India Morning Report: And it is clear thru to 6250 from here?

Most short strangle/ straddles would be in profit to have exited and is you have been a bit late you should close out here because the markets are going to have a position either way, mostly likely trying to forget the break between 6100 and 6250 as markets have been given the mandate to a new bull run, which might well start around 6250 again. For a change both networks are carrying investor conferences, apparently not the same but more importantly, the post budget rush to 6100 (more like 6150 ) came yesterday and was backed by real flows, the current levels thus likely to have fully bought in leaving a new index level before the argument over the direction for India starts, global equities being decided on the up.

The bet o f going short on the S&P500 is not necessarily linked to the single up move in Emerging markets and while the longs in Emerging markets continue, the shorts on the S&P will either become OTM hedges or extinguished as US markets also resume an uptrend

An INR 12.7 Tln expenditure budget is fair enough but the optimism allowed to him on tax revenues from a recovering India economy is likely to have brokerages just the right busy for traders and speculators to remain ahead on the risk trades  before being called out by their analysts. For example, yesterdays dissection of each such number as a “little too optimistic” finally seems to have gone unheard as it should in a believable bull segment. However, despite our India story being better than China, a sscal e of 10X will likely apply in comparing flows to the two markets alone and India will be able to win that argument for $10 Bln every quarter.

ITC, Bharti are not overvalued in the Consumer space. We cannnot see value in the HUL trade whose markets have matured in India. Other consumption stories never scaled anyway and that therefore is the limitation of investing in Indias FMCG story except the ‘other’ 2010 winners as titan and ttk remain down and the domino’s pizza is no longer the story as expected after the DD ride, showing up the absence of a secular market and pizza hut coming back out in investments despite the Dominos’ 65% share (Jubilant Foods)

Bajaj Auto may not have substantial price cuts that have  shown on the radar for Hero after the budget giveaway

There seem to be big earnings leftovers with DLF and ABB following on , ETNow catching them for a change, but one understands that CNBC mode better, having ignored these latecomers and even penalised them. Its definitely my strategy with such presenters. DLF has a 60% higher sales revenues , with or without their main contribution this quarter from the sale of Aman Resorts as costs remain high for the real estate company

IDFC, YES, PNB and ICICI correct after yesterday’s rush for buying the select list while shorts on Kotak lead the cut in all such Financial stocks. I will look to shorts jumping SBI again, but probably waiting to coalesce th ebull candles into a stronger up force. PNB is coasting at 540 post a week long correction mode after a day’s ibig wins in the post analysis.

LIC Housing is probably as good for the medium term as the Power NBFCs, all the 4-5 stocks at the bottom of their range and Sundaram and the Gold NBFCs unlikely tpo o be competitively buoyant. Axis Bank would support Bank shorts as Kotak and thus Bank remains available as a short hedge too. Cipla and Lupin present a new problem as they continue to activate a bundle of no good stocks they were partnered with in their defensive mode and are not trading bets as they reach the top of their range near 450 and 1200. There is no secular run in metals, none in construction and Tata Steel remains a buy with the auto stocks without Tata Motors or the Unitechs and the HDILs

Modi is looking at some obvious chinks in his own armor as he stands on a half poant English speaking tour, showing up equally worse off in Oratory as Rahul, but looking comfortable with one new round of Desi dose goevrnance for India Inc

From my end, Chidambaram was more than right in showing UPA’s 8.4% and 6.6% 5 year periods ( 4 year periods) against the 6.2% average, but apparently there are not enough Financially literate voters around, despite the preoccupation with growth

 

 

India Morning Report: Markets listless orphaned by a Superbowl

Superbowl sold tickets for cheap in the snow

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

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

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

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

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

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

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

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

Energy Markets react positively Midday

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

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

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

India Morning Report: Markets not ready to move from Vol lows Mr/Ms Short

A handicraft shop in Delhi-India
A handicraft shop in Delhi-India (Photo credit: Wikipedia)

Assuming a generic Mr Short in the market has been playing on the increase in volatility from lows of around 17 on Friday before last, he is still fishing for trouble and not getting much though the short strangle is paying the 6200 range(only in a very liquid market, and almost excluded the Nifty series too allowing only the sold puts most of the traction,( see Thursday report) and in fact continuing to burn sold call positions ( Calls written) as the markets move up on filtering out of bad news, post Taper and with the Indian policy and election juggernaut still finding surprising positives including the resignation of a Minister close to the DMK (Jayanthi Natarajan, is from TN) and a government with an unwilling, waylaid partner in the INC in the state of Delhi.

