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 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: Markets digest a rate hike and the new Maruti equation

India Auto ExpoYou heard it in 2009, Suzuki may go it alone:

The 7th Maruti Suzuki plant in Gujarat adding capacities to its 1.75 mln cars from Gurgaon and Manesar which has already seen union troubles in the North, will actually belong to Suzuki in a new Wholly owned subsidiary and as royalty terms have not changed the new production available from Gujarat in 2015 will improve MSIL’s margins. MSIL already is the dominant component of Suzuki’s global sales. The markets are however punishing Maruti for the loss of faith , the automaker springing the surprise from its ranks mid afternoon yesterday. Today’s morning quotes will be 20% lower and likely fall a further 5% tomorrow though 1200 is improbable. A Suzuki coming into India alone means it may be planning exiting its Maruti investment except for its commitments to successive Indian governments over the years. Maruti trade is being closed within this series as speculators likely get ready for a short trade in the new series after having been farmed in the construction sector. The Gujarat plant will supply only to Maruti production

Biocon is back in Volume breakouts from the switchout in cash

Rate Hike

Markets will likely digest the rate hike given good liquidity, as mentioned in Bank Policy Tuesday yesterday however the 8.5% and lower yields will now wait till end 2014 and at least one quarter of good growth with strong positive investments. The higher rate environment may not translate into higher retail rates and credit expansion may also not be threatened, but was it required? Yields did move separately from Currency markets before policy and thus Policy rate hikes squeezed the exchange rate back to 62.50 levels

Airtel again, Idea bhi

Airtel is definitely back in the mix, changes at the top likely positive even for Manoj Kohli who finally moves to the new businesses invested from the Telecom win for the Mittals over the years. Idea’s ARPU gains despite revenue per minute dying means both Idea and RCOM are also likely to see long trades and Bharti remains the back bone of he market as IT and Pharma break down. Tomorrow would probably be ITC again and the day after that Bharti

Bharti PAT is up 20% on quarter and ARPUs to 195 frm 192 spectrum auctions stamp their market print on Feb 03 and Feb04(post announcements). Africa ARPUs are up 10c to $5.80 or INR 360.

Sell 6100 Puts

If you are finally tired of shorting the market and Ashwini baiting from your camp you may join in too but ahead of expiry, 6100 uts are likely to look tempting and markets will close 6100 with such a huge magnitude of newsflow  getting hope trades shucked off by early market moves last week and shorts on DLF , Unitech and HDIL would likely be the biggest winners of the series. The days trading would likely see a similar mood sneaking into 6200 uts , which however is a function of the other market forces discussed with a 40 point increase in NIFTY being par and leaves tthe markets at 6160 and markets may not want to control further BEAR GREED till todays close whence the 6200 trade still rewards that additional risk

Banks are a big buy

10,600 seems to have done it for the Banknifty and investors are likely to stay glued to ICICI and HDFC Bank on the rise. Axis Bank fell 3% yesterday at the fag end of the correction ( on markets breakdown post Maruti announcements) ICICI Bank reports with India Starbucks (Tata Global) . Starbucks ma also prefer a new 100% investment in India after 25 stores have opened with Tatas.

After ICICI Bank’s clean sweep today, tomorrow will see earnings from Hero sandwiched by Bank of India and SBT and after the Adani and IDFC reports on Friday we close out earnings season with a fairly robust performance, near 20% profit growth still standard fare for the biggies.

Other Results

REC, M&M and Cox & Kings report on the 14th of Feb, ILFS Transpo, Page (and Lovable?) and Finolex Cable on 12th and Bombay Dyeing on the 13th. Lovable is doing well in the trade prioritiising for the New FMCG adds in 2010 IPOs

India Morning Report: Maha gets Power cut regime, will the apolitical vote amass for a functioning government?

