The longer term investors can finally see the difference between potential and fact in India inc but are unlikely to leave in light of the comparative advantage India still holds, while trading flows may well continue to come back to India at 5900-5950 levels as markets bother with important questions across Bank earnings disaster spilling over to Private Banks despite the unlikeliness of the scenario.
Banks apart, breadth investors except for passive funds and India bulls since nineties are also likely to be worried instead of being enthused by the markets remaining bulls getting shepherded into Pharma and IT which remain defensives but are being listed only for their Rupee Depreciation advantage, and thus not a real page turner for Indiaphiles
The Rupee strength thus breaks correlation from equities and with GDP numbers likely o breach negatively in non agri sectors, the situation for Monday open is also grim as is the PCR rise in the rally till Monday/Tuesday. US yields have come down pretty low yesterday after the GDP announcement. Ambition targets are back in Gold and Silver and retail consumers might even be hoping markets ring the bear in Energy markets and Oil goes below 100, which might erase the questions rought forth by Export parity removing margins for Oil Exploration and Oil marketing Companies
Rupee raging stronger than 62 levels might also see slower additions to NRI Deposits while raining inflows on to 5950 levels was easier for all categories of India attracted offshore investors, QFIs and NRIs
However if markets expect better Auto and consumer sales performances in non durables to shore up immediate performance, then this might well b the end fof the rally. Money is staying in however and Energy and Metals are likely to be th new stars apart from the continuing rlly in Pharma. With Sun Pharma and Glenmark leading from the front today, Cipla and Lupin cannot be far behind and next week will continue this discussion of India’s prospects from much the same levels than breaking below 5800 or such as whatever possible policy measures are enacted , look positive and on eecution rather than playing to the galleries.
At this point another market created distinction may be also worthy of reminding. ICICI Bank portfolios in loans , retail and commercial are likely as resilient and more than HDFC Bank which is already recognised among winners in the Higher interest rate scenario and the pressure on ICICI Bank may well be just the wishlist of public sector banks and DIIs and margin financed players trying to equate the inefficient public sector with the private sector counterparts.
Bharti, ITC and Bajaj Auto lead my list of high performers, while IDFC , YES and ICICI Bank may see lower levels yet but are good investments. One feels SBI is about to take a nose dive for its own follies rather than be part of the market standoff, and is not really at value levels especially as the higher interest rates hide its already bleeding NPA portfolio and the ssame is not true for PNB and some others but not UBI and BOB either. ING vysya may b a good pick but their emphasis has not returned to India and Indusind has probably already done whatever it could and will enjoy some sedate growth yet along with HDFC Bank will be scoring 20% topline and 30% bottomline growth regularly
BHEL is obviously our only turnkey project executo es in the Power sector and probably will not hit any below book value pick (from Religare) in a hurry and at worst may prove a big struggle with the bounceback already started. One might look at Kingfisher’s example which lasted a full five years as a everything for everyone scri from 2007 – 2012 on the back of a improbable comeback and which has just started paining lenders while paying slaries yet to executive management Which remids me, heling Laloo with the Ordinance delaying incarceration due MPS suspension/exit may actually be quite a big setback for India tan imagined by a coalition government extending the courtesy
- India Morning Report: Rupee at 66, GDP Growth at 4% and Interest Rates at 9% (awardz.wordpress.com)
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