India Morning Report: Markets out of the 7800 orbit?

The good index run aagain seemingly breached the ceiling put in place by new levels of 7800 and has crossed into virgin territory to target 8000 – 8350 in the next 2-3 months. Select buying has indeed completed reweighing the few fundamentally stocks up and also corrected a lot of unhealthy speculation built up in residential construction stocks, all lying in hock and weakening the buy sentiment without any concomitant improvement in demand

Auto loan companies have been an early focus in this rally since last year and prospects for them continue to improve. However, Indian automobile markets oevrall continue to operate in a capped uptick in demand scenarios limited by the continuing incapacity of Indian businesses to interest a larger segment of the potential consumer markets

Cyclicals will continue to bring rewards to select blue chips as the mid caps have run out of interest from bulls looking for a new sectoral winner or two. The cut in IDFC probably shows the exit of the residential construction pairs and will probably get a new lease of life to 230 levels in the week. Growhth in SBI and YES wil tally up behind ICICI Bank and HDFC Bank

ITC and Bharti continue to be interestingly poised for a fresh breakout. The interest in Cement stocks is likely to wane till concrete month end reports of demand improvements follow with news of monsoons taking their toll on construction sentiment as well

Asia and US Markets moves on Monday will aid the sentiment in equities as India inflows cross the $24 Bln mark this year



India Morning Report: Portfolio inflows, Infrastructure Refinance and that Nifty 50 bet

India Inc has a lot of future restructuring headed instead for the refinancing pipeline as take out financing became easier this month, as ET mentions aINR 300 Bln changing hands and freeing banks to lead the cyclical upturn Bonds in the meantime have stucj on to 8.5% in the new 10 year bond again after a not so easy Central Bank statement even as long term inflation expectations settled down and a 8% CPI can comfort from the price cuts in Petrol. Global oil supports our currency unwittingly as it heads to its lowest levels and US bonds are set to drop below 2% yields with equities buoyant globally and thus leaving Indian equities on the top of the game.

The Trade deficit was a lot more respectible as we completed 12 months of curbs and Gold imports were down 25% along with downticks in Iron ore and Silver that I hope were more of a nature of cyclical corrections in demand. Hindalco and ONGC had good reasons for profits to not keep pace with the topline and Options traders continue to look at a rosy prognostication for August closing after Janamashtami celebrations tonight. 

I’ll be buying banks again through this cycle depending on Yes Bank and IDFC to provide quicker coverage of range when indices move right and out of the new 7800 clamps holding them in for some time. There is no real policy change for India inc from the Modi government and the uptick is going to last more than a decade and a half



India Morning Report: FIIs buying index spreads again

So, any limiting range of the market is surely just a sign of accumulation for the series trend and that is definitely up from 7500 till at least 7800. One should get used t o a mild worry on the WPI as India inc is not really working on 5% WPI assumptions and the continued lows may be welcome however any misstep would not be counted as dangerous at this stage. The downtick in Oil helps as Petrol at the pump gets cheaper and CPI stays down from the last June figure and WPI will stay low and ease in to the festive season when one must again watch for a spike instead of the growth in GDP expected

Adani in the meantime is moving into Power with a big buy in Karnataka/Maha on the western coastline. Banknifty is looking meaty sat 14800 but will probably trace back to 14650 before striking up on the rebound, even as Dabur and Marico take up the unexpected rally slack , the market finally settling down from the heady pre poll pace and midcap buzz not unnecessarily spooking the markets

 ONGC and Tata Steel underperformance was on expected lines absorbing longer term costs and seasonal demand variations, still reporting good sales



India Morning Report: Markets not ready for definitive moves yet.

26000 has come. Or rather the moves will be completed yet in the morning or afternoon session. With a lot of buying being hoped for, the market makers will likely let in the draft and allow more orders near yesterday afternoon levels and rush back at day end above the final closes for Independence Day as the short weekend implies a last trading day tomorrow.

HDFC and HDFC Bank continue to rush the bull trend and allow others in the NBFC/Banking pack to restart an uptrade later in 2014

7725 is also thus probably not the closing mark for the week and reaches to 7800 levels ( reaching in the Indian ficition identity sense, still calling them English writers) .

Orchid Chem real estate plans continue to entice satta and matka pack subscribers l;eaving Bharti and IDFC on SMS , i.e buy much free much retaining big value for a continuing investment mode for stockowners and newer investors for the remaining decade til the first 2020 mark of a Super power India vision unfolds our Demographic ( possibly ‘lead by then)

European equities could be ready for a big crash and will have pull down effects in larger Asia with more than the normal lack of correlation as European investors continue to know India inc better, esp with our largess at picking up over the hill sick megaliths in the continent in outward FDI

Reliance GIO seems to have got off to the true india promise of sub standard delivery , reach and marketing affairs and remains a beacon of a dead and rotten Bombay probably rushing more out towards Pune and New Vashi. BHEL completed the big stinker after a phenomenal reward by the satta and matka gang int he rush for Capex stocks on India bets

In other unlisted business, though GIO is now recognised as part of a listed company,  Pizza hut has indeed come a cropper in Tier 2 cities ( hoping to flip a FBK report the right time one of these days) after getting a couple of rounds for spoiling the run of Dominos in the 100% growth in QSR in 2009-2011 before India inc’s misfortunes matched with Rahuls brief tryst with public forums.

SBI will lookie look keep above 2420 levels but just barely. For reasons in the unlisted sector and oevrall demand, Jubilant and Speciality will get closer to announcing their closure ( from just public market behaviour) and join Sehwag, Gavaskara nd Tendulkar businesses for a free Health camp in Western UP

Nikunj,(ET Now), again gets cornered into a new push out, looking at glum predictions asking for recovery to come in second half of 2015 ( which is probably just October 2014 Diwali time, and not any expected delay in growth plans of India Inc.  giving a lot of alfalfa for network broadcasters as they get into corporate screens expansion and retail subscribers ( who do not use the mute option) stay at 2011 levels ET Now despite being part of a public Bennett and Coleman would be my ultimate candidate for the unlisted Economy, acting in true private equity fashion and getting a lot of PE sponsors looking for a penny investment in Indian demographic reach out.




stub needs cleaning

India Morning Report: SBI well placed to move indices back to 7800

So it probably will be HDFC Bank in the lead this time as it has the best chances on valuation deficits despite the recent pre IPO move, as it has not discounted its continuing 30% PAT growth in the recent block of 4-5 years flummoxed by approved  FII limits. Markets can close pre August 15th anywhere between 7500 and 7800 as the markets are ready for the range to start up on a bigger trend, once institutional buying is done. The Rupee can probably move up on the continuing good news data as many at HSBC, Stan Chart and other European investment banks revise their ASia bull trades in rates, fx and equities

We are also flummoxed by the bid up in Cement prices as always in Indian predilections, choosing a monsoon pick up in demand to overlook bad cycle residue after a damning CCI decision that the industry has never recovered from and Infra demand that is still waiting to track the best performing infracos that would definitely lead the trend. Ofcoure the sector alongwith textiles, still automatically implies endless price rigging . Markets will try and close above 7700 today and near up to 7800 levels tomorrow to reward Options traders having sold higher index puts.

SBI will not move below 2420 levels


India Morning Report: Rupee tracks at 60-61 levels

In search of an elusive uptick from new lows, the Rupee will however continue to trade stably at NDF market levels, lending vaporware the claim to appreciation rupee may have had, esp as the US Dollar also starts strengthening based on Q2 performance. 

Banknifty seems to have still more room to trade down despite State Bank making expectations and confident of upturn in business sentiment going forward. However the fall in income estimates of banks are likely to show very small losses in the Treasury portfolio and room for some gains to be book too to balance the same if any of the HTM policy changes flow thru to their balance sheets. Markets have to lead this leg of the coming down of interest rates

Markets have a sharp pre open cut, lending credence to a likely revival in mid day trades and closing levels may not move below 7550, but Option traders may utilise the range move in the day to hatch a bullish plot, selling 7600 puts towardss the close int he more adventurous portfolios. 



India Morning Report: Markets look to ease out to 7500

FDOI opening in the Railway infrastructure area and finally getting approved for the 49% hike in Defence means better traction for funding down the road, but as of now, markets have peaked and would like to settle down to 7500 levels before another attempt at another peak as BS/ET outline how India finally scores ahead of Indonesia even as China sentiment takes a dive (yet again) locking FII money out for a few more months

IPCA action is likely negative only for the company and not the Domestic Pharma players who have also strengthened their international folios like Glenmark and even Lupin and Cipla. Two wheeler cos continue to see a tumble but all said and done Bajaj still stands proud while the Hero wars have taken a few pieces out of Hero corp in spends and Honda is not a l,isted player though a deserving no 2 in the mass market, even no. 1 uin less than 2 years from now.

State Bank results will probably start the stock up from 2400 levels it has been hanging on to.


India Morning Report: So what is it, you are bought in but 7500 is on the way?

As classic sell side advice used to be in another day in “ordinary ‘ markets, You should stay in, Hold on to your positions, a strategy never admitted to being out of Fashion, but that has not needed being said in the last 7-8 hectic years for equities looking to volatile markets for the daily

Also the rally in Cement in the monsoons should warn you as the sectoral uptick in performance is more a temporary function of inventories than a ‘residing’ upward change in Demand and the sector has to make up for a lot of underperformance during the down cycle

A great quarter for Auto sales, SLR release (HTM) in Policy, when exactly will lending rates come down? There is a new 10 year bond on the way and 10 year yields will again start down from 8.5% , but that just means a month of hectic buying in Indian public and private debt.

Results have not been so great for Auto companies, with Maruti sort of capping expectations on a profitable quarter and Hero reporting its gargantuan marketing spend behind the increased festival yield. As we mentioned in the Bank Policy Tuesday piece yesterday, the markets have however been capped at 7800 and are likely to start down first to 7500 levels from the 7750 mark achieved yesterday.

Banks will be unduly under a cloud today, a great opportunity to buy all cyclicals as markets assess the individual losses on selling SLR securities into the broader market. The uptick in IT today is a great sign for shorts , though the sector could ride out the cuts on the indices too ( unlikely , just a 1 in 3 chance ) as Defensives given the even performance from the sector. Meanwhile the speculative breakdown in Oil trading means the Oil prices could drift even lower from here esp with the Brent finally testing long term lows near 103-104 levels. Energy companies are thus unlikely to get a reprieve

In unlisted business, Samsung has been beat by local competition in both India and China, Xiaomi matching Micromax’ feat in India as Micromax shrugged off the challenge to a 16% Market share in smartphones.

In the broader market, some bulls could get tired and shift to lower Put ranges, while the DIIs come out stronger to buy in the remaining week as Economic data has built up quite a scenario





Bank Policy Tuesday: A ‘real’ impact of a SLR cut

The change in HTM ceiling conditions to 24% of SLR as the Central Bank indicated earlier through the pronouncements of outgoing Dy Gov’nor Anand Sinha last in 2012, was finally effected as part of the mid year policy review in the afternoon today. The no rate cut limitation in place because of the slow moving inflation data was attempted to be set off again by a cut in SLR to 22% of their NDTL and as banks are already sitting on much more SLR, at 26-28% (ET) the same is unlikely to cause banks to provide additional liquidity in the normal course. The banks can exceed the HTM holdings by extra SLR holdings as long as SLR holdings are 24% of their HTM category investments

As HTM ceilings of 25% can be exceeded now with a lower SLR limit of 24% however, the same may lead banks to get their SLR portfolio pruned earlier and thus hasten a little momentum to Indian GDP growth even as Private credit makes a comeback, apparently with a more finite ( improved from infinitesimal ) ratio of infra lending by banks and some non Real estate lending as well. Indian Services  sector data will also likely surprise on the positive side following the similar beat in the UK though China slumped to its worst Services PMI in 5 years

The Rupee looks set to come back froma bottom as well, after some good news for the RBI governor in an otherwise expected sea of long faces on the missing rate cut, seen by the market as a clean signal to investors and a clear signal evincing the revival of the Economy. The markets posturing however is unlikely to break the market trend which has recovered to 7700 but is headed to 7500 in the coming fortnight after 7800 was ignored wilfully by the markets earlier last week.

The Indian 10 yr Gilt in the meantime has moved closer to the 8% Repo rate from the earlier neighborhood of 8.75% near the MSF rate from the Central Bank at 9% . As 10 year yields move further down below 8% ( likely >90%) banks may nevertheless bring down lending rates in an expanding market before the Central Bank gets to it and announces a couple of rate cuts in 2015 and hopes rise of a return to a 9% GDP rate for India once again

If anyone here attends the Analyst conference later tomorrow dowrite in with your commentary on the same.


India Morning Report: The Economy is indeed saying differently now!