I for one can understand a politician like Kejriwal responding to stonewalled government in a way so the Indians know the daily challenges he faces. However, I am a very recent convert , made by tea sellers, esp the ones headlined in Bangalore who saved a lot of lives in a road accident. Then you must understand the vote bank politics of the other religion as well however, and the partisan nature of supporters for apolitical ‘figureheads’ like a Shashi Tharoor. Thus, the market will probably understand now to stay out of the political potpourrie and concentrate on performance, putting paid to an early rally and Goldman Sachs sell side, probably scratching a head or two on their own.

However, the INR 92 B power cut giveaway from the Maha Cong( a new definition for the local polit in Pawar country)  may actually cut the collation of vote from around AAP (Affirmative action politics) and Independents in one fell swoop, a lesson for those disenchanted to get on with their lives more than that other activists presuppose esp in centers like Bangalore, where enough time sheets were safely filled for a full day’s work  when AAP congregated in large numbers. And yes, Delhi Police should belong to Delhi only. May the good lord wish Godspeed to all local politicians without food splurges as a journalistic reprise so the breed of politicians may grow. India’s young definitely need to make a crossover to social streams in serious droves and without compromising athletic and able quantitative careers. India meanwhile will continue in force with the roadmap already laid out and credit conditions having returned to betterhood. So, infracos will e back and I am staying away from the self leveraged promoters though. (Sun & spice, not just coincidentally, was speaking on ET now as I finished this report)

I hope you understand by being a cogent summary of issues, here above is pour moi a non adjunct part of the report and also discourages – flying eagles from supporters who like to do so without reading or visiting the site affirming old affiliations or otherwise and without writing back their opinion on the issues

Indices are holding 6300 in a wonderful response to the results season. ttk results yesterday showed a INR 900 mln drop in just induction cookware after a 6 month flurry of sales of the new technology. In the wake of subsidy additions to 12 cylinders a  year which was expected, the recovery from the slump is questionable but the base effect of the October to March rush will be sloughed off by the end of this fiscal

ET is stuttering a little esp in print in the second phase of its consolidation after the ET Now launch. Sasken’s jump escapes me I having access to only their financials and their getting a new CEO from the ‘neither here nor there industry’ Many technical issues with ET streams and their renowned ad bartering systems may be in play apart from TAM in rendering the weather there on prayer. Is anyone taking advertising companies public, or is the FDI uestion kicked a unique insight?

The PCR has normalised at 1.02 and more availability of F&O data now biting traders, esp with NSE not being the only layer? unlikely. I hope you use an Excel spreadsheet( download the ones with all strategies from the web) Banks seem to have dulled out though trading volumes have returned for three months now and ICICI Bank results are likely to be as  positive surprise as ever, crossing the 30% yearly growth threshold

TCS shorts would have been a very small party, but the scrip should have been likely to keep going down well below the 1200 levels. However the given stippling of the range , with a splat 6300 on offer instead of 6250, most retail traders should just keep out except for the MidCaps which have been on a mad rush and ar not sell on news. Kotak reports today, Biocon tomorrow before HDFC. The FII ceiling is stuck on at 74% in that parable of India Inc however. Federal Bank has received the stake increase approval , FII limit to 74%(udated 11am)

Emami’s restructuring seems to have worked out. One only hope the management can keep the momentum to carry out the strategy to the finish line, the comany increasing Operating Leverage stiffly to post a INR 1.5 B profit from the 1.1 B a year ago. Cement again remains a underperformer with the expected poor results this quarter. I am going to be catching up on Bharti infratel too on Thursday so that is definitely on the Good shortlist(Mine) again. Dabur’s case is more complicated, though FMCG is running much better and I am bullish on the sector. Parting shot surplus: sintex who? what? no.

