India Morning Report: Infosys, the Banks and you & I

The bull run in IT will of course continue anyway till 3350/2800 on Infy and TCS but the firming up of a new guard in place in todays news is likely to keep the stock out of harms way till probably even 3750/3800 assuming there is no unraveling of the things set in motion by appointment of an Industry pro back at the Top executive position and NRN/Rohan moving away as promoters. The Banks and NBFCs in the meantime look tired yet despite the May run in SBI and the news last week of better days ahead for the public bank giant leaving ICICI Bank tired at 1450 levels and HDFC bank not continuing on the promise this week. The breakdown of the bull trade in Infra was also a negative for the broader market spectrum, offered almost as an excuse to the shutout of the midcap rally as most bull positions in Banks, infracos and Financial Services cos remain intact including in YES Bank and IDFC

A new trade in Power NBFCs including PFC and PTC is likely only in retraced levels for PFc/PTC even as REC tries to hold new levels and the indices maintain 7500 as a veritable deep bottom, safe after a 50 point cut. Entertainment and Media companies seem to be headed for a big move in the coming second half of the year but they have ducked earnings expectations before and are not relally your backbone of the bull portfolio including Zee and HT media/Sun TV. LIC Housing is not looking overpriced at 330 levels.

Maruti may have run up to overpriced heaven on news of the auto sales turnaround and will be a good short at 2500+ levels Short at 2600, Stop 2700).  Bajaj Auto may not lose much from 2150 and Heromoto may also hang on to 2700 levels , both ready for an up move till 2400 for Bajaj Auto. Shorts in HCLT will likely be key to Infy levels ramping up this time as broader markets have stabilised  to newer levels since the last move in August 2013

Domestic Pharma leads up move, DRL and Sun Pharma may stick out but will continue under pressure from shorts to 2200/550 levels. The list of shorts here is more or less exhaustive so markets should have no problems on the long side with the top half of the week being bringing focus to the coming debt rally with 200 Bln reported incoming in May after half that amount exited in April.

India Exports for May 2014 totted up $28 Bln and a degrowth of 13% in Imports in year dwarfed by the currency’s upmove from May 2013 (8% in Imports and 11% in Exports average rates) , Oil bill constant at $14.5 Bln. April -may deficit of $21 Bln completes a year long cycle from the fiscal strong measures introduced by the previous outgoing government, pointing to a minimum Trade deficit of $100 bln odd in FY15

There is no short trade in Banknifty, stay away, the rebound data just around the corner with July earnings reports also likely positive for the sector after due rerating of expectations last week and now. The $4 Bln Infra Fund for Road projects is a good start on the point frequently taken up publicly by Mr Deepak Parekh, Chairman of the Advisory council at IDFC after stepping down as chair of IDFC and HDFC




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