India Morning Report: Big Bucks bring a second breath to the rally

High Net worth Investors (HatTip:ETNow) with skin in the game from INR 20 mln to INR 100 mln have been activated by the markets, letting them make record highs on Monday on the move to 6800 as Institutions duck out of India to take another look at other Asian markets not doing well. It remains to be seen in the meantime if Reliance Capital will win the 24% stake it bid the highest earlier last week, before the Good Friday holiday

HDFC Bank will apparently be reporting results today afternoon, repeating its 30% performance card which it kept with successive 25 quarters of 20% topline and 25% Net Income growth and is expected to report INR 50 Bln in just Loan income Topline, i.e. Net Interest Income this quarter and adding INR 25-30 Bln in Fee Income. However the banks need to get back to a better announced earnings calendar as currently they seem to be pandering to trade only in keeping a tight circle and constantly changing dates every quarter for the “SECRET MISSION” of the top management. The Cost Income ratio of the company has apparently retreated to its lowest levels over the last 10 quarters to just over 40% with the profit increases coming at a subdued change in Opex on already strong 4% plus loan spreads and high NIMs near 3.4%. The news will likely eclipse issues of FII selling in the stock

The weakness in the Rupee is unwelcome as it likely will only increase the difference between the bank bid and offer rates for travellers and students that seem to be increasing the volume of trade in the Dollar. the Rupee never keeps a close range to its levels and seems to spend an excessive training time during trding moving between a 3 rupee range around its levels and that should increase the spreads for banks and even sharply for retail counters now in fashion at least in Bangalore

The Goldman Sachs CPSE ETF seems to be trading busily in its inaugural year at 19.79 which may not interest the HNIS but the trade will see a magnetic attraction to hocked real estate and infraco stocks trying to recoup the margin interest and thus that is likely to bring back pressure on the rally itself. DLF is showing the Price Volume breakout for example on Day 3 of the rally.

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