be, The corporate is out of privilege right now before its SAT appeal on the case and markets are reeling at the open with the scrip also a favorite with those hoping for a infra come back, skewing its case with FIIs who can see the risk of investing in Corporate Governance starved India in a DLF. Equity inflows, however rare and still bucking the trend from down and out Asia, will remain in the green for India given the strong cyclical recovery prospects and given that FIIs would hardly be expected to looking for a better IIP immediately unlike the local proliferation of “satta”(speculation) and “satta”(with a soft t sound) (electoral politics)

Markets expect to lead from speculative fronts, rooting for a CV market recovery as Indusind reports, however the CV market demand is likely to lag the vehicle market overall. Markets will likely hold 7850 and go back later in the afternoon after the DLF impact has been isolated as trhe overall market mood was/is very positive this week.

India Morning Report: And we all start back at 7850..

..Or less. The IIP reports for August as we expected tanked to another low of 0.4% as in July with Capital Goods counter intuitively but as per observed conditions showing double digit negative growth and Consumer Goods as we prognosticated skewing the condition with the Core Industries (38% of IIP which is primarily a barometer of the manufacturing GDP) staying healthy at just under 5% growth

The global markets uncertainty put a spanner in the works for the unseemly yet shrewdly topical to India reasons of there being no decision i.e. while most other Asian markets battle outflows including China ( for being heavily invested) investors committed to India too want an easy round of profit taking before committing further as they double down in Indian debt and get ready for the secular upswing after controlled inflation reports of the last few months raise hopes for Food and fuel inflation also to come down

Markets may thus preemptively start buying but only tentatively as results in Banks make it almost certain again that banking and NBFC businesses with Pharma will be the most profitable and thus most attractive to stock market investors going forward as well. Some new mid cap names and mostly flailing stories from IPO’d jewels and Consumer companies make the other side of the equation almost as tricky as the other shallow Asian markets like Korea and Hongkong. Just dial continues where Jubilant Foods left off but except for Page industries and LL the Talwalkars, Travelcos and the newly IPO consumer companies trail behind in performance leaving infracos the most likely has stalled projects come back on the rails.

The India story now another easy maxim, Modi, Modi and Modi..and the recovery could well start from 7800 levels mid day or there is more downside as F&O disinterest deepens at flat levels and India tries to come out of the lowest volatility levels in global markets. Buy Bharti, ITC, Glenmark, Yes, ICICI Bank and IDFC among others and do not stay with Bajaj Auto as Hero becomes the buy end of the pair for this month again

The Infy bonus share issue announced with results on the weekend (Friday) at 1:1 is likely to rerate that stock ahead of TCS as well as post bonus prices will have the best chances of reclaiming the 3000-3500 levels

India Morning Report: Banknifty on to 15800 and a high before Infy reports..

Ominous clouds gather before market open..the expectations from Infy are likely to turn into empty promises comparing the new management’s ineptitude for the outgoing founders as Gopalakrishnan and Narayan Murthy leave for newer vocations for their greay hair to exercise. The SGX Nifty for one did not like the big rally on Thursday and was clear int he verdict in late trading in Chicago, but pre open points to momentum carrying on from yesterday.

Look for a big cliff opportunity in the middle of the day as Infy results keep all market segments busy during the open and most positive utterances from Vishal Sikka’s team get standing ovations from the markets, expectations being subdued with the Rupee making a strong close at 61 yesterday Global markets responded with a big NO after the bonds started a new rally from 2.3% yield lows to we still see marks below 2%, equities waiting out the earnings season as expectations of a higher growth segment fueled by Q3 US GDP fail to catch on and the holiday season results come out only after Black Monday Markets may of course open back below 7900 and find strength instead in day trading once the run on expectations, based on real performance comparisons  from Infy is ruled out. If markets do close near or below 7900 levels, we will have a better start in late afternoon trading and next week.

IIP numbers apparently follow Infy results today and again expectations are for a rebound almost as big as in July. August scores had underperformed probably because of statistical discrepancies and the Electricity segment ahs returned to double digits making us hope for a better than 6.5% GDP score at year end but Consumer industry and Core segments remain uninspiring and credit offtake has not really given any better signs for better expectations in August data to be released. Consumer industries will likely discourage anew after Core industries also rebounded with a score of 5.8% in the infra segment and 4.4% yoy till August in the core data reports yesterday

The Rupee and the Bond markets will discount the changing face of liquidity but will overall follow the better fortunes of the Earnings season and will not be swayed by global performance or Infy releases (unless over performance is underlined by the same) through the day. Infy in the meantime may not be excused for returning to more value business propositions that have traditionally been IT services  ( “body shopping/maintenance” vs consulting/product management)

India Morning Report: To below 7850 or to follow Banknifty that is the question

The Banknifty has decidedly turned nose up positive and is a big buy, and the market was mostly holding 7850 thru trading all day comforted by buying from investors and FIIs even as volatility traded down. However IT and Pharma in its wake traded down as IT was expected to ahead of results season. There is a lot of disappointment in this recovery even as stalled projects take off and a secular rally probably wants more firm up indicators before the final moves start happening, traders still finding value in banks alone and overall economic indicators including the one month wonder of IIP or the slow 51.5 on the Services PMI implying a lot of caution in the 7.5% plus CPI and the positive trade on India Bonds that is likely to last the entire Q4 unlikely to pressurise the RBI Governor into an earlier move. The Rupee also went beyond 61.5 before pulling back yesterday and has reached the point where inefficient exporters again look for a free momentum from the currency.

