India Morning Report: Record low PCRs mean a bottom at 6000, Iranian Oil to be feted in markets

Goin' to Iran
Goin’ to Iran (Photo credit: Örlygur Hnefill)

The Nifty already ranged by puts and calls at 6000 and 6300 is likely to consolidate signs of moving up as the 6100 puts start looking good for a ramp. Despite the global cues, including an agreement with Iran, the market seems to show the Call writers have finally suffered from overconfidence for the second time on the trot this month and second time this rally after having been caught in October. The Rupee tantalisingly at 63 seems to be a factor too but Traders and  other market experts seem to have decided not to wait frther to buy into India. Citi’s MD, Mr Pankaj Vaish as much said so about institutional investors too on the weekend.

Even as Jindal Steel makes an exit from the Sensex, markets are finally separating the grain from the chaff, KArl Slym and JLR not helping the failing Tata Motors cause while Bulls continue in Tata Steel, probably widening th ga before the Ratan Tata vehicle Tata air and Air Asia get into the fight in 2014

As mentioned above, Nifty decided against trying further value levels aand opened around 6050.

Worth mentioning n fellow Network Analysts’ would e that despite the preponderence of buys that favor Bata and also repeat Tat Global, some have decidely loved the short on Bajaj Auto. Again Bajaj Auto was the genesis of the bbull trap last time around and Bears and shorts will pay heavily esp in derivatives for remaining short on what is likely the most of all bull trades in specific scrips in India after Pfizer and Wyeth as Banks remain on the back seat. In PSU bank picks to short too, TRaders 20 on both leading channels showed the kind of mistakes that can be made as BOI may not yield further in the short and a UCO Bannk may already be at the bottom after a year long short on the scrips, the last month rally in PSU banks (unfortunate) never reaching UCO Bank

If played along the ground in the sessions till Wednesday the markets may well try 6350 sooner than later before Friday close, but shorts digging in at this high concentration seems to me an isolated uncorrelated event worth researching as the US VIX on the other side rules at all time lows in low double digits and ready to try new levels ona new high from last week.

Good news for Axis Bank as it enters the Sensex 30 by December 23. If Banks do respond to that as  a secular class, despite Axis Bank hit on the FII ceiling of 49%, it will not be a big trend to ride but a one off, as the Fitch/Moody’s restatement of NPA woes is a twist anyone following pSU banks was having a hard time swallowing and markets were eagerly waiting for a turnaround in Q2 results let alone letting the slide be ignored in the DEcember and March quarters as provisions likely shoot up

IDFC and LIC Housing Finance seem to be walking away with the cake and short term traders continue to ignore a wonderful opportunity as investos stock up on both playersI would back picks on All Bank and Andhra Bank apart from the return to weight for PNB and BOI as ICICI Bank comes back to 1050 levels i n morning trades

Gold’s probably going back to 27k levels if not 25.5 (‘000 per 10 g) and if Fixed Income yields spin back to below 8.5% aided by the exit of trades on the older benchmark, things would get smoother for cash equities and the December series. Polling is underway today and counting would unlikely bring any shocks next week. Bank nifty would be stuck at 11,000. Oil prices will continue south after the Iran deal for 6 months makes arrangement for Iranian repatriation of oil profits, oil sales and humanitarian trade i.e. export of food and medicine among others to the India favorite (trade terms)

 

India Morning Report: On your marks, the rally is set to gooooo..

5850 levels would of course cede thru the week as correlation is reestablished and an agreement around the RBI call yesterday seems to have been on target to set the H2 rally in motion. Institutional investors have been selling the index futures hitherto a transparent look ahead hedge initiated for the select longs that have been holding the market above successive water marks since August 2012. Index futures selling aside, the Rupee move should also stop here at 58.50 or above that back at 57.90 whence long buying in scrips thought to be carrying their sectors and the indices are in fact treated to further quality buying

Godrej Nature's Basket
Godrej Nature’s Basket (Photo credit: vm2827)

However in concrete terms shorts on Godrej are a great idea as are longs on ICICI Bank and M&M. The side tag wars of Godrej and M&M in scrip selection if any for both promoters based from ‘amchi mumbai’ are non existent primarily because fo the inconsequential daily volume of 304k in Godrej Industries and thus for your institutional desk it is a single trade scrip, one position ruling its trend and thus will be a short beyond 20 levels too if one wants. M&M and USL similarily lead the remaining value in the market as some smart promoter moves, especially the M&M deal with a foreign promoter scaling up its auto ancilliary units in a single consolidated operation. USL is as good as a iDFC but as the network pick presented (Dimensions?) it is in a strongly invested position. M&M is also important because consumption will also come back in the second half once the recovery is in play.

