India Morning Report: A new Infrastructure corridor cannot ‘save history’
At 40, I should probably be more considerate about feeling young, given how I felt about India’s youngest dynamic Prime Minister about 20 years ago, but Cameron’s trip to India definitely highlights that young Britain though trying to make new bridges with India thru London is a different equation and with tough domestic economic conditions, the easier migration philosophies of the UK and the US for multiplying factor productivity are in danger of being decommissioned as defence deals unravel and India searches for relevance from a different end of the equation as the budding largest Economy , recruiting dollar salary staff in cost saving IT portfolios and UK looks at being the struggler keeping the light on regulation economics of a past era alive in the new European ‘coalition’ while trying to cut more costs than the rest in a virtual throw out of expansionary economics ( deficit growth)
Jeez, that was a snapper overcooked in Indian spice, definitely.
The morning however, is as dull as last week, despite a new Infrastructure corridor, which seems to matter more to small investors with linkages to the ‘barely productive’ IT and annuity economy of Bangalore with the old warhorse of Bombay not the same as the Jap funded Delhi Mumbai corridor. The Bangalore and the Economy of the South in general is more about spread out factors of productivity that are more socialist and crowdfunded social media fed than the big money Economy that links Mumbai with Delhi or the more labour Economy linkages of Bombay with the East
On Morning Report questions however, Mumbai Real Estate hopes continue to drive DLF and the rest of India’s Construction Economy, and in this leg of the Nifty/Banknifty rally the entire bank, consumption and pharma portfolio too that is priced into newer levels and is looking for a little lightweight and adroiting sifting thru real value and jump to all time high levels on the indices. The Budget expectation part is mostly done except for the small trading rally in the week prior as or post as we nail down the new fiscal deficit range and if all the improvement we have espoused and made appear indeed converts into a hard positive number(5.3%). While JP Morgan has been adroitly positive on the rally too, Adrian Mowat for one, does not believe in the Economic Miracle of India despite the Japanese engine having taken over Asia’s future and China having taken a brief break into the new Chinese year after a good 2 month rally and again despite profit-taking, made all funds flow to Asia wait and watch till liquidity returns in inflows to Japan and India in a couple of months.
Subject: India Morning Report: State Banks, Bread and Coca Cola
First the note on infracos that have unsettled the markets
What markets had initially identified as a resilient strain of Corporate misgovernance in infracos from GMR and Reliance Infra had apparently never been a cured mutation despite consistent action and PR by the companies. Even today when the infra gap is being addressed, because of group leverage showing on the holding companies, GMR, Reliance Infra remain active short candidates especially for those bullish on Kushal Singh’s DLF despite its bad results. Hoever, the short interest looking actively to rerate the markets has probably been snuffed in the bud and will likely lose out in this cycle as the day progresses today.
Brokerages re-rate SBI and Tata Motors
Expected disappointments from Tata Motors and on expected resilience from the State Bank panning out a lot of uptick has come in for both stocks, At 249, Tata Motors is indeed a good defensive buy and its JLR performance can only improve as it seems to have managed to keep sales volume increasing esp in China where they grew by 50%. JP Morgan and UBS have also upgraded SBI as the bank’s chairman explained on the networks that domestic NIMs are a healthy 3.75% and the international book stable with NIMs of 1.7% , in itself a very good performance given that the State Bank’s International portfolio jurisdictions are not in politically challenged geographies like BOB has.
The Sun Pharma and DRL conundrum
At this bottom of the Nifty cycle , the other cvonundrum also gets highlighted as growth s..
..Private Banks like ICICI are likely to enjoy today’s mini rally from 5870 levels in rare moment s of perfect correlation with the State Bank and exploratory shorts run out if the OMCs are indeed able to puh thru a round of Oil price hikes on the weekend.
DO LOOK UP PREVIOUS EDITIONS OF THE REPORT REGULARLY. THE MORE THINGS CHANGE..