Buyers will likely be encouraged by the Rupee’s boost back from the 62.5 levels as government coffers will go on an eminent shutdown in Q4 holding down the fisc and may even include what markets would consider very surprising if indeed any infra projects and companies celebrate real news moving them on. The recovery is short, helped by the tough interest rate scenario extending well into 2014 and the EMBI entry pending, leading to Bond investors filling up their index linked quotas from elsewhere in Asia. (EMBI == Emerging Markets Bond Index, from both JP Morgan and Morgan Stanley, though HSBC is the biggest debt player in both Europe and Asia right now)

Indian Banks are probably thinking of ramping up the Transaction Banking/Trade Finance motif again and will again be squeezed by experts like HSBC and StanChart with Deutsche in Asia overall and by PSUs catering to (synonymous with: stuck with) Export SMEs domestically, Indian credit growth lag nullifying any growth vectors in the India Inc business and relying on Housing and Auto loan portfolios, which could probably over 2014-2018 also mean a growth trend in securitisation, more amenable to retail credit once available in bulk.

But back to the day’s report, few buyers, fewer large ticket deals ( anything more than 1000 shares) but no sellers and a drought for Call writers as the 6500 Calls remain OTM hedges and 6300 becomes ATM/ITM Finally though the probability of an uptrend is a finite 10% and above and can be assumed till as high as 1 in 3 from here. The remaining 2 in 3 remains a downtrend but is mostly going to be like a slow, very slow and thick cloud of smog floating down on the cities, making bull traders also disappointingly unable to breathe in much profits.

However that slow lazy market is probably still preferable to the One sneeze games, which may get to come back to the market in a last chance in this week’s 5 sessions.   ( Assuming moves of around 100 Nifty points and more in mostly the South direction from 6250 accorded by the mood of the network commentators and encouraged by Prop traders and brokers who have themselves been run out of the Crystal Ball.

A wierd yet surefire save from Team India on Day 5 of the IND- SA Test may lend to the fogginess of the market participants but was good for both BJP and Cong supporters and the now infamous 1 in 3 a political vote that voted in AAP in Delhi

IDFC is a good pick for the week, Tata Global too, and infracos may be chosen  in advisement with your bankers/brokers. As recommended last week, Bank nifty did not break below and starts the week at near 11400 levels, with HDFC Bank, Axis and ICICI Bank getting bullish picks. Infy may not thus make the biggest stock in the Nifty 50 with markets changing it to a funding trade till it starts moving u in strength again but probably not below 3400 at any time

Aside:Khobragade?

The Khobragade episodes has probably seen the media opinions at their most lacklustre on both sides despite the vain attempt by NY Times to misunderstand everything done on both sides and the continuing desire of the Indian diplomats to make it a case of total amnesty. The pluses however, India takes a strong stand and gets its way to move the US Corps from their longstanding desire to keep India as the one team that plays low and slow to insignificant in all standoffs and Two Preet Bharara overplaying his hand allowing US Civil and Political Executive to root for and get more protectionism. Both are unfortunately basics we should have started with at the turn of the crisis and protectionism should have been sliding now to allow US any chance of exceeding 3% growth along with a weaker dollar, both impossible to assume from here for everyone.  India and China now reap the demographic dividend with US remaining an economic ally regardless, India getting sidelined in the growth story by a China gaining currency #2 for its pegged Yuan more egg on the Indian version of the Silk route

India Morning Report: The gradual Taper encourages a rally, India indescribable yet?

English: Skyline of Mumbai from across Back Bay.
English: Skyline of Mumbai from across Back Bay. (Photo credit: Wikipedia)

India seems to be locking itself into a no man’s land as the nations punters join the global hordes celebrating the slow Taper on Bernanke’s going away announcements yesterday. ET Now in the meantime has continued with finding obscure (GRE: obfuscation..) commentators on key event dates. CNBC 18 wins again. The issue we are raising is at a different dimension(d-axis) than the assumed obstinacy to be different or that of even the fundamentals of a recovery being spelled differently this side of the Himalayas.

