India Morning Report: Midweek trading break, HDFC Bank ready to post another boost in profitability, what correction?

As advised earlier, indices have enough forward momentum from repairing macroeconomic data and the ‘sliced up IT sector bag of douche’ that each results score is being rapidly converted into a push on index points while new positions against the 5800 are tough as markets take a midweek break tomorrow and carrying positions could attract prejudicial comebacks by the time it reopens. Conservative forecasts for the FY14 tablet of India Inc exports, CAD an Fisc are charitable and unwittingly as they score a 6.5% average forecast for real GDP growth they feed the India investment story. Chinese data, as expected pushed towards the negative territory again with manufacturing PMI estimates at 50.5 barely above watermarks and again India the only major G20 economy reaping positive GDP gains from the slumbering global inflation that threatens to lead others into deflation while our CPI and even profitability of the metals and mining industrials would benefit from the downward swing in commodities.

Most investment banks and advisory teams would of course benefit from colleagues like Mitesh Thakkar looking after their back as it were as he looks for the downward risk effectively at this time, his stop loss for the uptrade at 5790 thus an important one to watch out for (ETNOW, 8-10am and later today in closing trades) however the uptick is safe and puts expiring on thursday at the upper mark of 5800 or the savvier ones at 5600-5650 would be in the money. Most would profess various forms of irrational exuberance as also mortgaged fortunes of real estate speculators by habit for this rush ont he positive side but as one can see above it is almost engineered to perfection much like the 2008 wind down of over Securitised non collateralised european trades in US Sub Prime housing. US data in the meantime, is as positive as could be with existing home sales professing to fall below the 5 million houses runrate but actually managing another double digit increase in year/year comparisons safeguarding one key Indian export market as European data follows the rest of the week

HDFC Bank has us convinced of another 30% jump in net profits with NIMs of 4% plus ensuring a NII jump to nearer INR 38 bln, bringing the $1 Bln scale closer to its loan income itself apart from the lucrative stream frm fees and charges on commercial and consumer loans and deposit accounts. Private Banks lead Indian ECB financing push this year again, this year’s volumes closer to $20 billion from ET data again for lack of longer arms and legs required to catch all the source data. Once the parliament session is past one can look to some more Capital markets specific announcements to carry forward the reform agenda and one hopes, the last on the Sahara issue as well.

Before I close, I would like to address the plight of the investment professionals and analysts as they write in more of the global investment horizons into the Indian investor’s dreams and bring him closer to his dream of wealth and happiness for himself and his near and dear ones. As Dhirendra Kumar of Value Research writes today, investment professionals still expect blowback for mentioning US investment opportunities (that are open thru index funds and ETFs/FoFs allowed by our market regulator) as investment options and that definitely does not make for a rich creamy cup of tea we expect to start with at our dream home and hearth. Infact LIC’s INR 2.2 Tln corpus for the year should also instead be allowed investments in our future in US companies and more positive experiences engendered with US institutions and market participants even in currency markets to increase our Economic layover in the global investment communities

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