India Morning Report: Correction day, follows Indian Markets predilection with “Modiphoria”

Hat Tip – FT’s demure casual and below the belt rough Indian journalism that helps them along as they staff other shallow EMs

Though others have been very supportive of this rally, shorts may not be able to get in to this section of the rally’s correction for much either. The Bull rally continues of course bu t the intra day mark of 7500 was lost in rather a hurry in a single session, revealing empty profit taking induced price bids and probably leading the markets on to a stronger hope for a sharper correction to tear down the bull phase per se, as evidenced in the 7500 Call OI build up. ( which means 7500 is now being sold down)

Thus except for the couple of PSU Banks being unshod ( Karnataka Bank, Hat Tip Tulsiani) which are being dropped from buy trade lists in F&O ( hence, unshod) not many other scrips will have any tradeable targets down and will just trade wat their Friday/this rlly ‘s stable marks than lose momentum or give way to short traders waiting in the wings with or without a DII mandate for lower prices. Kotak has another announcement from the RBI requesting it to pare promoter shareholdings to 30% by December 2016 and it joins HDFC Bank in waiting out current regulators for what they believe is a temporary hiccup, with the whole market waiting with them for the next few months as the new Cabinet digs into the high chairs in North and South Block

The Cabinet, we agree with most watchers was a best effort and not a radical change from normal polity, though it is obvious that Narendra Modi has a defined agenda some of it targeted at the outgoing government style of the Congress to drive in his advantage with the electorate. PM Narendra Modi will have to walk a thin line when he expands the Cabinet in 4-6 weeks, though with large portfolios being shared at the Cabinet level, the exercise is still a unique attempt in the direction of downsizing government and likely to be lauded in the first year and more as he plays out a defined point by point action plan from his own Office.

That would bode well for our recovery as well, though it is probably safer that markets begin from 7300 levels and that means most great policy pronouncements will not get another standing ovation from the markets as they get down to the serious business of maintaining fair value markets. Eventually performance only will be able to allow the markets to beat 7500 marks ont he Nifty and the 25k on the sensex. When it does cross the mark again, it is obvious that that would be steamed by existing shorts now back on the index options,  and would easily cross 7800 or 26500 on th Sensex to the court of broker dealers betting on the magical 30k pronouncements and will likely end the year at all time highs comfortably above 7500

F&O strategies at this time could thus easily avoid the short strategies and go back to a new straddle every week starting with a looser straddle bullish at 7300 to 7500 using the existing leverage in 7500 to build the smaller range from 7200 and 7300 sold puts.

One does not again see anyone missing the chance to go long in cash equities all day today and the fall in indices should fool no one. The best outcome ofcourse which could define such simple price discovery all day would be if DIIS step in to buy even in salutory quantities on longer range buys in Pharma and Domestic cyclicals which have hitherto been tom tommed by us as Bajaj Auto, Bharti ITC and even Non discretuionary consumption builds like Colgate, Britannia and Dabur Marico with the HULs as the private banks get back into the saddle on the Banknifty, YES Bank probably continuing without a break alongside Financial services companies closer to yesterdays high marks as they are still likely to look undervalued in the recovery strike. Some DIIs are probably even waiting for Cipla and Lupin again but many will move on to building positions in Glenmark Pharma and Cadila, waiting on Sun Pharma, Orchid, Aurobindo Pharma and Stride Arcolab (DRL and Ranbaxy are that might falling arrow sign i.e.down all the way)

More than earnings data it would be worries about the real agenda meeting reform as Energy stocks start with questions on if subsidies would indeed be tricked out again instead of being wound down as per plan as the NDA finds its Welfare feet in the magical Mansarovar of deficit financing.

Also, sooner or later the honey moon with the markets is likely to wind down for the Modi government as it refuses to be led by Markets like all institutions in Emerging markets are wont to publicly end up showing in their winning hand. Also cuation reigns on the performance of India in governance given the political pitfalls of sharing a Rajya Sabha in Congress majority

Yesterday’s quick exits probably resulted in FII outflows pressuring the rupee back to near 59 levels on Tuesday’s open mark. SBI on the other hand may not see any moves out and continues up from 2650

The step to combine Finance, Commerce and Corporate Affairs under Jaitley is probably the most positive and ambitious move by the new government that should be a commitment from PM Modi and Jaitley will have to walk the plank to cross a real issue or two of mis coordination in evidence of late. Rather Nirmala Seetharaman should work closely with FinMin Jaitley to make it work. Also, MSME has a separate Minister all by itself (KM) and Modi has kept pension affairs with personnel and science departments in his dhoti. Inderjit Singh’s portfolio of Programme Implementation would additionally have been something I would have moved to priority levels in a new aggressive India that should probably look at more 2030 and 2050 targets with a renewed vigor in Planning ( anathema yet to the NDA government?) The implications of that are not lost on a Chief Minister coming from leading a progressive state still relying on Central Planning as much as Private investment. The Ganga rejuvenation programme will probably be closely watched too for someone iwth a record of execution having given the portfolio to a sangh loyalist. We will probably continue to pop surprises to the world from Defence and Ext Affairs mandates with India deciding on a long term commitment to Modi aided by a performance beyond just an earnings beat from India Inc

Indian Morning Report: Markets catch the bad eggs early, Modi sworn in on Monday

Markets caught the listed Morning Report villains early yesterday with PSUs getting a big early correction and markets sustaining the up move rather than jump to 7400. SBI however, probably with reassuring noises from Modi and Shourie insiders, caught fire again and closed at 2600 levels on being treated as a jewel in the crown and getting the required recapitalisation on priority. As of now however, technically no one from the new government is actually in position to deal with these issues as sh Narendra bhai Modi decides on his first team over the week.

Markets will continue up from 7300 and there may be a small correction in SBI too but shorts should exit the stock till it reaches new stratospheric levels beyond 3000 (when they will still risk getting trapped as Sensex targets have crossed to 31000) In the meantime the bank will be jettisoning more bad eggs to ARCON and other bad asset buyers. PNB also got an early reprieve yesterday on the same counts and followed SBI to an above 1000 close. PNBis a great short ( confirmed by Ashwini in the late morning picks)

Pharma companies, also as noted yesterday, came back with a big bang and IDFC provided momentum to the positive side of the market move while the PSUs including Coal India were rerated down after  a mindless rush on the upside over the weekend. Glenmark and Orchid Pharma are probably positive as Auro Phara remains subdued. Divis labs starts back from the bottom while IPCA joins in late s both follow Torrent and even Jubilant Life identified late in the rally.

In two wheelers we are still betting on the Bajaj Auto – Hero pair trade, Bajaj Auto remaining near 1900 levels after being ignored in the rally at its traditional top at 1948. ITC seems to be the one to be accumulated by institutions in the non IT businesses.

Mid Caps continued to rule their positives being easier access to financing as the growth memes take root again and markets , according to us , still looking ata  big risk as many cannot support the coming phase of steep growth fundamentally and choice of speculative multi-baggers opens the proverbial well (kuan vs khai in Hindi, the frying pan and fire being the universal translations of the metaphor) of despair led by over leveraged real estate and infra picks like IRB which have not completed asset sales to deleverage their current businesses. GMR continues to rely on aviation to get out of the rut.

Sun Pharma as always followed up on good news on Gleevec with the release of a warning letter from US FDA, consistently defying its backers for the last 20 years even as rival DRL lies in disarray

The stem in the rise of the Rupee brought gains back to IT as well and the same might continue a mindless exertion to the plus side today risking the fundamentally stronger banks and the down in the dumps auto/two wheeler stocks for the switch as indices will like to stay close to 7300 like yesterday till late afternoon. The top of the rally is above 7400 where markets would like to build a new level instead of keeping a bull rally correction, which is currently the expected result.

Chris Woods, continues to bat on the edge of rationality at CLSA, making smart comebacks as the easy rally remains simple to define and choice of available sectors is broad. Consumer Non Discretionary sector remains strong inthe indian GDP charts and may not be ignored in this rally. VIP and Zee Entertainment are likely to bat expectations of great results and at least the rally in Zee likely to survive in the longer term. Jubilant Foods may be out of favor but another short on it probably will cost the hype trades

Advance Declines may continue to try and balance out after a week of lopsided bullish ratios but opens at near 5-1 levels Energy companies and OMCs continue to face profit taking with Hindalco after DIIs confirmed they would wait for dips to buy.

That means the day will see Financial Services compoanies and Power NBFCs carry the burden of the bulls after a subdued week.

Off the bourses, the @PMOIndia shutdown may not be unwarranted as PM Manmohan Singh’s state representations are definitely not transferrable to the incoming PM but I guess Twitter can work on a generic solution. Till them I have no issues looking up @PMOIndia Archive instead but wonder what the official account handle should benow. I guess we won’t be chaning PMs in a hurry again!

India Morning Report: A sing song rise to 7400 is almost complete


The move up 65 points on Monday meant today the market could reach the high mark of 7400 with a 100 points rise in the Nifty. Given that the Banknifty rise on Monday left ICICI Bank behind and Axis Bank at 1808 can well rest without impeding this rise, the markets will probably reach the 7400 top mark well before the end of the week and the correction thence , completing the Modi at the crossroads rally with a corrective pitching in Thursday ir Friday allowing DIIs to confirm buying. ICICI Prudential recommended yesterday that the market be bought on dips and that is likely to be the recipe for the DIIs fresh from a profitable trade in IT that suffered a near 7-8% dip  yesterday’s trading in HCL Technologies and Infy. HCL Tech promoter Roshni Nadar is taking the family’s focus to Low cost Healthcare for India’s rural poor, the HCL foundation already active in the field of Higher education

IDFC saw a real uptick in interest since the announcement of the new government rising to 133 and ready to breakout to higher levels within this rally period along with infra majors like JP Associates and Relinfra as things crystallise around the budget exercise. The rise in Maruti is probably good fodder for the shorts to latch on to if the correction does ensue this week even L&T as other Gujarat stocks leave it behind. However, more importantly first the markets are likely to define good upward moves back in the defensives and Pharma companies as well, as Energy companies, Gujarat midcaps and the banks totally eclipsed their big losses yesterday, market operators doing their own quick version of the market re-rating badgering down stocks like ITC to 335 levels and HUL also suffering one thought without reason as the coming of controls on inflation and consumer spending/wages are not an automatic autopilot for the BJP government.

Glenmark Pharma should probably concentrate on growth in domestic market after some setbacks from the FDA and a still resilient positive start of secular growth in the US markets Energy stocks understandably take a breather and with volatility down 20% in the defining trade on Friday and continuing on Monday , one should see intra day ranges return to normal 1% bands than the 4-5% ranges seen last week and Monday. Power company results on Monday will likely be swamped soon about concerns over tariff realisations as the new government digs in its heels. Infra bottlenecks are also unlikely to disappear in the next 6 months as Financing has become tougher and local and state issues are likely to swamp any government quick fixes to kick off the sector in desire for good governance grades in 2014-15

The continuing focus on PSUs and PSU Banks over the big weekend has seen the sector catch up with gains in bank funds and even energy funds that benefitted from the late rally in April and May and the market is indeed looking frothy ont he indiscriminate PSU count though the good news is likely to keep the markets in gain till the month of May is indeed over.  Today’s rise in Mid cap indices is probably a portend of an index correction soon after the rise to 7400

DIIs will probably wait for a further 5% fall in IT stocks before buying back assuming an earnings score rated to the Rupee near 55 than the current estimates around 60.

Similarly, the capping of Private Bank prices in todays open predates a big short on the likes of SBI and PNB to come soon unless there is specific news to back the expectation of a big backing for State enterprises from the new lean government likely prescribed by Narendra Bhai Modi for saving Indias democracy, surely on its last legs at a current GDP growth score of 4%

The big question: Will India’s coming budget make real dreams like the first Bullet Train for India?

 

 

 

India Morning Report: Just a new Cabinet in play, Markets joust at 7200

There is virtually no reason for markets to hold the new 7200 levels on the Nifty or 24200 levels on the Sensex so there is always  chance that 7100 is reached again in the coming 2-3 weeks, but global markets are agog with the news of a new government in India and there are even some stray rumors of FDI being redirected from China to the Indian basket. However as a few that have rerated markets to 8000 levels would appreciate and Nomura does not in rerating of the growth target to 6.5%, the new Modi trade as yet does not encompass any change in fundamentals of the Economy as it awaits the qualification of India strategies with real strategy motifs from the new PM.

The FII sell trade on the index however as we explained already is a likely deepening of their bets on India as they exit naked index bets and return to stock specific bets while exiting cyclicals ( Citi – Pharma, Consumer Staples, Metals) . Goldman Sachs again, a good index revision to 8300 however no retail investors should be encouraged to enter the markets at these levels, those in play already inside whence the index crossed 6700 levels.

Markets as expected, open slightly positive after a rush to Mt. 7200 on Friday and now sustaining the range between 7100-7400 before fundamentals and a real government allow the move out to 7500 and then only one can say what the new peak for the markets shall be and where it will end in 2014 likely above 7700 and 25000 on th Sensex an easy target . Markets reached 25k mid afternoon on Friday. Global markets in the meantime see the FTSE stopped below 7000 as it along with the European plays changes the fundamentals of the Bull trade from European growth at home to Global growth and the bond trade exits. European markets will now rise on the weakness of the Euro having peaked out their slow growth memes at the 1.40 marks on the Euro. The SU markets after a scary ride down all week closed near 16,500 and still retain a bullish meme or too but only if the Bond trade stops doubling down every week, ten year yields still headed south even as retail reports a buoyant quarter this week.

The currency is headed below 58 with another 30 paisa gain at open to 58.50 even as Arun Shoruie gets another chancce at an Economic portfolio. It is a little discouraging ( intellectually) that the voting masses do not appreciate anyone with real qualifications, though one does not yet mind a man of the masses taking reign as he brings promise of long term stability and thus at least hope of turning the regular recovery to 6% into a big decade for India and India inc,

It almost seems superstition ( see our predilection series’ of 2011) for markets to stand on a 9:2 Advance Decline ratio after having lopped of the steep head of the trade on Friday when the markets understandingly rose 5% mid day to above 7500, allowing analysts to comfortably bat for India bull markets even after the great seeming froth in equities ont he back of a 336 seat win for the NDA. Banknifty hit 15k in Friday trades and the bigger better banks including the 2000 vintage Yes Bank too will continue to reap the gains of renewed investor confidence , allowing Yes Bank to trade around 600 levels and ICICI Bank perhaps 1500 levels as HDFC Bank is already at 800. Market earnings should be taken at around 375 for the Nifty and 1400 for the Sensex as the markets have moved on since August last year and India inc continues to perform.

A great bull run will probably stay stopped in its tracks for a couple of months as consumer staples stop rising even as inflation remains high with consumption the oonly growing GDP component. However as growth takes hold, it is desired (as Riddham Desai makes a case for it on CNBC tv18) that the %of GDP attributed to wages decline in favor of % of GDP attributed to Profits. That would also imply that consumption share of GDP that may keep growing will have lesser role to play as real investments finally make the GDP shine for India a sterling part of selling the new Modi model of global business. However , my takeaway remains that it may be difficult to undermine the role of Pharma, Exports and even FMCG/staples/Non durables in future Indian growth and performances from the sector may well continue to lead sentiment into 2016 giving the market consolidation a reason to not change baskets but remain stock specific after having chosen their favorite banks. China in fact continues to bat for a new dispensation that allows deeper domestic consumption markets where Japan has already moved after a first few futile months, and though analysts and funds start chasing China and Japan almost simultaneously with much bigger commitments, India will scor ehigher than its own previous benchmarks on Foreign inflows and markets will continue to lead business here.

India Morning Report: Markets jump to 7400 on Counting day as Asia tanks

Global markets tanked probably because of the strong showing by Japan in Quarterly GDP as Japanese bonds strengthened and the strengthening currency started a cascade conveniently allowing US markets to reatct negatively to good news in Asia ( highly reductive and downbeat prognosis)

However, markets will equally take to Indian news positively when Europe and US open later as India starts the call auction markets with the expected 100 point jump to the open. Apparently nearly 10- stocks can already be expected to reach 10% , 15% and 20% circuit breaker limits in the morning.

