India now holds the key to Equity success in 2014 as Global Equities return to select Emerging markets. Within Emerging Markets, specific stock selection remains key as Mexico joins the global pain story in a low 0.7% reported Q4 GDP ( on year) even as Singapore returns to secular growth after a cramped couple of quarters to a 6.1% QoQ growth.
At this muddling top of 6150 in the markets, most bears eagerly await the early downfall that has been scoring the most points even after emerging market flows turned positive on 6 weeks of battering by outflows. However, negative news has all but gone, the last home sales reports of snow driven year on year contraction.
Bharti is likely trying for 275-280 levels now having scored out on 290 levels and State Bank will remain the most likely start if markets indeed plunge, the short in State Bank juicy even as a positional trade at 1500, more than 220 in profits available to the fag end, as other members in the Banknifty continue to stretch themselves to carry the weight.
Adani Power and Adani ports both seem to be investment driven trades and all the infra stocks would agree to Adani’s leadership on this trend score as others remain leverage beaten in the case of JP, GMR and RelInfra or promoter margin beaten in the case of other midcaps. For whatever reason, Adani’s free float is not under threat and the trade remains good and is a great move to lighten the righteous pressure gaining steam on the aforesaid.
ITC, Bharti and the Private Banks ICICI Bank, HDFC Bank and YES rremains trades on the upside while Kotak and Axis probably remain shorts when the markets start back from 6000 or if after the Call Auction (Pre Open) they remain above 6080-6100-6150 levels.
The Maruti focus seems to be on removing the potential for shorts in the market, showing not many are indulging the bull side either on the H2 win also struggling with falling share in the mostly unlisted Auto – 4 wheelers market
The Rupee however precludes any move long of short as the G20 seemed to fizzle out in distant Australia, Aussies straddling the unfortunate situation of being neither a real G20 force nor EM of DM categories with China continuing a slow plod. The Yen Steamer announced last week is likely to kick into currencies this week as trades look to taking the Yen back from 102 – 108 levels the Euro and Pound standing on near new highs. Corporates have still not started the rush for ECB borrowing, the good ones also holding cash to start off investments, and yields ion the Indian Ten year remain at 8.8% on the 2022 bond and 9% on the 2021 bond.
Bajaj Auto will be leading the bulls with ITC and Cipla retaining both defensives and new longs. One can also see the coming rerating of IT stocks as IT forecasts get rationalised and corrected for over optimism at the turn of the year. I am also keeping longs in Power NBFCs without Powergrid and PNB. Infy and Wipro have now comprehensively been voted out of the Top two in IT as Cognisant resumes representing the entire sector for Global , US centric investors and Outsourcing itself falls down the rungs of the Alltime Top 100 ideas in its second rejuvenation.
Markets have started on another cycle of bash arounds on quickrumors even as Indian markets hit rock bottom at 13-14 levels on volatility, lending the shorting wins nary impossible from here. Markets seem to be again , ilike the NaMo episode, seem to be prescribing and proscribing specific measures to deleverage , options that are likely not even on the table for the listed Bharti, RCom and Idea as the unlisted premium Vodafone and the newbie Jio create ripples. Aircel deal might be a newsmaker there sooner than one expected.
I am impressed by Aptart’s F&O recommendations that expiry will be around 6150 levels, couting to me and at least some others as a brave call and naked put sales are safer than straddling or strangling anything for this week esp given local market premiums. Of course sold puts have to be near 6050 levels and thats hardly any good profits either but you can skew that position with a larger than normal exposure. to fund your value equity purchases now.