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: 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: Love in the times of cholera for Airtel, India

Airtel rode the Data market jump as revenues for data doubled as for Idea in mobile data (94% and 110% respectively) allowing Bharti Airtel to showcase once again that ist is the best business and the best business group to run for India and in India. Of course, firming up of prices is a mixed blessing for consumers but the explosion of the data pie esp in mobile data augurs well for companies in this otherwise mature market just waiting for a whiff of good natured mojo for the overall economy to blast off.

Modi’s government is not yet in through the door, his ominous cries for Dil maange more in dissonance with the campaign for mostly informed voters going to the polls in phases 7 and with exactly 16 days to go. However, it is unlikely that the polls will herald any other government in India than a full fledged Modi government that will last 60 months and most of the reforms will not be rolled back abruptly or at least most investors do believe that and look for reassurances for the same.

Markets finally break a 2 day losing streak and return to green making Nifty 6800 an iron clad resistance and support thereafter for the India markets re-rating currently. Merck reports in India tonight and the results will underline why Indian traders should not go for stocks like Alstom and Astrazeneca on global headlines that do not impact the listed business, so often mistaken as pull for the global corps in question. ING Vysya’s results reported yesterday again showed some weakness and have to be inspected for renewed commitment required from their parent in Netherlandas spreads /jaws contract for the Indian sub and the Income growth does show a better traction in new loans

Ashwini and other network commentators have again been baited/baiting shorts after markets almost flattened out at 6720 , some of the confusion spreading over from a long earnings and election season but the selection of midcaps again shows the limited interest in the markets on the long side except for returning to 6800, staying positive on good earnings ( there are no real bad earnings reports coming, bu t that is not being factored early by the markets) and standing waters are unlikely to make enough trading capital queasy to force a down tick in the markets making 6650 probably a safe bottom and sold puts will continue at 6700 levels from Traders and investors alike waiting out the final tally.

I am busy packing my bags in Bangalore and tying up loose ends as I get ready to join campus for a Ph D at Lucknow / Trichy ( thanks for being around)

Infrastructure spend and IPL like sports franchises remain Indias most potent steps as they await an empowered government

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 start the day at all-time highs from 6400

Though, it could have been better for the fundamentals, markets have not caught up to earnings increases over the last decade and will probably keep the gains in this weeks rally as the Rupee finally responds to buying and moves back to 61 levels without showing signs of tiring. As it moves further along to the top of its range to the 60 mark, consolidating yesterdays gains over another week, the currency does have a limited headroom as the Dollar Index is trading below 80.

Banknifty and IDFC are keeping their gains and moving north even as the indices savor a moment at the top and a lot of the individual stock memes switch , with Energy and Pharma both offering unique ignored opportunities that may well be taken up, without ruling out the better consumer scrips consolidating to new price levels or for ICICI Bank and HDFC Bank ( including a final decision on its cross holding by HDFC , still pending for renewal of its Foreing investor limit)

In Consumer we continue to back Bharti , ITC and Bajaj Auto. Yes Bank seems to be popping the champagne again, while the real estate pack will lead the way back for a quicker correction if interest in the sector runs up a bigger tab

ITC may again start up from 320 levels , if you are a trader and need to offload the stock currently. Bharti seems to have a new partner in sight for its retail JV( which I will tell you later why is not the ideal reason for backing the stock, like its financial foray earlier) but there are more fundamental reasons for owning the stock

Exiting DRL is a good idea at these levels

A lot of cash stocks have steam trading much below their lifetime highs despite good fundamentals like GAIL while the PCR is also a bland less than 0.9 with PUt OI still being extinguished , probably a precursor to Puts being written as confidence in new levels increases in the Indian markets , as they lead a global equity rally with the Dow a little behind as it is already at record highs. Markets have a long week ahead next week before 6400 Put writing becomes economic and the markets rewrite 2014 forecasts.

India Morning Report: 6250 again, naturally! O-O O-O

Asian markets do tick down slightly probably because of no Commerce in the financial sector as US markets are closed.

Even without anything much happening locally, The Chinese GDP underperformance at 7.7% was unlikely to be the markets’ concern here our export markets in China safe and the 9.6% production improvement and signs of bullish trades in Copper and other metals. India’s 6% forecast is hopelessly over optimistic and thanks to the networks avoiding the entire China update the fact of FDI non interest is unlikely to bear on market sentiment, and today, and in all 2014, this is a good thing! WPI hit a sharp floor at 6.1% and may breach much lower lewels with core inflation already below 2% Core inflation was basically flat.

