India Morning Report: Surf’s up, No rain no gain and other stories..

Ofcourse the odd westernised headline may not necessary mean that FIIs are few and far in between..but seriously, Axis Bank leads the day with a repetition of the India results season storyline called we may be growing at “only”6% but our greater companies in the sample seem intent on 30% growth in profits and 20% growth in sales in Financial services and 20% growth in Sales and 20% growth in profits in Q2 for consumer goods companies.

Of course, as has happened before, a bad monsoon twists up the noise quotient from food inflation as rice is set to even double at retail pop in the next three – four months if it stop s there. Dals are coming back to new normals in the average kitchen portfolio. Back on financials and inflation, yesterday’s report will also have a follow up from the CPI next week which will not be rosy ( witness previous argument) 

Apart from such aphorisms that continue to apply, the Bull rally is stuck because the Put Call ratio has trended down with increasing Call OI now meaning short interest an average seller of 5300 calls looking set to close out on INR11k per 2 lots at expiry. However, immediately today, there is a big rally in the works exp with Axis Bank set to surprise onthe positive side  and India remains the most undervalued emerging market story  

Consumer goods stories are the most hurt in this rally as Healthcare continues the run and infra and Banks stay in wait, keep running up as the Nifty decides to get capped. A rally in banks could see the better Nifty targets back in place. Monsoons are still deficient by 23% 

The Telcos and probably midcap MindTree could serve as a potent side dish for this rally tonight but more than picks, fundamentally the reform story is in question showing that despite their excess times in a range, markets are really impatient to hear of new policy action more than any reasonable government can feed them and then the concept of value is too hard to resist for the markets. Fundamentally, the only thing not clear to me is if the rupee is leading equities or equities are the only way to lead the rupee down! It is all about promoter holdings and that Hot money so Purchasing power of the rupee keeps suffering and we keep blaming the Gold


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