Banknifty drift is transcendental and unlikely to impact the prospects of private banks leading the rally.  SS had a great pick in Dena Bank and PNB is also a great long. Air Asia and Jet Airways take off on new India inc rides that are definitely more significant than mere exploration with Ramadorai in the chair at Tony Fernandes’ Air Asia and SEBI following up rigorously on the 51% Naresh Goyal controlled Jet and the “???” Indian controlled FDI by Air Asia in almost an established Malaysian treason habit in India investments

The sudden jump in Gold imports still does not mean good redeeming news for Titan or the slip on the CAD but is probably a last hurrah of the clampdown/controls. Jubilant’s correction looks like could continue another 20% down after the move back from 1300 to 960 in pre-open today one also feels that shorts on REC or Jet are misplaced at these levels of 200 and 460 respectively. Buys on ITC and Bharti Airtel are likely t o hold for longer term though minor corrections from these levels as for YES Bank have to be watched for, including any newsy disruptions to them. FDI increases in Banking and other sectors ( though not Media or Legal sectors) are looking likely but within 2014 H1 after government formation is cleared and not in going away policy presents which would e intemperate for the coalition at this point and more importantly for India Inc.

Morning Trading Strategies (addendum to India Morning Report) : Shortson IDFC and LIC Housing seem…

English: Logo of Etihad Airways
English: Logo of Etihad Airways (Photo credit: Wikipedia)

Yesterday’s move up was a defining one and is likely to be bet dowwn in today’s reaction. Also, infra is likely to be rated down as Election year approaches and India inc battles with inflation. However shorts on larger movers like LIC Housing and IDFC are unlikely to give more than the required minimum in the reaction and remain larger movers on the upside. Also Jp associates as expected followed last week’s DLF into the quagmire of being shortlisted wwithout a salary for the bulls on offer and are unlikely to be further good for more than a 5-10% move down or up. Similarily Bharti , another favorite on the downtrade, has already reached barely 300+ levels and may not move.

However, the loss of control in the Aviation investments being sidled in are a serious issue the market swill discount as Air Asia gets sleepy Tata and Bhatia (mittal in laws) investments and Etihad goes out demanding CEO and COO positions for its investment

Maybe a leg in Pharma before an upmove and that highlights Lupin and Cipla, while OMCs also offer an uptrade and private banks below ING and Indus ind in the pecking order get picked up further on deal buzz (warranted or otherwise) including Karur Vysya Bank, Federal and South Indian Bank all with almost no

South Indian Bank
South Indian Bank (Photo credit: Wikipedia)

available float for takeovers or buying of a NBFC to expand footprint.
Maruti is still not a blue chip for the Indian Market and Hero and Maruti infact make for a big short i would try as they can be kep t open well into next week a day before budget moves take over

India Morning Report: Asia shines in global cues, the FDI challenge will be limited

Yen-Hsun Lu
Yen-Hsun Lu (Photo credit: Carine06)

 

Probably some of my friends might find this calling the chickens before they hatch but more would understand why we are calling the upcoming Parliamentary challenge just another cog in the (w)heels (sic!) of India Inc.

 

China’s Flash data in the meantime shows HSBC’s Private survey catching up with recovery as expected after a few scares in the last year when itdipped and clipped any recovering trends and underscored the state PMI by a higher and higher margin. The Flash Manufacturing PMI is above 50 and that means the composite too will scratch above 50 and Services in China can also conme on up and announce a full recovery. Though MOM retail sales data remains a challenge, the annual rate of growth with weak Japanese exports also getting a bit of hope from a climbback in almost minimised Toyoda sales in the kingdom and Nissan and Volkswagen were also hopeful

 

Older Style Nissan Logo (1984–2001)
Older Style Nissan Logo (1984–2001) (Photo credit: Wikipedia)

 

The last 50+ HSBC Flash as 13 months ago. Back in India, nothing’s moving the markets ahead of the anticipation of a big blockade by Mamata Di and NDA independently already shoing that the fracture in the opposition is likely to eliminate any serious threat to governance but underwrites another loss of 20 orking days to the nation’s Parliament, hoping to clear as many as 17 bills in this session hich the ruling party will unlikely table so precipitately.

 

Asian markets rebounded led by good growth frm the new ASEAN low fare carrier Air Asia and a big jump in Korea and the new weakness in the Dollar has indeed multiplied nefariously on early Thursday trading resulting in a nice rupee open too. The Aussie in the meantime cratered as expected after the Yen offered a nice segueway, Reuters commentary (Neil Kimberley) even betting this rise goees beyond 85 to the Yen giving precious ammunition to Japan to recover the Domestic GDP growth thats been flagging under pressure from the neighbour while the USD gets a leg from Treasuries that Japan has been exchanging for its JGB holdings

 

 

 

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