The markets have however retreated and will likely continue back to 7500 levels as speculative favorites like construction fail to take hold and only Domestic Pharma and real infra stories like Glenmark and IDFC lead in a blazing trail of glory. Other Domestic biggies like Lupin and Cipla might come back as defensives in a weak market as well.

Inflation for Indl Workers slid to near 5% marks last weak and manufacturing PMI was a rosy 53 ahead of the expectedly buoyant release of Services PMI this week. The US GDP for Q2 at 4% augurs well for the global health and The Rupee can continue back against Oil cementing gains from the fall in Oil prices instead of staying below 61 levels. The Fiscal deficit challenge act will be much easier with the benefit of a positively enforcing growth cycle this time around and GDP can easily score above 6% in the Q1 estimates to follow next week. Speculatively sold Puts in the new series continue to gain initial traction but with the series showing a growth in interest across all levels between 7300 and 7500 the market confidence will take time to build up llimiting the series range on the upside to 7800 despite the Economic gains showcased in the data

India Morning Report: A new series, a new unfolding bull rally segment

The markets will start from 7700 on the Nifty and the Banknifty will be in the lead from 15200 levels as cyclicals celebrate earnings and non performers already discounted out of the rally remain worse off after another bout of results including DLF and banks like United.

The Sensex is also near the 25900 marks and has to lead the economy’s run up to 8% growth levels as investment returns banking on a majority government at the end of an extended bear cycle since the end of 2011

The markets start the morning slow in the preopen call auction but are unlikely to remain weak during the day. Pre Open markets have shown a tendency to discover the end of the “other trend direction” in the first thee years of its existence but is also a reliable indicator of the markets per se. DLF continues to be the prime concern before 9:15 and IDFC, ICICI , YEs and Bharti and ITC can easily take up the slack except for the sell down on Sun Pharmas Ranbaxya acquisition which continues to not find any sponsors in the wider institutional market.

Auto sales will also be a big positive as figures trickle in before noon


noon update: rupee has receded to 61 in search of settling down at 63 levels negating the gains from the petered out oil rally..

India Morning Report: Forget expiry, are these rates available tomorrow?

Sadly, no such rush is likely to be evinced in the markets given the realisation in everyone’s minds brought about by extreme caution and fatigue from 5 years of a on and off recession and not much progress for India on the growth front.

However, markets are likely to continue in the green given that the cyclicals have definitely resumed the lead, allowing the still hit sectors to continue the second half of the fresh baselining of market valuations meaning defensives and construction stocks that could not get a look in get into position for also being part of India’s revived growth.

Cement picks could however still be dicey to keep in ones trading stock and one should stay with cyclicals that are already in the winning habit. GMR Infra would need to replace JP group in many portfolios with their exit from more Power projects and continuing commitment to reduce debt (and revert to real estate project business) US Q2 GDP points to a rosy business cycle growing out of the leading rally but rate cuts are further down the cycle well into next year and euphoria is not advised.

We see a revert from 7800 levels again unless 7900 is breached and market indeed heads for 8000 in the new series. A reversal in the new series ( unlikely , <5% ) is going to take the market back to 7500 levels. However till the market breaks 7800 decisively the market would continue to rest till 77000 levels (26000 on the Sensex)





India Morning Report: Nah, the expiry, did not get that correction again

The Expiry draws to a close and though last minute arbitrage is better possible with some quick cuts on the indices till Thursday, today is likely to see better traction for the entrenched long term investors , who as of now do not seem to be sensitive to the admittedly limited down moves of the index. That means the better auto sales data expected towards the end of the week (from tomorrow) is likely to hold sway and the indices will probably close the series above 7700 or not too far below the 7700 mark keeping the battle limited to small touches on the 7650 line as the indices come back in the new series on indubitably better economic data. The monsoon has recovered from 45% below normal to 25% below normal and though the mark is still sore and red enough worth a scream or too, markets are likely to bite more on the positive side

Bharti and ITC posted good results. ITC as usual taking Q! out with a double digit growth in FMCG volumes to INR 61 Bln levels, one can assume to be the new minimum for FMCG sales of the behemoth. The tobacco pdt sales are also firm at a 64% margin, withstanding a bout of heavy price increases.

Bharti’s production seemed good on ARPU though  deeper analysis of its India vs Africa business is impossible at the moment

I can still look at YES, IDFC and ICICI Bank taking off together on the plus side, with the disappointment on L&T was easy wenough to see, with the PSU turnkey producer continuing to focus on its improving PAT margins and hopes to complete the turnaround on its order books in the next two quarters.

Domestic Pharma remains a great profit making opportunity and dealmakers are sure to follow on the good ongoing trend in the bourses.

In unlisted business, Flipkart seems to have won a round or two against Amazon with the launch of a quasi Prime service and new funding though at $7 Bln funding.

Markets will stabilise above 7700 levels only.

India Morning Report: On an as-is where is basis?

Markets are still ready to test the 7800 mark with Bank nifty falling to 15350 levels on Friday and ICICI Bank only reporting towards the end of the week. YES Bank however seems unnecessary subdued at 540 levels unless the stock has been given the heave ho for its general mid cappedness, to which I have not had the time to see any early or late slowdowns in business segments. Promise of new business segments has not been ever marked into the stock or is likely in the foreseeable future.

The Put floor for the Nifty indices has moved to 7650 and likely will not cross to 7700 levels till a final thrust into 8000 levels happen. Glenmark is likely to remain the uncontested gainer as midcaps consolidate at lower levels with another 30-40% performance left in the stock. HDFC and HDFC Bank will resume the week in positive territory.

IDFC also starts afresh at 160 levels and Anil Ambani (Reliance/ADA) group companies could take only 2 days out of 5 before the trend consolidates again. I am still not convinced of the Sun Pharma story or that of real estate stocks being able to play the coming infra boom. The JP Power deal for its hydro assets, probably finalizes the evolution of the group into a holding/trading company all over again and will unlikely be signalling any new capital infusions for the infra project bids to come(if any).

Bharti and ITC seem to have maintained equanimity while the Jet airways stock is likely being accumulated by event based and longer term strategy funds for its policies and potential.  The jump in HEro moto is likely to break midweek once the up trend firms up and the Bajaj Auto -Hero pair can come into green again

Adani group investments and the Gold finance duo seem to have run out their upside again and markets can potentially relax hold on current levesls till the uptrade returns in Power NBFCs

It’s Morning Report: Nifty on to new records at 8000 levels?

The indices climbed out of a big hole on Thursday as they completed a drop back to 7800 without losing the uptrade, with ICICI Bank results on 31st likely to see better levels for itself and the market. IDFC and YES remain the best picks followed by higher returning midcap Pharma stocks like Glenmark.

Futures trades fof 2004 instrumental in keeping Options trade volumes insignificant can probably reenter futures only trading at these levels in the new sunny beat as India again times it right on the business cycle in unlisted business, Business school recruiting reports from March show the cycle upswing is likely been read into the tea leaves for 2015 and 2016 as well.

In listed and tech, according to our assessment Wipro and HCL T are likely to remain sore losers in the next two years as far as corporate performance is concerned.

Bharti and ITC Ltd seem to be back in the reckoning I would have been bought into GMR and HDFC currently. The Kotaks break out is puzzling as it is not really buying into business expansion and well be watching the stock. Power NBFCs and Energy cos should take back an uptrend each right now -,-

India Morning Report: Markets already closed at 7800 yesterday

And like all yesterdays news markets will trade lower till afternoon after reaching the 7800 mark, to figure out if they can indeed proceed. Bank results being a good instinct to follow markets will thus trade likely at near 7800 levels till the ICICI Bank numbers hit the ticker in the afternoon before close. I am assuming there is more NPA to come however. LIC housing and IDFC are still for buying at accumulation levels at 310 and 160 respectively

The 1 mln strong OI addition in 7900/ the Position at 7900 is likely to continue long in calls making a fall harder for the bears, short calls would have helped cross the mark early in up trade. Rupee continues to trade above 60.

Reality is already trading down and will continue to correct even if (likely >10%) markets move up before close out of the 7800 levels


Afternoon Update: Changes in Relinfra and other Anil ambani group stocks may be used to add steam to the infra rally later and may be ignored as IDFC and LIC housing carry upmoves.

India Morning Report: Another Day, another buying bout

Equities continue strong despite an overnight cut in the Dow as Asia follows in its wake ahead of China data towards the end of the week. HDFC and HDFC Bank are good for a long trade and more accumulation at these prices. Kotak and LIC housing also followed up in buying after impressive results last week from Kotak and YES reports with ICICI Bank tomorrow holding new levels before a likely positive surprise.

IDFC is the best poised for a breakout with the Pharma companies probably quieting down (Glenmark and Cadila) after the recent comeback trade.

Bajaj Auto and CESC might see better sentiment ahead of month end data as a better IIP data indicates production strength on the back of returning consumption growth.

Even if sales follow up on auto sales last month due trades will take Bajaj Auto to 2250 levels.

Bank Earnings Season 1Q 2014: HDFC Bank ratchets up higher provisions, still the best picks in India Inc

The 30% PAT line growth was breached however the bank has 20% revenue growth and NII has grown to INR 70.25 Bln even as a 65% growth in provisions makes the score on the Net Income also even at 21% instead of our long observed achiever baseline of 30% for performing Indian businesses. Net Revenues are up 13% on the linked quarter as we mentioned being the “making” quarter for private Indian banks. Even as the NIMs finally return towards the new nirmal for the bank post accounting changes at 4.4% the Fee income however remains stagnant at INR 18.5 Bln. The bank has investments in two insurance subsidiaries that will be going to IPO with increased participation from Standard Life. Dividends from them are paid to bank two out of four quarters in the year

Operating expenses improved only 4.5% even as Cost Income ratios for the bank returned to good scores at 45.3% from 47% in the prior quarter

Advances have grown 20% to INR 3.12 Tln and the bank seems to have finally started a late push for international business as its international share of advances grew to 7% from 4% in the linked quarter. Deposits have grown 22% on year

Provisions seem to be on a higher portfolio size of retail and corporate assets which are almost even for the bank at a share of 52:48. The miss in profits is likely to be ignored by the market after the initial reaction on expectations

The Housing Finance NBFC, HDFC Ltd also reported INR 740 mln in investment profits and a similar amount in defered tax provisions in a report after the bank as it reported Gross Interest Income slower than the bank on stable spreads, profits growing slower than costs and a spread trend unlikely discernible because of its seasonal financial adjustments to cost computations but static in Q1 and Q2 to 2.29% implying a much higher NIMas discussed in our reports in 2012. Net Income grew to INR 18.7 Bln. The scrip is up with the gains in the sector since January 2014, its bank company growing near 30% in the bourses in the same period





India Morning Report: IDFC, Kotak, Bank earnings and a 7800 peak

The week is likely to be good for India equities and debt markets will also be coming back as EM flows continue positive and Turkey and Brazil continue to scare people. IDFC is indeed moving on to 200 levels and HDFC Bank and ICICI Bank are due to report in the week while GAIL, GMR and Sun Pharma catch up with other falling stars at the back of the line. HDFC reports later today.

Power NBFCs will probably not remain subdued for longer in this rally and LIC housing is also available at better levels. TM and TCS do not look too healthy at new prices in the week but the Rupee’s new levels should ensure a better direction for them.

Ideas continued profitability should fox a few analysts too with investor support unlikely to be uniform after its volatility ina few upturns in the market

Glenmark and Cadilla continue up in the Indian pharma players. HUL will probably come back into play under 610 levels ( Mitesh)

Kotak’s key purchase of 20% in MCX is going to keep the stock above 900 levels for some time looking for a move. Axis Bank earnings uplift ahead of key bank earnings, is likely to keep Banknifty above 15800 levels at the close of the week. Earnings surprises at HDFC Bank and ICICI Bank should not move the index much either way.

YES Bank could move out to a new range

At the weekend (Friday Afternoon Report ) – July 18, 2014

Markets closed near 7700 for the week and Biocon joined those going off the cliff even as markets ready themselves for another up move from here. Interesting stocks losing steam include Eros Media too , not likely to be buyable for Institutions despite the likely intent to buy in these markets. Indian Bank buys could continue while the stock goes down but we are not recommending such stocks. Jet Airways remains unviable for investors with a longer term renewal plan proving only longer term investors are welcome int he business.

The red marks on GMR Infra however probably could be recovered back from 22 levels and LIC Housing will again start with IDFC on a high note on Monday.


India Morning Report: Will the Rupee stay at 60 levels?

TCS reports early today kept markets busy with HCL redenominating and the defensives like Hero up in sympathy as the currency tracked to 60.20 levels. Real estate looks lightly positive, waiting for real trends to emerge and vulnerable to speculative runs in the smaller midcap players, Indiabulls and HDIL still holding the sell end of many a pair strategies based in fundamental value in the markets. IDFC should probably move into channels above 220 levels for the markets to get a complete picture on the available value in the market and a deeper sectoral look at real estate is unlikely as most midcap and large players have already been called out on their strategies in the last 10 years leaving the new propositions for infra specialists globally or new teams int he unlisted/PE space.

