India Morning Report: Global investors may not withdraw from equities

Citizenship For Sale (Garage Sale 2012)  ... F...
Citizenship For Sale (Garage Sale 2012) … Foreign investors flock to U.S. (June 11, 2012) …item 3.. Monumental Maneuver (Jun 20, 2012) … (Photo credit: marsmet481)

 

While US tries to balance its Economy after a spate of QE liquidity is seen as injuring fiscal and monetary health, a rise in interest rates in the Economy with or without inflation could do wonders for the paradigm of growth as China and Japan return as investors in US treasuries and 10 year yields rule around 2%. The US economy may not be able to break the limits of a sub 3% growth even if yields spurt in the next few years in the US even as Europe falls back in an extended recession and the South catches up, esp Italy and Spain with imports to offer to the rest of the Economy making a brilliant recovery this 2013
However back in India after the deep cut yesterday, the Economy is very much invested in and FIIs are unlikely to leave this isle of relative prosperity even as the struggle for relevance continues for India Inc and Domestic consumption keeps the beer head on even keel if not frothy.

 

Indian currency would have few takers in the rest of this month before the budget speech even though the Cuts in Borrowing would lead to a minor rally from here as the Rupee was anyway unlikely to move below 54.50 levels. Yields at 7.8% are likely to be a defining high instead of the 8% plus seen earlier in 2013 and may creep back from there as Asian investors withdraw from the Global rally but funds flow to India are again unaffected

 

Markets would choose carefully between equity choices on offer esp as the cut in Private banks by 4-5% brings back another choice of PSU bank investors into those chosen to run with (Investors normally choose to exit than reenter same scrips on a trot) but Energy and even Metals are likely to be in favor with Cement and Sugar returning to Demand pull after a long time and it is likely that Banknifty might still be rerated or reconvened ith a higher private bank weightage in 2013 .New nifty index scrips also seem to have lowered the impact cost for the index trades and higher index liquidity could be critical in roping in new funds for Indian Markets

 

Henderson New Star
Henderson New Star (Photo credit: Wikipedia)

 

Again I would still prefer no straddles be bought as they bet the markets will necessarily move and strangles be not capped at 5900 or 5950 esp if your investment is limited to even a few lakhs. Lupin, Stride Arcolabs, Glenmark and Cipla make excellent investments again. ICICI Bank can be accumulated at current levels. IDFC and stolid infracos will lead the new rally movces and it may be soon on budget announcements but that one is a vain hope not worth long term investors’ time or money

 

On Wed, Feb 20, 2013 at 11:00 PM, Amit Mittal wrote:
>
2011> more sectors seem to creep into the equation as the marketstructure gets hijacked by those trying to make it look like the same as a retail investor could do in the fun 60s rolling on the floor…but Power NBFCs led by REC and PFC remain good moves in 2013 and PTC could get a bigger stronger role in the quad with Powergrid unlikely to lose relevance and despite roads being deprioritised, there may be enough speciality infrastructure bids ( I mean ports and urban planning ventures as well as welfare structures for the new deal) to keep all other infra midcaps floating. Also I personally back GMR Infra and Reliance Infra while berating overleveraged pops like even GVK and some mid cap Mumbai Real estate juggalos

 

Five Rupee Coin
Five Rupee Coin (Photo credit: Dinesh Cyanam)

 

 

 

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