India Morning Report: Markets horrified by ‘unaffected airs’ slip back to keep rate cut

English: Logo of Bharti
English: Logo of Bharti (Photo credit: Wikipedia)

 

Markets sit on a big slip as they await the 11 AM announcement of policy rates and the afternoon meet the press with bankers. interestingly this is the closest to near unanimity in market expectations held together by all stakeholders including different institutional and brokerage based analyst teams on research and bank economists and other commentators that the RBI will be giving a 25 bp cut after inflation has fallen in line and the need of a stimulus is par for the course. However, the likelihood of the unlikely event is still finite in that no one expects the Central Bank to ignore the macro weaknesses and so far the prudent fiscal path is not more than a promise either. To cut the longer story there short, the question of the RBI not following through has really made the sentiment jittery(threatening?) ahead of the announcement

 

Interestingly GMR to take a infraco on point kept its head above water(closed positive) while the Anil companies celebrated the gold rush with the rally peaking above 6000 levels and Bharti’s deal today for 5% equity (new, post issue stake 5%) to be issued to the Qatar fund or other events like results are largely being ignored in the morning session. The session’s preparation for the q-case of the Central Bank not conducively incentivizing the markets thus means that the rally is still on and will not breach 5800-5900 levels on the downside after a sharp derisory devaluation of the PER of the indices today. The optimism on the surveys has however like us in the past led to a forecast skew towards the right with the india positive commentators opting for a 50 bp cut signal from RBI

 

Regardless of the bank policy announcement however, its outlook will remain cautious till the end of this quarter bu t may include data to prove reasons for becoming bullish from July 2013

 

 

 

India Morning Report September 17, 2012: A New High For Nifty As India’s Reforms Story Rushes Get Canned

 

The usual climactic rushes surrounding India’s reform measrues have effectively been canned with the coalition stuck Congress able to push thru reforms from UPA2 while keeping the support of the SP, BSP and even Mamata Di.

The usual protests and demonstrations apart, just in retail it’s going to take more than a year before the existing players from Bharti’s EasyDay to Reliance and Future Group reorganise their operations along statewise lines so individual permissions for JVs can decide their partner’s equity in retail

In aviation, there will be no takers for the 49% stakes except for promoters in Jet or new investors in Spicejet while one is praying for air India and Kingfisher.

But, why waste a Monday morning in recrimination ( and last time markets would have crashed on the mere whimsy that the sky is not sunny all the time and it is not raining everyday) hen fibnally everything ont he reform agenda has been finished in time. Well, there is still the case fo a new Divestment target which is unlikely to fructify as PSU CEOs put their foot down but then a Diesel and LPG hike could have made any balanced intelligence see the folly in a downgrade (which as brinksmanship would have it, takes India to junk status)

The markets will hit the path to 6000 today but as outlined above it is likely a messy positics that ill muddy that scenario for indian bourses soon as dollar inflows make markets so steep on the uptick that a deeper fall is inevitable. However, having invested in, none of them ill be planning to leave at this stage, the waiting time being immaterial for the returns expected.

 

UB SALE to Heineken, and other voyages of the Indian spirit

Wow O la la la leeeey o! My Kingfisher beer is safe thanks to Heineken getting to buy a13% stake in UB from Vijay Mallya’s 23% stake. The other 14% or more stake in the spirits major lies with UB holdings. Vijay Mallya’s personal fortune adds nearly half a billion or INR 25 bln ( $500 mln) at the market price of 545/-

And of course lot of leis from the Hawaii layover ( just la la !)being added to my map but then Heineken had been trying for 5 years now or am I a little tipsy! There is no aloha here in India, desh even in New York or anywhere else except Hawaii! Maybe Vijay Mallya and Lalit Modi can set up a new League there and let it be! Mallya’s KFA is unlikely to survive with anluy 20 planes and now half the operations shut down.

Similarily, another indian experiment lying low, on a series of bad puns, is Tata Motors with Landrover sales obviating sales figures of any Jaguar models or cars back home even though the new Nano is selling nearly 6000 units a month and has a 800cc version in the works

The “sell out” (OUCH!) gives majority control to Heineken and access to 66% of india’s beers and probably more share of its Whiskies and other white & colored liquors capacity W&M stays on the chiopping block in its overseas holdings for a minority stake.

