India Morning Report August 09, 2012: The Bharti selloff

The Bharti selloff taking over the whole market space in its wake from the ephemeral 5370 levels talk of an uncomfortable market segment trading the currency and the equities in equal weight and building on India’s unfounded enexcused staying away from crisis after crisis in the last 5 years even as Global markets roiled, looking for their pound of flesh in the global misery to “bear fruit” in india as well where returns on that depression would be higher of course. 

However, the sell off is likely to get localised in Bharti again as markets are unwilling to move below 5200 at best and right now planning to stay near 5270 or above 5300 and start the climb on the indices. Bharti’s results and the reaction it engendered was not so shocking after all but moves  pulling it down for ARPU moving down from 189 to 185 and revenue per minute of 42.7 vs 43.8 paisa per minute are signs of an overly sensitised market, not educated in the intricacies of that industry.

Bharti may have much more explaining to do if Capex is falling off as despite my years and hours of work I am unable to put myself hostage to figuring out why Tax expenses will suddenly increase and while some regulatory changes are in the offing and would lead to further occassions for a 40% cut in Net Profit, right now the relationship and incidence of that and the sudden increase in tax to take profits down are really not understandable. Debt at 680B is scary int he very least but the company added 6 mln subscribers in the quarter and maintains market share. The volatility in Africa earnings is not going to help its cause and it is likely to settle further down from here. 

PC’s magic is likely to continue enthralling the markets as markets know it by autobot with the land Reform act and the coordination committee meetings suddenly sounding positive and the fourth estate a noisy pparition disturbing the peace.  Also importantly Nielsen was caught with its pants down in a cover ET piece today, showing underreporting of consumer non-discretionary growth in soap, juice and toothpaste for example, however it is likely to get defended easily as secondary sales differ from sales recorded by the FMCG companies. However, whether Nielsen is statistically significant is becoming increasingly unclear instead of the scientific method winning more fans in the Indian and Chinese markets and they and TAM?NRS and otehrs have to really pull up their stockings. Market research and financial ratings companie shave both got rather used to Filled up stockings on Christmas and need to dress down for the summers in Asia, india not used to bleeding its corporate kitty on consultants and their ilk. 




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