In the midst of results season, the positive surprise markets did not expect and despite attempts will continue to be marginalized, is Wipro’s back to back second quarter of gains of 27% on year on profits but F&O markets are trading that and the last weeks IT news pretty feverishly /robustly. However, this interest is mostly maintaining shadows of activity while the Bank stocks get reassessed yet again. The realization that Markets were going to hold 6250 was all too evident in the one way candle of Friday, the 6 hours of sloping down, accelerating wantonly almost after 1430 hrs to achieve 6250 marks

Interestingly, a well-developed hedge fun industry would certainly have seen a short strategy for IT esp on WIPRO from some entrepreneurial trader after this bout of strong results, esp with WIPRO tempting fate and unlikely to beat history ( like Morgan Stanley did, Friday night)

Bajaj Auto and IDFC are my longs this week and will probably score very high as new funds enter the market and get earmarked to the new universe of stocks added in the buy lists ( ET’s Volume breakout series is a helpful ready reckoner, but I doubt you’ll easily find those mix tapes /snips on the ET Now carousel. Go figure)

Actavis may be a strong boost for Aurobindo with almost $8 in earnings in the last four quarters. However Aurobindo is buying its European operations with a EV of $1 Bln apparently ( $320 mln in annual sales) and obviously an easy divestment for ACT and the news has seen a $14 or 8% jump in the week’s trading in the US. After hours trading added $2 on the news . The synergies come from the operations tie -up with the 200 strong pipeline at Actavis

Gold’s busy start in this year’s trades, enthuse Indians but they have traded less of the metal under clampdown driving prices down in 2013 and the story is likely to repeat from a higher watermark below 30,000 this week

Comm stocks lead the indices back after a quick crash mid week on ticker news. Isn’t Debt trading news looming from the Central Bank?  Meanwhile if IRFs had been actively traded the rates started the great slide from 8.8% levels and would probably close  a 100 bp lower in due course whence RBI will return to relaxing the 7.5% Reporate ( excluding the 7.75% last tick forced on by the new Governor) Floating Funds would have a few investors more and any survivors of regulations may have new FMPs to this sector, but will likely be late again. Meanwhile the 10 year can well trade below 8.5% this week.

Energy stocks looked good for this week as well, but it seems there is a new LPG subsidy likely on the ticker for them. Kotak and a host of mid-caps report tomorrow and Dabur and M&M(Fin) follow HDFC with Biocon also reporting on Wednesday.

Midcap indices will probably harness a lot of gains in the week, none of them ready for a harvest of Sell on news tomorrow or Wednesday Avoid the L&T trade tomorrow unless you are fairly clued in to a tepid results expectation in the market

Edelweiss also reports Friday but the crown in the jewel should be Glenmark, that has already up since last week from 500 levels

India Morning Report: Markets may have a great week from 6200 levels

Sesa Sterlite is the only bad news in the market despite what the SGX Nifty might have you believe. The silver linings playbook again plays out the unearned expectations market economy built into the logit mind of the Indian markets with enough logic to propose either candle to the trader at 9, now bothered no end by the SGX Nifty only on Monday. The rest of the week will see the good tick in Maruti with a flurry of small car launches to regain share in the local auto markets and concurrent good news for the industry too.

Japanese automobiles spurred by the Yen aside, Banks are ready to gloat on good results as the NPA circles are now wholly identified scab NPA marks admittedly on large parts of the sector but totally mapping out a clear sharper growth trajectory for the Private Banks and even the foreign owned banks ( there is one that is listed, however that may not get the benefit of the industry) Rupee will make another great turnabout from 62.5 levels back to even below 61 in inra day candles as FIIs return for earnings season

Lupin continues to shine and Infy has again reached the stratospheric levels from which it xan be a good short as cosmetic changes to the EC structure do not mean much for earnings prospects and the Sector remains on watch with the Rupee likely trying to make a big move up and not facing much resistance, Export Demand lull more a factor of Chinese and European dream fallout as both awaken to another despondent forecast in 2014 and TRade is unlikely to pick up till the second half of the year

The 6100 build up wll likely strengthen though with Calls written but the new OI may end up being a hedge. Markets will of course head south first and one should await the consolidation to finish before diving into the green (white) Candles. Shors should avoid sector s and focus on Tata Motors, Sesa Sterlite and even Infosys as cautionary wellness levels will be established (baselined) before discussing and mooving in on expectations from reslts and infact in the case of Infy perhaps the wait would last till the real results and 3400 /3450 levels cannot be ruled out for it in the run up

To underline stylised facts the markets are keeping (more like memes of a post crisis market) , apart from the big positives in Pharma ( incl. Sun Pharma), Banks would keep the positives for the day  and Monday reports that include India’s Services PMI may not contribute much to the market recovery but form a basis none the less

The IIP redesign around Capital Goods is long pending and probably another will be chalked up soon to get bigger weightage for Services. Meanwhile Capital Goods continue to account for an inordinate amount of the volatility despite a less than 10% weightage becaause of the size of the orders when they come, ensuring November was a really low score reported. TaMo’s 17% jump in US JLR sales similarily mean nothing to shorts on the stock. It is no time to measure and speculate on range Strangles esp short strangles so early in the series, but towards the end of the week you could probably sell in to harvest time decay.

