India Morning Report: Markets rearing to break out before Bank Policy Tuesday

RBI’s October policy statement , a recap of India’s fiscal year 2013’s first six months is likely to show strong enough credit growth but stubborn inflation compunded by further expected jump in inflation data on the second round of hike in Diesel prices which merits a significant jump in the September series or probably even the October series.

However the markets having survived the 5650 level is liekly to respond strongly when and not if, ne buyers enter at these levels especially with Healthcare and Biotech well poised and even select Auto scrips like Bajaj showing an upward draft as domestic sales continue to trundle down.

Banks are also readdy for their second coming, ICICI BANK coasting ahead of its own results and HCL TEch and MindTree having shown the kind of minimum expected in losses ontSeptember’s sudden appreciation in the Rupee before the quarter’s billing could be published to financial statements. Oil is still weak and there is no immediate threat to the Rupee’s rise though yesterday’s gain were quickly erased in today’s trading. Oil is likely to stay weak despite  the weaker Dollar as US domestic production hits new records at according to the WTI export terminal at Corpus Christi, TX (earlier known only to import US Oil) and US domestic consumption remaining weak as per rising inventories of Gasoline and crude reported this month. 

Spanish yields have followed Italy to a new wlow as they seem to have come out trumps on downgrade fears yesterday from Moodys’ and another report due from S&P later this week or next. That means also that the Tier 2 rush for European Bank Capital and a relatively unrestricted expansion of their balance sheets will flow back into their older strongholds in Asia including better rates for Asian Trade Finance

Domestic Institutions have already been investing including almost INR 1 T in Equities from LIC and most MFs out there still waiting to get in on the bull action but unfortunately having added only the slow Infy stock yet and other accumulations from ICICI Bank and mid caps like Prime Focus and Speciality Restaurants waiting for more quick action to ‘ramp up the account’.

 

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