India Morning Report: banks weaker in the new week. Market affirms Capped below 5500

 

Fortune (magazine)
Fortune (magazine) (Photo credit: Wikipedia)

 

As we digressed from networked opinion on Tursday / Friday, there is no such thing as the 5500 mark for the market as leaching gets underway. Barings PE in the mean time made a play for a 135 per share valuation for Hexaware, the only Fortune 500 roster which has never operationalized a growth strategy meaningfully. Apparently growth is already underway at Hexaware and this is not a play at capping India’s further Dollar erosion led woes in the future or a transparent play at India’s notorious inefficiency stability motive. A Hexaware and a KPIT do gain disproportionately from the Dollar’s move against the Rupee as they price transparently and Hexaware also has untamed T&M contracts that price at competitive levels onsite and thus remained Dollar heavy, unhedged at least n the nineties. Most others have lost the Mid Cap IT space from investing in product and premium services and/or Indian Rupee/Output based pricing still capped in the$50 mln realised deal values after years of wooing.

 

Banks got cut mercilessly waiting for the HTM circular (SBI, is waiting as always) and saliently otherwise:

 

The Bifty(BankNifty)’s ‘stuck-up-pance’ at 9400 saved the straddles on the Nifty which you should have sold if you were in the market after the first hour in the morning.

 

The rupee is starting the new climb again as the Rbi loses room to intervene and stays away after this week.

 

No, these are not conventional range bound trades.

 

Yes, we did not anticipate the market to wait so assiduously for Thursday expir which can now assumed to be the final plan.

 

No, being quiet is not a bad strategy.

 

Yes, the big roller from the Fed as they leave Jackson Hole is on target and I am trying to figure out why $10 Bln is a good start apart from that everyone knows that number.

 

It is that $12 Bln would be too fast and $20 Bln a virtual unending panic, $8 Bln an equally good vote of confidence and any number below $5 Bln not enough to redact(the literary device for fabricated on paper) the surfeit of liquidity let loose on everyone. But then thats just because we started with $10 Bln. That just means the Fed would be buying $75Bln worth , and that should be a good start for equities to break into a done and bring back confidence in EM economy investments only at the end of one such full cycle of investments which may be as short as 2 months in US markets but for another sell down in bonds(domestically)

 

Held to Maturity classification clears the grounds for banks to carry bonds while double digit rates reign. !0 year yields are still rising in India and policy rates stand at risk of being increased too after the liquidity crisis is hung

 

 

 

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