India Morning Report:Global withdrawal from Equities, India inc unaffected, RBI policy announcement

As we have explained earlier and those following us for a few years have definitely come to know, Global investors climbdown usually is sharp and does not mean the same for India Inc or for the Euro. Bad News Euro is also stable for this week in the European sweepstakes even as Dow rattled by the Cypriot bank levy as bailout condition, could not recover into the green yesterday and closed 62 points lower. However from here, the path of the Euro which corrects to dispel the notions of recovery its investors had entertained and the Indian Equities or the Rupee diverge as India remains the island of hope and strength in the global recovery.

In no small measure the European breakdown will be caused as much by the breakdown of UK’s recovery mounts as the climbdowns of even moderately conservative fiscal outlooks for 2013, the recovery in Capital goods from global 4 year lows not withstanding. Even as more pressure befalls France in April to get classified with the South and the periphery after Germany and Eurozone’s pushback for fiscal discipline in March, India will revert to its new 6% growth target without accident.

The early morning session thus, was an eyeopener, one hopes for those network analysts including today’s revert of naked shorts on the Nifty and selling calls from none other than Angel Broking’s kulkarni. The markets are unlikely to even try the attempt for the 5800 bottom seriously but traders would have been burnt if looking at our recommendation set of yesterday which we continue unabashed again including ICICI BANK and GMR Infra with IDFC, Bajaj Auto and M&M. ITC and Bharti Airtel like India Inc are again ‘le chip bleu’ for all global and domestic investors both defensive and aggressive and both in FNO and Cash segments.

The Bank Nifty is the one slated for a jump in many idv traders. With Intra Day volatility at 17 the choices to print short strategies in F&O may be understandable but as I mentioned yesterday, these are unlikely to be in the money in the March series. A late afternoon weakness in the markets being the event hedged or the non move attributed to RBI’s announcements and press event to follow are neither overarching reasons for the ranged market nor a program trading event by traders looking to engender some vol into their bets stuck at August 2012.

Meanwhile China FDI data has come out positive and while China’s Manufacturing flash is yet to be reported for March , strengthening demand for Cotton from China is already moving commodities. Non Agri commodities may also thus break out of the depressing iron ore cycle by next week when more last minute demand planning for April or the rest of 2013 brings in a cheer for Exports. The Rupee seems to be at the top of its range however and even if IT results for Q4 FY13 i.e. March 2013 are buoyant, the markets may not let the IT scrips much upmove.

RBI policy announcements follow in just over an hour and while Deposit growth has been subdued in the quarter, sharp improvements in remittances to $70 B from $62 odd Billion in 2011 and a less than 10% cut in exports on year still mean we are ahead of the large CAD which was reported at $22B in the Q3 review last month.

Here’s another toast to India Inc.

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