NDA’s strong showing in the polls means the political stability mandate can well start a lasting bull market for the next 10 years in this part of the world. The Euro’s woes add on to chances of a global rally from this point as Corporates outperform the French GDP and take due credit for the survival of the Western paradigm.

Banks and Power NBFCs will likely lead the growth with Reliance and SBI joining ICICI Bank, Yes Bank and others in the rumination on results all day and most attention will remain focussed on leads and what outgoing and incoming members of the lower house have to say on the new government and the mandate from the people.

The Nifty will definitely see a 7350 mark during the day as F&O ranges have moved to 8000 on the higher end and salutory OTM hedges have also reached 6000 on the lower end, the 6000 puts getting expensive at above 50 in anticipation of additional hedges required by new longer term inflows into the markets.

Arun Jaitley as Finance Minister is likely to be a positive for the markets for now and the man is likely to keep his mouth shut for the period of government formation so ther markets have definitely set 7100 as base for the rally. ICICI Bank is the easiest pick after Bajaj Auto results for Q4 were indeed tepid and cyclicals for us now restricted further to the earlier mentioned Bharti and ITC.

PSUs and L&T will be the fodder pick for fattening the markets and will not face any resistance in up moves ( HT Ashwini G. / ET Now)

The currency has moved below 59 after a long time and may see stronger trades though Fixed Income markets will likely not trade heavily this entire period of government formation for at least a week to ten days as institutional investors do not require daily trades and retail investors are unlikely to come in without deeper markets being available.

CDS spreads if traded should hope to touch record lows nearer 110 basis points on the turnaround taking hold.

Oil prices may offer a risk trade that will toughen up the ask for the incoming government and rating agencies / fund managers are unlikely to change opinions in a hurry.

India Morning Report: Global investors go long on India’s new regime

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Even without the new government in place most would benefit from a big long tomorrow. I agree with SS that the NDTV poll was a definite watermark for those waiting on the fence and Nifty futures and long calls / short puts would pay off well tomorrow with the markets settling down at 7100. In case the 279 mark is achieved, the bang is anyway likely to take a rain check at 7200 mid afternoon on worries of government formation as the so called Modi vote is finally for stability, the one worrisome miss for UPA2.

Thus in either case global markets are long on an India recovery and though this may not translate into any “reduction” in the frozen anti India sentiment(sediment?) and other emerging markets would retain their weights being at a virtual bottom from here, global allocations would easily make this a record breaking year for FII and probably FDI inflows (the latter for Fiscal 2015) Also, the banks and other metal and minerals sector interest prove that currently investors have not come in to the market which is dominated by punters looking to jump on to the subdued PSU brigade.

The networks (CNBC TV18) also saw a ranking of under invested PSU banks like IOB, IDBI Bank and UCO Bank which to prove my point haven’t seen any resulting increase in stock sentiment thence in morning trades. The Rupee predictably, celebrated the relative certainty after the NDTV Hansa exit polls back at a firm 59.50 level instead of worrying about Friday In bank stories, Bank of Baroda easily fooled the most investors with their troubled couple of quarters last fiscal (FY2013) making many worried about their outlook. The bank has however stemmed the rot within 6 quarters and Gross NPAs have come under 3% after Q4. The scrip could have benefitted from better guidance earleir as well, but has celebrated investor faith nevertheless with a steep rise in the last few days. PNB on the other hand with smart provisioning that got it re-rated earlier is likely to lose the crown ( best besides SBI 😉 ) again with NPLs making it really weak and late provisioning rather hurting the profits despite treasury profits that could have won it over. BOI reports today and may further marginalise the PNB play if it reports the turnaround.

HDFC Bank in the meantime benefits from having made a clean breast of it in the markets earlier even as MSCI brings down weightages to 1.89% and confirms the possibility of deleting the bank stock on RBI restrictions due to FII limit being reached. Hat tip to Ashwini G. ET Now, for remembering the PSU rush this week, and a reminder to Nikunj of the reason why HDFC Bank will not worry about the MSCI pronouncements)

 

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Those instead believing in Tech Mahindra are likely to be disappointed, like in Genpact 3 years earlier which remains a GE business driven company and stylises the fact of inactive uninteresting Indian listings on the NYSE and the NASDAQ  even as Banks listed overseas shake it up a little. M&M however recovers a little and may be a good buy as consumption stories return and Auto sales buoy up from the bottoms reached in April. Sun and DRL seem to be riding the wave even s the A/D line again confirms 3:! after dipping to 1.7:1 yesterday, a very comfortable score for equity investors to end up choosing the wrong bets in arally year as the markets end the discrimination and stock specific phase.

Gold prices in India look to celebrate instead of following the global cycle of getting subdued on news of an Economic recovery and Global markets esp look to India to let the commodity price firm up further even as China disappoints after becoming the largest industrial user of the metal. PIMCO continues with large outflows for the year (trailing ten months now in excess of $10-20 Bln) but has made another smart macro recommendation on China, where growth rate may all to 6-6.5% the levels also expected of us in FY15

Infrastructure stories are also good for the last mile, but may consider prolonging the rally to confirm NDA action as it seems to be relying / planning on focussing on railways ( A diamond quadrilateral) and current infrastructure pipe needs to be taken up on priority instead to make the story work. Tomorrow selling 7200 puts would work well given the markets are unlikely to fall off the saddle anytime soon, but 7100 calls may start off earlier today afternoon and for retail investors offer lower risk equations as 7200 puts would keep rising in value thru the month. No post-counting scenario is likely or even improbably look at a Nifty score under 7100 or Sensex under 24k

Lastly, I’d request the NDA policy making teams “Please do not appoint MM Joshi or Yashwant Sinha to the Finance Ministry”. It may not be that bad an idea to give it to a young Amit Shah as we have a very able team to help him.

India Morning Report: India’s “coming of age” a likely takeaway of 2014

Nifty moves on to 7200, the Sensex to 24000 on the bright sunny Tuesday morning even as the Banknifty runs out of moves and the Nifty looks around cautiously after the open at 7100. Foreign investors will double down on India bets as the currency again starts under 60 at 59.70 and Bond markets will likely oblige with a secular move down in sync with the growth rate picking up and a likely upward rating for India in credit, bond and equity markets as well as a lovely reprieve for Foreign Banks invested in the Rupee this year. Global investors are likely to oblige with larger allocations as the US trsrys get crowded and finally start up from 2.6% levels towards the end of 2014 , Bond investors finally moving into other avenues after neglecting the taper and crowding out the High yield markets to the extent that even Junk Bonds pay under 5%.

In the meantime Nifty option traders continue to enjoy a expanding range and the 8000 Calls have come into fashion with a big slam on Monday translating into an exit poll 272 led continuing of the rally in the intervening 3 day period before counting on Friday.  FIIs have also sold a few positions in Options in the meantime , to make the out of the money end of their deeper long bets as they chirp up on the news and get into their choice dozen and if CLSA is to believed some not so fundamentally sound “typical” India stories like Ultratech, L&T and SBI

As mentioned above, Bank stocks may be running out of moves in the melee esp as PNB gets ready to report another quarter of increased restructuring and slippages while others like Canara seem to have come out of the long dark tunnel into the light. BOB reports today as well and with its woes already a big negative, it may on the other hand even with bad results , become the pillar of expectations for the average Joe Punter out in the “virtual” pits , electronic trading making instant analysis easily available

HDFC (for HDFC Bank) and ICICI Bank continue to lead sentiment, Axis taking on the almost traditional role of substitute as the large cap stocks start capping out on slowing momentum after a precipitous rise in the prodigal rally as the Electorate returns a decisive result with a likely encore for the new government, improtant for power and other infrastructure sector investments.

Positing on Maruti in these climes looks the unfortunate thing that will grab and crush a few balls if indeed markets continue without succour and so interest is likely to remain superlatively in affinity with the new winners in the dozen like Yes Bank and IDFC even as we wait for real results from the Auto sector and the rally continues after the government formation is over and consumers return to an atmosphere of certainty albeit in a new government with equally dictatorial memes as the autocracies in China, setting up for some interesting dog fights in the public media within India inc and within the government with or without having to buy the last few members into their coming NDA 3.0

A word of caution for baiters among Joe Traders out there, “MODI TRADES” are unlikely to offer short opportunities even in inopportune and pretty ramshackle choices like Jain irrigation and may hide a few upcoming gems like Zee and Adani which will likely also shine because of fundamentals making them FII darlings down the line apart from the ratchety cling from government patronage. Reliance will be interesting to watch esp with the new claims on an old government’s pricing policy while it also enjoys the fruits of India’s recovery and an expanding corporate and retail consumer business to finally back its expansion in Energy and now retail, Banking and broadband.

I would continue to back Bajaj Auto, Bharti and ITC for now among the non infra, non financial services sectors. I see no hurry in rushing Power NBFCs from where they have already reached at 9.30 and no undue reason to enter markets now even as indices definitely look to close 2014 above 7500-7800. Markets also look deeper into the IIP and CPI data as the Core CPI data includes Services which continue at around 8% higher and food inflation is looking at “new windows of opportunity”

Goldman Sachs and others also back the doubling down in the Bond markets even as the Rate Cut analysis is likely to become prime fodder in the debate with the Guv who is likely to hold out on rate cuts given the consumer markets staying subdued with sharp inflation pressures. Fixed income yields will have to lead from the markets for the macro to heal even in the confidence on the new dispensation. The currency trades will automatically give a fillip to both bond markets and long standing illiquidity in the CDS markets as the availability of the attention variable allows easy comparison and tracking of India yields globally before its eventual consummation into any EM or Global Asia index. If Exports start and continue a rhythmic recovery , the currency may well return to 54 marks where it could not sustain in 2010-11, last in 2012.

India Morning Report: The rest of the week is bullish again

indiaGiven Pfizer and US Authorities continuing crackdown on drugs from India ( Pfizers fake drugs lab featured Ranbaxy on Bloomberg yesterday, 100M users (see ET)  did not vote for Ranbaxy and founder Dilip Sangvi definitely has an uphill task trying to convert his $4 B revenue acquisition of Ranbaxy into a paying deal. The price even at Rs 447 was probably a face saver for Indian Phartma as Indian pharma contitnues the quest for bigger stories in the $200 mln – $500 mln molecule categories and even more and the US generics story also relies on academia to cut the costs of innovationand drug delievry with and without Obamacare.

As of now however, prices of Sun Pharma continue their rally as Ranbaxy finally stabilises at 447 (offer price) and markets look to complete their pre poll rally with benefactor Modi piping up some hot Indian curry to Foreign investors around the world. Recovery in consumption is not converting to better Auto sales apparently and poll time spend also seems to be down witht he fortunes of the Congress known well in advance.

In Financial Services and Banks, the IDFC story has multiple positives even as the markets nurse a big bruised ego from RGR’s matter of fact disposition of other applications and the Infra Financing story for India inc seems to be back on track, the Indian welfare state a survivor of other political questions as BJP promises to bring back rural employment and education schemes.

Stories like Bharti and ITC are unlikely to lose because of the changes in Political fortunes while the Pharma and It story probably come under the scanner being at market peaks and the Rupee responding in the NDF market to more than inspired business inflows and remittances from labour abroad.

The movements in JP Power., JSW Power (Nasik and Maha areas arnd Jabalpur?)  and obviously Adani Power ( Amit Shah connection) are interesting and likely to be back int he limelight as news on the business channels remains on target for a big 7000 breakout and is safe for a 6800 score by far, markets continuing to test the levels after each 100 odd points of rise, studying the ramifications and choosing a select dozen every 100 pointswith shorts back in Kotak and Hero Motors. BHEL and SAIL seem to continue to be short favorites and their fortunes and that of IDBI Bank are unlikely to be affected by market direction now.

The best derivatives strategy remains to sell puts at this point for probably 6500 levels on the safe side, markets likely to signall enough if the breach below 6450 levels in 2014. Buying risk may seem tobe in, but new investors are likely to be priced out by the constant rain checks and risk buyers from early 2014 will continue to be rewarded till end 2014 if they stick around.

JP Associates is unlikely to move upop from 56 historically a support for the stock as it continues its tortuous strategy of deleveraging its listed stock

Bank credit growth remains steady at 12-13% and deposit growth continues to outpace, leaving the changing GDP target forlorn at new higher levels and the GDP performance for 2014 and Q1 2015 unlikely to hit above 5%

Market highs around 7000 levels are however already justified by continued double digit earnings growth by top performers.

 

 

India Morning Report: Markets will breathe easier at 6300

Many market commentator see further moves north as highly unlikely and it does seem markets have done a fair bit already including the choppy start to 2014 as buying overwhelmed short trades. However one does not see any of the selected scrips losing much from current price levels. The Ukraine crisis fade had much to do with the afternoon bullishness and fresh buying will be allowed at lower levels in most of yesterday’s increases. Pharma and Infra trades may yet break out again with Pharma yet to take off, Cipla the ‘only’ big positive trade continuing to dominate sectoral picks. IT scrips finally yielded ground with HCL falling a few notches as market spine trades keeping interest in the stock finally seem to have exited the ‘always trying’ bellwether

New affordable housing targets in China as US and China complete their budget exercises point to the realities of the new post crisis economic melee as US Arms spending takes a backseat and China continues to increase its Defence hawkishness and faces increased executive flight risks from the Smog. Australian GDP gave the Asian markets much to cheer pre dating a secular return of investors to Asia even as China is finally deprioritised at some bigger investment houses

At home, one is still foxed by the marginalisation of LK Advani in the BJP as frankly NaMo seems a little banged up for the big job and AAP is well, a one issue pony. ( at best a canard) The fate of General Elections also thus has to be separated from that of the markets as India’s residual growth and any strategic direction will never be delivered by the Legislative arm given the state of our politics. Inspiration may be missing from the Executive or the Bureaucrat/Technocrat nexus but there is still momentum for the populace per se and India remains the best bet in global equities in such confusing times, making do with a much smalller stock of FDI for it knows its limitations. Our advantages in the English language could compare to an additional factor production given the dominance of Services and along with our expertise in more intricate subjects of the business management disciplines , we can well fashion as many competitive advantages any corporation needs to win globally as required Rajnath Singh returning to Public service will be NaMo’s other card but Congress and SP have got no leg to stand on even as the issue of the State’s division holds extreme potential before it also becomes a BJP manifesto dashboard line item.

And Nitish finally replies after 6 days on page 17 (TOI-Blr)

Seeing as NaMo’s other credentials being weak are still the best bet, Nitish finally gatecrashed onto national topics, catching his favorite Paswan in his horns. Meanwhile,  NMDC has corrected more than 17% and apparently has stable lows at 110 levels to allow further accumulation post the new CERC regime in progress with the 2014 guidelines. The Power quartet had a great start yesterday as expected and may strengthen the trend in the Power sector going forward even as cyclicals try to start back for the longer trek to the top uninterrrupted by market momentum taking the index for a roller coaster ride, including the Energy infrastructure stocks and the powerful Consumer staples like Bharti and ITC which arenot going to retreat in the bull scenario while remaining a defensive bulwark

Private Banks remain the most important component of India Bull portfolios with YES Bank leading the charge yesterday and Kotak taking a breather in the secular run. ICICI Bank and HDFC Bank continue to capture market share on and off the bourses from the embattled SBI and BOB pointing to the limits of an upward move in a side like PNB even in this critical move for the bankers, as PNB continues to show good profitability

Nadar is finally offloading HCL stock as his offspring looks to focus on the Education and philanthropy sectors even as both listed and unlisted Tech  and Outsourcing businesses battle the problem of employee commute in a society where broadband connectivity is unlikely to bring any solace or a formalised structure for the telecommuting options. India thus, retains one of the greater habits of managing to jump over bigger social potholes and non lasting technologies. ( in practice i guess with cities = potholes 😉

VIX trades apparently careened over from 15 levels itsel fin Tuesday trading back to mmatching US Vol levels at 14 as the Ukraine issue was wiped off investor tables.