Meanwhile what is looking risky even as Asia applauds the thinking behind the taper, that India’s currency markets try the haywire trade still hoping for an aftermath in the Rupee as the Rupee opens to 62.30 levels. Equities will start the day at 6250 levels and while others posit a rannge of 6200-6350 , the day might yet spring a surprise or two before noon trades. Anyway equities are back above 6200 and GMR is back among large bidders even as they exit Istanbul. Also, NSEL promoters in J Shah and Financial Technologies have been duly censured and MCX would soon be owned buy another consortium of Indian Institutions. Taper could have been abslutely a non news in the Indian currency markets too and the open quotes are a sign that shallow trading costs a lot in adverse selection prmiums to the currency’s bid ask spread.

HDFC Bank’s application for  increasing FII limits to 49% pends with Axis Bank’s application for a relaxation in a similar ceiling and both will be leading bullish plays today.  Assuming that currency markets just wanted to explore the possibility of a significant negative impact of global liquidity being withdrawn , India’s preeminence as a investing destination in the new post crisis world stands. The $34 Bln in FCNR deposits aart, because the Infrastructure situation in the country is unlikely to improve from current vies of coalition governments even for the BJP, the risk remains that India investments will remain confined to a NDF market in currency , smalleer Indiab Bull boutiques with no presence otherwise and at best at 50% of the pace China specific and China sympathetic investments in South East Asia. Singapore and Korea too are not looking for more than a flagship investment or two to artner with India in ther growth run. However, none of that impacts the fundamentals of India Inc and the rally we have outlined since August is rel and given US and European Banks and institutions will increasingly be constrained in the coming months given other investment and Capital constraints, or the recalcitrant DIIs recognising any new levels, Real investors have to sustain this rally, neither retail nor from OECD institutions.

The Yen also got a boost from the Taper trade, while India and other trade partners have increased trade with China in the last few months over its traditional partners as both Industry growth charters in China including European imports and Resource exports from Australia and Brazil have been sidelined in the build up to lower trade surpluses and higher retail growth expanding not just Landrover but also our franchises from Cotton and Agri exports and a new market for Management and Consulting Services in China and South East Asia.

The Taper past ( it will last till September 2014) and India starting on a recovery path, markets have to recognise the Depth in India as speculators continue to keep coming back to old favorites that were not more than tangentially aligned to the new Global equations like the frog that sips back everytime he succeeds in taking a new step or two to get out of the well

11 AM Update: (I agree with SS on CNBC 18 again), One should just wait out the falling knives and start buying towards the close of day today after 1400 hrs instead of the rush to sell 6200 calls or especially Axis and ICICI Bank Calls which are well worth buying (ATM) 

Fixed Income markets contrary to expectations of the 8.75% yield on the Ten year bond losing again because of Fiscal impacts in the last quarter of the year, may in fact move back behind 8.5% lines as Spending cuts materialise to balance out the missing $$$ in Rvenues and Disinvestment charges ( which may still come out on top) However equity indices will depend on only inflows into the select basket of scrips including Bharti and ITC in FMCG and IDFC , ICICI Bank, HDFC Bank and YES Bank, or other midcap selections outside earlier.  The Power NBFC trading range for example is a very wonderful opportunity for those willing to wait and watch on India.

Indian Pharma seems to be retaining market interest as $200 mm molecules have more than a dozen opportunities every year in a 2012-2016 period even after the first few Big patents have come and gone as more than 30 $ 5 bln patents expire. Teva’s first few generic applications being rejected upholding current patents in the USA may also not stop them from coming out on the winning side in revenues on the vast US market opportunity, while  Indian domestic business is still less than $10 Bln and probably can grow 5-6 times from here.

Banknifty has a bottom at 11200 so today’s snap southward may not hold after 1400 hours in closing trades before the last session of the week tomorrow. Gold swipes big losses in today’s trade as the Global liquidity shrinkage impacts runaway trades in Precious metals led by Gold and one assumes even Crude and Real Estate markets at least outside the USA. However, even limited trading volumes for importers, ne does not expect India investors allowing anyone here a win with significant short trades in the metal. International prices of Gold may well breach the $1000 per pound mark. They are currently trading at $1200 post taper announcements.