That said more than a solitary segment in the markets obviously finds value at 7750 – 7800 levels and markets may not wait given the trading pick up in Banks. Futures outstandings in the derivatives segments saw more cuts in positions effected by FIIs and the small net positive in Options could well bear more looking into

10 am update: A big jump to 7950 however surely means a cut back to 7850 from 8000 and thus a likely low before the festival/new year turnabout starts in earnest. Trade out the peaks on a daily basis and stay invested in longer term investments like ICICI Bank, IDFC and Yes, Bharti and ITC or your Pharma pick for this up cycle from 2012 to 2017 (likely)

Although not my own research, one can safely see Force and Linc pens following where Havells was in 2009 and hopefully the PE and non PE private enterprise basket in Midcaps will provide a big line up for investment bankers to bring to market in the next two years..

India Morning Report: Oh Look! A rare Indian fire eating plant(!) -it’s just a correction

Markets start the week exactly where they were slowly losing steam and marked by investor exits even as a week’s holiday made it clear there were no buyers coming back and accumulation in infra and banking stocks proceeding unhindered, the banknifty closing last week at 15300 and higher in Tuesday’s trading ‘after the long weekend’

Markets fall below 7900 marks in mid morning trading, unidirectional since the a.m. and are unlikely to get buying support all week, though indices might well stop the rot at 7800 level marks or just below the same. The first trades of the week after the Monday holiday continued the weekend, look like the everlasting last hope for IT led return before the results season, but the IT stocks, playing purely on negative market sentiment as investors exit the broader markets will likely end the rally with a big whimper as results remain challenged but the Rupee moves down at notch to below 61.50 levels



India Morning Report: The working holidays are nigh?

Markets are closed, and talk is afoot that no one wanted holidays in the student community in the USA and accordingly the MSG returned Modi is sweeping over the Gandhi Jayanti celebrations as the last national holiday for the man that made India possible. But then, this is unpublished geek


Markets stayed nose down, the MSG not making a ddifference to Maggi and the other indianised pop snacks demand for Indian Gen Xers after a tepid Navaratra fortnight. WE ofcourse remain true to Noodles and soya ( mushroom sauce) and a Special K diet with waters. and this is going to be a long break in the middle of a young academic campus teaching a 1000 odd MBA students about business with a 15 day holiday thrown in every navratra, christmas, and nanak day, Happy Deepavali if the schedule doesn’t catch up with us. We won’t let the bedbugs bite in the meantime

stub; needs rewrite, Prime HDS is live in Asian markets whicha re ofcourse busy inthe pouring rain in Hongkong



India Morning Report: May the force be with you

Pharma gets in on a lazy Monday as Divis Lab and Cipla seemed to have great stories going for investors to get back on target. The MSG show is completed and BoB trying to replace PNB in the survivors from the PSU queue in the great shucking of banking stocks is likely to be tested as markets assess another move up from 7950 levels because of the possible strength in infra at this low valuation. However, Real Estate and IT seem to be worry points and being speculator favorites the lack of green signals on these sectoral picks is unlikely to be comfortable for a market with volatility lows already a no go in the India market from last week’s experience

F&O markets however show the accumulation of puts sold on 7800 and 7900 levels and a cut in Calls sold at 8100 levels, meaning the pressure to move down is lifting for markets in the October series which is also the muhurat trade for the Hindu new year on Diwali. The muhurat trade can again be a symbolic alignment to the new levels but even if there are no new highs markets are likely to keep a positive move in the brew than a money making big short for the festival spend.

I would invest in energy scrips in a turnaround economy like India despite the global weakness in Oil prices because of the inherent demand explosion released for India’s new surge post 2013 lows and the twin advantage for profitability from market linked pricing for both upstream and downstream OMC  plays. However at this juncture IOC seems to be more ahead of the pack and may already be fully valued in the recent rallies

(The headline is a quote from Star Wars, used by the PM in a tete a tete with the young audience at Madison Square Garden)

India Morning Report: Markets cannot hold the 7950 levels

Or rather they want a secular trading range and one up move today could possibly end that as seen earlier, while we wait for the Economy improvements and growth pick up to show in consistent performance and investments. With FII flows now waiting for the bull run above the 8100 levels and not adding more moneys to the pile, the markets would likely  trundle down to below 7900 levels intraday or 7850 during the week before heading back up with bank buying because of its early rundown to 15200 levels last week making more upmoves likely for the secular market

Modi’s visit was of course a great difference maker and is part of his continuing investment in US diaspora which will certainly lend a great hands to right the US India investment flows and redefine the tilted ship on global waters in foreign relationships, India’s position in a US centric world and the Make in India dream, a motto worth exploring as the Services juggernaut hopefully returns to finance infrastructure and smoothen the growth kinks in India’s demographic run to 2050 to the top of the pile.