The TCS $2.66 Bln revenue topline is in line with the workhorse’ stabilisation in both NA and European markets and the Indian currency will also appreciate back from 60 levels


Meanwhile SBI has redenominated itself to 2600 levels as HDFC Bank and  ICICI Bank report next week. Glenmark and Cadila have room for a run with IDFC and YES Bank as some Energy Companies (OMCs) also provide upside opportunities as the producers ONGC and GAIL stay south finishing their moves on the pricing news alternating with the Power NBFCs. Bharti and ITC are likely to go to the top of their trading ranges and Sun Pharma remains a mystery as it is unlikely to back its sterling scrip performance with any on ground upside in performance for the next 2-3 years despite the prognostication of good times for the Pharma Industry.




India Morning Report: Markets have done enough on the positive side? not yet..

Though prognostications of Valuations are not supportive are not entirely unwarranted and the rally has been one sided before the correction last week, markets have more or less established their range at 7500-7800, with a 1-10% increase in downside for the best failures of last week. That means that markets will stay here or move on up till 7800 at their pace or take a breather again till 7500 rewarding risk investors stuck in the middle of nowhere in the breach on Thursday/Friday. Options have quickly moved on to 7500 plus again (Put floor)  and should keep 7500 calls (Call ceiling) out of business after the decimation on Monday. China’s out performance too, likely not an intention on investors’ part.

IDFC took honours and Anil Ambani stocks kept pace, showing the importance of the ceiling to the market range in the latter case and making investment baskets again in the transition to the bad boys for the good side, as they remain the easiest to short come 7700 or 7800. Adani Port mandatorily becomes the lynchpin of India’s mid cap Infra strategy, the only one capable of tracking political and cocio-scultural risks the bane of ill equipped Mid Cap infra sector plays. With GMR and GVK also not making the route to ready deleveraging, IDFC and REC remain the spearheads of any such portfolio that read the infrastructure policy locus of the country. Longer term Infrastructure Financing is not here yet per se and a lot more needs to be done but Macquarie ( not the equity/invst desk) and 3i infra funds need to be supplemented by more long term debt, continuing QIP and execution on the ground.

TV18 reports on the short term positions built in REC and PFC point to quick gains as these fail and wind down. REC bottoms out at 283 at the worst case and is probably going to be a big move.

ICICI Bank is also back in a short rodeo ride to 1460 but will wait at lower levels in earnings season as it habitually reports later in the cycle. Bajaj Auto earnings report today for the quarter. Page and P&G (together on the ticker) look extremely promising too. I am yet not sure of the moves in Petronet LNG and GAIL after the PSU scored to 430 levels. Kotak earnings today continue to report increasing NPA (Gross) and NII but the NIM lead over competitors with a large retail portfolio continues to be a business driver again, volumes for the bank have refused to move substantially in more than 5 years now and it is sitting on Tier I Capital closer to 20% currently with a 15% jump in Net Worth on year. CASA for Kotak’s high interest accounts has moved to INR 190.4 Bln. Corporate and SME Banking has made a substantial date from Q1 to Q2 however, up 27%





India Morning Report: Banks return indices to glory

Overnight, Yellen presented her semi annual testimony to the House Committee on Banking putting forth a new calendar for the US interest rates to return to normal, feeling unconstrained in her criticism of the failed objective of growth. Back home, Kotak reports business as usual and picked up on the day of recovery of banking sentiment as the day ended in gains for SBI too up back above 2500 for a start. YES Bank reports later next Wednesday to change its priorities again.

The sharp coming rally in the Dollar may allow Rupee to drift to a new range low of 61 as well but one still wonders if Rupee will indeed rule above 60 at all in two months time. We expected FIIs sitting outside and having exited bonds to have come to other EMs and India debt again, having exited back in April

Adani Ports picked up again from where they left in the post election melee as infracos stepped into the saddle and yet not large cap Pharma plays displayed strength on rising Export shares of pie as well. ICICI Bank also on expected lines crossed the flat range at 1360 in the last week to near 1400 levels as Banknifty returned to 15000 levels. Banks will continue the run today as will P&G India listed stock. Relinfra accounted for the majority of the Anil Ambani group Mkt Cap recoveries yesterday and today would follow with the group companies returning bigger gains

J&K Bank also looks promising, the lightly traded stock having also hidden in the prior rally till January and returned concomitant to the rally again in the April rush till 7800 in June though mostly defensives hiding away during major trend days catch up much like another PSU biggie SBM that had such a mini rally streak till 2010. PNB gains again bely its weaker balance sheet as it continues to bleed on low quality assets but runs on par with big brother.

HDFC will also gain in affordable housing funding, though UBS seems to disagree and Jefferies also posits better days for bank lenders, Keki Mistry ‘backing Housing companies on Morning Tv as ‘I leave for ‘work’ ” (rewrite stub]

India Morning Report: Up again, Down Again..but the investors are staying in

Probably a function of the loading to debt markets, but this data will show up on a consolidated basis down the line. The Nifty recovered more of the tomfoolery around the GAAR provisions which the new Finance Minister is aligning to as BJP with a majority vote is likely to continue with the infra push and can conventiently keep its traditional guard/vote bank/ideological corner of the PM’s mind hope for Mom and Pop kirana stores and other FDI that affects masses. While welfare is tuned, the business cycle is definitely back and CPI is expected to catch up with the cuts in WPI translating into lower CPI goods and services baskets. CPI for June returned to 7.31% with Cereals and Vegetables leading the way down at under 9% and 8% respectively as Food was tucked in below the 8% mark.

The cut in TCS and IT companies is encouraging for the market fundamentals as the Depreciation candy refuses to perk up blind speculation on stocks effectively still battling long term decline and maturity issues in their key markets.

Banks have to lead the cyclical sectors back while GMR and IDFC look set to continue a ‘monotonic out performance’ from here. Relinfra ‘s bullish move seems to have put off the broader markets again however, a distinct unease in the index as always coincident with the upmove on the Anil Ambani stocks likely to come together with Rel Infra

Proctor & Gamble seems to have said a few things about its consumer markets plans rolled out in 2010-11 and looks like will be fun to watch. Tata Global and P&G however could also be running on empty as investments from Tatas in the former case will unlikely speed up and the resulting loss of potential business is probably running away a lot of likely Starbucks customers a s well with their higher prices being key in the QSR markets , customers still hoping for Starbucks Coffee experience at Coffee Day prices as proven to Barista/Lavazza.

In unlisted business, we haven’t heard of market performance comparisons between Amazon and flipkart and the challengers or from McDonalds and the Pepsi restaurants that rolled out new expansions in 2012


India Morning Report: IIP shows India inc is back in the saddle

IIP inched closer to 5% on Friday post market data releases, raising hopes for a strong performance in the first quarter of the fiscal as well as an improving trend thru July – September. The Rupee responded to dive below the 60 mark, the government having promised to step in if the Rupee rises back too sharply. Sharp cuts in the NBFC sector on Friday as the indices dipped on continued watchfulness at 7500 levels would be reversed back at the beginning of the week , however we are not backing any rise in the currently listed realty stock.

Thus also the IT stocks will recede again and buying in Pharma will continue thru the week as weightages within the export favored sectors increases in the Pharma cos favour. Sun Pharma has escaped the 700 hatch to 750 levels and is again in a new zone for the stock

Energy stocks may temporarily react to Oil price declines contiinuing but with the business situation continually improved and the Fiscal target already improved to 4.1 % sentiment will catch back with the stocks as they remain available at value levels and GAIL has caught up witht he rest but continues to enjoy a limited preferencde over the Oil and Gas stocks. ITC and Bharti may again consolidate at  350 and 340 levels respectively. Bharti has initiated the sale of its African Towers to a local business to reduce Opex.

Monday afternoon update: The GAAR fracas is a big onion as the Current President and the BJP FM both seem reluctant to take it out of circulation. However the disinterest shown by the markets in its wake in the morning session was mostly a false wall of defiance, as Investors are likely to continue investing into the recovery and it is not a black and white position for anyone with India entitled to some if not all tax revenues from its large market on offer.


Friday Afternoon Report: July 11, 2014 – Banknifty breaks down as Infy cant carry market

As IT sector has been dropped out of the reckoning for the Bull run to be in 2014, the exit from markets remained predicated on a continuing lack of interest post 7800 for the couple of weeks past and Banks and cyclicals responded in kind to the call for making an early economic recovery happen with the Budget belying any quick opportunities to improve the outlook for markets to take to investors.

The impactful score of the Budget comes from renewing older policy motifs from a youthful government in steed, with REITs , though not of their own choice allowed to invest in smaller projects of 20k sq mts, and $5 mln minimum for capitalisation with REITS expected to remain exclusive to larger investors and benefiting from tax incentives.

Whether REITs take up the chance to get listed and traded remains to be seen as the inherent partnership structure of REITs is essential to the projects even for Affordable housing projects incentivised by the new FM, Arun Jaitley. The resulting rally in DLF for example should be reflected upon by markets ad DLF is still deleveraging and REITs and real estate investors would actually expand the developer space yet again in India as markets do note the focus on Infrastructure and realty in more concrete terms in this budget

A promise of INR 120 Bln for Housing emphasises where the new government can score for India inc with quick investments, but some media reports ont he REIT sector seem disingenuous , esp the one in Livemint yesterday afternoon

(We missed the morning edition of this report on Friday)

Markets will close the week at below 7500 levels with Banknifty erasing gains as RE financing and Infra Financing get their own space in the india debt space, but Banks will probably dismiss this breakdown int he markets next week as credit growth returns to normal, but the correction in SBI was a long time coming and likely to drag the rest further before BOB and other PSU Banks try and make a comeback with the Priavate Sector weighting in the index coming up again int his churn as the private sector abnks power ahead with better flexibility and response ratesto corporate and continuing Real estate /Infra financing. IDFC will likely be a good buy at 150 levels as well, but a probable corection below 150 can provide bigger opportunity at 130 levels

Infy reported a good set of numbers with INR 28.86 Bln in Consolidated PAT but with IT and Pharma returning to Defensives the likelihood of them carrying a rally was obviated in morning trades. The Sensex as candidate abocve 25,000 closing levels for the week, means a greater traction for the tried and tested trading ranges next week.

The Power sector tax holiday was the critical piece of the reform machinery to be on view but budget day saw exit from Power NBFCs on the announcements signifying a probably locus around their roles as Means of Finance, however we back the Power NBFCs and their ability to raise QIPs as a key strength that will enable them growing their Balance sheet exposure to high yield assured return projects as Power stays a priority. The Insurance IPOs (49% FDI will increase concomitant foreign partner participation) coming will soften the impact on debt participation in retail as tax measures are tightened. Debt settlement measures don’t mean much without India getting on to a Debt index


India Report – Budget speech Update – The Big Reset

The depth first reduction of new values reached in most shortlisted scrips that cornered buying over the last three months, spurring on the markets in the guise of a rally expected by markets actually resulted in a bid of profit taking and reestablishing stamina for the coming bull run in the markets, though expected digitalisation of such hopes on the market expected speed because of budget announcements seem to have been less informed than hot air rising.

Markets have employed an extra instance of the Big Reset post new government for a new rush to 7800 in the coming two quarters. (snippet for editing) A below normal monsoon and higher CPI while BJP redenominates current Welfare schemes means governance actually expects no change in the recovery year except for the force of a decisive government who can only clear their throat and intent in the first few months..

India Morning Report: Budget day starts with reset expectations

Markets seem to be running with the perfect assignment: to overturn budget blues of a hung parliament and show a sharp positive return in a return of ‘majority rules to Indian democracy, being also labeled partisan to BJP interest aiding and abetting the idea train that markets are leading the economic recovery belying their own over optimistic tendency again with a pre announced 7800 top , a sharp exit from which left budget week in disarray at least for new comers and foreign investors having turned buyers lately. Indian DIIs assume center position in the coming months till the end of 2014 with FIIs already inside the market to the tune of another $20 Bln, and the fund management industry has to have realised by now that this is the last opportunity to board Bullet Raja’s 21st Century train ( aka  ‘The Golden Palace’ or ‘Palace on Wheels’) bringing back the India meme in global economic circles after a big bout with negativity staple fodder of India analysts from back in 2006 or at least 2008.

Modi and Shah unite a new cleaned up (and slimmed down) version of the functional executive in India under a Hindu government whose Economic agenda is as clear as any of the strong governments of “no choice’ earlier in the short post Independence history of India. Malls, Bullet trains and Fashion boutiques/Beauty parlors are ready and waiting to cater to a Generation Y willing to partake of their share of the demographic dividend as India undertakes probably the penultimate step of the journey to GDP health in the Global pecking order, having underscored miserably on the per Capita front in the first few tries and markets would depend on continuing improvements in execution for hard results from the Modi Government for further moves north.