 

India Morning Report: What a 7000 index(Nifty) means for India Inc!

Gold Bar and Investment Jewelry
Gold Bar and Investment Jewelry (Photo credit: epSos.de)

As Neelkanth Misra mentions very credibly on TV18 and CNN IBN, coalitions v. stable governments were never a questions for India Inc and as we have avered since 2007 on these forums, India has been a story run despite politicos in power , as much by the burueaucratic mandate of the time as the populist opinion of what the market economy will and can do.

The latter of course is more uneasy on the shoulders of a government but as a democracy we are habituated to arguing out our investment and business decisions deciding the underlying philosophy for example, the extent of WTO requirements or the Tax regime in the current milieu which are longstanding items awaiting a market verdict even if a fractured government or a single largest party wants to decide. That also means the young ones are communal / secular agnostic probably.

A schematic map of the Indian Railway network
A schematic map of the Indian Railway network (Photo credit: Wikipedia)

The 6800 mark if it comes in this rally may be just a market verdict and a bubble rally to boot without investment spending kicking in, but the same levels would be underpricing Indian markets in 12 months when investments are underway a s corporate earnings have shown. I think that weight is enough for one day’s business. To Neelkanths(Credit Suisse)  credit too, if Powergrid indeed commissions in TN and Andhra, the Indian GDP based on contribution from just that Southern grid will shoot for the skies

Meanwhile another journo got the better of my market specialist verdict,catching that the more leveraged the trade, the better its performance. By the end of the first flush of 5% increases in banks and all other stocks, one was able to catch HDIL and realty not doing well as also Stride Arcolabs hitting the lower circuits, (down 10% at 10 am)

Rupee finally appreciates this morning to 61.50 targets and Gold investors have been satisfied by the BJP’s coming , growing the metal to 32k levels in these few trades.

Delhi’s 67% turnout is another India investment indicator that has hit the scenes and well, in defence of the incumbent which delivered at the State level, Delhi-ites might still see a AAP – Cong coalition post counts as BJP  is a pariah even for the Anti corruption front that has probably garnered the 20% of the vote that educated Indians had stayed in vacillation , having to vote for politicians ( not just a half joke, probably i would go all the way on this one)

The Nifty rally is strong, Banknifty leading again, and as Banknifty is a well traded index ( or one mis spell may say trading index) it will likely return after a big rise to same 11,000-11500 leves for a new rush of bullish trades as this rally lasts the mile. PNB leads with ICICI Bank on the Private sector side and bulls seem to be cornered in YES Bank for the same election reasons, otherwise I do not see any capped upside in YES Bank either. Axis, ICICI Bank and PNB are all good for a 10% jump from today’s 9.20  levels itself(or 9 am when 6400 was tagged on the index in the pre open)  but if other PSU cranks, muddy the Banknifty at higher levels instead with a sharp irrational step up, they might see lower targets around 1150 for ICICI and still atleast 650 for PNB

Even a vote or BJP might be just a part of India’s reform behemoth, having carried India thru fiscal and industrial reforms more in hope than in action in the first flush of growth from 1998-2007. India is very different from other EMs and even China with an autocratic government despite attempts by even passive investors to blur the differences. Witness the Apple China Mobile deal (rumored) and the comparitive with an Airtel – Apple deal in terms of what volumes mean for Apple.

Investment cycle will also remain weak under the new government for some time but as we mentioned any 7000 level on the Nifty 50 will be a value play within 12 -18 months of these levels signed into this rally by the markets L&T is a slow elephant but the Power sector would showcase a great score, REC may have topped off  and Powergrid ready to carry the rush with PFC, PTC and others and as the requirement of the sector more Financing power and utilitiy pricing power (12% /16% CERC pacts) or mega power signings

On the global front the Euro has started moving up in vain obstinacy as contraction and deflation strikes in tandem in the Euro 17 and the overall 27 nations that encompass the European effort, double signing into the deflation and the Yuan has taken over from Euro in all important trade finance contracts, making the competition between HSBC(volumes), Deutsche Bank(!dealmaking!) and StanChart(price) that make up the Asia carveout

Professional Disclaimers and Opinion/Fact checks: We agree with only 8 of the Goldman Sachs dozen ond one o of five featured Credit Suisse picks in this rally as published in November and December 2013(today on tv18 for Credit Suisse references). 