A traditional speculator in the market will continue to bundle real estate and infra stocks together in the immediate down tick and FMCG also has been at an indeterminate, indefensible high fueled by consumer spending optimism while the Central Bank holds back on rates and India debt starts becoming currency again among liquid Asian investors moving ten year yields down to 8.25% and 8% marks

YES Bank seems to be a simpler target in the meantime on shorts if markets indeed trend to a defined bottom of the new range to begin the secular up move, and ICICI Bank can (<10% probability) try and hit lower marks at 1350.

Gold may move down domestically given the global downtrend and 28000 prices are likely though the metal is even as defensive often positively correlated in up moves in the business cycle in the Indian markets while the CPI is apparently expectedly still moving slowly at just below 8 levels instead of trending down with the difference in baskets making trading its time dependency on the WPI untenable.

The afternoon pronouncements by S&P timed with Modi’s address in Madison Square Garden, is barely an olive branch if not continuing pressurising of India’s weak currency mechanics and ever slow investment flows as more pliable emerging markets suffer from the excesses of  dependence on trunk FDI flows from China and Europe.



India Morning Report: Weekly closing may not be nose up after all

However, banks are probably looking good for some intermediate buying already with the Banknifty a 1000 points south of 16100 marks. The urgency to bring back PSU scrips into play is however evident at this stage and looks likt e the market will end up further south as the week closes as the PSU bank crowd waiting to catch up with the Private Bank valuation increases are still in the midst of a NPA crisis and State Bank will also have to wait for the proper stock selection to thrive with ICICI Bank and HDFC Bank, Yes Bank and the trade on Kotak/MCX which will likely come back ahead of profit stories at Indusind/ING and the others. PNB is probably going to be a bigger winner in the stock selection semantics that play out to broaden the basket of good to go stocks for the secular rally that fell through in September

Power NBFC trades likely need to be explored for a complete trading range redefinition again and as such do not seem to be subject to any corrections but with IDFC will end up on waiting lists as the new dispensation tries to bring back winning elements out of the wood work of a unified bureaucracy ready witht he development agenda India needs

If the indices do move north, HDFC Bank ends up keeping most of the gains as it looks equally ready at 849 levels currently while ICICI Bank below 1500 probably needs to go back to 1350 levels in technical consolidation, there being a single move from 1350 levels to 1550 earlier

ITC and Bharti remain in the saddle unaffected by the market’s lack of volatility int he upmove and the current bout of volatility from historic lows on the VIX

JP managed to close a first deal for power assets with JSW and Sajjan Jindal

India Morning Report: Declines become significant as markets do not like staying down

Markets would thus see another significant down day to close at lows for this rally segment either today or both today and tomorrow to close the week at 7800 levels on the Nifty and possibly even 26500 levels on the Sensex as Technicals confirm the weak sentiment of the last few days to fructify the shut down of trade at 16100 levels on the Banknifty as Banks continue to expect to lead the rally back and have not seen much uptick ahead of the fiscal half year mark next week.

At 8000 levels on the Nifty therefore, the sharp cuts today will likely not see much buying coming in and tomorrow too would be pretty harsh for the markets with the Rupee holding stronger levels in vain as far as equity markets are concerned

JP Associates continues down for the year on to 25 levels after a brief respite at 35 triggered apparently by bad news on the asset sale as the deal with Anil Ambani companies falls off a cliff. Meanwhile ICICI Bank has already cut out all positive gains from 1500 levels earlier and will continue to retrace from its rally highs as the market cross section looking for lower levels finally gets its act together and hopes to create new lower levels strong enough for sustained trading in the next 5-6 months as the recoevry news crystallises into specific sectors and movers. The week started with the Pharma companies getting into the cross sights of the market players after an unsuccessful fortnight trying to jump a big trade from the sector.

The culmination of the Coal saga affecting markets negatively is really a dud for most informed opinion in the markets considering the obviousness with which the allocations were apolitical yet, totally unproductive since the first allotment over a decade back, NTPC and Coal India still holding the key to the entire sector a known weakness we could not address in India.

India Morning Report: Markets “under the radar” at 26800 marks?

Markets seem to be joining the larger ranks of those waiting and watching for the Indian Economy to turn up the volume of good news and erase marks of a bad block of four years for the Economy and the Currency under a new government and soon without any material QE as the European stimulus is likely lost with thew Japanese in servicing their own growth deficits and negative credit in Europe, unlike the first LTRO wrought good news for Asian investors.

Indices are barely positive again after staying ‘underwater’ below Friday and Monday marks all day. Bank investors esp seem to have to wait a lot with some short term news on bank portfolios as they sell down some ‘SLR’ debt in excess holdings and have no groiwth to report with credit growth (non food) dipping below 10% last week.