The Great Indian Premier Tennis League Auctions

In other unlisted business, The mega sports franchises era continued untethered with Tennis joining the ranks of other popular sports making a commercial comeback as a four location auction saw  Mumbai grabbing the top three in Nadal, Djokovic and Andy Murray at $2 million each ( less than $2 for Djokovic and Murray)

Ecommerce has enticed Walmart to India too, even as PE players move on to above par valuations after a year of job cuts and enthusiastic middle/senior management recruitment at Management school campuses and Amazon opening its second FC in India in Bangalore

The Dell Foundation makes a return to Indian shores after the Gates Foundation confined itself to outright charity in limited indian programmes. The Dell foundation will be backing a BOP Private equity set up Intellegrow.

ET also headlines India pharmas second attempt to break into higher market shares in US generics in Complex molecules that could well go to the PE companies given the investment required and the uncertainty of time horizons ill suiting listed companies like DRL or Lupin.

Aviation revenue miles are likely picking up in the final month of Fiscal 2014 and Fixed income markets also likely to accelerate demand led price increases bringing down yields as Crude becomes a bear trade and Indian currency moves up on redenomination of the dollar forecasts down for the year in 2014. Policy Day in two weeks is unlikely to be busy for the Reserve Bank of india though the Central Bank may choose to exercise a rate hie whence the yields will come back to 9 levels before investments make a mark in the Indian recovery still flatlined below 5%

 

India Morning Report: 6250 mark to prove daunting again

While Hero Moto has indeed skipped over Bajaj Auto again to try and pull through at the cusp of Auto Sales recovery expected from March, with sales overall remaining dull keeping manufacturers unwilling to pass on excise decreases means Auto Sales along with the overall economic sentiment may not pick up at all in March. The unequivocal thumbs down to Economic data dragging growth in December /January data with IIP reporting core manufacturing and infrastructure growth dragging at 1.6% still shows the hopes of bigger numbers in India’s imminent recovery trade meaning net inflows at 6200 levels itself will likely keep India’s comparative advantage in Global equities in 2014

India’s overall PMI, led by the weakness in manufacturing grew to an anemic 52.5 in February and the GDP growth will beat expectations if Q1 and Q2 growth is revised to compensate for a lower base effect in the dull 2012-13 prognosis of this extended “lowest growth” phase for the Economy. The Oil Bill(not the Act or Law, but the invoice for our profligate spending) pinching has already moved up India’s currency risk levels and the Rupee wearily awaits the news of the wind down of the situation in Ukraine

Use the sells in Private sector banks and Power NBFCs quartet to accumulate more of the stocks, including REC which will not go below 183 and buying will predominantly happen at 185 levels, similarly for PFC. Both enjoy undisputed 5% NIMs on an expanding base unlike Kotak’s saturated advances since 2007.

Banking License trades continue to fox with a focus on the dark horses like Shriram Transport, we favor LIC and IDFC trades which will outlast the license news as the number of new licenses is likely to be limited. A writer of 6200 puts may be steeply heightening his risk exposure but may prove to be a bigger winner in current trading conditions. However, such moves are likely to be the focus of the market after midafternoon open in Europe as markets get updated with the current policy moves on Ukraine, any sanctions on Ukraine likely to tighten the upward spiral lock on Oil and agric commodities, where India continues to hold  a distinct price advantage.

DRL is in focus as a good 15% of its business is in Exports to Ukraine. Nestle seems to be a good pick, starting off the return of Pharma trades to the mainstream even as the new crisis masks underlying positive moves in market flows. Index shorts continue to increase for FIIs and their use as a hedge is  likely to increase even as calls written on the indices get extinguished with the PCR still continuing lower from 0.9 levels on Friday

Meanwhile Switzerland seems to be pushing on India’s request to put an end to its woes fighting other Global Banking regulators unsuccessfully adding to India’s basket of embarrassing foreign policy quirks. Oilcos are likely to mainatin price levels as they are able to pass on increases but are unlikely to capitalsie on the opportunity to increase profitability

FII debt buying was limited to Stock exchange listed(traded) debt , with listed business focussing on buying in the 10 – year 8.83% 2023 Bond. Bank of Baroda continues to stabkly trade at just below 550 levels but its NPA situation has not stabilised neither for other players down the ladder like Union Bank of India

Volatility can move up two notches more, meaning markets can face sharp daily declines to 6150  levels depending on news from Europe in this week and next

India Morning Report: Markets start the Maruti short 1 month down

As expected, indices are holding and the degradation of Maruti’s role in Suzuki strategy has finally clicked into real trades early morning, that will probably keep the broader indices on an even keel, Maruti no longer a portfolio pick despite a 50% share of market and being the listed representation of quick and easy Indian growth components ( not many left there) as protected cash flows fail to assuage investors

A $2 Trillion GDP really bloated up India’s old economy bottlenecks and one needs to gravy the Indian infrastructure boat, but with hot money and leveraged inconscientous promoters the only steed, it is unlikely markets will try for that 7000 index just today

Cash equities have a lot to catch up with on the Futures that closed at a grainy premium, but I am not sure volumes are still low or if only one player is around, as India with 200% of GDP in equities, has deeper markets than most other Emerging markets including Korea and Singapore who still have a story to tell.

The traders picks continue to show six old timers without a growth strategy and apart from regular stories of restructuring on 1 or 2 of those stocks most others like Tata Elxsi may not be good trade picks either way

If markets are so indiscriminate and all mice come out to play on Friday before the weekend, there may be some reason to looking at short picks when they open dstarted in August and now for two months of 2014

I still worry about the Tech Mahindra story, apart from the possibility that they are playing with another i-banker to get the deal flow into a continuous stream. KPIT is a good pick but then insiders know when and till where 🙂 as PE picks up stake in the fast growth play with legs in embedded/systems programming/chip design and the normal outsourcing meat still available form more than one sector and not having been wasted on product /enterprise investments like at infy or wipro

Those foreign funds still underweight india will not get another chance to come and invest in India and may likely underperform Asia benchmarks at the end of the year, like HSBC Securities

Banks are hot again in this segment, and SBI shorts will strike before the end of next week as interest spreads across Pharma and some Consumer

In unlisted business, IIMA infra naming rights story headlined in ET is a late thing but a good start. One hopes there is also a base endowment fund when the Subsidies are let go from this sector. The Annual ioutgo from the HRD ministry could have well come for each institution from a single/individual endowment

StannCs back in an indiabull avatar but one wonders if there are beaten down sectors left this time for late entrants. Most Foreign investors who stayed invested over 2013 are going to score much higher this time onwards and one hopes this can become a doable tradition for the indian markets finally rid of old time ponies and bad trades in a new era

Unlisted Captives of Global Auto companies have the best chance to make a statement and increase Expoprts traction from India as Ford gets on it.

The Rupee has nowhere to go after hitting 62 from the up and Gold is stuck too even if they try to reverse the bear trend with some late late buying as markets can grab the precious metal at 30k levels itself for a good short and adding to equity trades

Indian residential and enterprise ( Retail Malls and Offices etc)  sector has some potential to add new inventory, last years smaller sales not having added new inventories at all. Chances of Bajaj Auto in the 2-wheelers producing positive surprises in next months data have increased but traders are right in clamping down on Hero, Bajaj and TVS as February data is released into the last months of deteriorating production conditions over most of the manufacturing sector as IIP uptick will include a negligible contribution from manufacturing. A new bite, though, the residential construction intel comes from one of our steel producers. Not the way to go , India so there iwll be another sad story down some months but I guess Jindal (JSPL) was a dead story anyway

India Morning Report: (Closed for Shivaratri) Markets hoping to be tested again at 6250 in the new series

At 6240 levels the market achieved yesterday itself, another round of consolidation is due for the markets and with the second round of investing in November having attracted Passive fund investors while the active foreign interests remain bought in, Indian markets unlike China batting on euphemisms and an opaque economy non responsive to new stimuli, India will retain most of the bull interest as it proved at 6000 levels and then two consecutive bump ups in a testy 2014 start .

The March F&O series may see more active Foreign interest returning, but it remains to be seen if markets can continue from here. In any case, markets will increase the propensity to remain flat and one suspects the new correction that laziness induces next week, may be short lived till a volatility of 18 is reached before deep corrections are completed in individual stocks closest to heavy overvaluation, namely the SBI, BOB and other PSU Bank trades among others

I don’t believe India’s increased short term foreign debt situation is causing any fresh payment problems as Oil has decidedly planned to start a bear trade globally and in India and hot money or NDF mispricing does not seem to have the desired hook on the trend, as markets might indeed get a positive pricing kicker from the NDF markets on the currency as long as Oil trades lower and a commodities bearish cycle licks in across the broader spectrum , esp those in demand in China where domestic production has not only suffered but been officially deprioritised.

Indian Fixed Income Markets seem to agree with Governor Rajan that CPI may not trend lower as the Governor sets his sights on an ambitious training target program for inflation thru required government diktat to support the Urjit Patel report. From all signs, however RGR is a pragmatist and given that India will anyway continue under the spectre of high 9% bank rate scenarios, additional rate hikes may actually hit more targeted spots on the consumer inflation , but banks are unlikely to have increased transmission of the available liquidity to the broader markets in terms of reducing extraordinary deposits and increasing effective velocity of money as the investment cycle awaits other signals. RBI also completed paperwork on CDS issuance in Corporate paper ( IG and HY) while the market continues to look for th esecular India pull to deepen India’s debt and Fixed income markets

Expiry 2 pm trades on Wednesday had not seen a sharper cut, but the markets could easily turn any new 6250 positions of sold puts into short interest could have tanked the market back below 6200 levels to watch for as expiry otherwise is a dull newsless affair, the above discussion being mere undercurrents the markets have faced for more than 2 years now. Markets are closed for Shivaratri today

Energy cos, like the OMCs retain a default rating of BBB- . Sahara promoter, Subrata Ray got a rude shock on the delivered judgement yesterday as the court issued him a non bailable warrant and ADB signed a new road project in the backwaters of Chhattisgarh.

India Morning Report: 6200 on expiry day, not ready to ooze out to 6150

As we said taking ranged positions went out of fashion pre expiry Friday, and markets madea quick climb on 6200 hill which just means Expiry could now choose to be around 6150 or 6250. The sold puts hedges effectively outran the straddles with all players participating in the market mechanism forced out of neutral positions, shorts exited after a battery of trading losses since October, markets down but holding first 6050 then 6100 and 6150.

Some other stock specific plays are more important than others today as markets now bet the flow on small ‘binary’ bets on new license applicants. Plays on IDFC,Bajaj Finance, the other Bajaj and even LIC Housing which is an almost safe play are actually quite risky shrieks ( single point jumps in interest) and investors are welcome to accumulate thus traders on these can be easier branded losers than the Archana Bhargava’s  United Bank hide, ill educated players(or not bothered with education) might think. However, while India’s deep Financial markets may not entertain such arcane history they will be quick to show the door to such plays given the sensitiveness of expiry and vols floating near the bottom at 14 in still waters.

Bharti and IDFC have used up more of the funds headed into the markets as a new series looks at more encouraging inflows based on the stoic handling of the pressure on 2014 by India irrespective of its classifications in EMs , G20 and other such fragile groupings created for an overarching dialogue but India managing to duck each classification as far as the long term buyers are concerned. Again, early snafus by students of the markets would have confused such committed investors enthiued by the performance as residual interest and China the big white hope that continues to hold most international portfolios of US and Europe in sway might still cause additional flows from that.

The class of investors in India may also note that we do not again do not support old ham handed organisations like L&T or BHEL as Investment sector plays or for bank interest in the case of L&T. L&T and Shriram Transport should have been big bets by analysis for their existing asset portfolio and market as LIC Housing and not for applications to the banking regulator. However, be that as it may, Jalan committee has completed the process and submitted its report on all hopefuls, asking clarifications from 23 players excluding India post and IDFC on the NOFHC structure for the banking company and though there was very careful vetting during application by the corporate hopefuls itself, there will be 2 or 3 applications denied for specific judiciary actions pending against them. Only Aditya Birla and Tata seem closest to the post for the limited number of licences this time and one wonders how anyone will distinguish between Muthoot and Mannapuram when only one of the two has to be chosen for issuing the license. Tatas have withdrawn their application, probably trying to finnagle intra group exposures also but struck out at the NOHFC level itself

Expiry trades may finally see rollovers catching up on the robust monthly statistics by 2 pm and markets may allow levels to drift lower in the next 2-3 sessions before public news is again used to build buyer orders into a new level as there is no profit  taking at these levels and no real chance for shorts either. Volumes in equities remain low globally and the Dow did have a mcorrection on Tuesday despite a great presser from JP Morgan on investor day and the first few retail earnings shows. The retail dog and pony show will overtake other market news mid week with a half dozen reportign today in the US and through the end of the week

ETF inflows may not get another chance to dive into big plays in India as it makes a standout bet for Global equities. IDFC, YES, Bharti are today’s superior line, followed by ITC which has remained static for over a week and the infra probables will continue to generate ‘ikka dukka’ buying with Consumer Goods makors priced out for longer term investors looking to add positions. The bear is back in gold and Titan, ttk and jubilant are all big no-nos for us

A small correction in HDFC Bank and ICICI Bank may be due. However,  as most of their gains are sucked out of counterpart PSUs and shorts in Maruti and SBI continue to be an important cog of reality for investors, the Bank nifty is likely stuck again at 10650 levels.

I agree Tata steel is out from 360 levels and a good short if you are not exiting Infy in the changeoevr to bull scrips. CESC is definitely showing signs of having cleared all investor flags and of being a great bull pick and I’d try to follow them to discover the right bulls for them. IDea remains an important new discovery of equity only players, Kotak remains a short on saturated markets for its products and inefficient margins despite a great 5% NIMs, with Power NBFCs showing both revenue traction and extraordinary NIMs not subject to scrutiny or short term market failures. Tata Motors will make a great short, but the pair trade would be Bajaj Auto up and Maruti and Hero could pair up as a poor second, with again under normal likeluihoods of profits both charging extraordinary markets costs for being safe plays, reducing their returns frontier

In divestment jumps, BHEL and IOC projects are out of the door and their inter PSU investment sales given the ‘go’ sign

Apart from the Energy cos catching up on inherent value ignored by the markets, Media cos could also respond to a big year in advertising revenues, even ignoring an IPL exported out of India again with ENIL, TV18 and Zee providing extraordinary value.

India’s recovery in this business cycle will see Consumer investments making a definite impact even as some steps are taken by private investors to catch up on the infra juggernaut gone missing in play from India Inc’s 2030 and 2050 projections. Bharti and ITC remain the biggest non financial sector stories, followed by ICICI Bank , Yes and the Power NBFCs with the new bankers

Start shorting Oil in faster packets till 105 on the Brent or lower and patch in smaller packets of shorts on Gold and Silver till q2 end or August 2014

India Morning Report: Markets retain new bullish memes (again to 6100)

Markets will close above 6100 again but later afternoon sessions may see more enthusiasm as good economic data could be followed by expected passive investor moves and new EEM flows to show likely coming trends.

HDFC Bank is up and out of the 600-680 move with new targets to probably near 750 levels. Banks will expectedly support the next upmove too, ICICI Bank having made up new routes to at least 1030 levels, probably 1070 A look at some fund portfolios , interestingly shows Axis is indeed out of favor and Infy in a different block of memory unlikely to provide any traders with gains or hedges as it corrects to 3600 levels. Apollo Tyres, India Cements and JP Associates added open interest yesterday as main trends broke tin the nifty drop from 6150 to below 6100 levels. Sree Renuka stake sale does not seem like a trade at all, being a long known and expected unloading by the promoter. Open offer is apparently at a discount but Wilmar is immediattely extinguishing debt worth INR 12 Bln. Bharti is a great buy again in positional trades from 295 levels. Bajaj Auto will likely continue to 1950 levels for a stab at a quick double (century) The Adani Port move you heard today is so true,its the INR 80 Bln JNPT contract.

