India Morning Report: Really, you’d want to short the markets right now?

Traders might face active discouragement with home cooked trader tools available on the wider price range in the markets today, very much unlike those HFT and algo inspired automatic anti-trades outlined in the new Michael Lewis book. (Narnia was written by CS Lewis ;)) Seriously, though the business of going bullish on India hasn’t begun much and some segments of the market could not be blamed for looking for an early correction. however markets are likely too low at 7250 and today’s moves would depend on all important results for Murli Manohar Joshi, State Bank of India, BOI and ITC. While the first two are likely going to have a neutral to negative impact, the latter two would take the markets as a whole higher. Sun TV also reports earnings as the Media sector is likely on the hot button list of plus movers right now as the short list on Consumer discretionary gets exhausted. Bajaj Auto is still hot on news of exports resuming with the shiny metal stocks running out others yesterday. Pharma and Healthcare businesses still offer fundamental value on explosion of size in the Domestic market.

I think Indian markets are mature enough to signal their dissatisfaction, if MM Joshi sneaks into the young cabinet, even as they remain tolerant of the new dispensation, because like the vote, they are today populated mostly by a younger generation, unlikely to fathom a failed patriarch in the midst of Modi’s scheme. LK Advani getting Home and Defence portfolio for example would have been a neutral action.

Back on the Financial news trickling in, SBI has probably overreached itself as has been the stock’s wont recently and would get primed down to 2400 levels post-earnings in late afternoon as it posts a flat loan book or increasing NPAs or both. ITC’s sales are expected to rise on retail and consumer businesses while BOI has turned the corner and markets will probably get an expected 20% increase in topline and a flt if not positive growth in Net Income with some NPA sales to the business.

HDFC and HDFC Bank priced itself out of the MSCI index as the bank scrip exits MSCI on continuing resrictions on HDFC Bank being declared a foreign entity and limits probably reached in HDFC as well. The expected double digit dip in SBI Net Income is unlikely to be neutral either given the PSU banks competitive comeback this quarter. Thus the Banknifty is short intra day but if larger positions increase attention on the Banknifty we could see cash flowing into the flagship movers of this bank rally in ICICI Bank, Axis Bank and YES Bank/Kotak.

In unlisted business, the expansion of amazon in India now has a competitive baseline with a INR 20 Bln deal from Flippkart to buy Myntra. Flipkart has already jettisoned 20% of its staff to get leaner for the fight but with bpth players relying on a marketplace model with independent shops and businesses creating a dispersed ecosystem, both are likely to grow independent of each other almost having usurped ebay’s model and business in this new ecommerce fortress/market among India’s Gen X and GenY( under25).

Power NBFCs and other Financial Services (Auto loan) businesses remain an investors delight any corrections good for further position increases but the current levels may hold for some time. Markets are likely to close above 7300 for the week but if a fast rise stops on lack of steam near 7325-7350 there may be a sharp correction in the coming week after markets open on Monday. IDFC is headed to 150 levels slowly and steadily


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