India Morning Report: Another week , another rally (5900 in sight)

The rupee move is past but the jump in Bank Nifty to 11600 was largely unnoticed and will soon expire, making this overall market move almost technical though watches ready to short characterise the weights for incoming investment as higher eigenvalues, an illusion created much like the exit of investors into the rabbit hole in the last three weeks which actually saw no shorts winning an hardly $500 mln to $1 bln in exits from equities. Again investors returning to the fixed income markets would also take their time with yields likely not capped at 7.5%

Bank candidates are again led by the unlikely private infraco IDFC already a large investor with capabilities to scale based n acquisition of various Financial services arms and a large functioning infra project portfolio rare for infra financiers still used to barely manageable quality character lent to Asian infrastructure investment markets esp larger participants like India . As Infra financing continues to seek sophistication nd has easy access to cheap 30 year debt and equity it may bounce back sooner than later, right now in this rally with construction cos like residential majors DLF and the many midcaps including unitech tracing near technical lows ready for a big pick too. LIC Hsg and IDFC remain safer bets right now with everyone who could be a banker actually lending the gamblers a fillip in this week and the quarter as RBI weeds out serious contenders but real India will see immediate gains from a select 5- 6 players, others taking their required three years o ore to establish a banking network

I think ICICI Bank and Axis will be good trading picks this week for longs and will not return to these levels even if shorts get to them at the top of the marke just after it crosses 5900 or 6000 whenever the shorts are able to marshall forces. Also those willing to take a risk should keep fueling their portfolio with additions in Bharti and iTC holdings though a 1-3% correction from current levels at 292 and 330 is still possible in both. HDFC and HDFC Bank will almost lead a different section of the market but they could well be important gainers in any big move as and when recovery does show up in real outperformance of economic data and balance sheet/profitability in Setember. June result season as always enters for the market in perfect disinterest and will continue to build long markers for the selected outperformers and probably weed out from public sector banks from the mix.

the index move is straitjacketed this week by the losses in IT as th rupee cannot help them cover the chasm created by the imigration reform hanging on the sector like a damocles sword. Also in the IT business champions some valuation may b returned later on the realisation tht at the offshored business is unlikely to be renewed with others despite the few mighty on the Hill trying to balance and change the direction of future evolution of the sector.

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