Japan is celebrating a bullish candle early in the morning as Chinese manufacturing, along expected lines, brushes near contraction levels. Fed minutes from January showed the Fed agreeable to  changing the unemployment targets and thus somemembers eagerness to discuss increasin gthe short term fed rate will likely be ignored as markets start up after a 5-10% cut since the new year. However on the flip side for India, the risk of an inflated Oil bill has increased. External Commercial Borrowing Markets are open for India Inc to increase disposition from, the CAD averted, but the small packet of Coporate External debt, now unsettling India policy markets. Fixed Income Markets and Currency markets would recover from yesterdays dip as the recovery unfolds into a more tangible item of import than just hope traded by domestic equity and consumption markets. KKR is also providing transformational capital in a new (presser in ET) bid, that could soon be emulated by SBI and ICICI as restructured assets hit a new high in the banking system.

A new endeavour at the Central Bank could see proposals to accept some or all the changes reccommended by the FSLRC. The recommendation, are likely to further aim to bridge the gap between Private sector growth memes and the larger PSU counterparts with capacity building and skills development (HR) guidelines

G20 is up later this week, IMF taking the opportunity to underline that currency concerns remain, obviating any choice of policy leadership for India at another G20 edition, India the easiest dog to put down in the revolt of the EM manger. ( twisted, yet really twisted, paraplegic choice and execution of simile (not stimuli) The Ukraine Hryvnia, the Korean Won  and the turkish lira are likely to be the largest exceptions not part of the mainstream in G20 trades and will be dominating the agenda, not to forget the Singapore Dollar which remains a unique economic substitute for the whole block ( try a whole fat analysis) and mexico a member but likely to stay silent too as Australia lead this round (2014)

Jet Airways’ loss in a sedate Airlines quarter, even as its etihad deal now hangs fire  at the Compat ( like the CCI but just the Appellate Tribunal) Jet has loans of INR 104 Bln as of this quarter, hardly $1.7 Bln but apparently 7X of the other nearest competitor. its market share is now less than 20% as it waits for deal approval. The INR 2.85 Bln loss a INR 3.60 Bln deterioration from its year ago profitable quarter, leaving unlisted IndiGo the winner with Sale and Leaseback economics still leaving maintenance bills manageable and the airline scoring on all the busy metro routes. Air Asia is likely to change that if it is allowed to fly. That would be concomitant with changes in regulation allowing all these Indian fliers to book international routes without a track record’ compulsion(Two dogs in the dogfight, Indigo and Jet, why are others even flying? – significant business case and consulting win with free markets allowing portfolio rationalisation).

And as Facebook found its Twitter-alike acquisition for mobile messaging that paid its promoters $19 Bln, India media look to another expat manager in the pile of 55 employees for the India story and there is as usual one solitary reaper, digging away in that bee hive(ant hill)

Kiran Mazumdar Shaw has taken stewardship at IIM Bangalore as Chairman of the Board . IIM also recently saw a new Director joining back from Boston University ( Sushil Vachani)

In other unlisted business, why wouldn’t a new Pharma business story with unlisted Capital or a PE try to fund a great Pharma business , not from a decade old Pharma attempts in Hyderabad and Ahmedabad but elsewhere. Cost of Equity in India is no longer that cheap as the Pharma market still offers unique advantages to scaled businesses in Export markets and domestically, while current entrants are likely limited by the $500 mln market for each generic molecule,a similar cap for the domestic market too, based on a limit to branded volumes in each drug. The model would definitely be more Chinese if it happened but it could really expand the market opportunity both at home and in the US and Europe

How about new moves in the big retail pie, which despite its propensity for political disaster, is still available in at least 4 states. One reason, hitting continuing entrepreneurship as India stands on a big comeback, holding India back would be the virtual withdrawal of Foreign banks from India, assets now down to 7% of the banking system, esp the unlikelihood of a public markets led such revolution makes it imperative that the easy flow of foreign capital to India be capitalised on.

India Morning Report: Markets drain out the good guys gokum

Markets seem to have initiated a bout of profit taking on ICICI Bank and even PNB as the small shard of storyline of reform and growth reflected by 4 of the 14 odd great showtime picks of India inc celebrated a min rally holding 6050 in the last month and , lending hope to the army of naysayers ill-equipped with research and running out of options in PSU banks that do not merit much research before going up and other such streams in midcaps dead in the water, still looking for predilections like Crompton Greaves in infrastructure and foreign brokerages still waiting for client monies to fuel the new rally, leaving markets without shore leave. Bajaj Auto has indeed switched in , in most reflective portfolios that fully analysed policy impact and Hero or Maruti shucked out. Maruti of course will remain in an uptrend but domestic automakers cannot hope for new sales till the second half

I am hopeful of the banks and the Power NBFCs with IDFC and YES coming back in supporting the winning segments of the rally and portfolio churn must have impeded quite a few changes till here since the halcyon NaMo days of the market post Halloween. The Dabur, the Maricos and the Godrej’ failed to make a story and are not a winning FMCG half dozen, with investors wary of saturated markets and tired memes. ITC for example, is not new but qualifies as a winner expanding into new amrkets effectively at the touch of a button, getting into Icecreams and frozen foods after HUL failed to hold it back in food and beverages. The answer seems to be in Investment Capacity in all such cases and somehow markets refuse to carry that answer home, still reliving penny stocks and midcap turnaround sagas from the eighties.

Pharma markets have missed a significant opportunity in overseas markets with the USFDA oitself exerting a pull to reduce the cost of drugs in the US and over sensitive on Quality  concerns. With innovation pipeline getting critical support from Academia in the US, it is all the more imperative for Indian Pharma to get beyond $500 mln molecules/formulations in this clean bill of health in the US markets even as struggles continue for Indian drug makers. As of now Glenmark, Cadila  and Sun have settled back with only Cipla and probably Lupin continuing long in portfolios

Earnings growth will definitely outperform double digit expectations market advisers like Nomura has given them for par score as growth has the best chance of getting nose up for a takeoff this year. investment in both Consumer and Infrastructure are beyond policy hurdles now, and the silence is deafening. Adani’s return on the bourses today is again like Torrent earlier not part of a secular story ( ; or a communal story as the case may be 😉 but jsuta stop gap switch . Shorts in Kotak as expected lead other corrections in the Banksa nd NBFC space ,a sure sign of a saturated market, trying to like a free market player waiting for a mannah from heaven to further declare businesses that can make a profit.

Here’s hoping the final six or let’s say ten banking license holders at the end of the month have a story to take forward and licenses allowing speecialist banks do come to be on tap, though the regulatory reticence to do so would be so understandable. HDC Bank and ICICI Bank ( in retail business) would definitely do their but to grow the business more than 20% again by the time MArch results are announced despite some contraction in the linked quarter

Energy cos catch up with old levels as the expected did happen on cue in FY2014 for India Inc. IT companies have obviously overshot the mark in possible for even FY15 earnings valuations. The Gold rally is a mirage waiting for the fall at 1300 itself but definitly not beyond $1400 or INR 31500 whence it will come back to 29,000 and retest marks.

It’s Monday Again: Draghi has a position, Oil rally has no legs, US out of consumers (US Economy & Markets, The week ahead Feb 18-21, 2014)

Oil is charging faster than ever before as Brent at $110 looks at being under investigation soon, even as the rate setting London FX Market has snared all material banks. Bonuses at Credit Suisse were rebadged after derivatives issued on their own derivative exposure of $12 Bln as part of the risk awards to employees were disallowed in Capital and the Banks, happy enough with CoCos being allowed. Credit Suisse used the awards to divert $17 Bln of toxic risk from its balance sheet and the regulator objected to the implicit CS guarantee on the securities issued to employees

Either way bonuses are up at more banks with role based allowances seemingly getting past no harm no foul verifications and will allow a new slab in base salaries while from all accounts they will change each quarter as role based allowabnces, allowing banks to get questioned on whether they are masking variable bonuses, but still fair game with UBS and Barclays joined by Foreign Banks in London. Foreign Banks in the US, which as of date still hold 20% of all US Financial assets come under the new Fed umbrella from Today.

Earlier, the capital regulations for Foreign Banks have already been postponed, and are likely to be postponed further as the Fed comes under pressure of US based banks who would be facing regulatory uncertainty overseas. Under current regulations, banks with assets in the US would allocate separate Capital in the US to hold their US assets and if that is indeed allowed to exist , it would be ideal national regulation to imitate across many other national jurisdictions also applicable to US banks. Within US, All Global assets of the US based banks and all capital qualifies for the Fed, while for the Foreign Banks all Foreign assets ( i.e. all assets in the US)( have to be shored up by risk Capital held in a US structure. The Fed had earlier mandated a limit of Banks with more than $10 Bln in assets which has been further eased to $15 Bln

Retailers report full quarter results in a week from now except for Llowes’ that reported expected dismal quarter sales and profits last week.

British PPI was reported today when the US markets opened after the Presidents Day weekend and the healthy inflation, supported German solitary rushes in European reports yesterday as the BOJ liquidity of worth $650 Bln did nothing to break the Euros rush back up to year end 2013 levels, Draghi out of a similar move to infuse economic capital into European Banks which continue to report negative credit growth. HSBC and StanC also get ready to report year end balance sheet and more detailed Financials are due from Deutsche Bank The Euro will also be alone as the Aussie has started back from 86 cent lows against the US Dollar and the Pound looks ugly at highs of 1.65 ( this week at 1.62) and needs to correct but probably not t o my choice levels near 1.5 before it starts a new run . The European surplus is a great show at 33.2 Bln higher by 60% over the last month, and unless someone is serious about a banking union and some more political union, there is unlikely to be more liquidity

The week’s Treasury data reports large outflows auided by $18 Bln of buying in Foreign Bonds by US investors. Foreign investors also sold out US bonds leading to a total outflow of $51 Bln this month’s report

Existing Home Sales report Friday after the Housing Starts data on Wednesday and all signs point to more contraction in Mortgage business this year but with the fall having lasted more than six months and the overall gap to 2007 peaks or even any efficient recovery in housing still back a few million homes, most would expect the housing starts and home sales data to start perking up and the reports are critical as they show how much of yearly growth can still continue to show up Housing starts will stay near the 1 M mark and Existing sales near a 5 M run rate it reached last month

The NAHB Index showed up unexpectedly lower by 10 points this morning. E-Commerce too, may be hot in India and Asia ( up 100% in both India and China) but back home remains near a secular bottom at 3.5% growth

Equities have completed the correction after 2013 ended on highs with all short interest obliterated, and  Soros’ and Allianz may also be exited from all his reported 13 F Shorts on the SPY , and you and me should definitely be long on US equities now as the economic sentiment also sank easy down to lows ahead of the snow lifting in April

The Dow’s in its first trades of the week is already trading at 16100 levels and today’s FOMC minutes release showing details of whats doing well in the recovery and how more taper may not be the answer will both more than likely add to the euphoric sentiment

Good news out of Korea in January data was again followed by great improvenents in China with the Year of the Horse FDI scoring a 16% growth on year with China looking buoyant despite the PBOC cutting up $7.9 Bln in liquidity as the credit rush focused on real estate continues. The retail sales buoyancy in China on yearly data is mostly because of the small base of branded retail, which continues to enthuse all Global MNCs including some from Europe US trade dat will thus remain buoyant and with the Treasury Budget also on the up and up , some of the Executive Action in the SOTU might not transpire after all

Coke was down 1% and Pepsi 4% after US volumes dipped but (FastFT) Chevron’s down 9% on the year already. Einhorn seems to be jst playing safe in Anadarko and as of now it does not look like one of those Greenlight Capital attacks where he has been forced to exit from GMCR , not wholly unlike Bill ackman and the retailers. Apart from Caterpillar, we showed you the best squeeze for Portfolios not looking for ,emons this year, namely Starbucks, Amazon and the others from non tech as Hedge Funsds probably try to corner more tech before Apple comes back in vogue in the second half of the year. Liberty Global is indeed a great pick for Mr Buffett

India Morning Report: Les deux ex machina, et vous? Les fou de cirque n’est pa!

In singular, it would be the Ghost of the machine or the fool in the circus. A market of course has more than one of everything. Apart from that there is cricket too, where India turn a win opportunity into a clarion call to stay awake

Markets ‘jumped’ overnight to 6080 levels at the close, with US markets closed on Monday. The VIX trade is back again, 2 weeks from expiry, ( though the last week in Indian monthly expiry is usually the busiest in contrast to more deeper US and European markets that trade weekly expiries and expire by the Friday for Third Saturday in monthlies staying untraded the last week as most of the busy series are in the “next” month or new weeklies.

The banks are back with a bang but the Bank nifty trade is a good strangle range pick , even a sold straddle will give you a decent range (as Ashwini reccommended yesterday) as PSUs and SBI get exchanged out for new buys in ICICI Bank, HDFC Bank and Yes. While one is not sure of Kotak, PNB definitely has enough detractors yet despite the great performance with controlled NPAs and fully provisioned balance sheets at begin of year allowing improving provisions while releasing profits. That means PNB might again be a buy after the big run to 550 levels is cut on profit-taking.

I”d try a short in Kotak and let you know what happens. IDFC, Bharti  and ITC are great picks and starting from the bottom of the trading range while the Power NBFCs are ready for a move as well.

Bajaj Auto gets first mention on the Excise giveaways from PC’s last presentation, which was technically just a Vote on Account.

Excise Cuts on SUVs and Medium and Large Cars to 20% and 24% mean the gains in market will start for all automakers including the listed Maruti. The markets preferred Hero management coming out after the excise cut, but with Hero also biting a lost mandate for a grip back, Bajaj is still better off with Egypt exports hit by the import ban meaning less than 100K units to be recovered from the drop in excise duties.

The Indian Macro is easily the best poised for most fiscal adjustments to be burdened at this time and the VOA optimism could well prove to be PC’s gift to the parent Congress party in its new roles after the Elections as a fiscal deficit target of INR 5.3 T is not a shakedown or bleeding optimism in the projected Indian Balance Sheet. The nominal rates of growth at $1.10 T base in FY13 we assume may yield $1.26T and $1.44T targets for FY14 and FY15, that may very well be any other number at the realistic 11% nominal ( achieved in FY14, LV-CNBC) and 13% in FY15. However the 4.1% target look daunting esp as Food subsidies have been duly increased to INR 110,000 Crores (1.1T) and Energy subsidies understated at even INR 650 Bln (65000 crores) with INR 850 Bln scored in FY14 after the deferral.

A great Fisc performance thus at 4.6% will be greatly rewarded by the markets esp that includes INR 2.46 T and INR 1.8T only from Tax revenues but shows 100% achievement of Divestment (INR 400 Bln ) and Spectrum sale targets (INR 600 bln) and the new government make the usual drop down ravines for itsel fin beating the other government’s VoA, before trying to dump comparisons in the new Budget post general elections, All inall, not a great day in parliament for the new government as it would never sound better than boring humdrum in the whirring engines of growth that have to take over this year. A last note on India Macro stems from the continuing dissociation of Investment levels in the GDP at 34% from the true investment which has barely just hit 5% growth and mostly in the Consumer areas. Unconstrained Bank lending continues to remain available in India and interest rates are likely to continue down from here at a fair rate, allowing Fixed Income portfolios a bigger boost

There however is no comparison of the difference between any remaining expectations on Infrastructure investment in India and real participation to any other subject to kickstart India’s new millenium story, yet to begin after in stalled in 2009 and infra funds have to prove versatility in financing the new projects still blamed on bureaucrats or the Congress. None of the private cos as the markets have shown they realise, are in any position to take new project debt into these balance sheets at GMR, Relinfra or JP Associates and conventional bank lending is not the answer for them

Kejriwal and AAP brought the AAM AAdmi back but failed in their mandate by leaving from the aisles before the start of Act I.

