India Morning Report: Infy comeback not happy for markets, “Mind the Gap” and Rupee is still down

Don’t get me wrong Mr Murthy, you have been welcomed back except by your family at Catamaran, but that India is welcoming the IT story comeback of the decade to only 2 paise jump on the rupee itself goes volumes to say in a market shunning the banking sector after changes in provisioning introduced last week. Provisions aside, Credit growth to industry ( non food credit) hitherto most subdued in April, still grew more than 15% and coupled with global jump in Business investments except in Japan and Europe, it is still more likely that apart from extraneous bull fittings like “in the face of elections” ( middle pages of ET) growth jumps in the second half of the fiscal will lead India Inc to higher pegs of growth and make this snafu around 6000 a suckers bet for bears globally. markets opened in the positive but as today’s news was concentrated around Infy, failed to keep the momentum of the pre open after a month end weekend

Image representing Infosys Technologies as dep...
Image via CrunchBase

Before I go back to Infosys and rupee machined external debt obligations of midcaps, Sun Pharma has indeed tipped off its highs and along with banks completes the reasons why there is no jump desite widely accepted as having bottomed at 6000 on the Nifty and in fact below 20,000 on the Sensex. Old hands hold steady but the defensives are well scattered in underperforming categories led by Metals and the ever decreasing demand hit Autos led by Maruti or for that matter the ever neglected growth bid filling in for the halcyon days of IT as defensive at Biocon

GMR Infra’s INR 25 Bln revenues for the quarter were led again by a 2 in 3 contribution from aviation (DIAL) at more than INR 17.5 Bln but with both airports and highways making profits apart from the CERC guaranteed power subsidiaries, and debt in the main standalone company ( one assumes the results pertain only to that even in consolidated data) is much lower than could have stoked a bankruptcy hazard at a very healthy 3.04 against the allowed 5:1 for infracos. Thus, though Relinfra might have a bit of an expensive portfolio, GMR has stabilised in profit terms and locked out bad players like GVK and Lanco, with a segueway for quality and volume plays like JP Associates no longer required to mirror the flailing fortunes of DLF. Rel infra of course would try to sell each project in the portfolio on individual merits and may have better news to share as well down the line.

English: by Neville_S Uploaded to wiki by user...
English: by Neville_S Uploaded to wiki by user:nikkul (Photo credit: Wikipedia)

On Infy again, Rohan may not shine as EA to NRNM, Infy may no longr define Indian market’s fortunes but the nudge up to 2500+ on Monday morning has definitely rerated the stock back into some portfolios.

Infosys slide not Kamath “idli-chai” vs. Murthy’s “flash drive IT”

I agree too despite his own protestations that it would be wrong to put the finger on KV Kamath which might make the coffee tables at the Infy campus not in “My-eye-sore” or other satellite cities but the one at Hosur (part of my-eye-sore ;0) One thing of note highlighted much later in hindsight could be that KVK had a globalisation experience of a very Indian company in management values and markets while NRNM has the outward-in outlook of an outsourced engineer/ almost NRI like that ie entirely different. India must realise from its last two decades of exposure to both sides that global mores of management and indian ones despite a shared management education spine and an equal distaste for ‘ajurveda’ or failed homegrown remedies, differ in values and attitudes except some of that ‘jugaad’ in ‘not so big’ money situations.

It was this gap that probably KVKamath found too abstract to jump if indeed he tried to take an active role in the situation at Infosys. Also, though much of the morning’s contributions from TV and media have been rather objective segueways into the first quarter of reporting by a reconstructed Infosys savoury dish in Q1 of the fiscal, not much is expected immediately and this upside is limited.  Annuity business of $21 Bln is however intact from global businesses like Big  four banks or leading global brands that continue to find Indian management equity compelling for “outsourcing” repetitive tasks that do not require expensive compensation strategy key. Cognizant thus will be difficult to displace in the high volumes game infy has struggled to avoid.

On the more important topic of Cricket and the general elections in that order, Srinivasan must be joined by Dhoni in resigning from a few of the intertwined job responsibiities sooner than later and yesterday’s farce is likely not the end of the story of IPL gone wrong if indeed the Special GBM of the non profit is called. Similarily the sub 5% fiscal deficit performance may not bringing the flagging fortunes of INC(Indian National Congressas is registered with the EC) any required relief but we can probably look to a left included coalition at Delhi in the 3rd edition of the UPA if we indeed are able to fend off the extreme politics of Gujarat from the national scene. The more cosmopolitan under 40 population normally wronged for not participating in elections may infact shun the ideology ‘ridden’ politics of the far right in time if goaded properly and yet save the next 5 years of the India Inc canvas

Mid Caps like Opto and Orchid seem to be targeted by those that could not recover the infra vector gains from their speculative tips in HDIL, Orbit and even DLF consruction flats and despite the big jump in equity and convertibles from European investors last year or two Indian banks, infracos and pharma companies will have a much easier time this time around in managing ECB receivables during this continuing hammer down trade correction on the rupee likely stage managed to change into 2014 order of magnitude of purchases and export realisations and likely to last all of june as CPI still has not trended down and no seen imovement in supply chain efficiencies despite AAdhaar and the Food security Bill

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