Anyway, markets are not moving below 6200 significantly, Bharti ranges from 310 – 34 0 and so shorts on the stock may sustain existing shorts and build ups, ITC is ready to move up but will wait as profit taking is still suggested but will be brief given the cornering of the top prices in Thursday afternoon by a single operator (cartel)

Pre Open shows energy cos moving back up and note that a significant speculative interest has been started into the market with a build up in JP associates at its lowest levels for another attempt on Mount Everest by powered trading rooms

11am update: Unfortunately, markets have caught the correction inbetween and sitting on it, making this week at 6200 especially dicey till a south move is done into the market nomics. Also the move on Aurobindo is probably done. Any such new top off and profit taking now could trigger the move to 6000 levels. I am warning the watch tower only as there will be no editin of the report on Tuesday and maybe Wednesday before 11 am when I expect to be back , idling for this deed again.

India Morning Report: A new bank, not Citi, 8 not 4 and numerous other slips to the mile..

Vikram Pandit’s new efforts in India with Kampani’s JM Financial may get JM a 10% bump in stock quotes but it is unlikely that his 50% buy of the subsidiary and 490 million warrants worth 3% of the listed company with Hari Aiyar and wife in the new bank application at this stage will build on anything like branch infrastructure in at least the next decade, so watch out for questions on the application being followed closely in the media?

Otherwise of course the Chinese continue to prefer the number of wealth ‘8’ in their phones and registration plates for the cars that are sold and you should avoid gifting them anything with the number ‘4’ thats sound like the word for ‘death’ and Morgan Stanley leads the list of suitors looking for a bear to hold as Indian markets sit pretty on last year’s prudent calculations still not outrunning the underperformance in sensex companies in the quarter gone by. Markets are headed to all time highs probably but the next target is 6350, steady as she goes..

A wonderful FNO pick on Tata motors reversed my earlier opinion of the TV18 guest who chose Tata motors again but as stock vols (option vol in current month series) closed above 40 the bid to range the 280-310 stock trade with a bought put at 305 on a strike of 290 as recommended should gladden many a margin accounts. The strategy is brilliant only if when it opened this Friday, the bids in the normally not so liquid stock family  would not have quoted the ratio spread at a profit. Buy three puts at 290 at today’s open and sell four 280 puts in a minor tweak to the strategy played on the network but you could leave it a t 1:2 as well

Do write to us above and link in with your blog / facebook page in the comments. 2013’s dull exports and consumption story for India in the meantime cannot stop cosmopolitan urban India from turning Jiading(F1 track) and Pudong (Shanghai) and Lavie and “Caprese” luxury bags with Gucci stores springing up here now much after China’s $15 b market accepted them despite our protestations to the contrary .If not the Chinese predilection for lucky numbers, one could still catch a fancy to under-reporting ages , the ilk spied upon by Jug Suraiya on Page 3 in his TOI op-ed of today

ITC results should be eagerly anticipated and with infracos back in demand together ITC and IDFC will garner a lot of new outstanding demand volumes ( open interest) esp as JP Associates has completed a first rush yesterday to 80 on the futures. Sun TV is much better than Satyam though but both are equally risky on corporate fundamentals after the corporate governance in churn in either of the scrips. Sales of $1.6B at ITC in the quarter reflect the last of the big consumer companies making a sustained comeback after the jump in Q3. Europe based consumer goods giants including Nestle, Diageo and Unilever have already been singled out for investor attention in growth deficit hungry Europe for their stronger Asia businesses (ref FT.com, subscription required)

The New Drug policy is out though impacting margins at Pharma MNCs and Cipla & Lupin will also trend down on the repricing of margins across the board.

The main topic on this busy day could still have been the new RBI trend policy established by the WPI falling below 5% and the CPI having come in earlier. Though loath to check the sub indices this morning i see a Core inflation at 2.77% near all time lows and I do not believe we have seen the last of food inflation though April did not get to be a major run on the home makers’ wallets.

10 Y yields on the new bond have already responded vertically to near the 7.25% mark and thus RBI will take the whole term down immediately in the next three-four months before growth actually responds, likely leaving the rates below 7% forcing banks down on deposits despite the flagging demand and without more than a signalling cut in CRR. The news of more cuts was however the most important one behind Thursday’s heart of a rally.

 

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