A concomitant revamp of major Indian statistics and a broadening of the research and Data mandate is probably concomitant to this push for execution if one is to rely on foreign investment (private investment) as has been the focus here since 2009. However as far as budget day moves are concerned, the continuing breakdown of the plus trade in cyclicals led by a 10% shutout in ICICI Bank early in the week are key watch points for any rally in the remaining part of the week as the Budget document from a new FM is likely to eb a staid , boring one focussing on putting the fiscal house in order esp as Tax collection targets are to be cut down by 20%

The essay above is probably excused by the fundamental nature of change manifesting itself in the deeper Indian markets which are in the Global Top 10 by Market Cap if only on adding both BSE and NSE behind China and Hongkong ( $2.3 Tln vs $3.4 tln each) and a few others behind the US markets getting nearer to $20 Tln

In the morning’s concerns, a rally in Cement and real estate in today and tomorrow should alert you to a more sustained bear short taking over ( again, probability <0.01) . Pharma and IT lead candidates from Dollar markets performance while Consumer goods and Energy segments could be the easiest conversions in a shoot out rally building on overall good marks for the budget. The 8000 mark is very probable but somewhere in Calendar 2015 after the first 6% plus scores in quarterly GDP performance or corresponding marks in CPI and IIP, but 7800 is fair game , equally probable this week and July series as for December 2014.

I would continue buying YES Bank, IDFC, GMR infra and ICICI Bank with eager catch up on ITC and Bharti positions. The Rupee markets moved up at open , pointing us to interest in domestic debt markets getting deeper again again our Indian 10-Y yield targets of 8.25-8.5% back in play before a structural push to move down to sub 8% in a fully performing economy in 2015, till the end of this business cycle near 2018.


India Morning Report: Rail Budget strike brings market to pliable levels

Markets may likely try to hit 7800 again given the more specific positive impact expected from Budget measures as BJP gets into gear for its first Budget as a majority government. The optimism in the Rail Budget was rewarded sharply negatively by markets as markets too the hot air balloon opportunities to spring a surprise exit from the blue sky 7800 levels reached at the end of last week. The new government will be under pressure, The DTC for example is unlikely to be implemented and subsidy reduction measures likely to continue in Diesel if not in Gas as Gas pricing and Poverty line debates bring back the realities of a Fiscally responsible India required at the Centre. Banks and Cyclicals incl. Autos remain safe buys.

Auto industry sops have already been extended in advance , raising chances that markets will feel cheated during budget day proceedings which means that market watchers will indeed sharply follow up on over expectations factored in as likelies in the budget to an even 7500 level before assessing the final impact of Budget measures. However, it is still more than 65% likely that markets will keep 7650 levels and end the day on a positive note. Markets did not provide any real shorts opportunity to build on Monday before springing a weary budget day negative rush for 600 Sensex and 165 Nifty points, before ending at the lowest levels for the Nifty, leading bulls to losses as they headed for a swift exit on the low interest in taking markets higher from 7800.

The Rupee’s bullish trades, brought down the house for IT sector’s inopportune gains in the week, perhaps cornering cash speculators trying to build a chimera of hope. The Sensex used the last 10 trades and assigned minutes of recon to average out the 600 point bit to 517 levels it closed at the end of day. Equities have been trading at extremely low global volatilities and a breakdown in the Dow followed by the sea of red in Asia this morning would also impact dodgy sentiment, the speed of the correction indeed limiting gains for bears who did not have time to build positions in this market. The US dollar is back on a strong run and the on again off again news of a mass exit from US bonds, triggered off the sharp reaction in US equities.

Sold Puts are not safe above 7500 and would likely see some more exits at all levels in the hope of finding a safer entry point for bulls to come back in morning trades.


India Morning Report: Rail budget holds Nifty below 7800

The markets seemed among early finishers in stakeholders holding out on India’s Economic juggernaut unfolding and thus Rail budget day would be a good day to lose some of the sunny disposition if a budget induced rally is still the way. However, even if markets breakdown today or tomorrow ( improbable, <0.01%)  beyond 20 or 30 points on the Nifty it would be on specific stocks and the bank breakdown on Monday shows the rally is keeping alignments to macroeconomic predilections safe with cyclicals losing to even IT for Monday’s session in an oft repeated down tick day in the last month.

The Banknifty could again show up the long queue of buyers it last displayed at 15200 before the Banknifty starts leading more of the rally above 7750-7800 or 26200 as the Sensex is showing up to the promosed targets on strength of real investment backing Indian pie in the growth plans, one which has gravely seen a lot of pies thrown away into the fire as fuel instead of food in the last few years of a hung parliament. One is unable to fathom a strong year for IT overall as the currency gains will eat into any dollar revenue increases as the industry returns to its new weak normal since Satyam

The markets would likely stay above 7750 on the bottom and close towards a new mark in the best case though a simple downtick seems to show markets will top out at 7800 if its just no bad news in the budget and the market has indeed overthought  the recovery jump. If indeed tomorrows budget day follows a more sunny /happy shower day ( if you are in the North) you’d like some real investment back into social welfare, higher disinvestment and real plans for increasing the FDI regime to Indias gain or other plans to increase India’s pie of the World as it ‘catches on’/cashes its demographic advantage

Rail suppliers have definitely overrun their wont in the mostly optimistic prognostications of the new avatar of Indian Railways likely to be put back in place by observable fiscal prudence today and tomorrow. Markets will hold most of the rally gains to 7800 only after budget day for a corrected Fiscal stance without sacrificing the welfare stance but this market is well on its way to ruling on more subsidy cuts sooner than later without nodding to political compulsions, unlikely for a government with 300 seats in the Treasury benches.

I am still trying to find out why ICICI Bank led the Banknifty down with a near 10% cut in yesterday’s session despite news of a planned acquisition, with plans to expand in China and South Africa as International assets continue to expand faster again for the bank. A new acquisition definitely demands more multiples in valuation from the market as a cash positive and profitable operation is unlikely to be for sale in Pudong(Shanghai) or Sandton(SA) YES Bank reports expected better than normal results this week with Indusind also having written off most of its CV portfolio woes.


India Morning Report: Mr Sensex gets ready for the Budget round

Markets did celebrate with an early rally in the top half of the week and with the currency holding new levels, markets are likely to wait for big moves post budget announcements next Wednesday. The Rupee, true to form likely continues gaining against the Dollar even as other Asian currencies take the US Jobs report announcement to allow the Dollar to get ahead and the Euro breakdown also offers India better trade mechanics in the coming months. Asian equities are bullish and will continue the celebration on Wall Street overnight at 17000 on the Dow and near 2000 levels on the S&P 500

Nifty will hold 7750 levels during the day’s trading and the Pharma auto complex will hold new levels while the private banks will continue to improve scores and infracos will regain fresh investments led by IDFC even as GMR and JP associates fritter away investor goodwill on an equity/debt overhang that continues for them. Even SBI is likely to hold 2650 levels ahead of the next week’s busy prognostications

Lupin’s return to growth seems to underline better days for Indian Exports ahead joining the few really good performances in the last 2-3 years from Glenmark and Cadila. ITC and Bharti should be back in Buy lists at the bottom of their trading range. Those hoping to speculate in real estate mmid caps should note the fate of pharma and utility group Torrent which failed all litmus tests and is dumped this week. The Muthoot Finance IPO /rights ahead will likely keep both gold NBFC subdued as the new issuance exposes their pricing weaknesses and the company can do better by choosing a low premium for the issuance.

Bajaj Auto has chosen to stay away from mass markets as it faces the inevitability of Honda getting ahead of it on overall numbers and that is likely to coincide with the scrip returning to 2200 levels. Hero also gives up excess gains from the momentum rally on new monthly data figures. The market may return to Cipla and Pharma MNCs with the Energy complex between the OMCs and the private and Public producers and even IT catches up again as markets stay positive but avoid further up moves pre budget. The IT rally may be tempered by continuing strength in the Rupee from bond market strengths in the second half of the day.

F&O markets continue adding new interest above 8000 in Calls (sold) while Puts catch up with new 7700 levels.

India Morning Report: IDFC and GMR join the IPO bandwagon

IDFC would like to dilute foreign shareholding a little before the IPO to get an advantage for its banking operation and GMR offering would further dilute a pretty large equity base but it is likely to find a reprieve in cost of capital from public equity given the debt overhang in its projectised sector that will continue. The news probably aligns with the coming announcements on the $1 Bln Road Infra fund being readied and lends to the required financial closures pipeline in the infrastructure projects to come.

ETNow is leading Thursday with the fact of improving traction for delistings with Castrol and Bosch also winning greatly. As always such cash interventions in the market greatly enhance its capacity to wait for the Economy’s fundamentals to prove themselves and markets look to be steadying faster for a move near to 8300 though a prediction in that regard is literally shooting in the air above the immediate 7800 levels which would be new highs for the market.

In Sensex terms that means nearer the 28000 mark so still within the sell side pontification for 30000 on the Sensex. The Bank nifty having come out on top with Fitch and others upgrading GDP targets probably mean Banknifty will easily cross 160000 without selling pressure, the increased confidence also coming from continuing double digit credit growth and the final canning of the NPA blues at the better performing PSU banks.  PNB remains a sell in this sector bu tBOB and SBI may well gain free momentume tripe to completely disregard the falling out of such bank stocks including Union Bank and Central Bank of India

If markets retain intra day gains today they will likely trade at 7800 / 260000 for the rest of this week before the pre budget expectations and the Rail budget tighten up stock specific plays from Monday. The Rupee meanwhile reacted well to real inflows returning to the fixed income markets post Oil crisis as it gained an even 1% to 59.50 levels ahead of another move below 59



India Morning Report: A budget round for Mr Sensex?

In an almost forgotten presentation of facts since the nineties, the new high on the Nifty and Sensex actually makes it a buy at new levels near 7800 which are likely this week as markets celebrate the return of buying and successfully beat the heat to geto into icier peaks above 7500. The monsoons have responded, and even if they do not or IT sector corrects from the continuing appreciation of the Rupee the INR 5 Tln business in portfolio investments (predicated on last month’s INR 2.35 Tln – Lakh Crores volume in P Notes assumed at a high rate of 50%)  is powering the return of Domestic investors at new levels esp those who held out for lower levels in the early legs of the rally since August 2013.

F&O open interest is no longer long on the low end and short at higher levels, markets having tasted cream and sugar to move into strategies sold into even 7600 level puts and moving up to 7800 with 8000 Calls being the likely focus of Call writers hedging their long.  A short covering surge gave markets good momentum on Monday and Tuesday. Buys in 8000 Calls too provide some naked fun on the exchanges but that is likely to return to better risk reward scores for complete strategies esp if sold 7600 puts get close to null score and let market akers move to higher put ranges. The indices are definitely headed to 28000 and 8000 levels, but are unlikelyt o tolerate pfaff esp in policy and Budget announcements, reliant on cash impact and to an extent allowing revenue impact on rollbacks in the name of populism.

As expected, Bank nifty stocks, Power NBFCs and select Pharma and Infra companies are high on conviction buiy lists , our dozen performing the perfect rallying act for the markets in the period. Apparently Federal Bank, SIB and CU Bank have advantages of being perfect private sector substitutes as well for FII limit hit Private Banks but I’d rather you stayed with ICICI Bank, HDFC Bank and more importantly YES Bank

Sun Pharma seems to have covered most of the ground from Foreign buyers’ interest and may flatten out by 695-710 levels much like Kotak Bank in recent years. Budget related news will be key for the Pharma sector and we back Cadila, Glenmark and Stride Arcolab among others.

Auto sales were a great motivator for the markets Maruti again recovering monthly sales of 112,000 units even as unlisted MNCs increased export volumes with Ford moving up with 4677 units exported to nearly 12000 rate. Tata Motors and Hyundai also scored between 35-40k units in June 2014.

The Rupee and Fixed Income markets will be key to India’s fortunes again even as the Budget gifts unfold on India Inc thirsting for better policy execution and investment. Trade volumes for June will be keenly watched in the second week busy with budget announcements.

Markets will definitely spend most time above 7700 levels on the Nifty and nearer if not above 26k levels on the Sensex in this series.

India Morning Report: A new series, a new high

As markets regain 7550 after missing expiry at 7500 the bullish moves expected in banks might well come to pass. In the mean time the new dispensation has mobilised its hoary yawp to show its concern for Food Security, and the requirement to implement it may pass on to states, with Modi asking for a rest at the end of month 1 and inflation targetted finally by the Fiscal controlleg of the government rather than further requests for the Central Bank RBI to implement more measures.