Energy cos are getting the best possible deal with INR 1.1 T in payments despite the deferrals with more than INR 800 Bln already paid out , so they should have already been discounting much better levels, at least 250 for IOC for example as the fiscal did see a consistent unburdening of the energy infrastructure and a more rewarding marketplace, even as the Power regime gets more competitive

India Morning Report: Vote on Account does not offer anything by definition

Not to be dismissive of other efforts to research quantised discernible notes in the market, we have beaten others hands down with the preciseness of each sentence seemingly in a complicated human language. And we are not artificial intelligence, just something more  populations can understand. However, that is all a predilection of becoming  part of a deluge unless we can remember the basics. Like 6100 yesterday, 6050 today and stuck at 6250 again. Or for the currency it is an even simpler, 62.50 and broken till 63.00 now returning to break 62 on the upside, waiting to break till 61 to start a trading move in that dead market Foreign investors pass by with just a tenth of the allocation to the China which would be enough impetus for investment I guess.  That is adding the currency noted going out of circulation bringing in additional thicker statistics streams of returning investments instead of churned velocity without disposition, which remains the only unexplained flow for many developed and EMs. Meanwhile India posted a latest velocity of another 12.5% and growth of 4.9% kept WPI ticking under at 5.5% , inflation at 8.8% (and still high to merit 8% rates for the RBI policy (India’s Central Bank)

Now to get thru the market open again, HCL Tech is done, L&T is not coming back so soon, having clarified there si no better financials in the old heavy pipeline they keep carrying in New Orders. However, the note of caution from Kotak does not translate into a correction in the markets, as it is a known flaw, using subsidy deferral on the way to an improved performance and as we have always maintained to PC’s weaker arm, its not anything to forget to talk of.

Banknifty is at 10,250 but their seems to be a dearth of substitution for older SBI folios, because SBI has to go down to 1250 levels ( broader guess) bottoming out near 1280 ( our estimate – not to be confused with the statistical mark of MLE). HDFC Bank is up and out of 640 levels but no 645 it is..Pharma should not have been a defensive trade, esp as Bharti and ITC remain powered on apart from the IT scrips which can keep current levels once HCLT returns to 1400 levels. I have faith in ICICI Bank surprising in the post speech trade if India’s Financials are surmised as feasible, though it is just necessary expenditure for the six month period going forward and the Macro economic review has already been celebrated. A smaller gross borrowing figure for instance , may not be possible as that may be the only accommodating flag for the noise of governance to come. Also it would be a shame in my mostly moderate opinion otherwise, ( cooked to become the mainstream o-pin-onion like other examples of better business leaders than the half cooked Modis and Rahuls of today) if PSU banks join in the rally just for their survival has been noted by additional Capital for FY15 in this month again confirmed in any allocations. YES Bank and IDFC remain mainline (first leads) not for this bull segment but for the secular bull cycle that remains.

Nifty i s actually having a hard time at 6080 and will not drift down but 6100 is the new bear dominance levels, mostly because the media presence as Citi explains ( in that elusive to understand bid for retail investors here) requires reusing old hat ( from this trend) and the market tone is still as 6250 the normal would have been but that is a likely illusion in the distance, with markets using the distance again and again to tone down , letting shorts bound them up and show the futility of expectiung an overnight renaissance in the Indian Fixed income Markets. StanChart in the meantime has sell side macro posting the VoA precursor on ET Now since AM, looking at Government freeze to show the numbers.

I’ll leave that unedited para  in, just because I have things to do before I come back to edit it. It is just a Morning report. I may not be writing in the vote on Account speech or the dictum,

The markets may not break down, mercifully, for lack of reason to celebrate, a not new feature of beating down equities at their own, esp cognisant to those who bank promoters accounts and promoters’ who play their equity to death in a monetary degrowth, which now runs an extended life with a defined taper even with a reduced nozzle draining out the dumped in steroids, in the recognizance that US was critical and that most of excess liquidity remains excess. I wonder if one coming from my free markets background can make enough morbid adjustments, but one knows one must to explain how taking care of the trifecta is not done by just that phase of liquidity and now by the withdrawal of the same. One does note also the 16 mln unemployed uncounted in US estimates when declaring a successful 6.5% unemployment statistic from the same.

I like Crompton Greaves for the capex trade, old Mid Cap plays will be sideline for the 2010 IPO brigade in most cases. The fisc will score the most points when it reports a positive surprise. The FM should not aim for FY 2015 without thinking up options and should look to a fat target as we have probably over reached in the current fiscal itself. I would even let him off at a 4.5% target and that will not get BJP any further advantage.

Post Vote On Account satisfaction, Congress is going to be a quick disappearing loser in the elections, BJP winning it however would be disturbing not to India’s soul, cause there was not any in the conventional modern world definition of it, but it is can only be a rude awakening to India in a few years, however growth will churn in any government, because of the strong basis on which we stand up and shout for more, and the bureaucracy , the technocrats ( non outsourcing) and Private investors / Business will remain the agents of  this growth. Bank lending will never be a constraint and there is no wishing away corruption. One can even learn the vast cycles of it in local, regional and International Sales processes, and is not a equivocal nodding to suffering , nor a socialistic bite of suffrage that will make it the topic at the corporate dinner buffet.

explains: in the middle above is used as colloq/sms for explanations

India Morning Report: Agricultural subsidies are a Global Constant, bullish trend remains

U-Car 2014

Sugar Export markets ar unlikely to ruffle any other segment of the market as the issue of agricultural subsidies was settled for good in the latest renewals by Asia and EMs led by India and continuing noise on farm subsidies are likely to be brushed off by most including customers of Indian sugar. The government has approved a INR 3.3K subsidy for 4 mln tonnes of Exports of sugar in February and March.

Of course, India’s battle with Export competitiveness is past most winnable battles and we are just increasing our tendency to be a worthless ( in terms of premium) commodity exporter, as is the wont of most resource Economies as well with far more disastrous Economic consequences like Brazil and Indonesia.

India will never be confused with the likes of the same despite setting at 4.5% and 4.9% growth in two consecutive years of GDP growth and a 25% decline in currency repeated twice in a block of 10 years, a far mitigating circumstance than Brazil or Turkey’s Economic history and one could have also included China in that list but for the almost independence of policy and execution in a democratic form of government.

India equities maintain a bullish trend ( to 6100) as a cognition of far reaching reforms did barely enough to pick outstanding dozen or so large Cap companies, usually more than enough for any broad market to survive.  The missing depth cannot come overnight and Investors are more than satisfied with the new crop of 2010 IPOs in the Consumer sector including Thomas Cook now dealt with, and Page and LL continuing older trends. That also means scrips like ttk , Titan and others that do not represent the broader market will not recover interest and those with very wide off the mark correlations to sectoral growth will not be propped up despite weak governance and order book issues at L&T and BHEL. Crompton Greaves trade is likely to sustain as the Investments and Capital Expenditure segments of the GDP stay in focus.

The Rupee started early yesterday catching the advantage of depth and domestic markets back to the Indian Debt and Equity capital markets, as a US long term bond auction also registered a new faith in reduced tapering promised by the Fed, allowing Global investors following the risk money to come in without the wait and watch chip reducing their participation

Citi is betting this will transpire in India having come out on the CAD front after extended delays and qualifying others dependence on Foreign debt skewing the CAD dependence factor, however it likely to be secular Dollar dependence worries for such resource Economies which will again qualify India ahead of the “EM Basket” and China as well in this year, though on a smaller order of magnitude of FDI flows.

I would also think the Tata Motors bull trade is vulnerable to falling off sooner. However, immediately Cipla’s results have extended the trade in both Hero and Tata Motors apart from individual stockpicking decisions.Cipla reported margins that are 600 basis points lower.

India Morning Report: Tata Motors rebound, Markets still headed for 6100

The rally  in Tata Motors has been on and yes we would still be advocating fresh shorts on the stock. A bonanza in Tata Motors on JLR gaining strength remains the story of the day, with no news on bank licenses. Anand Sinha apparently is staying on till April just to ensure things are not done in a tearing hurry and news from yesterday’s session is awaited.

JP Associates apparently been in a two stock portfolio with Tata Motors, dropping precipitously even as Bank Nifty starts the day at 10250. Results from Dhanlakshmi Bank were not good. ENIL(Radio Mirchi) encouraging and TV18/Raghav Bahl also encouraging

JP Associates apparently could not manage earnings expectations well, leaving doubts if there is more to come inn pressure on the bottomline

Bajaj Auto is up and PNB is holding 550. Crude prices seem to have been exceptionally buoyant on the sly and a good bit of short is coming in Oil futures. The markets are still headed north as broader Bear strategies continue to create space for buying in the selected folios. Sun Pharma seems to be good for being on the buy list even at 624 levels. MCX and CFTC in the meantime cannot do enough to bring confidence back in the largest asset trades

IDFC and YES are as  good as Cipla, Lupin with Glenmark and Cadila  making a complete portfolio. Longs in SBI need to continue to be careful. Shorts in Kotak remain exclusive in the banking sector holes. Jyothy’s EXO round seems to be on a dho daala spree.

NMDC raised sales (37%) and profits, 20% on iron ore comeback

Sells on Bharti Airtel are going to be sad fails at  303 levels with the stock likely making new support at the worst at 295-98 levels Buys on IGL are not exuberance based alone and shorts are ill advised

ET Now’s suspect list for the Daily show remains ‘Pakau’ and uninspiring relying on Mitesh and Ashwini ( Bear Mama?) . CNBC 18’s Top 10 feature at 8 am is a great show.

HDFC Bank is in the middle of its 600-680 range and ICICI Bank well priced around 970 levels before index action takes up one or both the stocks. Pfaff on the winner’s curse is not going to make the real price degradation in the retail Telecom market go away. Telecom and Aviation have historically proved unprofitable with volume players shutting out sustainable pricing windows and Reliance JIO is again going to score the walls with ugly graffiti for the search for BOP without profits

India Morning Report: Markets inch up in time ( to discount better earnings)

Markets are able to easily move up to 6100 levels as earnings baselines have increased in doubledigit CAGRs since 2007 and 6400 has been conquered. Rupee markets thus remain buoyant with EM outfolows reversing after $16 Bln in outflows including debt markets from India in December and January apparently

Bharti and HDFC/HDFC Bank have seen FII selling (LV) and are correcting with the spectrum celebration priced out in the immediate after as debt concerns remain.

Optional addins: However telcos will consolidate on their combined effort in making a real time market respond to overpricing bids by the governments if you count each arm of this diversified bureaucracy with an apparently non working polity (BJP) and a misfiring chaiwallah (Modi increasingly sounding like his stock is due for a big correction, anyday now, no fundamental value showing esp on the home state Topic)

Tata Motors may not be able to celebrate JLR sales again this quarter, still the easiest short in the market and Ashwini Gujral may end up with more buy picks than sell after spending the morning on the down trade to ensue, I agree with his buy on Cadila Healthcare with 61% rise in USFDA business (31 new generics licensed to them) , its annual revenue rate rising to $2 Bln and likely to be a straight line up till a $1 Bln per quarter is achieved.

Glenmark and Aurobindo continue as buys. DLF has a big day today after the sale of Aman Resorts worked out. Contrary to a section of the market hoping for India to be counted with China, India has to now compete with China after the bank regulator there assured markets of liquidity with FIIs continuing to favor China investments by a factor of 10X or more and Global 500 companies continue to shore up higher volumes and profits in those luxe and westernized aspiration markets.Look for our Monday morning round up ont he global markets in a few hours at advantages.us

We’ll need to be back after the Governor Jalan chaired meeting on Bank Licences.  Janet Yellen’s testimony on the Feds plans is due Tuesday and Thursday and RGR would be among those watching. As we said last week, things look better for Indian corporates looking to tune up domestic and international growth plans and India’s short term debt pile is not that high especially with a 4.9% GDP performance for the fiscal. The Japanese Yen has finally started down from 102.3 levels this week growing the CAD deficit with weaker exports even as the US deficit turned out higher than expected with a $38 B trade deficit.  Japanese Yen hopes to reach 110 levels over the course of 2014 to boost domestic exports and further boost the growth seeded last year by a turnaround in policy. January is past in US payrolls making further prediction easier. Asian markets saw the reurn of Cit to top of the honor roll in debt markets this week

The Sterling TCIL deal has been signed with an open offer from Thomas Cook in the markets. IDFC is up on license news, but levels are good to continue accumulating. Bets on License additions are still sprained by the fact that only 6 of the 25 applicants may be successful before the licensing regime moves to licenses on tap at a future time(being considered). YES Bank is up for some good bull spreads as the Bharti and ITC trade takes a breather and Pharma stocks also interrupt a 4 week long bull trade. Banknifty will deliver huge gains as new constituents to the index universe get an in and PSU banks deselection (im)probabilities rise.

Securitisation and Fixed Income markets in India continue under the regulatory glare in a bid to expand the player pool(correction tick in dull late morning trades) and HDFC Bank is stoic in the middle of the 600-680 range. The hopes ofor a rally improveas correction in IT stocks deepens and indices stay on target for 6100

One would have expected the energy companies to be getting more attention after the changes in gas pricing worked out well for the State’s Welfare Economics keeping India’s fiscal concerns well at bay. The stocks are still worried on counts of subsidy expense deferment hitting upstream companies ONGC, OIL and GAIL. The outgoing Finance Minister has promised a debate worthy 20 pager for the Vote on Account due on 17th February and GDP estimates for FY2015 will again be in the 6% ballpark. According to Tanvee Jain of Macquarie as shared on Profit, the Gross Borrowing for FY15 is expected to be INR 6.7 Tln and that remains athe single biggest reason for Fixed Income yields in India to continue northward.

 

 

 

 

 

 

 

 

India Morning Report: IT’s missing pizzazz, Auro Pharma strikes Cymbalta gold

Courtesy: BioSpectrum Asia

While the markets renew interest on Friday to get ready for the battle of wits at 6100-6150 levels, Banknifty has moved into gear with good boy PNB ceding its additional upside from 550 levels and SBI continuing down near cracking below 1500. Private Banks see Kotak going down too with Marico and Godrej losing the barely viable Western(Maha/Goa) branding attempts , consumers rejecting being shortchanged as a way of life. That leaves both ICICI Bank andHDFC Bank with YES and probably Axis but for its NPA woes. Aurobindo Pharma’s wins were mostly likely for the gains in Cymbalta and that’s a big molecule to crack.

The Foreign investors however bite into its market pie despite a 10% indicated gain at the open. Jubilant Life is also returning 3% at the open. In Banks, as desired by the broader markets BOB and BOI have also been shucked out, though the turn of events has apparently got Ashwini and proprietary traders’ older generations into a tizzy in the markets proactively readying themselves for a blood bath monday

Bullish picks in YES Bank, ITC  and Bharti continue to plough open interest as short interest is extinguished in droves before a new bite. Shorts were down 10% in REC even as PFC stole the limelight with great scores , unfortunately pushing the Powergrid story to the back. The Power and other infrastructure stories thus remain orphaned by the impracticality of raising larger equity or single entity debt for the mega project financing requirements of India Inc and specialist Finance like IDFC instead gets more important not less.

PNB remains a buy, Axis will probably continue down with BOI, BOB and grandpa SBI. The correction in Power Finance is probably understandable after the big gains overnight. Ambit Capital again agrees with us on the rate cuts remaining in RGR’s coat pockets to conjure due braking for the inflation express.

Bajaj Auto is back again but pairs would require new designs probably mixing Tata Motors into the trade as Hero exits a long term bear view on the stock. The Bajaj Auto story as pioneer however, much awaited by shortchanged Western region industry, is definitely back with a bang along with banks, with performers in banks waiting to be rewarding after marginalising of the Foreign banks in the Business and Consumer sectors

MNC Pharma will probably get into this rally for more than spectator gallery participation. The Infotech trade is unlikely to be back though opportunity for shorts in the sector or on the flip side for cadgy immature ET reporting in print is probably extinguished (opportunity)

Spectrum auctions, unlike reported yesterday have indeed turned out to be an exercise in budget restraint , bidding well for the Indian Telecom sector as Vodafone returns as a 100% owned business. Total Bids have still brought in the desired INR 500 Bln per budget targets and it was a big ask to have completed successfully with the prudence now reflecting in Telco strategies necessitating the delays in the process where Government was on the verge of bankrupting telcos with its greed.