The Rashtrapati Bhawan which is the residence ...
The Rashtrapati Bhawan which is the residence of the President Of India. (Photo credit: Wikipedia)

 

India Morning Report: The Taper trade that did not matter and a SAP for Sugar

taper-2
taper-2 (Photo credit: Chriszwolle)

Even our best performance this fiscal is going to keep us in deficit and ECB debt is going to be fiancing thaat to a heavy share for some years to come. But we are not close to getting investment back into the Economy. Though one would specifically request those in the audience paying heed to the new Catcalls for Greed&Fear ( the one from Chris Wood, CLSA) to be extra careful even as India’s weightage rises in the same, the concept of greed & Fear including the other global index by CNN i s probably an important turn on for investors who like to measure a positive performance than just revel in the goodness of equities. The CNN index for one is more like a PMI chart to benchmark against esp now that VIX has shown to be absolutely negatively correlated to good sentiment.

Back on the Taper spooking the markets, I think the markets are being taken for a ride, but a s long as that is backed by skin in the game, the resulting corrections and from here the rally to 6300 are as real as ever. The Taper in its entirety has already found India backers pooh-poohing the European idea that India will shuck itself out from that ONE trade whenever it starts, and the traction for that correction was educative for India analysts to realize the negative sentiment India’s sitting on the fence has created for India.

Again, thankfully it is easy to see the negative sentiment as a European thing because those are really fragile banks and though they will continue to press enough of their capital into Asia in the coming decade too, their role after this taper might well be non existent after two currency crises in Asia and a little of the curry for the home run. Sorry, UBS. Sorry , CLSA. Pension investors and Infra shows like Citi, Macquarie and that HDFC investor(Scottish widows) still remain, but those sharper on the Short trade including HSBC and StanC at times, must suffer for it. That aphorism about Glass houses is meant for them to read into their history of shutdowns accelerated in the last few years

Taper trades are a hoo-haa if 6000 survived. The date for the Taper moving to June 2014 ( We mentioned sometime in October)  and a lower CAD, also star  as the most important factors in the next stage, when the Taper quantity becomes limited and gets filibustered by a non US QE from another OECD Central bank as 2% becomes their growth ceiling and the scare runs back to Bull trades, like they shut out shorts today

Of course markets closed yesterday without any shorts exiting and no one has been caught this morning because they exited the trades or are in the process of exiting the same. Yesterday’s negative FII flow would be a rare moment in the history of this exclusive bastion of Bulls that is India nd e are again ready to move beyond 2007 levels here, especially if the Dow moves out into the 16000’s as it showed last week.

There is no argument 280 per tonne,is electorally stimulating for farmers and ever untenable for Sugar Mills suffering from days they could get it for INR 130 just before the SAP arrangements began. However, it is unlikely that farmers will go back to lower realisations and it is still that SAP’s positive effects continue to out weigh its negative impact on Agri inflation. I’d say till Core inflation starts getting impacted, it is another “sleepy hollow’ strategy that India Inc is more willing to bear than it lets on and will be critical in India’s continuing move to reap the demographic dividend, not just in consumption but in investment in urbanization and modernisation residual to the New World

Those bullish on IT and Pharma for the wrong reasons may be the next in for a rude shock as markets refuse to stay on a particular 6200 or other level in search for the elusive big trade. Especially in IT, those like Tech M may not be able to hide their being disapproved by current and potential customers despite the Dollar Rupee. One suspects HCL’s half hearted transformation may also have found the cliff it was hiding for all the time.