And why did Amazon come by underground sea cable?

Image representing Amazon as depicted in Crunc...
Image via CrunchBase

Amazon.com landed in India ahead of its First fulfilment center as its own internal business models are delightfully more complex than the country’s FDI,. sales tax and excise regulations. While packaging centers may get into excise inspector brouhaha with the Supreme Court adjudicating ( Freaky Friday Speculations)  adventurous Amazon executives may also be wary of getting subjected to multi Octroi, Sales tax and local taxes ahead of GST roll out in the country.

At least those are the typical silly stuff one avoids by starting a totally desi business in e commerce thence it can be sure of getting what Fabmall and now flipcart are getting in terms of taxes and accounting.

the testing of waters with junglee.com is however more likely to backfire till it comes with its full range of shipping made available at a safe and reliable amazon.in. Indian customers a re a ticklish lot and though they suspect nothing in government and business is above board they by and large do not expect to partake of that in their daily lives. We did not welcome the Apple stores till the latest iMacs and iPhones (iPods) were available simultaneously and we will not let Amazon get by on ebay like junglee.com.

Amazon founder Jeff Bezos starts his High Orde...
Image via Wikipedia

FDI wise , trying to escape a multi brand regulation framework is going ot be impossible for amazon and waiting for amazon.in til 100% FDI is allowed would be one option that India phobes have shown favor for but likely that will only lose them more business in the World’s #2 English speaking Consumer market. The loss is all yours as Chindia trundles along.

Junglee.com itself came and left back in 1996 and now will feature 12 million products from 14000 brands to keep the portal available, but consumers are likely to wait till Amazon can get a clear decision, esp if it can introduce Prime here, international shipping is a bore and a real swindle on a retail shopper’s budget as Jeff Bezos would understand

FDI momentum for India’s growth

India remains the #4 destination for FDI worldwide way behind China as less than one third the rate of FDI

Armani Exchange
Image via Wikipedia

hitting China. China’s FDI changed characteristic at the start of the crisis to a Services led growth in the Central and Western regions , moving away form the Eastern seaboard and even as wages increased at the rate of 12% per year it stayed in new Services areas and current enterprises in McDonalds,, Starbucks and GM continue to either grow or as in GM’s case battle new 11-22% duties but remian the dominant player in China.

On the other hand, India has turned away many in retail from Ikea to Walmart, keeping those planning JVs in the play for more thna one reason. Yet, Till November the eight months of FY2012 managed a $22 bln inflow

Deutsch: Moët Hennessy Louis Vuitton Logo Engl...
Image via Wikipedia

of FDI, $15 bln having come till July 2011 and data for December and January incl LVMH and Starbucks but excluding Carrefour and Ikea still expected from official sources.

FDI in aviation allowed to Foreign carriers is yet to bvecome a happy event without a ready pipeline of bidders and local sourcing restrictions helped a couple of 100% entry decisions get shelved

English: Simone Singh at Jimmy Choo Bash. Phot...
Image via Wikipedia

FDI averaged $2.8 bln, $1.7 bln, $1.1 bln and $2.5 bln from August onwards and likely stayed below $30 bln for Calendar 2011. China in the meantime crossed $110 bln for 2011 as FDI alone even as new exchanges in Schenzen paralleled Hangseng in size and grew business on the last remianing Indian bastion, the Equities Capital Markets, India’s natural advantage in a well understood global ecosystem lost in China’s sheer opportunity and advanatges of quick execution and operationalisation we somehow never wanted, putting the blame on the democratic process.

English: Logo of Ikea.
Image via Wikipedia

Fortunately, India’s infra sector does not suffer from those bottlemnecks that much, except that the Land acquisition itself has been an issue for many projects and the Power projects in play already beat by non availability of coal and sector specific finance deals

Up ↑

%d bloggers like this: