India Morning Report: The right resetting of expectations of a viable future

It was in a way a proud moment for one to hear SD Sharma of Global securities on TV18 able to influende the market psyche to a deep bear crush on the Indian exchanges after the market open. In a way, even as the bear minority pushes its way out of the last 8-9 months in an underground nuclear shelter, it is a stable market that accosts viable and unviable economic data and dissatisfied domestic institutions as they wait for a 5300 market to go for a buying spree. However, these are not just dissatisfied investors but for any mathematical or qualitative modeling along fundamental and technical forms, they are also losers who bet on recoveries from Suzlon, Tata Motors and engaged in the same speculative position based research reports on unviable bets and suspicious corporates as they blame others who are bullish on the market no. Of course, some of his expectations of immaturity and malafide or job security motives behind bullish research are almost jurassic in their relevance and definitely no longer contemporary but still similar vies are yet commonplace in lounge conversations about our markets esp when Gold buying is on, one still believes to be just a veneer to lose uncomfortble facts and cut to the chase.

However, Rupee as expected is recovered to mid 54-55 levels and results expectations are indeed low with Consensus estimates on the Sensex PE ere so low in report previews yesterday that the expected 5-6% limited earnings growth in Q4 earnings has more or less taken care of bearing expectations and with historically low Sensex and Nifty PE multiples on 1180 and 1400 earning s estimates respectively, it could be that this buying market for investors may also see a build up in long trades ith Put call ratios historically never lower than the current 0.80. One does not expect you or your investing family to sell puts on the Nifty this week or next though even if the firstfew results beat expectations well, as these expectations underline the rerating of end 2012 bullish expectations and Global funds have exited India and EM ETFs to the extent of less than $1 billion but it is still a significant cut from inflows of more than $-3 B just months ago and this money is likely leaving without any profit booking in the short period after emerging markets hit a plateau in the very begining of the new year

To it however, e still expect to balance our CAD with foreign inflows and thus you can do the math that positive inflows to India will continue to outweigh outflows in 2013

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