India’s PSU Banks led the results led carnage almost wished away in the FX carnage witnessed in equities even as the US continues to hold bullish in equities till the end of 2013 and especially in view of a global statii of low growth stable and with no inflation risks continuing probably for decades before China starts expanding again, if it does.
India’s banks are directly linked to GDP growth and as the government policy is decidedly on the side of manufacturing rejuvenation even as nothing has happened in the infrastructure sector since 2009, it is a big thumbs down for even India and China focused funds looking at underlying growth that India is a long term destination or not.
However the yield curve in India has for a change straightened up with short term rates higher and leading long term rates to the fundamental posit that investing is safer in India in the longer term. As more demand feeds this cycle for a bit till the Dollar stabilises and the Rupee starts moving back into strength, one could see yields down in the 20-30 year range and basic Asset liability matching dictates that mortgages will remain cheap therefore and keep interest rates stable in the larger Economy.
However credit growth to the real estate sector may slow down though unaffected by asset price inflation fears in East Asia and Singapore/Hongkong but scared by the rapid rise in real estate values in Delhi and all tier ii urban standards and the possibility therefore of larger inventories with construction companies as admitted also in results
The exit of interest from Infrastructure sector in particular is a warning to India, a blow that will hit long term prospects. It is driven by their project based leverage,a s any good financing plan in infrastructure must, being considered an unstable NBFC at best while leverage in the sector and the asset profile is much more mature, long term and would probably keep them going except for the personal leverage of promoters and lack of quality projects in the sector even as the others stay pending in the fluid situation and dollar debt pincers them as the currency because of deficits