India Morning Report: Modi’s China gambit could be “The next big thing”

We know which ones would be the real weaknesses a new government could tackle to get rid of the stigma of being on the rolls without having any achievement scores for 10 years, a fact which a previous NDA can also probably attest to for stretches of years in the dispensation till 2004.  However, Modi seems to have come out strong on two edicts : A performing bureaucracy, and an open acknowledgement of the need to catch up with and beat China. Both will work in the new government’s favor but most importantly will likely come out as key reasons for new long term investors adding to the hedge funds and other random QFIs registered online.

Banks are up again holding 15500 on Friday and likely to cross 16k between Monday and Tuesday, a fact check for the markets subduing current levels possibly after that only with the surprise Friday performance engendering a sympathetic demand(buying) led upmove further from 25397 marks Friday. Sun Pharma and DRL are great shorts for increasing risk bets in the market now. ONGC’s subsidy bill impact will likely not clear up till December as it paid out an extra large cut evident in the Marck Balance sheet

The Rupee is barely crossing 59, now however aided by the rush in buying bonds ( mostly from money exiting debt in April and May)

GAIL is back in the buys , sneaking in the mid of the renewed Energy rally last week, after a likely upgrade or two on Monday post results. IDFC and YES will likely lead any important sentiment moves afresh to higher levels as Sensex awaits a fact check or two before a consensus upgrade follows FII brokers who had already posited a 30k mark for the Sensex. An important criteria for all forecasts was a performing government and mere policy pronouncements and faith therein might likely not be enough for the final rush to begin and new entrants continue to face a higher risk of losses on a market casually returning back from here to 7100/24500 levels

Energy refining and processing downstream and also OMC futures look brighter on the global outlook and a revamp in Demand, Jeffries in front with a report on RIL. Relinfra (which operationally owns the Mumbai Metro) is likely to be a strong bet this year as it battles fare revisions ont he new metro with the state government.

A return of faith in IT and pharma is likely misplaced in plus bets on IT with RBI unable to support too many upmovesin the Rupee and likely to let it slide up to 57 levels against the Dollar thereon. Infra project takeoff noise seems to be unlikely to convert into real financing and project closure till real execution is seen aplenty and not across one or two projects with more than 100 projects waiting Centre State alignments and financing closure.

Nifty hits 7700-7800 levels this week, with Option bets likely moving beyond 8000 levels to range it on the higher side and 7750 formations likely to gain the magical liquidity used as funding levels for Put bets that remain the most successful in the rally segment.

RBI’s move to cut SLR was a good ramp up to further reduction in SLR levels in FY15 and beyond till probably 10% SLR levels atleast when we would be closer to a 20% RRR competing with other Global dispensations (US and China at 15%)



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