India Morning Report: India happy with global correlation for a change

India markets usually exhibit a distinct toughness when it comes to bucking the global trend but in the last two years, othert Asian markets have become a more reliable indicator of the investor sentiment and thence market directions in Bombay and on the virtual NSE. Markets are taking a lot of strength from othewr upmovesi in AAsia even as the Rupee and our bonds star another upward journey from 8.5% on the weekend to 8% or 8.25z% before the first rate cut is evidenced in 2015

The Rupee trade still looks a bit weak and uncertain,  probably because non POil non Gold imports have been rising steadily and export rise unsustainable from a 10% rate oif increase in April 2014. Yesterday’s list of stocks incl Force and Tata Motors could remain instructive even as markets wait for banbks to sell off their excess bond holdings before putting them back in the buy list

India Morning Report: A week for more introspection for the markets

Markets trundle down early on Monday as investors stay away from both Pharma and Banking scripos to take the remaining strength out of the market, leaving the new levels again fragile and the banknifty 16100 and nifty 8100 levels technically breached in early trades

Energy stocks are barely holding as  is new look resurgent Hero motocorp at 3000+ levels, ICICI Bank and IDFC are still holding 1560 and 146 levels after a cut in trading rates. Starbucks followers are hanging on to Tata Global but the stock has not really moved from below 160 levels in the first half of the year to 170 levels now. A lot of US competition in QSR (Burger chains) is entering India this year and next including the likes of Burger King, Johny Rockets and Carls Jr and that should speed things up for the Indian Consumer.

Power NBFCs are still positive trades though and along with GAIL and private sector LNG/CNG stocks should see markets off the bad week, not going below 7900 as the lack of buyers spooks traditionally leaning markets like India and FIIs move to options only trading again took the sails away from the markets

10 year yields are ready to move below 8.5% and the Rupee may well strengthen at current 61 levels, also giving markets a reasonable floor to work with. Gold and Oil price trends are still down globally and will likely hit new record lows on both as the Dollar trade strengthens ahead of rate increases and the wind down of QE2 completed next month.

India Morning Report: Xi Jinping’s never before offer for India

Chinese President Xi JinPing offered a never before bouquet of investments to India as Modi wooed a not too reluctant Chinese polit buro in his home state, making a dream come true for his home state as the new Prime Minister of apparently a new India on another growth surge that can take it beyond 7% growth in GDP sooner than you can say choo choo High speed Trains

Markets hold on to yesterday’s gains and many don’t realise the import of the Scottish No vote which brings more investors back to the table than Yellen could at least as far as India is concerned with a religious yet nuche following among global investors , mostly those in Europe and not from the States which still looks locked in on China and Latin America for time to come.

Cipla and Lupin as expected, shine in the dull week which saw markets retrace to below 8000 levels and banks under a lot of scrutiny even as investors hoped to and continue to double down on their bank investments ahead of the return of project finance and investment based resurgence in GDP growth to follow

Hero’s new levels are also here to stay even as IT gets ina s a fill in the gap during the week and probably in anticipation one can go short in these scrips a week from now till results come out for the Top 4 if not till CTS reports later for its US listing

India Morning Report: Markets unsteady , cyclicals looking to garner sentiment

Indices looked ready and raring to accommodate more buying and the immediate target would be banks and other cyclicals and not to putt too fine a point, that would not mean immediate rate cuts in FY15 neither before or after December so that remains a thorn in the market’s flesh as it looks eager to buy up great stocks like YES, ICICI Bank and IDFC and continue jettisoning small and midcaps that caused a big hole in investor pockets both Friday and Monday and will also continue in the same before the closing session tomorrow.

NBCC is doing well given the other players being too speculative or facing questions of corporate governance while many pharma companies, not just Lupin seem favored by a manufacturing and marketing agreement with Gilead Life sciences and one  other

Markets look to restart indices at 8100 from the pre open call auction which could just mean a biuggger fall in mid session as markets would remain slow this week and next after the blood bath on Tuesday

India Morning Report: Markets get into a twirl, counting the air pockets for “hyperloops”?

Markets hit turbulence Tuesday and from the inside it seemed that it was mostly because of an expected day of taking the floors out of the markets with no hedges holding longs or maybe exits were well and truly done midweek last week. However, the way markets kept falling on Friday and Monday together, it was mostly egress of air bubbles in expectations that could be much more dangerous further on, as markets still looked to pressure RBI and guv Rajan for a rate cut, which India is nowhere near with WPI at 3.67% but CPI still near 8% at 7.80%

There is bad news for the Rupee ahead as again at cycle lows for Brent, India seems to be getting off at a deal no better than earlier with the floor price by OPEC seen at not lower than $95, putting a lid to Brent which moved up from lows of $97 last week but still seems to have more downside with India and China pushing for better prices from the Arab world and US happier with its own production to even cut down the remaining less than 1 bln BPD imported from the middle east

A key learning sold puts are no defense in a new market zone, and bulls if any serious ones are aboard to support broker sentiment, would need a way out as one understandably wants to stay away from future bets in a new market as well. The exit of the range trade made a down move possible but as of now one does not see any instrumental players in the market claiming the spoils as I expected at least the markets to recover from 8050

IDFC had a n easy enough time, getting a Rs 1000 Cr QIP completed as brittle small and midcaps saw a big red mark on Monday with many hitting the board at 6-8% lower including Praj, Punj Lloyd and Magma. While that was on, JP Associates scrip steadied ships at earlier lows of 35. JP Associates completes the classic wind down of the trading scrip with its promoters also exiting, like Kingfisher a couple of years earlier took 5 laborious long years to complete and will eventually also hit lower levels in the mid 25s. The Firm (Menaka Doshi on CNBC TV 18) had a great piece on the USL INR 5000 crore White & Mackay and other holes in its Balance sheet which I believe ( courtesy SES) includes a couple of subsidiaries in the Bahamas