If you need to refresh buy lists do refer to out morning reports of this week. The new series again starts an attempt first to regain the 7550 mark for index options and one assumes this time there would be no positions below 7500 ar 7450 at bext as the markets have been consolidating near 7500-7550 all June. Upward targets depend on continuing buying as even at the head of a big rally FDI and FII inflows for the year were muted at best , investment rankings for India at 13 within Asia and April 2014 ticking down for $10 blln in the first four months of 2014. FDI for FY ended March 2014 was just $24 Bln.

Divis Labs has completed an agreement to supply Ranbaxy API for its Diovan generic and Sun Pharma is also importantly relieved on the news. After Divis Labs, Glenmark and Stride Arcolabs may again see fresh investments through the month. However a recovery in currency and Fixed income markets means banks will lead the way up in this month again and earnings follow in two weeks. Reliance seems to have added back on the shortlists this onth after energy moves ignored the private player in the Iraq fracas.



India Morning Report: End zone signals looking for a bullish close to June

Markets may have hee hawed a little on Wednesday  but with the US removing export ban on Crude the move down in Oil is something Asia has not ignored in the morning and even as bears drop out of 7300 and 7500 positions, the lukewarm addition to 7600 puts OI will likely be followed up by a much better clamp down on the Nifty and Sensex at higher levels, markets looking to rally and given space by an unwarranted check down in Bank stocks like YES Bank yesterday. The indices look set to try their best in the July series and expiry will try for another 100 points from 7550 levels by the afternoon.

The bullish news from the budget desk, is especially notable for the markets because such welcome surprises have historically been wrapped in mystery and shadow power play till the actual presentation. The pre announcement of Excise measures and increase in Divestment limits will thus have a more than salutory effect on inflows to the market

The refusal of the government to tackle the gas hike may be excused and Oilcos may have held on but a downtick from low realisations is inevitable for ONGC , not for GAIL which remains a great buy with the banks like YES Bank even as HDFC /HDFC Bank look at pending applications to increase their FII limit to 67.5%

The trepidations of the Telecom markets are also seemingly facile as Bharti may not be weak in an expanding broadband market, yet the desperation of investors on the long side satill shows through sometimes such as the Six pick from CLSA/Chris Woods

Short Calls should stay away from 7550 7600 and 7650 series through the day. YES Bank will outperform by the afternoon with ICICI Bank . 7550 is safe even if the SBI/Pvt Sector trade off gets in the way. Sun Pharm will continue down without hindering the broader market and uptick in Domestic Pharma plays now adding on US business.

Bajaj Auto likely takes over from Heromoto in the new series again. and the Power NBFCs are also a big buy even at new levels in July. Currency and bond markets will be higher despite a seeming market predilection with equities.




India Morning Report: Breakout hints at higher expiry close

That ofcourse means that with a vanilla bull easily cramped by fresh shorts also at 7500, the market could easily see one more pricing push on expiring strategies for Thursday as they mark markets back to 7550 levels before the markets indeed breakout to a 7600-7700 expiry in line with the 7700-7800 move likely pre and post budget in the July series. That also leaves ITC to catch up as any excise price increases are hardly likely to affect the demand for its core product range and it continues to score better with its newly established food brands and the continuing growth of modern retail after the confusion of FDI in retail has been crossed to a final side. Including unlisted (ecommerce) business that is likely to mean a growth in more Consumer durables and FMCG businesses this year in a recovery economy as the focus shifts from food and groceries.

Back on the sectoral punch for the listed business, Banks had a nice recovery on Wednesday and expectedly led the markets to 7600 scores on the Nifty even though it looks a little dwarfed on the Sensex with just 25400. Banks will be hoping to expand spreads on loans int he declining rate scenario esp as ICICI Bank leads with 25% growth in the retail book and SBI will also consolidate its bent of business in Home loans and other retail. HDFC Bank/HDFC will again lead on profit margins in the Industry and YES Bank will surge as it builds a new portfolio in retail even as Kotak continues to contract its abnirmal margins at above 4% in retail and non banking financial services business dies down with low volume business in the new fiscal in broking and insurance(life) The fund manageent companies are also likely waiting for the direct business structure to again deprioritise in favor of distributors with investor power.

The morning’s moves on the currency again likely mean the week will go a wastin’ watching the price of Oil and markets may well test back to 7500 levels Bajaj Auto is likely to share its spoils with Hero intraday as end of month calculations of revival in demand score for the back of the pack (Hero) before returning to a Bajaj Auto and Heromoto pair with Hero still making its first export contracts.

Gold and Crude look set to trend down and in sectors, Power NBFCs continue to score ont he trot for a second day with positive announcements from REC


India Morning Report: Expiry Week slow and tortuous as expected

At last, something has replaced the slow and tortuous progress of the Monsoon on India branding efforts and news flow. On a more serious note however, you must have noticed i have missed a date here on Tuesday. That is likely to continue with my present schedule and with markets tending to remain flat now with active OI adds near expiry on the short side, it is definitely not a morning you will miss.

ITC shorts signal a sidling in of the flat traders and it is probably still adventurous for straddles and strangles to focus on a single 7500 point and increase their risk on the trade though the only sure bet at this bet remains 7500. The Midcap trade will not pick up. The trade in L&T and BHEL, SBI and Maruti is probably misguided north of 2600, 2400, 1600(L&T) and 250 levels. Sun Pharma will likely replace ITC and the infracos in the red zone today at 630 levels. The infracos could not catch a break despite a willing new dispensation and again sectoral signalling at the cusp of the recovery is likely to keep everyone biting their nails at current levels and in many cases without many moves south except the mentioned few above. The Cairn trade has also wound down and banks will lead the way up with the newer banks and to be banks leading the trade when it happens from Indusind, Kotak, YES and IDFC.

Interest rates in Indian Fixed Income markets have hit the ceiling near 8.75% and the Rupee ready and willing to move to stronger levels soon as a definitive news item on Iraq reaches shores.

As we mentioned Tuesdays will remain busy for us this couple of months.

Have a nice buy day in the markets again.

India Morning Report: Massive build up around 7500-7550

Short Call Interest has spiked up ( data for gross OI is the one available) after Friday’s boring daily affairs and Short Put interest is also equally active keeping markets opening the week at an even 7500 again considering the move up. The return of Capex majors L&T and BHEL on long trades however may not be very encouraging for long traders and the breakdown in such trades can trigger wider contagion as markets wait for real good news to back India’s continuing growth equation

Sugar stocks move ahead of the uneven sentiment on Cement and Real estate stocks despite the delayed monsoons which will also impact the agricultural product negligibly this year. Better production and improved domestic and International demand for sugar ensures the markets have a defined focus on the upside as banks wait for the inevitable move up but markets seem to be disappointed by the topping out of midcap sentiment.

The Rupee has also not strengthened on the Dollar for a period of 7-8 trading sessions despite some interest last week. . All in all the week will see the same business as last week as chances of a breakdown remain remote but real and any cut will probably take off 200 points off the Nifty and leave the sensex also well short of the recently regained 25000 mark. On the north side, the more probable direction for the markets, targets remain as high as 7800  as we get closer to a complete budget exercise with improvements in fiscal data and an expected strength in execution for policy and investment programmes. The CAD is has come at a strong $38 Bln for FY 2014 and will be under 3% in FY 2015 as well suggesting the pressure from shorts and currency speculators to have receded without adverse news from Iraq/Syria or Russia/Ukraine. The sideways move will possibly close out strongly after due premium has been built into the 7550 short straddles (7500/7700)

Global data for the month of June may also leave Wall Street subdued before better news from the Oil front results in objective relief for the markets. Gold imports will likely be freed again in FY15 allowing a CAD target of closer to $100 Bln for the fiscal. The government is also expected to withdraw the creep on Excise imposed by the Fiat judgement asking the automaker to pay excise on List price where discounts were extended to consumers.

June Auto sales are likely to continue on the turnaround posted in May 2014 extending the rally to listed car makers even as Maruti and Tata likely resume losing share to Ford, Nissan and other unlisted players who have also strengthened India’s export data.  I would recommend backing longer term investments in IDFC and Relinfra/GMR with continued investments in YES Bank and Kotak Bank as ICICI Bank follows SBI back up in the recovery. Any downtick in demand from rail fare hikes would have to be compensated by infrastructure improvements and renewed commitments but concrete plans for the same have to be shared before celebrating the same ina  weak performer like L&T and other such customers of the rail behemoth.

red draft: Meanwhile PFC seems to have a play in the battle of the Delhi Discoms and power pricingimplications as DERC , the state counterpart of the CERC in charge of Delhi power payments. Sugar payments in the meantime are unlikely to dampen the better sentiment on sugar and power stocks in general as better exports and domestic realisations for sugar and the continuing catch up in Power tarriffs sneaks under the radar with Railways ahead on being reformed by the new government

India Morning Report: SEBI moves on Anchor investors, markets ready to close to 7800

SEBI moves on Anchor investors and Stock purchase for ESOPs

SEBI moves allowing Anchor investors to up to 60% of the Institutional allotment in an IPO will do wonders as India Inc readies for a barrage of public sector offerings and the season to borrow for Capital and investment considerations from Foreign investors looking to add both debt and equity in no small measure in this run in India.

Top 200 listed companies have been prima facie allowed to conduct offers for sale while ESOP companies hitherto constrained by having to issue new equity for each batch of new ESOPs will now be allowed to warehouse upto 10% of their issued shares from the Secondary market for such schemes; both ESOP and ESPS  schemes.

PSUs will issue INR 600 Bln this year if SEBI’s diktat for 25% float is followed through this fiscal and minimum IPO size at INR 4 Bln is validated by the increase in allotment for anchor investors.

The index shennanigans

UBL/USL and Private insurance(RCAP, MAX) seems to be on the ET Now survey in the call auction segment of the market while markets seeming subdued yesterday will make them start Friday smooth and low. Most likely however, is an uptick for the markets back to 7600 before the close as on Tuesday with markets well into buying at Banknifty levels of 15100 and Thursday following up with a rerated index allowing the IT indeices to ramp up on Q2 earnings season even as the Rupee repaired the Oil/Gold streak with more RBI buying also to come, ensuring yields come close to 8.50%

Our bet still is on 7500 puts and 7700 calls having lost their active premium and market index moving on to 7600 Pand 7700 Put writes in tune witht he adventurous form of the Indian markets this season. Most of the annual gains on the Nifty and the sensex are irreversible with fundamental earnings reratings coming at the first uptick of the new Economic cycle and markets wont really price option markets much better even if the markets movee to 7500 again before starting up.

Orchid Chem starts back on an anti insomnia pill for the US with Glenmark and Cadila likely to be strong and Stride Arcolabs back in the fray. Multi Retail FDI may be pulled down after a half hearted attempt in UPA and an ecommerce transformation for Walmart in India

The fundamentals

Index earnings have moved on to 375 (Nifty) and 1400 (Sensex) since 2004 when the index last reached 21000 highs on the sensex and the markets are well nigh fairly priced with earnings being updated with double digit growth every quarter at between 20-30PER for Emerging markets Infraco stocks are expected to see better traction with financing schemes and terms improving as project execution also moves ahead.

Power NBFCs like REC have remained unrewarded for their extra stable high NIM business and Housing NBFCs  like LIC Housing are also standing with IDFC and YES Banks on fairly ferocious growth leading providers of Indian capital with high paced expansion suppoorted by bigger playuers like ICICI Bank, HDFC Bank, BOB and SBI.









India Morning Report: There we are, atop Mt 7550

The puts at 7500 and the Calls at 7600 have more or less lost most of their active trading values, even as US markets bottomed out on volatility again at barely 10% with the bond trade expectedly resuming a prognosis of low rates till end 2014/early 2015.

Yellen managed to duck most pressing forecasts, but that has not stopped commentators from catching up on the Fed is hawkish line as the US sits on the world’s largest repository of bonds not even including the Fed’s portfolio of expiring run off portfolios as the taper gets grounded.  US now expects 2% growth and only 5% unemployment (5.3% – 5.7%) for the long term forecast with deflation exit ensured in the prior 6 month odd period. That means EM debt buying will now resume but the risk trade is in equities and markets like India which remain the last refuge despite the opportunity

Indices will likely resume to Tuesdays level of 7600 with debt markets also resuming the run back to 8% yoelds after the Oil spike intervened briefly on Iraqi shennanigans. The reasons for the Rupee notwithstanding, the Rupee is holding at 60.50 not because of impending buying but in waiting for the Oil price threat to recede to systemic levels.

The Bank trade looks hot again midweek after a quick material yet a single tick reduction in the Banknifty from Tuesday levels back to 15100.

Bharti and ITC as expected have nosed up and DII buyers have finally been making good on the promise to investors, buying on dips both Monday and yesterday.