The Gas companies will be on the good side whatever happens on Monday and some bad boys like Jet Airways have probably bottomed out while midcaps like Talwalkars, Prestige, LL and Page continue without breaking even as Pizzas break speed with Pizza Hut taking back 30% growth on completion of capex spends in new restaurants.

Thomas Cook and Sterling remain a bad story post merger with lots of work to do including printing restated financials, probably still required once the combined operations on board. The IT clawback is a temporary mirage and the sector should be avoirobably hiring plans will be postponed again as the Visa sanctions come back owith immigration reforms on tap in the US

If indeed Bear on Monday , one should retreat into Auto and stay invested in quality stocks identified here over the last year

In other unlisted business, Twitter results serve as warning to those assuming bigger volume pies from the SMAC crowd, the social space inherently low value except for big advertisers and Corporate Business with Facebook and Linkedin

Look ahead to a grand theater attraction as Disney’s Frozen takes the world by storm and ESPN after global success proceeds with better redefinition in India as well. Time for someone to get another update from Aubon pain and the QSR ilk?

The rupee is trading consecutively improved levels at 62.30 and yields are still hoping to cross 9% apparently though if we start angling for ECB debt we could score tighter spreads and renewed growth could indeed be aan easy story again for India Inc

India Morning Report: India Nifty again manages to cross back over 6000

Short interest is flagging and except for proactive shorts who got good prices (unlikely) in the February series during December and January, no one else would have survived the market and shorts have been extinguishing even as Volatility increases and time decay sustains call premiums lower having been written at hefty levels .

Till Cipla reports next Wednesday, the earnings calendar is sparse yet still interesting showin the need to reorganise the calendar again as Jet and Reliance Infra group companies report today and tomorrow but more should have already reported before them including MMTC (today) and NMDC (Monday) Media enterprises like ENIL (Monday) and HT Media (W’day) also remain interesting to those ploughing value in the India’s Consumption story with mainline CNBC (TV18-Monday) and zee reports.  J&K Bank joins Dena Bank and CESC, Stride Arcolabs, Cadila and SunTV(Spicejet) over the Friday leading to weekend – a good breach for value pickers after a consolidation on the index.

The Rupee is up to 62.40 levels after BHEL results on expected lines wiped out the green in the India Capex story. Cuts in Powergrid are likely to be great picks for value building portfolios again, though one can wait for the events foretold in the price cut in the pre open ITC similarily is a great pick, though the trading correction may well be supporting a business volume update post gargantuan price hikes in the tobacco business. As expected YES Bank stayed up and Kotak stayed sold (assuming prop marketmaking holding up levels on zero to negative float) with HDFC Bank also in the middle of its 600-680 range, keeping the Banknifty locked in at 10200 but with much more interest at the upside, volatility increases in the broader market allowing Banknifty to breathe more comfortably without the PSU/performing bank dichotomy

REC is a great pick, PFC and PTC likely even better. IGL and Petronet hopefully getting into value buying sustained uptrends after a week of trading up and down on news. Apparently Cognizant guidance follows Jubilant into another sunset trade for old faithfuls, the IT story never expected by us to get into another stratospheric orbit. After expected quarterly contraction in Singapore and Indonesia at th end of a Chinese fueled investment minicycle, Korean GDP ahs scored a good 4% on annual growth and a sequential pick up in GP as well as Emerging market flows turn positive again in the next few weeks with India firmly in the saddle and excluded from most benchmark portfolios except the salutory 5% odd weight

Indian markets are expected to reach 6100 and most India backers would be willing to go with that till inflows allow for further market aligning in specific sectors outside Consumption and IT bandwagons. RelInfra trades would likely turn south after results with no more than rudimentary backing by marketmakers already aligned to the stock

Morgan Stanley and BofA feeling bullish about India is not necessarily good news, bth having lasted the entire rally since July and probably tired stockicking likely to lead to market accidents or at least easier targeting by the dime a dozen shorts

Jet Airways is definitely a value pick at 220 levels but bad news continues to dog the stock. Aban Offshore seems to be the only LPG stock consolidating gains from the large market changes in the sector. I am still bearish on Gol from here so I do not see liquidity conditions in Banking changing anything on the interest rate scenarios including th interbank markets, but overseas market spreads for India deb have probably tighted perceptibly given the anti cadence in more sensitive markets

India Morning Report: Markets responded to opportunity on Tuesday

Wednesday Morning however, despite Asia a day late as usual responding to Dow wins overnight is up 1% and 0.5% across the board. Indonesia’s Fragile Resource busy GDP story breaks ground in a few and the Asian story remains different from the India story despite sharing some older European origin investment Banks and India bulls in the  offshore markets.

At least two Indian companies in BHEL and Ranbaxy report single digit OPMs, markets still in love with them for their size and representation of sectoral wins but mostly sentimental and disproved by Corporate governance foibles though BHEL still shares a stronger order pipeline and key barter investments in Africa.

Exchange markets settle down at 62.5 levels after the run ofn the Dow and the exposed sensitivities in the current breakdown make bulls not just stock specific but watchful of still more south moves

Banknifty resilience was on display yesterday as it returns to favorites to lead the rally when it hapens and will likely hold 10300 levels, notably as expected YES Bank making an early recovery at just under 300 and ICICI Bank following from 950-970 levels itself

Tech Mahindra results may not be able to hide their BT attrition from markets and are at best a sell on results as key profit taking in IT continues

DEspite the cut in SGX Nifty to 6000, Nifty has barely moved in the pre open yet is positive with many investors still holding cash and some able to switch to Longs as TRaders end the short trade. Shorts in Emerging Markets ETFs have been extinguishing this week and inflows may well be back at least in India specific interests as the South AFrica-Indonesia-Turkey inadequacies play out to the new lows for the currencies

Bharti a great trade in longs, seems to have recovered the renewal bids in Spectrum and competition from RElianc eJio is still not looking at Winner’s curse level bids after a long drama played out over two years for the cost of Spectrum. Government, despite 68% higher prices in Mumbai and 50% in Delhi for Bids closing in on the INR 1 T mark at the end of the 2 day auction, still probably south of the Centre’s initial target and the value of the spectrum, paying for being not counted in a fragmented aand fractious mandate, likely to bite any new incumbent again

PFC reported great results, NIMs for Power NBFCs continuing  near 5% and spreads of 3.5% after all costs with Revenues of INR55 Bln and Net Profits 11 Bln for the December quarter (Q3 FY14)

What about the iPhone at 20k?

In unlisted business, Apple India joins the host of halfway attemts to infiltraate Indian markets and remains shucked out with its half baked plan to catch a mass market at 20k. With smart phones , including latest Adroid offerings from Samsung available at 12-13k, they have definitely missed the bus with a 20k non-option . Yes, I am talking about premium phones. The 20k price point is way north of the premiu market price points in India esp for Gen Y and Gen Z now than Gen X is firmly in the mid 30s and we have alredy crossed into 40s, not wanting a sunk cost instead of a premium phone making the decision easy for most of us.

Another India unlisted key card losing focus on what it can do is Economic Times, again losing ground in print with shallow almost incomprehensible half analysis in each post, disappearing like a TZP excerpt for the Oscar run and which will end up as a barely half quality unusable piece of paper/indian chip with the latest Y design in journalism woefully missing the mark

India Morning Report: Markets listless orphaned by a Superbowl

Superbowl sold tickets for cheap in the snow

Asian Markets are closed today and lack of Foreign investor interest on Monday Morning leaves an India open totally listless at 6100 levels and falling again, struggling after a brief respite at 6050 last week. IDFC results were inconsequential along expected lines with no fresh disbursements in this financial year but the stock has only upside left at 93 levels where it closed last week post results as it remains the only empowered player not dependent on infra approvals and a fresh book of loans in the pipe likely. Loans continued to make a better ratio of all NII at the Bank as spreads showed up resilient despite a bad interest rate environment in the nine month period reported.  Retail interest aside, the stock will remain on Institutional buy lists for time to come. It’s large provisions also make it a great equity investment with the Provisions unlikely to be called and can always be reduced prudently. Non interest income remains slave to PE principal and proprietary trading business

The Rupee starts the weak on such rumors where the deciding NDF market actually feeding on the panic mindset in low trading volumes and the onshore markets trade down but only for the morning after as the Superbowl even that draws a 200 mln audience in the US and around the world has ended minutes ago and investors will be back to a market fairly under priced by the recent pitai (hustle-bustle/buffeting not to be confused with the sage of Omaha’s investing interest)  Bank Rate will remain higher for the majority of 2014 , the prospect of rate cuts being pushed back and there being no prospects of improved transmission of monetary policy with yields pushing for higher dollar depreciation despite the RBI efforts to clamp liquidity which has time and again proved more amenable to intuitive policy than a counter intuitive rate hike move to tackle measures outside Central Bank policy. However corporates borrowing in ECB might actually be able to break the ice in terms of getting older level low rates and break the impasse eventually with increased investments (starting to flow in consumption sectors) and RBI , maintaining a new inflation hawk stance would likely have to hike rats further after the 200 Marginal channel cation and announce a veritable change in stance on rates first.

REC had started up Friday and Powergrid should join in after mi d-day if the sentiment indeed looks up. The Equity rally in the Global Markets hit a big snag in January and that is holding markets back awaiting  a confirmation of investor interest with FDI having exited Emerging markets like Turkey, Mexico, Argentina and Indonesia in a hurry with Turkey coming in midweek last to raise rates by 4% to near 12%. Goldman Sachs is in trouble again having started their own EM investments in losses having chosen MINT’s obfuscated markets and a deep and dead in the water China over India’s liquidity given the cross winds. The Rand(South Africa)  also closed above 11 to the Dollar for the first time in January.

However Emerging markets sentiment is likely to get into it in a couple of quarters from here and India will remain one of the best performing destinations having been unaffected in the post taper trade in January if it maintains 6100 levels or at least stays above 6000 levels

PNB scored great results having come in counter cyclically on raising provisions in a known strategy and NPAs under control in a rapidly deteriorating market sentiment for Banks shoring up investors to its ferry/rafters and trades 10% higher at 550 levels still a strong buy. Banknifty starts the week near a low at 10150 and is good for the trade up but one should be watchful with ugly quotes (in both the 10000 and 10500 series) in the bid auction market still holding an initiating trader to ransom with option writers playing ultra safe.

IT stocks are still overbought and Infy should retrace 3600 levels and even TCS should come down to realistic levels (but already at 2200 levels) as the IT/Outsourcing axis is not coming out as the GDP’s saviour this time either. Volatility levels are hardly material at 16 in the current rally agains 14 in the previous segment in December ’13

Energy stocks should start the climb back as and when markets stabilise, GAIL having  started the year smartly. Glenmark and Cipla/Lupin lead the Pharma rally that continues despite an ugly breakdown in Ranbaxy and Sun Pharma. We still do not believe in a robust Arvind Ltd comeback on USPA and other new limited franchises inroduced by the team since 2011. Tata Global Beverages remains a hold but the magic is still in 100% go it alone investments in India ( which are still a far cry from the carte blanche leading to exchange rate breakdowns in LatAm and SE Asia in recent EM history) Aurobindo Pharma on results and Lupin on announcements today provide good portolio picks along with Glenmark which has only $500 mln in overseas debt and among companies tapping a continuing generic opportunity in 2014 with a new pipeline

Interest in the IPL in the meantime continues strong esp evincing interest from global players in the playing XI and a fresh re-auction for all the 8 franchises picking up steam soon after the spectrum auction closes. ING and OBC related good Q3 tales as were also employing covering strategies but have not started lending/stopped losing on NPAs. Yes Bank may not fall back to 280 levels and accumulation is advised at current 300 levels. The BOI /BOB story broke down in January itself as we foretold with both banks still addding NPAs in droves. ICICI Bank’s INR 45 Bln ( including INR 30 Bln pie in restructuring) included the bank can survive the pressures with relative ease having also been proactive on definitions than the PSU penchant for playing it by the ear and losing continuously losing investor confidence and investor money as far as its favorite proprietary traders are concerned who lose another constituency in an unplanned bull attack with construction stocks Dlf and unitech still in a free fall after the ill advised run

Energy Markets react positively Midday

Gas stocks reacted positively as Petronet LNG produce became free to sell to industrial users and IGL and other domestic distributors esp IGL getting commitments to cheaper Domestic LNG in the new pricing regime. This also means domestic CNG in all markets including Mumbai where already 100% domestic gas was supplied prices of CNG and PNG were reduced by 30% and 20% while increasing IGL margins. Petronet imports LNG and will no longer be getting custom from IGL which Delhi used upto 33% imported gas

The move was a n expected one with a new Minister coming back (Moily ) in a sensitive election year . Moily is also expected to facilitate large project clearances with changes at th e Ministry of Environment (EPA Act bottlenecks)

GAIL shares the good news as renewed pressures on its subsidy costs will likely subside as it supplies to city gas companies and others at new revised rates and the policy is deemed stable after LPG quotas to residences have increased to 12 cylinders per year and gas TX likely to increase volumes with good results reported Thursday

India Morning Report: Expiry, Policy jump, Vettel at Airtel and a difference between Ukraine, Turkey and India

sinbadThe overnight return of the Emerging Markets this morning in ASia was none helped along by continuing waiting for news on the Taper Wednesday but India’s own policy will be stable, stoic and yet enough to motivate the markets ith the Banknifty at 10,500 laying the grounds for a bull trap that might finally work after ages.

Bears got the markets at 6200 again, the fall below 6170 precipitated mostly by Rollover computations in jeopardy. Maruti’s lookahead to today’s earnings may have helped but we think that performance remains sub par and there is more yen volatility on the horizon, trades continuing from 100 or stronger levels on the Yen back to the original 110 target for the year. The GDP forecast in today’s published review has barely any chance to score to 4% in April let alone any number RBI may still hope for in the policy. Banks should continue expanding NIMs despite the HFS effect loaded in Q4/H2 with easy liquidity and yields stuck in almost non-existent liquidity cuts which continue to be required for the same reason.

Indian Exports have inched close to the $325 Bln target and definitely do not need additional level punched in by hot money or market sponsoring of IT non-performance as the new India peak. The markets will thus expire at higher levels after running to close to 6300 again if not higher, the momentum on the positive side jumped by crossing over 6200 and 6250 levels. Volatility barely hit 19 yesterday and ‘proprietary’  longs in the eternal ghouls of  shucked out old fabric like DLF, JP Power, HDIL and Ranbaxy and Apollo Tyre showed up with more than 10% cuts in OI in each easy pickings for daily bears when a brief surge in panic put paid to a lot of outstanding long trades on Monday

Idea’s ARPU score improved to 169 again ( been a little volatile since 2009 including the last 5 recovering quarters) and es I do believe the full margined Indiabulls is close to being the scum that plays the hurt wheat in a festival of crushing chaff just in 6 hours and some few of trading.

Thankfully, including HSBC there are still a few advisors and boutique investors left out there that already under stand a difference between India and the Turkeys, Ukraines and even the Rand trades of South Africa.  Mexico’s recovery again is being clubbed with a fully private island (economically) of Thailand and that probably means the depth there is much weaker as most EM investors stay fully stunk in China, Russia and even Brazil. A glaring difference in most is the ease with which investors engender volatility in the Economy, Japan and India resilient to the charm

Tata Motors’ tailspin could continue as there are barely any reasons including Ralf X’s designer JLR bets for buying and investing in the stock. Tata Steel seems to have run out again waiting for the jump back in metals for further gains in Steel, which could steel ( silly, naive me) if construction in infrastructure picks up or being confused with a residential construction and auto slump  that is also extending the slump in Cement and other manufaturing bets, closer to a deflation in the core than one might think ( seriously just preppy talk)

Glenmark is up 10% from its recent all-time lows at 500 and GAIL shows a lot of promise. Today’s trades have finally rewarded IDFC and not beat it down with the Jhabla trades in chicanery beat down in a half day yesterday morning in Unitech and DLF

I respect both above for example but only when thy are near creating performance  and they definitely are not quasi- bets in private infrastructure holding on to an inelastic line created by their pricing power and always illiquid markets despite a surfeit of available built up real estate. Aswini as usual back in the morning with a straight face after recomending bear trades n BTST at closing yesterday but 6135 was certainly out of whack yesterday itself and markets did refuse to move north at closing despite every reason.

