India Morning Report (July 13, 2012) : TCS OK, Automobiles OK, Banking NPAs OK, Markets not OK

Infy’s underperformance covered for a lot of fronts on which India’s performance and growth has started to worry India baiters and though it came on the back of a mini launch pad for the markets around 5350, the flight has not been aborted. TCS results saw 15% increase in Rupee Sales and Profits and 3% growth in dollar volumes putting faith in the 15% of Indian Industry put in focus yesterday. 

The 15% of GDP of Agriculture continues to be hit by Non Performing Assets with INR 1.8 Tln in total non performing assets more than 3% of our current credit stock and growing at 47% in agri and 40% in non agri sectors. Most of it will reach honest restructuring and NIMS will improve from the next quarter onwards regardless of the disinvestment programme and government interference in Public Sector Banks

The RBI warning is well timed and fortunately the banks are doing better this year but it would be futile to club the PSU Bank performance with that of the Top banks including Indusind and YesBank in the Top 4 with probably just PNB from the PSU Banks a question with SBI if they belong to the performing institutions sub set

Inflation will likely remain below 8% on Monday and markets would want to recover yesterday’s losses today but the fresh short position will not be decimated so soon despite the 5250 mark considered breached yesterday by some really just holding in a blurry zone at 5230, constant derating of individual stocks having taken their toll. 

Many participants in the market had however punted for all their orth in the recent rally like any other on basic convictionand nothing else ( not explained by policy / anti-policy at all) and are at a loss looking at the puts Infy bought in the markets yesterday. Theat has given a chance to policy hawks to ask for India’s guarantees of performance in terms of quicker policy action in this correction. I am sure the mature policy callers are still waiting in the wings knowing positive action awaits and knowing real timelines that can be put to it, but undeniable signs of india’s outperformance have borne fruit in growing consumption followed by positive moves in Basic and intermediate  production and there is a fundamental rerating of benchmarks for India Inc after the last 18 month’s retribution from the bears for markets to undertake the next phase of growth that China manages thru its 5 year plans. China reported its lowest GDP growth of 7.6% this quarter earlier in the morning but there is some firming up of natural gas demand in this month apparently


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