It does seem like infra funds are up for sweet retribution next, trying to score the now distant performance marks of 50% , 100% and even 200% annual performance from virtual bottoms that lasted since the onset of the crisis in 2008.

In index options again, 7600 puts should be written so go ahead and take a new position with two weeks of active sessions still between the series close and today’s trades. A riskier but probably most profitable trade would be in writing fully fat 7700 puts now as liquidity comes to trade that as the midpoint bringing the best gains for you.

Brent’s peak today may again not surprise trades in currency and Bond markets allowing equities to force the 7600 call writers into losses as the market would probably make one move to 7700 before deciding on closing levels for this June series

The budget news seems to be getting to be a big bag of everyone’s expectations, with the lone MoS batting for the party manifesto as a curtain raiser from the new government. The debate on High speed trains is encouraging but the government has to avoid taking half measures and indefensible policy options preened out before going public with and executing irreversible growth directions.



India Morning Report: Markets set to recover the tailwinds

India specific interest in Emerging Markets investors remains buoyed by yesterday’s events in Argentina even as Brazil gets downgraded in growth projections again and UAE floats some debt among Asian and European investors/bankers.  Argentina lost 10% as expected after the rush into Turkey and Argentina prompted our comment on the same last week and EM debt remains in flavour making the necessary soft touch for the new Modi government weeks before their first budget. Markets in Asia will however continue to ignore India and index fund allocations are not changing anytime this season, the MSCI India index probably our bread and butter despite the floating troubles on that dessert.

New Road infra rationalisation leads the way on the Modi agenda as UPA welfare schemes and Ministry staff come in the way to a fully functioning government till now making its mark with unique ideas in every pronouncement since V-Day (May 16) At least the exercise on Paid tollways is going to be relatively transparent though only media seems to be getting a dekko.

It might also be rough on the government that they wait for a Cabinet expansion till Budget day so there is no remaining positive tone for the markets, yet untried, the correction having subsided at 7500 however. Mid cap gainers may remain in trouble as sector specific news is substituted for sentiment in the shallow business on the exchange there in, leaving Domestic pharma picks and YES Bank and IDFC stronger and better for the lack / surfeit of stock selection in the markets in the last 12 months. REC had a good Monday as Powergrid took turns to correct and both may finally correct to better buying levels but for no one completing shorter term trades anymore in any of the Power NBFCs, unwilling to miss the bus as it makes a vertical move up. Sun Pharma seems to have shaken off bears as Pharma gets secular sectoral thumbs up from QFIs but the sentiment on the stock is likely to get set up by a surfeit of bears again in 50 more points, joining the now tepid DRL as they become the wrong poles in pairs with Glenmark and Cadila, Auro Pharma and Strides Arcolabs also making a comeback.

GAIL has made a good trade in the week, probably a bite from substitution by ONGC investors as ONGC cedes higher royalties after a court decision in favor of Gujarat and Net Crude price realisations suffer despite the upbeat global sentiment on Oil. The currency trade suffered a big setback on Monday as well but higher levels might recede again as new Currency bulls enter at these levels, despite rumors of the new fat rupee levels at 65 in the midst of the Oil price push which is already just a $1 from its likely (2/3) peak at $114 on the Brent

The OMCs Victory march is also unlikely to sustain as the interest created by a Oil rally subsides this week itself. I also recommend you start buying into ICICI Bank at 1400 levels and the bullish banknifty trade is well nigh here, today or tomorrow. ITC is ready to go up again. I would not bet on a short but the interest in Kotak has definitely subsided at new unwieldy highs for the stock.

Update: Though I did studiously ignore them, L&T nd BHEL have cracked in the call auction session , markets looking to wipe the inefficient again after a big bump up when no real candidates were known for the recovery juggernaut in motion in 2014.

India Morning Report: A situation in Iraq and a tighter budget in the works

It would , however at best be just the best laid plans of men and mice having gone awry on Friday, with Oil bill worries spooking the Rupee.

That means the index is a huge buying opportunity, with another 10% cut left in Real estate companies but the banks having more or less bottomed out at one go on Friday. Domestic Pharma would shine and the Rupee might well see retracement to 59 levels as the situation in Iraq keeps more negative implications on the rest of Asia like a Damocles sword but India’s already discounted currency has again not much to worry esp with a minimalist budget plan in the works again, treating the fisc as sacred.(update,06/20: and raising fares in the railway bill in advance as planned by a previous regime)

Also available avenues for infra and other corporate debt at less than 6% is likely to fuel the investment spending adds with a nicely humming Global IPO engine letting business fly.

Nifty shorts will have dug in on 7700 levels on Friday but with the call whittling down to 50% from its peak last week, further additions at 7500 levels would find it foolhardy and revert to selling Puts as well thought the markets will have to continue under the shorted 7700 levels as a guide for the week.  The correction was a reality check and a back breaker for the forth in Midcaps and the Nifty junior (4% last week) and the 7500 support is unlikely to help back mid cap bets except for well governed growth candidates. Glenmark and Divis Lab look good to outperform and a rally is in the works on NBFCs led by LIC Housing Fin and IDFC

India Morning Report: Markets look happy enough for a 7700 close

The dip in core inflation took a long time coming and the score at 8.28% on the composite CPI is still unlikely to make early celebrations of the right turnaround change into a lasting rate cut move or two by the RBI in 2014. However, of lasting value is the April 2014 data for IIP which at 3.4% is nothing less than robust growth and starts in the first month of Q1 FY2015 itself. China in the meanwhile is well adjusted to slower growth and indices at all time lows will remain weak for 2014.

The usual culprits in both Consumer discretionary and Consumer Durables were at hand scoring 7-8% negative growth, the cut probably a result of an Indian gene costing managers’ lack of clear sight till inventories are substantially depleted esp in April at the beginning of a new Fiscal, most probably accustomed to inventory drawdowns in April to allow for a more robust production plan in the coming 11 months. Nevertheless, given the resumption of exports and the jump of Capital Goods data and Utilities (Electricity which is another 10% of the IIP) in double digit levels at 15% and 11% we are probably into the comfortable data watch horizon for India as an Economy and a global market choice.

Yesterday’s new bond auction went well and yields are well on their way down irrespective of rate cut lags which will be a likely feature of this recovery as inflation stays up. WPI is reported in another 3 days and may well be near historic lows having already stayed near 5.5% in the last month. The Housing component of CPI is up for another rerating in the next monthly announcement.

Crude bill may not be substantially impacted, June anyway expected to be a big hit on the Deficit from Oil imports with Indian oil basket safe despite the flare up in Iraq and the inevitable move up of Crude for which the Indian currency seems to have already over corrected at 59 levels.

Banks are finally up after a long hiatus and this should be a big day for the markets with even Consumer discretionary moving up in response to robust demand scenarios and ignoring the April data on IIP.

ICICI Bank, and Yes lead out performers on the bank indices back with HDFC Bank and Kotak also unlikely to be stopped after the new i ching readings from the tea leaves. L&T Finance has completed the move to paring promoter stake to 75% and Kotak is also on target after a block sale last month. Bajaj Auto and Heromoto remain buoyant and the 26000 mark ( unlikely today) will likely be significant for the Indian markets in creating another quick baseline with Nifty above 7600 thru the entire week.

The continuing investigation in the pre OFS insider trading which has meant severe strictures against Factorial, will hopefully net a few more as SEBI strengthens its hands in taking market regulation to a more active deeper level(jeez, rewrite!)

Bond yields will close below 8.5% this week from the bump in data. Dollar will strengthen against the Yen and Euro this week but the Rupee might stay flat.

Power NBFCs are doing well with REC now holding well above 330 cycle highs at 354 levels and weakness in GMR Infra may well keep infraco plays waiting including IDFC which is poised for a grand take off at 130 levels.

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

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

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

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

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

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

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




India Morning Report: Quick I am running out of Ideas , fast!!!

The markets cottoned on to the last defensives with Titan on Monday and with construction staying away a shallow short on DLF at a pithy 239 top makes only less  sense as making a fat short on the just bumped IT crowd after the expected Pharma led recovery in sentiment looking practically overshadowed by the Dollar dogs of the IT sector. Probably only a fallout of the consolidated RBI sale statistics on the Rupee among other currency moving factors, we maintain fat shorts on the entire sector, one by one adding all today or at most tomorrow. They will only fund big additions in the Q1 earnings report moves in banks, NBFCs and consumer discretionary led by ITC, Bharti and HUL, the HUL short like dlf a pretty shallow one.

The Infy/TCS balance is perhaps likely to keep positive interest in the sector up as a whole with TCS and infy in the middle of a new range at 2150 and 3080 levels. With VIX unlikely to move into the 20s, further OI increases are also likely to flatten out in the remaining week

Jet Airways saw some buying interest and for a complete wipe out of all possible reasons for shorts ont he stock the levels are indeed great for accumulation as it follows a 18 month calendar to get back to promised profits. Other stake purchases in the sector, on the anvil for Spicejet and completed in part for Indigo fuel the play on the best listed play in the sector with Tata SIA making timely PR bursts and Air Asia operating on one routre to start. However real results on Jet plays are unlikely before end 2015

Banks in the meantime remain muted despite the redone story of the SBI mega merger to 20,800 branches and INR 16 Tln in assets adding Travancore, Hyderabad, Patiala, Bikaner and Jaipur and Mysore into the fold , last adding Indore and other in 2009

Domestic Pharma ramp up in investor interest as China flattens out at 2050 levels will probably include back Cadila and Stride Arcolab with Glenmark and Divis as DRL and Sun Pharma remain candidates for shorts and the Rupee needs to get back up to 58 levels  with $30 Bln in the forward sale basket on the Dollar

The best idea for longer term safer plays out there remains waiting for the Bank and Finance company plays , which are likely to stay down to set the tone for a goodish but not ebullient earnings season in Q1 as was evident in May itself. In unlisted business, Modi’a agenda had a more than salutory effect with the President reiterating key agenda items in core infrastructure and improved governance and the Economic agenda being safe already celebrated by markets during government formation. Pizazz from key wishlist items like Bullet trains and some other will likely be needed for the markets and India’s last chance at being a globally acknowledged key player while the GST and DTC rationalizations are delivered.

PM Modi also has to take care of the existing project pipeline before embarking on his new infrastructure plan focussing on the D-quadrilateral, low cost airports and agri-rail networks ( to eliminate supply bottlenecks and battle inflation) and arejuvenated agar Mala plan with DFCs along Delhi and Mumbai and other hopefully seeing more from exaples of GIFT(Gujarat International Finance Tec-City) and DSIR(Dholera)

News of the abolition of retrospective tax, was probably not new, yet key rhetoric for India to gain back a good corner of the stage. Modi meets the Chinese President in Brazil after the show in July and then meets Obama in September.

Speed. Skill. Scale.

Democracy. Demography. Demand.





India Morning Report: This whole Budget sentiment thing…

One feels of course for traders who have stuck on to the ‘secular’ bull run in the markets since August thru the win , but wishing for the continuing rally to be a Budget score is almost daydreaming. Even considering the sincere no. 2 granted to the portfolio, one is probably looking at more policy execution trademarked as the PM’s doing from other ministries and only more policy pronouncements and allocations from the budget.

The key issue remains of course if one would exit to reenter this market later and likely miss the bus or stay in and assess the risk of staying in post budget and post quarterly data pronouncements in July. One does feel that one would have a lot of upside boxed in the market in either case and 2014 has much more to deliver on real results coming from the Economy backing India’s claims.

Open interest is ramping up and not a clear indicator either as VIX moved up for the second time in almost the entire year to date with a big positive move on Monday covering to 7650 levels on the Nifty still under the 77-7800 mark and the Sensex looking bright and cheery at 25600. Any receding of the index marks would probably only score a point of ten under 7500 and the Banknifty is also ready to move from 15500, probably looking at the quarter’s banking performance for a reason, which however is unlikely and any 20% + growth in topline or profits thus limited to active head of the pack picks like ICICI Bank and HDFC Bank

YES and IDFC would real any significant move days and a 50 plus move in the meanwhile is definitely breaking a few records everyday

According to data on TV18, GMR Infra is trying to sneak back into buy lists and could be a big big play. The relaxing interest on ITC and Bharti is however a mistake if one is going to be rewarding performance in this market. A play on NTPC or Coal India could again be mistimed and Power NBFCs in good steed yet, though a new trade will likely wait. Domestic Pharma along with the Power NBFCs can probably use the rally to increase the marks an  there is more than a chance they will not return to 2013 lows/ highs as they outperform in this long term move up. HUL will join back ITC on the long side after a 50 point cut below 590. Bajaj Auto and Heromoto again probably alternate as the news of Q1(Fy15) starts firming up.

Chris Woods’ /CLSA conditional target on Bharti seems misplaced as most of the strengths of Bharti remain in the India/South Asia markets and Africa is not going to be an overnight turnaround. Short IT  the top of the marks today and tomorrow for best results. (Lather. Rinse. Repeat.)