The worst of the markets on Monday was the attribution of the lack of interest rate cut on cyclicals like Banks as one expected the mature Bank trade to stay the course in the continued bull run, which will apparently continue from here as markets use the new ‘old range’ gained from the fall and build up stamina and Indian markets return in global favour. Banks and Auto companies continue to lead the market nose while Pharma holds the market during the consolidation, the correction from Friday deepening probably because traders never want to sit out in a one-sided bull market and bull proponents though seemingly corrected on choice of a lot of speculative trades still looked at Easy Modi’s here type of rally legs from the new  bank rate – investment cycle and small and mid cap capex plays both of which were bad moves again.

In unlisted business, Snapdeal (ETnow plug for Kunal Bahl) and potential CM Harshavardhan seem to be winners going in even as markets would probably welcome more corporates to be tied in with the Modi rath to India’s glory in the coming decade or two than just one Adani.

India Morning Report: Markets ready to start back up again!

The Bank index looks juicily undervalued and at 8050 Nifty looks tremendously under priced favoring though, overnight F&O survivors after a fairly uneven bout on Monday. As I mentioned in our weekly Wall Street opener yesterday, Gold and Oil are still on a down ride so equity markets in general have something to look forward to, despite the unnecessary hangingon tot the coat tails of the US fed, with real recovery underway in  key Emerging markets

I doubt if the recovery in BOB is real yet, but then I am just partial to prospects of PNB and prefer the latter as the last PSU stock to a portfolio of SBI, HDFC Bank and ICICI Bank.

Also Hero seems to be up for the prize this rally leaving Bajaj Auto in the lurch as push comes to ..infracos and IDFC and  Rel Infra take up the slack from ultra HNIs at a loss for choice as RE and IT get lost in the moving up crowd. GAIL is a great pick and the power NBFCs have over riden the market switch for blue sky shutdown even as the Nifty flails at 8100 levels after barely a week of unopposed movement Glenmark and some new midcap Cap goods stock look like a potential basket for new traders entering this week. Thge auto ancilliary trade probably triggered the fell swoop on markets over the weekend on bad economic reports , and Tuesday willl see a revival based on the improving Gold demand data for the Economy as a whole as India gets into positive eigenvalues from institutional values but yields are still 8.5% (10yr) and bond market reforms are not anywhere near implementation yet, except the continuing incremental improvements.

Raising interest rates by policy tweaking SBI has been mildly negative for the bank stock on Monday but Tuesday is another day. Chris Wood in the meantime has been laughable with volatile soundbites making up for shallow unresearched riffraff Kotak in the meantime gets a big headstart for its ultra hni community as it gets its stake buy in MCX thru the regulatory set up

India Morning Report: New week starts with the Rupee breaching 61

Fram a stable prognostication all of last month , the Rupee suddenly nose dived on a pathetic July IIP performance which saw utilities coming up back to double digit growth as expected but apart from Electricity other sub indices were pretty badly scorched by a mostly inexplicable July patch of non performance. Fresh longs in Cipla and Ranbaxy apart from signalling a robustness of the sector also show a preponderence of defensive investors in this area despite the push for the sector to be counted with the cyclicals in the up move. Ranbaxy may have a lot of up move in this segment as markets consolidate below 8100 but nthe reorganization plan by Sun merely heightens the speculative nature of the stock in the Indian stock markets and one should be careful of sharp cuts in the proposition on the bourses leading the rediscovery of chinks in our ‘national’ big pharma strategy

Markets see opportunistic corrections in many cyclicals joining in the mainstream stocks in which cuts have been evinced to match the indices, and the dull nature of F&O markets after FIIs  moved out of futures to index options, mostly 8100 and higher floors are likely to be fortified byt he correction and volatility spark up from 12% lows last week

Among the weaker stocks BHEL and some other unwilling Capex stocks must be jettisoned altogether. At this time one does not see a rosier prediction for even L&T in the capex stocks. Cuts in GAIL probably offer a buying opportunity. IDFC, ICICI Bank and HDFC Bank remain mainstream buys esp as HDFC Bank gets to get ahead of ICICI Bank and both lead banking sector performance by leaps and bounds ahead of the recovery data stabilising for India Inc.

Lack of volumes because of low floating stock show up on “opportunities” like info edge ( naukri, 99acres). IT sector would probably make a comeback into the good books ahead of results season sometime this month but this week’s move would necessarily not last on the sector.  Lupin responds to news of another foreign pharma signing a marketing deal with Lupin

India Morning Report: Playing Global catch up, to get down to business?

Indian markets corrected well and Oil is below $100 on the expensive Brent edition so India should have plenty to rejoice during the day’s action but will likely use tihe chance to pressure the new Put positions clustering to 8200 and higher levels for the series as US markets broke down after a prolonged stay above new 2000 levels on the S&P 500. It does not mean much, do not buy anything new. The deals in India Glycols ( deliveries up 1300%) and Carborundum Universal lit up bourses the last week. An interesting report in BS points out the side effects of concentrated Bull chip strategies as Top 10 stocks including our ICICI Bank and HDFC Bank reached 25% of equity MF assets

The rupee too seems cowering under some pressure of expectations instead of going up in style as its respite to 60.30 was cut down to size in yesterday’s trading while the Middle East continues to enjoy a $3 premium over ‘retail price’ for Asian customers and that just means Brent Crude on ICE and other contracts has to follow below $97, a matter of time

I expect the markets are on the verge of bucking the global trend brought on by the US markets

India Morning Report: Markets completed the weekly move on Monday?

While the 8100 put floor is likely sign of things moving up thru the series, there may be another consolidato=ion on the week’s gains as there is selection amongst the cyclicals all over again, while ICICI Bank, HDFC Bankl ( on merger with HDFC) , IDFC, and YES run to leading investor interest and Hero’s sterling performance starts recalculations again but the Bajaj model seems strong enough on its own too and Honda would still likely target Hero in the same segments, skewing expectations albeit from the unlisted space. Power NBFCs look undervalued for their robust models even at new levels

India Morning Report! Not that it is going to matter..

For one, we won’t be writing much this week. For the other FIIs though no longer moving up the chain are definitely continuing doubling down on Put Floors which have definitely moved up over the last 2-3 days of the week closer to 8100. Autos and Banks are definitely great investments and so is Infracos and Power NBFCs financing the capital dream. JP Associates exit is key learning for all of us and markets will be brutal of companies with Infra Financing pedigree selling down operating businesses for a song just to get out of hock/debt

In the overall scheme, it looks like 8000 is no mirage and is here to stay and the week will have at least 2-3 up days..happoy hunting! Portfolio inflows are up to ` 60,000 crs every other month ( counting both)

India Morning Report: Its a slow yet positive day for markets

And it is in the blue sky zone of a lasting rally that has just begun from 7900, gaining confidence every day, institutional buying no longer a necessity but just arbitraging off the required liquidity while complex hedge strategies remain unrequited as Put floors make markets complete and investors board the Train to India after a long crisis induced hiatus, though portfolio flows and FDI were bigger than ever in 2010 too, the response much more encouraging now with a Modi government in place. 

IDFC and ICICI Bank finally seem to be getting into the groove again, no longer monopolising trades but better than any other staple pick by far (sic!: {Head and Shoulders,for all values of expertemporaneous burn scratch late comers}) The Sensex is almost looking stopped at the slow pace of the week and is actually at more value at 27000 levels as it needs to cover to 30k to break into the same foxtrot like the know all Nifty dominating investor mind sets

The auto ancilliary mid pick storm is likely to be another hail mary for the industry whose export counts or continuing slow Indian growth features scare the bezeezes out of knowing indian investors and will likely be a tad better than the real estate hocked pack in giving company to the select few that indeed merit continuing accumulation and investment. FMCG and Auto have climbed out of the trenches this time with Bajaj, Bharti and ITC giving greater strength and Pharma and Energy remain the best sectoral climbers in the Indian market till any infra momentum starts the hill off to a roaring start

Power NBFCs and bidding Infra monolith IDFC meanwhile steady midships and continue to greater strengths



stub, needs rewrite 😉

India Morning Report: 8100 was a no brainer, curb your enthusiasm!

It seems,however, that with each passing day, the market is too happy that it is indeed waiting right and gets into a wild move because everyone is on the same side and a counterview may be needed making this smooth penultimate peaking rally of Indian bourses a little more choppy, probably a sharp down week from 8200 or an intermittent slow down slide over the next three days. The closing basis moves seem considerably stolid however. I t may also indeed be that the active trader community is busy counting each landmark and chewing nails in anticipation from being a t new levels but they would do well to run slower waiting for the real consumer and investing cycle to grow the GDP growth to realisable sustainable new levels in 2015

In case you did not appreciate the above, please write in your minority dissenting opinion before wildly chancing your new blood in the volatile markets USL in the meantime seems to have completed another cycle of foxy transactions following up Black and White’s clean transfer with another cleaned Diageo asset break.

CIPLA and CESC both seem great picks for all time and CESC /CIPLA also alternate being part of the cyclical boom which theoretically may count against their stolid stature as a defensive but is more in tune with the extensive market development component of the few everlasting brands and enterprises on the India consumer mindmap that are listed in significant growth markets and have considerable growth potential individually exceeding the market

Vishal Sikka continues his challenging assignment at Infosys , choosing to be in the public eye as a rebranding strategy for the corporate governance star of yore as cost concerns flood the outsourcing market for another year and more

GAIL is probably back with the Power NBFCs on buy and trade up lists. YES Bank and ICICI Bank finally seem to have hit a good patch though a spotless record thru 2011-2012-2013 ended up engaging them in a standoff with the bloodied and yet trying short traders as China remains a bigger flow attraction for global funds

stub; needs rewrite



India Morning Report: Markets north of 8000

And may not necessarily break for you and me before they strike 8350 marks next and return back to previous levels at 7700 or lower. However one has no new buys in this market and the market is almost completely selected by different investors classes. This strong move north will probably decide the peak of this rally however it may not be very sprightly as no new buyers are expected to increase market momentum from here. The focus on Sold Puts as the floor of the rally at 8100 to 8400 is interesting though at least 50% of OI in Puts is likely to be at  8000 and some 7900 levels at its best for this series

Selling down of PE stakes in Indusind is probably an expected event however the bank seems to have also failed at generating further investor interest hampered by the challenging industry conditions and an incomplete diversification of vulnerable concentrated businesses

The heartening slowing of speculation in Real estate markets and still under evaluation stocks like SBI is likely to remain the lasting ‘investor interest’ segment of the rally noise.

Also equally staple would be the strong accumulation led rise in levels in Bharti and ITC

The return to infraco investment is key to a lasting breakout and is yet waiting for a clarity on whether policy or on ground performance will be key

Also of interest is the ONGC attempt at a $7 Base price for Gas from the new find in Ultra Deep Sea  segment UD-1 of the KG basin gas blocks. The Mahanadi pricing of  $15 at break even actually accounts for just under 50% of the proposed production for 2014-15 and the Oil and Gas major needs to get Government’s OK for resetting prices currently established at $4.2 per MMBTU last year.


India Morning Report: A GDP score of 5,7% after 9 quarters

Arguably the report is now a weekend away but markets will be preoccupied with measurably reviewing the modi-effect bubble and any remaining corrections while indulging themselves with select stocks now available exclusively at higher levels Auto sales data will provide welcome surprises today and tomorrow though select stocks like Maruti and Hero will take time and a re-evaluation before they find competitive demand activating them in positive stock pairs OMCs will benefit from a return in petrol demand at the pump as prices start coming down

The Rupee is stable at 60.50 levels


India Morning Report: Markets inch up to 8000 levels on futures trading higher

As mentioned last week, most stocks are ready to move but being at overall new levels the blue sky moves are finding it harder to stay in the range of certainty in no small measure due to GDP growth still pending return to growth cycle levels if improvement and cyclical demand expected to improve still not doing so. The SC judgement on Coal should largely have been ignored as a fait accompli by the markets and this expectation of policy reversals in each and every item is highly disconcerting, given that none of the 200 + allotments had produced anything since theiur allotment a decade earlier

The Indian currency is holding 60.5 levels even as another PSU bank corruption case breaks cover in the media and we move on to the next set of reforms long lying unchecked on the agenda and investors getting hope from performance of the select fundamentally impermeable stocks in key industries

SBI has started rate cuts early as expected in home loans above 30 lacs category and the coming competitive scenai=rio unfolding may be great for reviving consumer sentiment with ICICI Bank only expected to follow after 3-6 months given their strong hold on their consumers as well

Markets may find yesterdays highs easy to emulate  again during the afternoon though surprisingly with greater contribution for new midcaps hitherto not participating in the rally



India Morning Report: India GDP announcement a key market rallying number at new point

Markets have consolidated and stepped into a new range after a longish dismemberment of a Modi effect rally in two weeks since August 8. As Large caps consolidate at new levels, banks have finally started moving up again, HDFC Bank in lead but PSU banks still selectively showing signs of NPA fatigues and continue to dress down assets. Bhushan steel machinations also put a question mark on lead bank SBI’s fortunes as it navigates a INR 100 Bln exposure with new recovery approaches including an ambitious extended management participation.

However SBI is stil undervalued at 2500 levels and Maruti and Bajaj may also have flattened out at lower levels after an unreasonable advance surge ahead of the April May trough from which Sales have barely started picking up in the last two months. Falling prices of fuels greatly aid the return of consumption based GDP growqth ahead of deeper investments expected to line up in infrastructure and in the broader economy including at FMCG and Metal and mineral companies

India remains in a strong position in equities in 2014 and can find a couple of new fat pocket investors lining outside its doors as Emerging market flows remain negative for markets like Thailand, Turkey and Russia and even for Mexico which showed quiet promise for US based companies. The 8000 mark maynot be a big deterrent for markets as a GDP performance of near 6% excites markets and new FIIS take the markets to record investment levels again after the rush in 2011-12

The new investor sponsored surge in Infosys as the new CEO unveils a market blitz to create phantom growth may well be accepted by the market but is more likely to turn out empty as any aggressive strategy has been in the Outsourcing and Offshoring market”: after years of market development investment by leaders like Infosys

NBFC LAS regulations have been tightened reducing the flexibility available to them to lend to promoter investors and ultra HNWI markets that depend on the facilities. However one is unlikely to see a real reduction in LAS volumes from the tightened regulation even as some rare stories of collateral being called by banks do come to the markets ahead of high profile restructuring like USL/Kingfisher and other accounts. Prices in the real estate market on the other hand are unlikely to come down and thus improvement in demand in the sector may take its time ruling out much change for the rest of 2014

The Modi roadmap on reaching a third of the unbanked in a single year is indeed laudable and doable without much ado increasing the involvement of recruited correspondents and allowing Post offices to defacto represent their stations as correspondent. 

NSE Cash turnover has clearly grown ahead of  BSE further since 2008 when it had flatlined till 2011. Options have jettisoned 7900 completely at the top of the range while Puts move up the floor of the range to abbove 7900 and Calls take to higher levels thru the week including 8200 and higher levels bu tFII buying indicates a likely focus on Futures contracts, sign of hedging at new levels in the markets


In unlisted business, the new collaboration announcement of Arvbind Mills with GAP is indeed worth watching as the retail markets are poised on a good kick off point and markets have been expanded by the healthy and growing competition between E Commerce firms like Flipkart and Amazon.  A new pizza seems to be the “hotdog” in a rare direct fight between Pizza Hut and Dominos. The latter has been taking care of competition in Tier 2 cities since its IPO in 2009 but has recently flailed in growth while Pizza hut has been stop starting new investments it had outlined for India back in 2010

Energy realisations falling may not be all bad news for Oil marketing companies and upstream producers as demand returns to the market


India Morning Report: Markets starting to look positively at cyclicals

At new levels of 1500 for ICICI and 2400 for banks, markets enjoyed a fairly long hiatus as fundamentals having iomproved encouraged many to hope for much better financials probably without cause. The move yesterday seems robust however and the market floor in terms of sold puts should infact move up to 7900 in the coming week and is definitely exiting 7700 to the north towards 7800. Petroneta nd IGL had a good day at the exchanges too and probably GAIL can share some of the spoils as SESA Sterlite (erstwhile Cairns) tries to ramp up the business and play in the big league 

GMR and IDFC are still underpriced and will find bigger buyers among fund companies still hoping to use their cash in time. The jump in East India Hotels and Mercator come after a very long time and the uptick in them is likely to be sustainable

I hope the Power NBFC play also comes back otherwise the markets are just moving sideways for kingdom come



India Morning Report: More disillusionment in the old Economy and IT segments

Cement stocks and IT remain weak and good for the short trade even as the unlikely Energy short caught everyone by surprise. Oil PSUs ONGC and OIL and the OMCs will probably instead switch into their usual positions in investor portfolios , ONG remaining long because of the weakness in Brent prices and as the realisation dawns on the non impact in the Indian crude basket pricing, the gains could and should now shift to IOC and BPCL who are able to cut petrol prices at the pump and in a year or two demand for petrol vehicles could be back to 2010 levels. ONGC divestment target is apparently closer to $3 Bln and a downdraft is likely to remain on the stock til that demand is shown to be int he available set in the next few weeks and is not used to create a bad ipo pricing decision for the company

I would pick up opportunities in GAIL and private LNG/CNG/other Gas storage and distribution companies in this probable last resting place for the markets as the markets continue to wean out old economy laggards. The gains in Pharma were heartening and there is a lot of steam left in the sector

Banking data was not so week, any double digit credit growth not really divergent from the industry trend at 11% and investments also grew to over INR 20 T as Deposits continued outpacing existing credit and create a healthy capacity for the upcycle at 76% Advances to Deposits while SLR has continued increasing in the reported week, before the policy announcement to create the increasing investment stock above. 

In unlisted business even as the NDF market gives in and Rupee has stabilised at 60.50 levels for the quarter, the e-commerce players continue to create a lot of good undercurrent creating hopes of early 2016-17 exits for PE players in Flipkart ( merged with Myntra) and other

JP Morgan brokerage is making a mistake returning to Buys ion the EMtals and minerals area and SEsa Sterlite and Tata Steel will likely take some time getting a supernormal edge from the recovery though the latter posted a great comeback in Q1 last month

Markets however start the day at the bottom of the new range at 7890 nifty and 26300 Sensex levels but up moves are limited with continuing targeting of ‘disillusionment’ shorts revaluing old favorites down and out of the rally mainstream. THE Automobile industry is set to create 25 million employment opportunities in the ecosystem with industry players eyeing export led expansion in the next three years with the Banking sector closely tailing it and will likely create another 5 million direct jobs in the coming three years ( 2 million estimated by FRPT Industry research)

China has slumped again and global equities will probably be unable to whether the storm after a buoyant first three days of the week. Flash PMI reports for Mfg in August are looking at the 50 border again and will likely cause predictions to drastically change over the next week in US on the return of pessimistic scenarios to US and Europe but that is probably another reason for Indian markets to brealk away on the up side and for the fairly small group of knowing FIIs to farm the global arbitrage and capture the score on the Global revival comprehensively. 


India Morning Report: A new high to close the series, No Capex in the mix

As FE reported this AM, most of the hopes of growth returning this year are already predicated to next year as far as demand for project financing and Capex companies like Siemens, L&T and BHEL are concerned. The latter are indeed being jettisoned from portfolios as their weak financial model is exposed in the tough times extended in the markets. However indices are strongly up at new levels of 7900 and 26300-500 respectively on the Nifty and Sensex, The morning looks rosier for HDFC Bank as one hoped a week back and cyclicals are indeed ready and waiting for any big series surge in September though markets will close this one between 7800 and 7950

IDFC indeed seems to be back in favor with GMR infra and Reliance group stocks on the Relinfra connection giving good positive cues to a fairly revalued market where the old has indeed given way to the new.

The early breakdown in the auto pack is probably equally linked to the end of month sales prognostication not expected to be really strong, and the early start to the festivities craising most of the maruti’s and the hero’s to their speculatively untenable levels

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