Assuming a generic Mr Short in the market has been playing on the increase in volatility from lows of around 17 on Friday before last, he is still fishing for trouble and not getting much though the short strangle is paying the 6200 range(only in a very liquid market, and almost excluded the Nifty series too allowing only the sold puts most of the traction,( see Thursday report) and in fact continuing to burn sold call positions ( Calls written) as the markets move up on filtering out of bad news, post Taper and with the Indian policy and election juggernaut still finding surprising positives including the resignation of a Minister close to the DMK (Jayanthi Natarajan, is from TN) and a government with an unwilling, waylaid partner in the INC in the state of Delhi.
Buyers will likely be encouraged by the Rupee’s boost back from the 62.5 levels as government coffers will go on an eminent shutdown in Q4 holding down the fisc and may even include what markets would consider very surprising if indeed any infra projects and companies celebrate real news moving them on. The recovery is short, helped by the tough interest rate scenario extending well into 2014 and the EMBI entry pending, leading to Bond investors filling up their index linked quotas from elsewhere in Asia. (EMBI == Emerging Markets Bond Index, from both JP Morgan and Morgan Stanley, though HSBC is the biggest debt player in both Europe and Asia right now)
Indian Banks are probably thinking of ramping up the Transaction Banking/Trade Finance motif again and will again be squeezed by experts like HSBC and StanChart with Deutsche in Asia overall and by PSUs catering to (synonymous with: stuck with) Export SMEs domestically, Indian credit growth lag nullifying any growth vectors in the India Inc business and relying on Housing and Auto loan portfolios, which could probably over 2014-2018 also mean a growth trend in securitisation, more amenable to retail credit once available in bulk.
But back to the day’s report, few buyers, fewer large ticket deals ( anything more than 1000 shares) but no sellers and a drought for Call writers as the 6500 Calls remain OTM hedges and 6300 becomes ATM/ITM Finally though the probability of an uptrend is a finite 10% and above and can be assumed till as high as 1 in 3 from here. The remaining 2 in 3 remains a downtrend but is mostly going to be like a slow, very slow and thick cloud of smog floating down on the cities, making bull traders also disappointingly unable to breathe in much profits.
However that slow lazy market is probably still preferable to the One sneeze games, which may get to come back to the market in a last chance in this week’s 5 sessions. ( Assuming moves of around 100 Nifty points and more in mostly the South direction from 6250 accorded by the mood of the network commentators and encouraged by Prop traders and brokers who have themselves been run out of the Crystal Ball.
A wierd yet surefire save from Team India on Day 5 of the IND- SA Test may lend to the fogginess of the market participants but was good for both BJP and Cong supporters and the now infamous 1 in 3 a political vote that voted in AAP in Delhi
IDFC is a good pick for the week, Tata Global too, and infracos may be chosen in advisement with your bankers/brokers. As recommended last week, Bank nifty did not break below and starts the week at near 11400 levels, with HDFC Bank, Axis and ICICI Bank getting bullish picks. Infy may not thus make the biggest stock in the Nifty 50 with markets changing it to a funding trade till it starts moving u in strength again but probably not below 3400 at any time
The Khobragade episodes has probably seen the media opinions at their most lacklustre on both sides despite the vain attempt by NY Times to misunderstand everything done on both sides and the continuing desire of the Indian diplomats to make it a case of total amnesty. The pluses however, India takes a strong stand and gets its way to move the US Corps from their longstanding desire to keep India as the one team that plays low and slow to insignificant in all standoffs and Two Preet Bharara overplaying his hand allowing US Civil and Political Executive to root for and get more protectionism. Both are unfortunately basics we should have started with at the turn of the crisis and protectionism should have been sliding now to allow US any chance of exceeding 3% growth along with a weaker dollar, both impossible to assume from here for everyone. India and China now reap the demographic dividend with US remaining an economic ally regardless, India getting sidelined in the growth story by a China gaining currency #2 for its pegged Yuan more egg on the Indian version of the Silk route
- ICICI Bank MD & CEO Chanda Kochhar named most powerful Indian businesswoman (indiavision.com)
- Economic and Political Weekly Vol. 48, Issue No.49, December 7, 2013 (knrajlibrary.wordpress.com)
- Delhi backs Kabul in row with U.S. (thehindu.com)
- India Morning Report: It’s Conferencing time again, do India advisors need the Brain Buzz (awardz.wordpress.com)
- Row over Devyani Khobragade’s arrest intensifies: 10 developments (ndtv.com)
- India Morning Report: Markets catch the flu , ‘one sneeze games’ continue (awardz.wordpress.com)
- India Morning Report: Industrial Production revised for March 2013, Gold estoppel for importers (amitpost.wordpress.com)