The big rally in debt is upon us again except for any still busy exiting Indian debt from May as we move into high gear for rolling downhill to sub 8% yields and rate cuts become part of policy de rigeur with a likely tamp down  in yields to below 8.5% for starters ignoring the “subnormal” monsoon forecast (more of a hoo haa at this point in the cycle after a good year and with consumer spend ready to stay up)



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

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

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

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

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

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

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

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

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



India Morning Report: The battle of the minions is done?

The markets seem rested and able at 7500, the banks ready to take the fight here but 7500 also seems an able mark for consolidation with government actions deciding most marks (Ridham Desai /MS ETNow, nice touch)  Maruti and HCL probably aid in the dip in Infy to the unexpected 2700 levels after coming under 3000 on yesterday’s news ( exit scores added up to a more than dozen mark this month) even as the buzz gets ahead on Nilekani reentry on the positive end.

The new Motor Vehicles Act and the relaunch of Infrastructure projects including revival of city metro projects(F E 6/6) . The market top has moved higher to 7700. Media stories like News X seem to be back in the game in the unlisted business as the poorly funded listed business gets into the trenches and Reliance gets a handle on the new buy at TV18 ( CNBC/IBN )

It would be interesting to watch how DIIs cascade buy lists from Pharma and Banks and reentry into Energy and IT. Apparently SBI has not moved in the last three weeks now for some coming “assymetric whirls” for the market oldies

IDFC and Yes lead my fundamental buys to a target of 150 and 600-630 levels in this market range till December, Power NBFCs set up the trade again with REC at 300 levels and LIC Housing is probably still on institutional buys

The planned LTROs in ECB policy announcement yesterday are unlikely to reach anywhere near the minimal objectives of the Bank to infuse /rejuvenate credit in Europe and the Euro is already looking to new data on the planned late Easing by ECB in 2015 making Indian currency moves a nice cozy unlikely to hold at 58 lows .

India Morning Report: This 7400 ain’t so high after all..

As long as we stay off the Rupee, right! So the IT companies are still falling esp HCL Tech and the morning probably belongs to Financial Services businesses NBFC Large Caps/Mid Caps masquerading as sunrise champions of a new India though I still do not see many lasting propositions in the other Mid Cap performers. LIC Housing Finance and IDFC remain cherished holdings in Institutional portfolios as the coming wave of Fund portfolio additions swipe into the remaining Infrastructure companies and Larger NBFCs like REC excluding construction. M&M seems to be toppling over with the month end data past, but one does not see a trade active in the scrip post the bite from May Sales data.

Maruti’s best could still see it leading both down in the melee to go for 7500 and 25000 without need for unaccomplished plays with no future still strugggling to carve a big play in the blue chips and probably the wrong end of a cross industry funding trade favoring Pharma plays in Glenmark, Divis, though ready pairs are also available in Sun and DRL unable to go up. No good news has been forthcoming on the Ranbaxy buy for Sun either.

ICICI Bank will likely be back in the forefront once the market nears 7500 scores.


India Morning Report: REIT’s make a splash in India again

Real Estate investments are likely to become one of Modi Government’s new priorities, with the earlier edition of REITs being a recipe for disaster in liquidity assurance and primary requirements of the markets still making it unviable to allow smaller retail participation in the sector.

One could well see REIT entry requirements upgraded from INR 1 mln to INR 5 mln in this version of the revamp allowing REITs to skip any pressure of Daily NAVs on the business. But my information is unlikely to be the last word on this stream. The Big SLR cut in addition yesterday pushes out a real deliverable in terms of new investments that steam India’s NDA phase of growth from here.

Euro falling CPI spurs policy action from Draghi later today , building on the recent weakness in the Euro. Also the Union Pound ( GBP/Pound Sterling urban/slang usage prompted here) is likely to ensure Sc otland does not press on in the EU and in referendum to separate from UK

PSU Banks are likely beneficiaries from a new bank holding structure in other reform push approved in the PMO adding to defined pathways successfully likely to be implemented by the Narendra Damodardas Modi government. It looks like MSCI would come under pressure again for its indices as float based definitions scar up a detrended , cut in MSCI India index and India moves out of its pegged peer groups on its over performance. India Nifty bottom is unlikely to go to 7100 and the Sensex could well try to strap on boosters to make 25000 a key support in the coming months, entcing an assessment of fresh buying though not at the index level.  15200 levels hold on the Banknifty and will likely move up again in the coming weeks.

Nifty is likely to hit a lasting 7500 score to underscore a move higher to 7800/30000 levels from here. As we predicted, Inflows are definitely capable of beating previous records in the Fiscal 2015.  The Rupee probably broke on FII sales exiting Equity before returning to Debt.

The list of losers is likely to include DRL/Sun Pharma and HCL Tech, though the worries on GAIL seem to be misplaced.



India Morning Report: Ouch, This 7300 starts hurting DIIs now!!

Markets are finally opening at 7300 and it looks increasingly bleak for fund managers waiting out there for another breakdown in the markets. However, IT portfolios continuing holding will bleed and The Rupee will soon follow if Debt markets indeed pad up with inflows from FIIs.

I guess a fund industry roll back is imminent in true BJP /market non nexus democratic traditions for the domestic junk sale purveyors with SBI again staffing every two penny sour dream left on Indian soil from L&T BHEL and Maruti to others already mentioned, leaving som again forewarned to be cautious and avoid a bad taste in the mouth.

Today’s prognosis again, a bad lullaby for IT, with Rupee weak to turn the IT sector a red hot furnace . As mentioned, I am not going to be doing much of writing this day and tomorrow.

BPCL starts catching up , with a 3 Re stretch in the call auction likely below the close in the markets today.Pharma remains a buy, IT remains a big sell ( using the higher levels of today) and the Bank nifty is pumped and primed from 14550 levels again.

I would prefer shorting Sun Pharma and DRL in different pairs again, but cross indutry pairs are unlikely to fly andI guess that answer will purely be a statistical exercise.



India Morning Report(weekend edition) : A new week , new beginnings again (from Monday)

Markets will continue a tired spiral down to 7050-7150 without any shorts and if someone actually makes money on this leg it would be not rare or sprightly.

Domestic Pharma plays like Glenmark and Divis lead the way up with our list comprehensively surviving our lack of remuneration and lack of flow of information. RBI sales of the Rupee have effectively killed the again NDF spurred rally but future trades are likely to negotiate to 55 and Foreign bank desks continue to hold the currency despite a few adverse experiences at StanChart, Deutsche and one hopes HSBC is again not caught out of the move as it was its wont to do so in the nineties and oughts.

The falling out over the Banknifty is spurring picks on BOB and YES and ICICI Bank will live out the feigned disinterest outpacing any hopes for midwifed Axis Bank. Overvalued 55 levels of the Rupee are however inevitable and Export data is due in just over a week now

M&M topline continues to compensate for anemic EBITDA falling by a third again as the 10% degrowth of the auto industry is well down and out  of the coming tribe warriors arsenals influence (Bejan Kobadiwallha) and Auto sales are definitely better for Maruti setting the market up against a revival of Primary sales dump on the dealers or a anemic growth to at best 90,000 from 79,114 for April.

Markets are closed for? Nope not a listed holiday! Its a Saturday and I am due in courts to close out unfinished business in the Garden City, Garden IT city and exit Infiosys incoming BJP Spouth city wonder of India alive, juxtaposed and bored with unattended unfurnushed accomodaation dotting the fate of gloibal migrants..





Please suggest meanings for new words hereunder: druven, and be forewarned about continuing ghosta ttacks on here..

The Pharma stick and stock tripe lives with Major players Sun and DRL out of the rally play, Sun again ably misguiding would nbe investors and any worthy analysts of any possibilities for the company and succeeding in showing an opaque set of Batty speculators raising it with Maruti on the expected jump making the old pony hope for a dog show for the steed in Indiaphile hands. Most likely (90%) Sun and Maruti will lead the only possible cash shorts on the markets down to the 7050 levels as a Banknifty shakeout leaves new buys like BOB on the table for the pump up back to 7350. SBI seems to be waiting for the outcome as market volatiolities rule at near lows yet. YES and ICICI Bank lead the way back up in the Privste sector Kotak’s fate decide dby the play of new float as supply or not and again the vine is clinging to its stray tail in spreading public information in closer quarters than sustainable for able bodied economies, markets and countries.

However the pain above is much lesser in the Indian markets making disgusting impactations of an atrophied middle class and a worse off trader business (India unlimited) equally willed out of its future with AAP on its deathbed. Now lets get to work please.

As explained below in required uncharitable terms if anyone felt electronic ghosts were needed for the same(Kotak)

Maruti attempted bu randomcyclists puching out erudite analysis for bonus latrines in the army recruitment drive coming draftat 79,114 being the score for April a low bar for randowm walk theorists of analysters


(any organised attempts ;lol) of random consequence and heterogenous oxygen/food packets of varying bad research and irradiantly bad karma focus) – another electronic ghost inside

with the next batch of core growth  followed by inflation and inflation (another week later:WPI) data with detailed IIP timed to CPI release near the 10th-15th of the month – onlyu 2011 we cry better than this rodeo at unemployed high schools eating our skype


There this is still a persecution druven throught train as follows:The new market at any residual resting levels nearer 7050-7150 would be leaving buyers irrefutably priced out of the market for the whole year this rally would be exiting soon. However as of now lack of buyers RBI stepping in to save the Rupee has been restored to a 100% relative surprise and thus any rally on the rupee thru the NDF signals is unlikely to test the Rupee higher soon. However overvalued 55 levels should be sustainable for the Rupee.

I am unlikely to afford time for the required analysis so you’ll have to rush me to accept any awards for the same without disseminating any knowhow on it. (tired student aphorism, equating my experience to his gutter prospects) or if it is network broadcaster helping the web onions in shutting down  my enterprise this must be in his stars. May such thoughts on your part inspire you to bollywood twitter career scars for life.  Anyway, assuming Rupee does reach 55 levels and growth continues, it would have ended up exposing our rotten out competitiveness in exports and the new reform government isunlikely to have any handle on the same to any redeemable extent and the prospects for any 106 projects awaiting state approvals again requires too much of digging and thinking at this stage

The cash market seem to be drawing residual TV audiences /dreams as retail investors or erudite broadcasters are anyway tied up like mine and sell broker dealers are unlikely to transform themselves into trusted mules without any prospects for business improving. That basically leaves only legible prop hedge funds and other compadres of the invisible continent to continue screwing themselves over trying to screw around with the rule base of a 1.5 bln strong country and reverting to living and dead pennies and penny sized corporate businesses. That prognosis itself would likely make them se  any unlikely shorts striking thias market and That having been written this post is likely to see some modifications later for rabid tripe turnouts having been caught and jockstrapped outby bedwetting mothers.

Irascible psychosis running this world(ruining my world would be correct and a Morning TOI would remain important);

On TOI scoops, some regular workplace haemorrhaging would be: : 1. Salaries of 300,000 a year , they have gainful employment they were probably worse off and will be worse off if they leave. 2. Kerala cong powerplay goes the way of Kochi Elephant Thunder in 3.2.1.boom 3. FinMin PR is extraneous, Thanks for the idea haemorrhaging biddys, I definitely do not need your help again.


India Morning Report: O, The last one is always so hard!

Indias GDP report, in this case will be the last before the turnaround becomes de rigeur for the markets and Services GDP is expected to be much slower than Q3 adding to the Indiaphile’s woes. Index is continuing a bullish move despite the late negative rushes it closed yesterday. US Markets continue upward and lend impetus to the broader Asia theme ( not South Asia) That aside US, India will lead equitis to strong marks this year and India is likely to make up lost time in this dip week sooner than later and one should be extra vigilant to buy nes best scrips in this market.

Markets may continue to 7150 levels as DIIs wait out the GDP report intraday shakedown before stepping up to the plate. Moody’s has increased the offer for ICRA after the S&P experience and that should go by well. McGraw hill Financial owns more than two thirds of CRISIL as well. I believe some Pharma Open Offers are still to come.

The ONGC subsidy bill is higher by marginally less than 20% at INR 550 Bln for the year, Q$ revenue hit from subsidies INR160 bln. BPCL reacted well to cut in profits and strong revenues yesterday and may strt seeing accumulation at higher levels itself after correction as they also contnue intensive Capex plans simultaneously.

The Rupee trade is off and the Indian debt buy has apparently started (still waiting to check out figures, daily data on The PNB shaledown is final however and a good short will brighten the stocks chances back at lower levels. The Gold pick up is ephemeral as the Gold trade hoits an intuitive low in the local markets if not ont he economic prospects perking up then on the oversupply as import controls are lifted and the lower cost of leasiong for winners like titan industries.