Gopal Vittal gets anointed as CEO and MD at Bharti Airtel and Formula 1 season is not so far away. Students and Analysts at work should not follow the woefully fashy and flashy titling on the report.

India Morning Report: 6250 engages, but no higher levels in sight

Despite the appearances on Tuesday Morning and the potential in Indian stocks on an earnings basis, there really does not seem to be reason for markets to attempt to maintain 6300 and 6400 levels at this juncture. So having negated the bout of corrections in Asia and the US markets overnight, markets are happy enough to hold the 6275 score gained at yesterday close.

Idea and ITC are harnessed and riding the wind, which would determine the ending levels of the index. Infy seems to have been capped and Bharti saw confirmation of breaking down at 335 levels. Unfortunately for Angel Broking followers, the shorts on ITC do not play out below 335 especially with the price rise being likely absorbed by its large retail markets in branded cigarettes, continuing from last month’s first increases in Classic and Goldflake families

KRC have cottoned on to the IDFC plus LIC Housing trades , bullish at these undervalued levels as they hold their own. Their other long picks are Sterlite and Finolex Cables, old trading smarts that are doing well in this segment, probably on Order book highs for Finolex Cable(is M&A also likely this time given their capabilities?). Both have been Volume breakout candidates in the last week. Good to see Biocon making the Volume breakout finally, and probably would sustain new levels too above 500.

I for one would like the shorts to buzz off Glenmark too, but for now Cadilla longs hold with Lupin getting tail as much from its own apps to the USFDA as from other stocks now being fully priced and for Ranbaxy ready to fall by the wayside. Pharma that way is a healthier sector than aapno IT wallahs che with Emphasis and even KPIT looking ready for a big fall as the big depreciation jump in earnings is past and many others reflecting that standard of Corp governance which is good for a slow let down after the halcyon run not likely in the Pharma family of stocks

The December CPI at 10.4% (Rural) and 9.87% (Composite) is still worrying, though the drop is welcome. The drop in temperatures is probably contributing to the 9% tick in Clothing, bedwear and footwear category(CNBC TV 18 flash) is still worrying as the November data affected in this number is just before the start of the real cool season and is likely a sign of the inordinate lack of real market availability throughout the year ( the seasonal demand allowing manufacturers to jump over negative and zero summer production?) and the concomitant supply imbalances bearing down on the price heavily.

The political drama is already at the point where the heightened interest could recede especially for the apolitical class which also determines chronic disinterest in the electoral process and the era of apolitical coming out of the local politician in the known acceptable mould as would have been needing a much higher tick than 8 seats for AAP and the existence of one AAP only to sustain interest. BJP thus with its new canvassing for Anti Corruption ‘saders seems to be in fact abreast for the fight.

India Morning Report: Why exactly is IOC available so cheaply?

Of course, Infy will lead the bullish breakout on the Index, and the profit prognosis again at a Cons INR 28.75 Bln is much more to look forward to than the Cons Revenues of INR 130 Bln but the dip in Revenue growth , braked to 0.5% on Q2 Dollar data is still probably excusable. The jump from Infy to the Earnings season that starts in earnest next week.

However, IOC is as expected delayed on the divestment news but mainly because the Oil ministry got the fangs to file a dissent note as the Energy co’s price has slumped to lower than 200 (on the average of prev 6 month closing prices) There are many benefits to divestment and in fact a bargain such as IOC at these prices would be an investor bonanza par extraordinaire. BPCL (up 7%) and HPCL(up 3% probably) gain on the news of the delay but the question to who are the agencies involved in muting the price performance of India’s best navratna after ONGC remains important to answer unfortunately for the BJP fueled markets and the outgoing Congress government

The Delhi Power audit will also ensnare Relinfra as it owns 2 out of 3 Delhi Power distcos with more than 30 mln subscribers and three-quarters of the Peak Demand. Delhi takes in a huge 7.5GW of Power Capacity of the installed 130 GW nationally but the share is much larger in utilised Power capacity

The Pharma companies, the other beneficiary of India’s global largess in currency trading, will also be busy making aggressive deals in the US Pharma market while rejuvenating their domestic Pharma businesses, with Torrent and Auro completing deals this quarter in Elder (domestic) and Celon.  Lupin delivered another USFDA win along expected lines with Twynsta generic being allowed to both Lupin and Torrent. Fresh buying is impossible even in Lupin, Cadila ( 850-1350 nah?)

The market is not really ranged and while Infy may not be able to envelop all India expectations ever again at the start of the results season, it still clears most markers impeding a new rally post earnings. Bank earnings deliver the second infusion of realistic optimism on India Inc in a few days when the upward edges of the range are exected to stand up to better levels. Meanwhile Infy should crawl to the top of its 3400-3650 range benefitting the rare speculator who punted positively for them , most having to square out written calls, even as the markets face resistance offered by such shorts and Infy sets the grounds for more positive surprises down the line with NRN back at the helm. The changes in the Executive would be the easiest to explain.

A problem of plenty as I use images from Google with the syndicated image burner feed disappearing from WP?? 😉

The RBI governor would be probably hoping that the month end policy becomes a non-event considering the positive mpact just from holding rates and the challenges from inflation growing by his side. BofA’s Axis Bank ugrade may still be too little and too late as Axis battles NPA spam with PNB , counted for its days with the PSU crowd

Indices should not see a meltdown thus at 6150 and you should get one bang out of the score if you sell 6100 Puts getting cheaper by the minute at the open and even 6200 ones. If you cover them do cover them with buys in the OTM range(buy) at 6700 ( assuming 6500 in  a close future top of the market ) The bottom of the index range should thus become more volatile funding the shorts glued in to the market bearing down for over 6 weeks now but they will probably tire out this time, Vol allowing a long-range upside on its own nevertheless as India VIX continues to ride low on a stuck to the tea leaves recovery, which will still trend higher and not lower like in China

India Morning Report: Sharp cuts ensure quick bottom in India around 5650

Bombay High, South Field. Undersea pipelines c...
Bombay High, South Field. Undersea pipelines carry oil and gas to Uran, near Mumbai, some 120 NM away. (Photo credit: Wikipedia)

A more than expected negative reaction in  the Indian markets yesterday may have subdued analysts into a negative whirl as they were waiting for the same, but post the subdued slightly positive open in global markets, it increasingly looks like today’s move in the Indian markets is more a positive search for value than just a reaction to yesterday’s sharp negative move.

Though your favorite superanalysts may be recommending shorts at 5650-5700 levels on the markets , I would invite you to use this rare opportunity to further sign in to Indian markets in scrips of value except that though banks refer the most value potential they are not ready for a move up yet. ONGC and Tata Motors are good shorts too, and apart from the index shorts one can see the visible analyst reaction actually picking out rare weaknesses for shorts as Ashwini Gujral recommended in Option spreads shorting Tata Motors and ONGC . Telcos haev nearly recovered the positive sentiment almost immediately and exporters are mobing in the positive zone including Bajaj Auto and Sun Pharma

The heavily discounted PER multiples in the Indian indices also ensure further ETF outflows do not negatively impact Indian allocations and one expects debt market outflows to stabilise soon as well as the yields in the Fixed Income Market spiked n small volumes itself yesterday and there are only higher opportunity losses for further exits The Rupee can obviously not last at these levels having failed to establish any zones in the three breaches in last two weeks but as the “correlation backward catch up play has lasted almost all week, the rest of the markets are unlikely to oblige Rupee’s bottom making move in the next few weeks and is likely to be ignored in equity and debt///government bond markets

Shorts on UCO, Karnataka Bank  and Vijaya Bank will work singly and can be tried as pair with buy in Banknifty once BOB and SBI bottom out as the big movers in this move. A Direct air with pvt sector ICICI bank and HDFC Bank would be riskier. Nifty short strangles with the Nifty bottom at 5600 is recommended y IiFL which would be their first positive trade in the quarter (joking!) but a great one Short 1 put at 5600 and use to buy puts/sell calls at 5800 . Selling 5500 put would not be bullish for this market nor very remunerative.

 

India Morning Report: Infy comeback not happy for markets, “Mind the Gap” and Rupee is still down

Don’t get me wrong Mr Murthy, you have been welcomed back except by your family at Catamaran, but that India is welcoming the IT story comeback of the decade to only 2 paise jump on the rupee itself goes volumes to say in a market shunning the banking sector after changes in provisioning introduced last week. Provisions aside, Credit growth to industry ( non food credit) hitherto most subdued in April, still grew more than 15% and coupled with global jump in Business investments except in Japan and Europe, it is still more likely that apart from extraneous bull fittings like “in the face of elections” ( middle pages of ET) growth jumps in the second half of the fiscal will lead India Inc to higher pegs of growth and make this snafu around 6000 a suckers bet for bears globally. markets opened in the positive but as today’s news was concentrated around Infy, failed to keep the momentum of the pre open after a month end weekend

Image representing Infosys Technologies as dep...
Image via CrunchBase

Before I go back to Infosys and rupee machined external debt obligations of midcaps, Sun Pharma has indeed tipped off its highs and along with banks completes the reasons why there is no jump desite widely accepted as having bottomed at 6000 on the Nifty and in fact below 20,000 on the Sensex. Old hands hold steady but the defensives are well scattered in underperforming categories led by Metals and the ever decreasing demand hit Autos led by Maruti or for that matter the ever neglected growth bid filling in for the halcyon days of IT as defensive at Biocon

GMR Infra’s INR 25 Bln revenues for the quarter were led again by a 2 in 3 contribution from aviation (DIAL) at more than INR 17.5 Bln but with both airports and highways making profits apart from the CERC guaranteed power subsidiaries, and debt in the main standalone company ( one assumes the results pertain only to that even in consolidated data) is much lower than could have stoked a bankruptcy hazard at a very healthy 3.04 against the allowed 5:1 for infracos. Thus, though Relinfra might have a bit of an expensive portfolio, GMR has stabilised in profit terms and locked out bad players like GVK and Lanco, with a segueway for quality and volume plays like JP Associates no longer required to mirror the flailing fortunes of DLF. Rel infra of course would try to sell each project in the portfolio on individual merits and may have better news to share as well down the line.

English: by Neville_S Uploaded to wiki by user...
English: by Neville_S Uploaded to wiki by user:nikkul http://flickr.com/photos/nsukhia/303927860/sizes/o/ (Photo credit: Wikipedia)

On Infy again, Rohan may not shine as EA to NRNM, Infy may no longr define Indian market’s fortunes but the nudge up to 2500+ on Monday morning has definitely rerated the stock back into some portfolios.

Infosys slide not Kamath “idli-chai” vs. Murthy’s “flash drive IT”

I agree too despite his own protestations that it would be wrong to put the finger on KV Kamath which might make the coffee tables at the Infy campus not in “My-eye-sore” or other satellite cities but the one at Hosur (part of my-eye-sore ;0) One thing of note highlighted much later in hindsight could be that KVK had a globalisation experience of a very Indian company in management values and markets while NRNM has the outward-in outlook of an outsourced engineer/ almost NRI like that ie entirely different. India must realise from its last two decades of exposure to both sides that global mores of management and indian ones despite a shared management education spine and an equal distaste for ‘ajurveda’ or failed homegrown remedies, differ in values and attitudes except some of that ‘jugaad’ in ‘not so big’ money situations.

It was this gap that probably KVKamath found too abstract to jump if indeed he tried to take an active role in the situation at Infosys. Also, though much of the morning’s contributions from TV and media have been rather objective segueways into the first quarter of reporting by a reconstructed Infosys savoury dish in Q1 of the fiscal, not much is expected immediately and this upside is limited.  Annuity business of $21 Bln is however intact from global businesses like Big  four banks or leading global brands that continue to find Indian management equity compelling for “outsourcing” repetitive tasks that do not require expensive compensation strategy key. Cognizant thus will be difficult to displace in the high volumes game infy has struggled to avoid.

On the more important topic of Cricket and the general elections in that order, Srinivasan must be joined by Dhoni in resigning from a few of the intertwined job responsibiities sooner than later and yesterday’s farce is likely not the end of the story of IPL gone wrong if indeed the Special GBM of the non profit is called. Similarily the sub 5% fiscal deficit performance may not bringing the flagging fortunes of INC(Indian National Congressas is registered with the EC) any required relief but we can probably look to a left included coalition at Delhi in the 3rd edition of the UPA if we indeed are able to fend off the extreme politics of Gujarat from the national scene. The more cosmopolitan under 40 population normally wronged for not participating in elections may infact shun the ideology ‘ridden’ politics of the far right in time if goaded properly and yet save the next 5 years of the India Inc canvas

Mid Caps like Opto and Orchid seem to be targeted by those that could not recover the infra vector gains from their speculative tips in HDIL, Orbit and even DLF consruction flats and despite the big jump in equity and convertibles from European investors last year or two Indian banks, infracos and pharma companies will have a much easier time this time around in managing ECB receivables during this continuing hammer down trade correction on the rupee likely stage managed to change into 2014 order of magnitude of purchases and export realisations and likely to last all of june as CPI still has not trended down and no seen imovement in supply chain efficiencies despite AAdhaar and the Food security Bill

SEPTEMBER 2012: RBI CUTS BANK RESERVE RATES BY 25BP

As yields dropped on the reform news, good news kept raining on the markets with Duvvoori Rao going ahead with the much pressured rate cut of 25 bp to give industry a chance to shore up the IIP froma low 0.1% last week to better reports than the expected turnaround in April 2013/June 2013. The cut has not been made in repo or Reverse repo rates but CRR has been cut to 4.5% However this rate cut simply cuts possible maneuverability for the Indian Reserve Bank RBI in the rest of the fiscal. india’s fiscal deficit is likely to be revised to 6% from the budgeted 5.1% as FinMin tries to revive a much hated and shelved disinvestment program but is helped by a Diesel rate hike

Losses from LPG and Diesel have been averted to more than INR 50,000 Crs from the INR 1.3 Tln together from last week’s hike and to that extent government will not be reimbursing nor Oil and Gas producers be paying foregone profits to Oil Marketing Companies.

Yield has in fact gone back up after the policy from a 8.16% trading range in the morning to 8.1726% The future of OMOs is quite clearly what is upsetting as the CRR cut implies RBI would not like to provide further liquidity using adhoc operations later in the month though banks seldom use the liquid assets blocked by CRR even when they are freed.

Late Morning Trading Strategies – An Update By 10 Am (September 17, 2012)

 

Markets have not gone nose up on news and thus are unlikely to go belly up by next week. As unexpected as it was and as fruitless it might be the sectoral runs in Aviation and Broadcast channels have been well left alone, the improvement in FDI regime resulting in gains of 3% (JET) to 12% (SPICEJET) in aviationa nd 3% Broadcast Cable companies. Sensex is up 100 points.

Holders will gain and it is not really time for fresh buying. The commodities cycles are quite done in the big run up of last month according to us but shorts dio not have a clear run in silver or Copper or even ANtural Gas. Crude should go higher but not ithout a not so shallow correction. The Euro at 1.30 is pointing to a bottom for the Dollar being very nearby though some European investors have again taken Euro into their fold, saving it to 1.36-39 by the year end (HSBC)

The policy data comes out in a n hour

 

India Morning Report July 18, 2012: O if only Pranab Da was the Sensex!

