India Morning Report: YES, ING Results follow up and rural consumption

Bank of Baroda at night, at Dubai Creek.
Bank of Baroda at night, at Dubai Creek. (Photo credit: Wikipedia)

PC’s conference approved PSU Bank performance over lst year with 12% growth in credit highlighted SME credit growth along specific objectives even as above INR 100 Lacs(00,000)  borrowers continued to account for maximum defaults. However that pushed most discussion on YES and ING results to the next morning. ING kept NIMs higher at 3.46%  but NII grew only 20% showing the bank’s reluctance to grow in India and CASA for ING a for IndusInd is still just 33% behind industry biggies at 42-45%.

Yes on the other hand grew advances to INR 477 Bln and deposits to INR 672 Bln posting  30% higher NII to INR 6.72 Bln. Non interest income booked a swap income of INR 1Bln even as the HTM AFS transfers were already accounted for an INR 1.12 Bln loss in June making linked comparison moot and setting up for a bigger NII jump in December from the running gowth maintained by the bank and better margins from reducing MSF corridors as RBI policy rationalises. PNB became the firat bank to tap the ECB market in the last six months with a $500 mln QIP this week in short debt YES did not report any restructuring additions even as ING added one from NPAs ack to CDR approved loans which increased provisioning power in the balance sheets

Meanwhile short cash picks led trade from 6200 levels in lackluster morning trade though multiple analyss finally rallied around our long lost Nat Gas pick in Gas authority presumably as the pricing decision is finalised. Pharma scrips are up to. This correction with 50 points eaten in half an hour maybe the result of IT scripts uptrend being limited as they prematurely bought in interest into the market and topped off at yesterday’s levels. Also suspect is the long in Bank of Baroda, still dumping old NPAs into the wheel an the return of interest to Allahabad Bank which also uniquely invites shorts back on unseemly shouts of overvaluation

Tales of a repo rate hike are over rated. Also the markets may be back in the afternoon as HeroMoto rides back on rural consumption growth after a good monsoon but the probability is limited as the urban Bajaj Auto has rather created a schism in earlier running analyses on its potential in the future as the post split Honda climbs back every month on higher market share The monsoon also hits Cement stock prospects badly even as they were already in a lurch following  weak pricing trends lasting over 2-3 years now since the industry was hit by record fines.

Sugar production has risen only in UP producers this year after decontrol. WIRO shorts seem to be on the mark as talks of improvement are unlikely to last the stresses of recovery in the industry

The rush to SBI shows a funding trade that is likely to lock the market to 6200 levels as the bank will inevitably rear up on ugly assets that hold sway on the biggest bank balance sheet in India even as ICICI Bank could power ahead in that wake and market targets for November post Diwali at least remain 6350

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