A good rally in debt will strengthen Fund business inflows and bolster them for the equity buying spree to new India charters fructifying on the ground as a new government performs.

Industry growth will likely be negative in the GDP not far from Q3 cuts despite expectations of 0.5% growth. Maruti is the next big short at end of month sales data with whispers coming out before today’s close. Closing trades will correct up on weekly closing and new entry in this market should be avoided thence as Markets will again assess afresh on Monday. Infra and Pharma buying continues thru this week and next led by IDFC

I’ll be leaving Bangalore on Tuesday and may/may not print an Indian Morning Report that day or the weekly US Markets & Economy summary

Late Afternoon : (1% Ashwini) HUL blindsides punters again with a complete range move u p , remains fairly valued at 600

Kotak also sold off the first tranche to under 40% ..Promoter Uday Kotak obliging RBI’s diktat which further requires his individual stakke to come down to 30% by end CY 2016 and 20% in end CY 2018




India Morning Report: New government’s initial prognosis is positive

Infy of course will provide an insightful opportunity to buy below 3000 levels as BG Srinivas exit follows others lst month, a proverbial straw on the camels back and the proof of the pudding is in the eating, with sell calls on Infy making it prudent to not rush into buying till the afternoon session and maybe all of this week as selling pressure continues in it.

Expiry day will see ranged trades and the Nifty is tied into an upper trade from 7300 in the new series led by infra NBFCs and Banks holding mildly positive with SBI shod into big trades up on specific announcements

As we mentioned this week, IDFC will be active, and the stock is fairly active in F&O so option plays will have a nice time betting it again to 150 levels in cash and further later to at least 160 levels. Bajaj Auto trade is indeed positive contributing to torsion on Heromoto but that gap will be sustained at today’s / this week’s best levels. The positive trade in PNB is back but we do not recommend following it as it becomes a short candidate risking the sectoral and market wide long trend near 1000 levels.

The morning downtick is probably led by Infy and will be filled by others  with Heromoto also falling through on expected lines. However on the downside for the indices the next level is 7100 and DIIs and even other participants who recently took real profits will brave it out to get good buying levels. Also as already mentioned last week, IOC is leading the way back up after the push on energuy stocks at last month’s highs

Bharti and ITC are longs, as is YES BANK returning after two weeks of profit taking with ICICI Bank holding levels before others mark out a definite trade Pharma scrips remain buying opportunities along lines outlined this week. SS is confirmed as again being in sync with all the moves on CNBC tv18 backing a sub 3000 infy and Bharti. Also, in the meantime HDFC Bank has recovered trading interest , ruling at 830 levels and positive trade likely this month again. Kotak in reserve on a similar policy announcement trade with FII limit trades actually making the sector uninteresting for markets which the trade predilections should watch for.

Page industries has recovered some speculative interest and that is a good sign for the markets overall making a post Infy reaction rally likely early next week.

Sun Pharma earnings would be critical to the stock’s health in this rally and BEML seems like a great candidate once again unless the government is in a position to pick and choose int he sector. In private infra plays, Adani still seems the only secular positive added to buy lists. Divis Lab trade is apparently affected by Sun Pharma results as well in speculative plays extending their disposition to strong-arm cartels in the market

Update at 12pm: The swish swoosh Horseshoe Casinos have benefited from the BJP’s entry at the Centre as it bans casinos and excludes locals at Parrikar’s levels ( from an earlier decision) allowing Delta to breathe easy on its existing business despite the cancellation of Horseshoe License. In both cases wires are setting free what are undoubted black pockmarked insider trades on the assymetrical flow of information on rule changes as opposed to the subject matter of assymetric information typically understood in spreads and price discovery transparently acted on by markets in anticipating public information. Action on closed promoter plays like Abbott and other Bombay club members may also take a backseat again till activist investor information agencies find good feet in the system

I expect the predilections ruling the market in a much stunted format to however continue to levels as Domestic players continue to advance the same as reasons for domestic business competing with FII flow run business on the Indian exchanges. Thus similar will be the fate of the optimistic SIT on Black money and the infinetismal differences in the execution between a Non BJP and BJP governments (ruling out any Third and Jhadoo Fronts) aided by an informed bureaucracy and technocracy survivors. However that is rather a rough draft to reform directions and not the final word and the majority is a heaven sent opportunity which the BJP will realise and deliver to the electorate for a coming block of years

India Morning Report: Its not going to be another day on the bleachers, Mr Jones

Mr Jones, being the aphorism creating reference from the white explorers of the 15th century in a smart tag often used in everyday winners dictionaries.

Well, most participants in the market will vouch for a slow and steady influx returning to the Indian markets as we wait for the data to pour in. As buying did occur at the lows after mid morning trades on Monday, the markets continue to try and fail at locking vacuous prices for new buyers and leave a large intra day range on the indices, but it will still be mildly positive on increasing OI in the new series ( from rolled over levels that are near normal) esp. with PNB back to an able Lieutinant to SBI on the bourses and no one daring the Indian lead bank despite continuing horrendous numbers extolling pain on its balance sheet which will continue till the best recovery scores are in late next year.

BHEL and SBI investors are unlikely to back out till a knowing FII dares a big short, not required in the limited weightages and expectations from Indian markets. That only I can grant a s confusing because with a preponderence of average joe opaque hedge funds most Dr Jones would benefit from shorting to create funding in this market, and that speaks volumes to  the limitations of doing business having created this market impasse that is going to keep activity tired and lethargic at 7300 levels as markets fail to recognise it as a new high or a restful break to higher levels, dithering because only of the waiting game as DIIs are definitely not going to extend buying unless thre is a sufficient impetus in individual stocks, markets having caught up on fair value.

But FII points of view and Midcap rage apart, there is also a requirement to underline the coming recovery showing in data with a leading data series or more than one that actually cann see the recovery ont he ground, leaving Auto sales to do the morale boosting this week with inflation at Core CPI baskets continuing to rein at 8%

Investors still holding longs continue to win in the new government’s settling in period, a classic for enticing new investors with real results,retail traders let down by the Interest winding down in IT but also a fairly shallow level of business reporting from MidCaps which braver ones continue to ignore in market punting herds but is even showing on the portfolios of accomplished investor traders like Rakesh Jhunjhunwala. Ultra HNIs look forward to the big long in Gold coming back again at 7300 levels, much like they were busy trading Oil, Silver and Gold after the winding down of the big trade  at 5500 levels of the Nifty

Hero Moto as expected is winding down after a double header staring in Festive season , ramping up on distribution and models in rural strongholds while Bajaj Auto celebrates the coming improvement in exports and domestic sales. In 4 wheelers even as Nissan and Ford ramp up exports to near overall Hyundai scores, Maruti has probably been treading dangerously overbought levels ahead of a slightly better number in May, with April not being a lesson enough for the trade.

NBCC results continue to be consistent but not to the outperformer level needed to compete in MidCaps to enable the making trade while JP Associates also turns out to be a damp squib in the expectant Large Inra plays coming out of a large dormant shell since 2009

Banknifty is unlikely to rise faster or higher again but is strong at 15000 levels with most banks happy to trade further from these levels YES Bank being in fact still undervalued for being ignored or pushed down on lack of comparative vbusiness volumes with the other large trade candidates like ICICI Bankand HDFC Bank and one suspects the Indusind trade, despite their patchy oneuppance one quarter a year, is still expected to be another vibrant day or two in the coming series.

Infy buyers will probably hope for sub 3000 levels again as TM follows down and one sees in this scenario anoither strong month for Relinfra and IDFC both together with NBFCs like LIC Housing leading the way up from here and Banknifty back to highs supported by Domestic cyclicals but bellwethers like HUL vs ITC vs Bharti splitting the individual gains.

Havells results confirm it as one of the favored trades, we personally having being wrongfully waylaid in the earlier trade from 2012 because of some patchy quarters and a corporate campaign confusing another section of the erudite newby market watchers, so unable to predict targets. Jyothy Labs has recovered its merger costs and is operating some good fine tuned scores but Oil India and other Energy results are likely to keep important rallies waiting for a day or two. If one were to look for shortlisting winners again from that half dozen one would add IOC only to GAIL and let the BPCL story be for the time being after their gaiins in this rally and thus again a lot of disinterested watchers on the bleacehrs when it remains in fact the better buying opportunity of this year.

Jet Airways could be a good trade in a quarter or two and should continue to benefit from accumulation by investors as seems to be the case for Divis lab and Auro Pharma . The Sun Pharma trade is dead? Also, earnings plays this late in the earnings season with Q1 of the new fiscal set to close soon is really expecting too much allowing promoters to target a more fatter passive investor book for themselves by just ignoring quarterly and annual report periods

The IPL qualifiers/Semis however are going to be damp squibs in the 1-3 2-4 format with two strong teams riding it out and KKR’s late fightback as one of the best wasted in alikely clash with Mumbai Indians later

Currency based impacts should not douse interest in Mid Cap Pharma which remains the big story in the recovery year with some big drug molecule markets under the belt and are far superior to Mid Cap or Large Cap IT stories which are anyway flat on revenues and slower on profit aheadof the backing out of Rupee gains from the business jotted down.


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

India Morning Report: And Then The Markets Struck 7500

Well, the mouse ran up the clock and Global markets will rock around the clock this year i guess. So someone banked an ugly appreciation of the Rupee with an ugly depreciation of it three years ahead of time and today it starts back to 57 levels hurting a lot of weak economy stocks. Almost like the Pied Piper played it. Still, a lot of Indian Economy watchers are just looking for rats who are actually losing in this and the best short candidates would be IT and I guess the fact that Pharma actually has a future coming up which fundamentally at lower levels even IT can justify will probably play in favor of Pharma only after a one day break when the markets correct. The negative US GDP is similarly likely to be treated like pure chaff by global markets waiting for a big Q2 release.

The MM Joshi rumor mountain is past. We will have a lean cabinet, market volatility(to the extent reported by VIX which technically is not real vol)  will be at an all time low and probably we will be so optimistic by end of the session when we ring the bells for 7500 being reached on the Nifty and 25000 again on the sensex that someone will try a pansy bull trade to 7800 instead of looking at the facts and we will have a silly wall breakdown to deep 7300 levels ina fast session. More likely howebver, markets will take a break – not a flat onbe for consolidation, but a break that actually is negative to 7300- levels and in the worst case, right now we will not correct below 7100 before the budget comes to pass. Or the Rajya Sabha impasse comes about in any critical case ( RS is controlled by Congress)

Anyway, I’d say the analysis above is not a casual out of body experience but a critical admission that needs to be made before any investors go walking into the netherworld for having seen a “Miracle” nbeing performed on the banks of the holy ganges.

The Rupee’s rise as shalloiw as the fall isnot backed yet by debt buys. Fixed Income yields continue at 8.8% and will head south in due course. A new fiscal target is more or less pre approved for the new Cabinet Minister and welfare programs are also insured by BJP manifesto objectives, making subsidies an easy scapegoat for the required changeover and a new edition of the FRBM guiding the government. A large disinvestment program with Shourie back in the saddle compares with another younger minister leading the able MOF team and implementing DTC and GST first.

The Friday rest allowed an uncomplicated market move in a market which is almost too easy to read despite the depth and complexity of the textures in this market. Most retail and MF investors therefore remain overtly cautious and the rally benefits no one.

IDFC having reached 150 levels all Financial Services busineses like Infra, Power or other auto/gold seem to be off color in Monday trading. But the Banksw wil not be able to take  aslack unless you have a overflow into bad PSE banks before the markets lose these new levels again ( earlier intraday rummages scored high on Election Friday) Real Estate is also overvalued esp in Mid Cap. Mid Cap profit booking should start the downhill oil slick sometime next week if not Thursday. That period will see where the easy volatility trade firms up on the indices. This time I’ll be watching before showing what the strategy will be.

State Bank results proved the markets like NPAs off the books more than anything else. Yes I do not think the FII limit in other banks is important either. The markets are just stuck on an old bad habit andfinally no one will attempt to short the bank till it scores 3200 or even 3500 whence we can find out the final profit taking levels which the markets would ( no hope really!)like to spin today and tomorrow). I am watching the Banknifty , probably at 16,200 or 16300 I am a sure short bet on this tripe.

Monday is again one of those days when Bharti and ITC are both in the long trade, but the bank investment limit confusing people or the news of Debt index or that inflation target thing are unlikely to make the agenda in this NDA-I (Modi-I) dispensation.

From the looks of the late morning session, the markets can also stick around 7400 allweek and make the final rush last trying (unsuccessfully) to bump up the IT trade as a strong one , probably instead waiting tillt he auto data for May turns around. Markets have some profit takers getting a free rein and most analyst shorts on Pharma look to be early failures  with not many institutional holders yet in Pharma making that probable strong long trade in 2014 despite the currency moves likely lasting as they will be on most buy lists.


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