 

 

English: Source: http://georgewbush-whitehouse...
English: Source: http://georgewbush-whitehouse.archives.gov/news/releases/2008/03/images/20080324-6_d-0665-2-515h.html President George W. Bush meets with India’s Minister of External Affairs Pranab Kumar Mukherjee. (Photo credit: Wikipedia)

Mr Pranab Mukherjee can possibly land a 73% vote in the Presidential election later in the week as Mamata Bannerjee capitulates for a fellow Bengali. Early monsoon worries caused a big hole in the states of UP, Punjab, Maharashtra and even Rajasthan with more than 50% deficiency but Foodgrain production is already 257.44MT for the year ending June if government estimates are believed with Record production in Rice(104MT) , Wheat (93MT), cotton and sugarcane keeping prices down in the meantime. this last estimate has been revised upward by 5MT from April.

However Nifty’s rangebound worries have initiated more correction calls and already stopped out some shorts at 5200 where it lies in wait, as the most undervalued emerging market and also as the fastest growing Coke market where Coke and Sprite both grew by more than 30% The MF reforms are going to come in with commissions restored but the usual halfway house on the bridge of expectations draws a line in the sand for what uptick you will get from further policy pronouncements. The macro Indian story has to celebrate but next year is going to see contraction in agri production with Sowing in crops down from 10-30%. Even in hot commodities like sugar and cotton, the downtick is there though just 2-4%(in sowing)

India is still 15 points ahead of China in the Nielsen consumer confidence. However IMF seems to have given it the thumbs down despite keeping growth estimates north of 6% with India’s Fisc targeting a number the same as Ireland and higher than Spain , vying for the 8.9% mark in 2012 behind Japan’s tsunami restructuring funding and not likely to improve in 2013 either , making mockery of india’s budget estimates brazenly, giving Moody’s and S&P fodder as they are set to evaluate the india rating in the next 8 weeks. Guar seed is the only commodity doing well though the shutting of the Straits of Hormuz mean Oil could march ahead again. India’s trade deficit data for June found Oil buying missing ahead of a probably ban on Gold imports to $10B from $16 B in the month of May

Bajaj Auto reports today and Hero Motocorp follows tomorrow while non discretionary consumer companies ares showing health in Sales and in marketing spends at 12.9% for Marico

Dr Reddys and HT Media report this week with JP Power closing out on the weekend with Q2 numbers. JP Infra is poised to report the Yamuna expy opening as well. Monday opens to expectations of good results from Colgate and HUL. TV18 also reports on Monday followed by the Pizza guys and Dominos franchise holder  Jubilant Foods on Wednesday when the IT saga unwinds with par for the course HCL Tech results

Smaller banks Karnataka Bank and Bank of Maharashtra report this week then ING, Canara, LIC Housing  and SBBJ set the stage for the big Yes BANK reports on Wednesday (24th). Kotak Mahindra Bank reports tomorrow.

 

 

 

No not yet Trading Strategies – India July 05, 2012

MK_GMR4827
MK_GMR4827 (Photo credit: Presidency Maldives)

Late Morning Trading strategies (DID you buy your ITC yet?)

As the title suggests most of the activity is in the silent bond and currency markets with Indian bond rebound and unrelated yet unlikely dollar rebound sees hectic activity as accumulation continues n the suggested consolidation, the market having not seen any exits and the rally probably been too quick for the bus to fill up before it moved.

The marktes are healthy not waiting for a fall though a dollar rally cutting off air supply cannot be ruled out and hence the unwillingness to move from the enw normal – right priced in ne light after  a 5600 year to years back left investors bothered seemingly

Buyers have to stick around and probably get in today or tomorrow. A dip does not relally add more interested investors and thus is unlikely.

Buy Infra stocks, GMR, RelInfra and RPOWER and even RelCapital and of course IDFC

English: Diagram of covered interest rate pari...
English: Diagram of covered interest rate parity in the foreign exchange market. (Photo credit: Wikipedia)

Morning Trading Strategies – India July 05, 2012

GMR Malé International Airport Private Limited...
GMR Malé International Airport Private Limited (GMIAL) Office (Photo credit: Ibrahim Asad’s PHotography)

Auto sales being okay for maruti, it has been hidden that Tata motors production is falling off a cliff an dmonthly auto sales from Renault, Ford , GM and VW have not been great either. Toyota alone ploughs through with Honda also contributing to   positive variation since its closure thru 2011. Two heeler sales did well enough but the sector is still ripe to be targeted for correction. Bajaj auto one feels is a good longer term pick at least and one expects a jump during trading in the scrip.

YES Bank and DLF are near the cliff they normally share but ICICI Bank, SBI and HDFC Bank have the potential to move up while Hindalco, Hindustan Zinc and yesterrday’s stars SESA and Stelite will continue to see action. This edition of trading strategies is a trifle early and some of you might even appreciate that but we will be looking closely at the trends in pre open and after market open before taking the choices for the day. IT is bearish but there may be no profits except in HCL Tech on the shorts till the market hits Correction Bell

Morning Trading Strategies – India June 28, 2012

July
July (Photo credit: kurafire)

Expiry Thursday means buying would not have picked up in July series and some are not quasi currency forwards for a change. IDFC Calls at 160 levels for example are cheap and buying should be done today and yesterday. Those avoiding options can sget into July series infrastructure futures in ICICI Bank and IDFC, ICICI Bank looking like a candidate for 900. SBI could run to 2350 similarly and HDFC Bank left alone for the next run after the market corrects from 5350-5400

Yes Bank is likely to see an important correction as HSBC exits Yes and Axis Bank holdings of $500 mln each at 3-5% discount t o market

Auto companies would be great in the july series, Star (Stride Arcolabs) good for purchasing at lower levels if it comes back after usinfg $300 m from sale of Ascent for the $110 FCCB repayment

State Bank of India Logo
State Bank of India Logo (Photo credit: Wikipedia)

HDFC is my all time underdog favorite at this time of fast rising indices and there could be action to start the bear in Sterlite and SESA soon as their VAL load becomes clear ahead of the board meeting hich will still likely approve the actions

All the usual recommendations for this week apply as per sectors recommended especially if you are not day trading within june. kingfisher got shorted already, JP Associates, one feels may get left behind again and BHEL and L&T are buys only till the trend is up

Jubiland and Titaln shorts should also be avoided while the trend is up PSU Banks like BOB and PNB should be very good picks. Many hedgies picking up PSU bank strategies in the last quarter

India FDI Report (March 2012)

India’a FDI process received a tremendous boost in March after $2 bln flows in January and February, itself a fair score were boosted to $8 bln for March even as international media slips into a morass susing the Indian voice and using their ignorance of India to blindfold and then play with Economic Darts ( or half cooked $$art points).

Hamersley Iron 20 class locomotive at 7 Mile Y...
Hamersley Iron 20 class locomotive at 7 Mile Yard entrance, Dampier, Western Australia. (Photo credit: Wikipedia)

India is well provided with such munition for its unfriends starting with the 4% Current Account Deficit and the double digit depreciation of the rupee to the curbs on FX trade imposed by RBI since October and added to today with punitively enforced conversion of Export dollars to a local currency. That boost was also needed for the Rupee as it faces severe action by European speculators stunted by the lack of LTRO ritual and a drying up of business back home.

FDI grew in the last month of the fiscal and even allowiing for the fiscal end corrections if any in the tabulation, is still a great score considering that FDI in multi retail was never satisfactory after coalition politics robbed the Indian markets of a great expected boost in the Hindu new year. The $36 bln FDI in 2011-2012 is still below the FDI receipts expected when the Fiscal began last year before it ended on a low note, expectations of growth scaled down to below 7%. Asian competition from China and Indonesia apart, India still expects to see a boom in retail consumption and needs a lot of private participation in infrastructure. Telecoms and GAAR apart as they target specifically sensitive corruption and governance issues, Foreigners remain welcome and banks may not be the only ones growing business in Asia esp India in 2012 and later.

Routing of FDI thru Mauritius has been a special charm for the India story signalling to most Indians on the ground that jugaad is still the order of the day and hence the efforts by the government to re emphasise that india is not one of the banana republics or one scrip economies that Western investors seem to favor. Indonesian and ASEAN FDI story is however more freely linked to Chines e FDI into and from these Countries.

The March rush may be explained by earlier announcements, large ticket investments expected in Mining and Energy from BP and other global players. Rio Tinto is part of a diamond exploration project in Central india.

Fixed Income Report: India back as flavor of the year

Global sentiment has again turned in favor of India as a leader of the trend of survival led growth, thaat is bleeding the best of developed world markets dry with expectations of QE fuelled growth that are increasinglytemporary growth humps on the chart and trending down like a dampening whale’s breath on each injection of liquiidity.

हिन्दी: ताजमहल English: Taj Mahal, Agra, India...
हिन्दी: ताजमहल English: Taj Mahal, Agra, India. Deutsch: Taj Mahal im indischen Agra. Español: Vista del Taj Mahal, Agra, India. Français : Le Taj Mahal, à Âgrâ, en Inde. Русский: Мавзолей Тадж-Махал, Агра, Индия. (Photo credit: Wikipedia)

Put in simpler terms the yields from $100 in first round of QE is probably as much from $230 in the second round and now that most have more than $1000 invested and are getting half the strength expected to continues in housing and treasury markets, the Indian yields are good to be shopped leading a trend down, though RBI was also mopping extra liquidity out from the markets in today’s run

Indian spices
Indian spices (Photo credit: Wikipedia)

The Coal allocation sweepstakes

Fidelity
Fidelity (Photo credit: roujo)

And like the jumbo jackpot in the sweepstakes, the CAG report choose to value the losses as every penny of extractable reserves from the Coal field allocations with 33000 MM Tonnes of coal realising a INR 10 tln loss to the exchequer or whatever new price is assumed. That is a bit like charging L&T INR 100 bln for the INR 100 bln of assets Fidelity sold to them, much to Fidelity’s delight!

THE INDIA BUDGET 2012: Healthcare, Education and the Rest?

New National Urban Health Mission mooted, NRLM (Rural Literacy ) allocation increased

AAjivika women self help – bank credit -> extended interest subvention ( eff rate 4%)

NRHM allocation INR 208 bln

Addendum: India to get its own Huijin as holding company for Bank Capital 

National Credit Guarantee Fund for Youth, Rural Development Fund!, National Social Assistance increased by 37%, INR 255 bln allocated for Right to Education, INR 200 bln for Rural Infra Devlpt Fund

Kolkata water purification and Kerala Agri separate allocation, Hissar allocation allocation (, Hyderabad ..NCAER INR 1 bln and lesser INR 0.15 bln for NCAER and a Pali language research center ( India is diverse, definition of weaker sections is even more diverse)

Avlblty of residential qtrs for Central Police Forces (8000 units) and separate allocation for Office bldgs ( INR 10-20 bln each)

AAdhaar platform – compulsory Id for all above 18, used for beneficiary accounts…

Black Money Control: 82 DTAA, 17 TIEs signed, 33rd signatory of Mutual Assistance in Tax Matters,

Defence Outlay of INR 1.95 Tln or $39 bln higher significantly

Benami Transaction Prohibition Bill to replace 1988 act

Narcotics control provisions to be also updated

Rest Tax performance after study, review and analysis

India Earnings Season: REC does better than the rupee.

REC’s revenues grew to INR 27 bln or $520mln in the current Q3 again building a 25% topline growth in rupee terms as a rupee lender, it will not face much losses from ECb/FCCB having finely priced QIPs as it reported a INR7.7 bln for the quarter or $ 154 mln

REC grew advances to INR 813 bln or $16.3 bln with Tier I&II Capital of INR 148 bln or $2.8 bln approx

3 month PAT is just $400 mln

Its NIMs are low but consistent at 3% and it has not been plagued by its SEB portfolio’s NPAs. REC would have been hedging its loans with SEBs as lease backs or to first lien but the rest is for a full day to the company later. My last quarter’s review should have been useful as well as last year’s NTPC/other PSE dealmaking coverage

PFC however is likely to be watched for NPAs and PTC facing other implementation troubles with its Hydro elec projects

 

Overseas FDI by India reaches $45 bln

Indian outbound FDI reached a $43.9 bln mark in 2011 till March 2011. This includes the Q2 purchase of

English: This photo was taken by Nikhil Kulkarni
Image via Wikipedia

Airtel Africa (Zain ) in 2010 in 15 African countries. It also includes the $3 bln and more purchases of Shale by Reliance  across Pioneer, Atlas and other shale owners in the Marcelus and other shale areas in the USA.

FT reports the Sahara acquisition of Grosvenor House as the landmark UK investment while M&M snapped up the SSangyong SUV business in Korea for pennies in 2010-11 less than half a bln, rumored to be headed for Saab from Spykar this year M&M scraped its ventures with Ford (earliest) and Nissan – Renault ( 2008) as it still produces the M&M Verito on production lines set up to produce Logan and Nissan’s India car to be designed by them.

Liquor baron, MP and Force India owner meanwhile is embattled in a fight for the survival of Kingfisher Airlines and Tata consolidating its JLR and Corus steel purchases from more than 3 years ago. Indian Financial services business never reached the required scale overseas either but carries a book of more than INR 8 Tln or  $ 160  bln in SBI and $3 Tln or $60 bln in ICICI Bank following on the heels of Chinese and US Top 4 with over $225 bln in assets each

India Infrastructure: HSBC, ADB funding to bring up $ 1 bln debt fund

India’s first infrastructure debt fund is well on its way with the $1 bln corpus mooted by IIFCL successfully

Infrastructure improvements
Image by Scottish Government via Flickr

siloed for a launch of the fund in February 2012. the first fund will include IIFCL participation to 26% or $260 mln only as Asian Development Fund and HSBC chip in with $250 mln each for a 25% stake. LIC and IDBI get to participate in the fund with $140 mln and $100 mln each

As a mutual fund the Infrastructure Development Fund, first proposed by the MOFFIN in the 2011 Budget, will invest in debt of the infracos , allowed 90% by its mutual fund charter

The government is infusing the INR 10 bln required by IIFCL the first of India’s public infrastructure funding vehicles set up by the Indian Budget of nearly 6 years back and has failed to tak eoff while Pwer finance companies also set up by the govt and IDFC in the private sector have

500 Rupee note with Gandhi on it
Image by nimboo via Flickr

picked up the funding requirements and turned in a few successful projects each with a good interest margin on each sale.

The debt fund is part of the 12th plan charter to ensure at least INR 1 Tln (Rs One Lakh Crores) in infrastrcture funding primarily via PPP projects if required and ensuring Private participation to close the Infrastructure Financing gap for the country.. India’s overall financing gap coul dbe as large a INR 2.5 Tln or 4% of its GDP

The RE60, the 1.4 mln Akash Tablets and another LNG unit

The Bajaj auto effort to showcase the 3 wheeler market is an honest and probably remunerative strategy to capture latent non markets for consumer goods and durables in India as most categories have less than 50% attributable to brands and we have npot progressed beyongd the first few gains for brands last heard in the nineties.

In the meantime Datawind is reaping gains of consumers realisign their world ahs changed with more than amillion $35 tablets ordered. Blackberry sold 7000 of its tables it two days after it brough tprices to $200 closer to its international rates and half of its offer price earlier. Datawind is expanding to four mfg plants adding Noida, Kochi and Hyderabad 2 to its one plant in Hyderabad right now.

Meanwhile, the younger Ambani still has traction left in public and power infrastructure play Reliance Power,

Ambani's palace behind the hanging garden's
Image by xnmeme via Flickr

while its other flagship infra and telecom plays are losing investor confidence. East coast gets its first LNG storage plant at Samalkot, near Rpower’s own gas power project. The LNG facility in partnership with shell will cater to 7GW of power generation capacity in the area including GVK power

Zuari has a JV with Mitsubishi in Singapore, the same being used as vehicle to buy both a Fert unit in Peru from Fospac for $46.1 mln. Whatever happened to our post Airtell/ ONGC foray out in Africa and Latam!!!

Almost all from pg5 of today’s ET

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