The Taper? It does not loom..Sorry Mr. Doom

Banknifty had a hard call for market soothsayers even as higher than 9% yields tempt everyone to the current Fixed Income market as well .Kotak’s projections for H2FY14 could probably look for sympathisers extending the sam eto the Full year where it a little short sightedly holds the bullishness in earnings to a mere 6%., that probably landing it again in the wrong side of caution tales.  Also one expects Bank earnings to tank the H2 report card for the index as a whole but the double digit earnings score should still be a n easy challenge for Indian companies showing an immunity to global volatility esp with FMCG, Domestic Pharma and Automobiles. The Sun Pharma trade is on the short end right now, more to do with Sun Pharma being clubbed in the passive folios with  Hero Moto and thus probably caching good stock for short trade to use a s collateral. They could thus off and on make the negaive end of scrip pairs within their sector but overall they will still be an increasing part of bull portfolios their index scores likely to go up esp with those not formally keeping to the index components in index tracing funds that will walk away with more inflows

 

India Morning Report: It’s Conferencing time again, do India advisors need the Brain Buzz

View of Hilton Towers Mumbai
View of Hilton Towers Mumbai (Photo credit: Swami Stream)

The Kent RO India Economic Conclave(ET//ETNOW), probably reminds other Indiaphiles of the Autoclaves and Indian barbecues as the Delhi Winters approach. Indian (Mughlai) Barbies of course last all year and the take off on that name is rather steeply silly, but not as silly as those Modi’fying Indian polity or still relying on Bankrupt European franchises not just in India but even in US where European Banks try to claim the upcycle again just for having reached the bottom of the valuation pile in investor opinion.

It signals that people are listening to more than the seldom heard refrain earlier that US Bonds are headed for the 4% mark on the 10-year Treasuries, Goldman Sachs having updated their opinion and with US equities starting from record 16000 levels finally after 5 years other equity assets around the globe are also finding favour. India must be enthused because even without the Enclaves or any agro encomium (at the new WTO round in the ‘hood), India weights will remain ahead of European bank investments, HY Bonds in the US that continue to come back however will be something EMs and India cannot compete against.

I-Banks stocks are a good pick if your portfolio does not have overseas diversification yet, with Investing in fashion and rising by the EM watermark rate of 30% growth at least in the first 6 months. Again, these flows including US high yield and specific picks in Global equities do not compete with India flows, while Asia credit remains at its most constrained sufficiently tempting even without European QE to keep the arbitrage for Asian treasuries and an umbrella from Domestic Interest rates is always readily available, not threatening the CAD in any of these South Asian / ASEAN SE economies that seem to bring more relief to Chinese investors and pro reform governments. The winners however in the I Banks are HSBC and Goldman Sachs and other stronger names, and one should be careful to whom one listens and sets the morning alarm with.

FIPB approvals have come in for Singapore Airlines – Tata Air joint venture and Religare which will invest as holding company from the island state.

Another quick silly update: The linkages of urban and even rural India to radio as a media have again spiked into something tasty and a medicine to nail the hubris, without having to drink and drive, even as new year celebraions come around the bend in Lutyens’ Delhi and elsewhere. Home is where the heart is, they say, esp when the RJ is handing out your favorite Mall freebies and movie Tickets with Muscle and oomph.

A small slide in from Gold to near 31k marks just on the news of 40% investment demand of last year returning. Gold season is tough for Financial discipline. UCO Baank results? give them a pass and stay with BOI and PNB, and you must get short on SBI to save the India Fund you have been planning. Buy IDFC, trade YES Bank and ITC because you have already bought and no there are no retail investors to count in the Indian markets the residuall INR 50 Bln turnover of the class probably counting professionals in the trade, since the first 95 circulars from SEBI cut out sub brokers and MLM chains from Indian Financial Markets. QFIs have still not taken much to directly investing in India and apparently there is still something to be done about it..

Modi? Bad experiment!

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Hotel room, Hyatt Regency Delhi
Hotel room, Hyatt Regency Delhi (Photo credit: John The Geologist)

India Morning Report: The “growth-inflation dynamic” is getting flustered by the rates

English: The Classic view of Saving & Investment.
English: The Classic view of Saving & Investment. (Photo credit: Wikipedia)

While the equity markets are back from 6000 levels making up for those missing trading days last week, starting the week at 6150 levels, an ongoing investor conference revealed the likely India bull among banks getting the short trade for not being able to lend in Europe. CLSA Chris Woods asserting that the challenged growth inflation dynamic has not stopped inflows into the country. Similar assertions from Barclays in the morning, who quite track to our Top dozen picks as revealed in the last two-three months (previous trades though in very similar scrips are NOT ACTIVE) underline the fatality of Indian policy as presented to the new generation by Foreign investors coming to India at the bottom of the global cycle.

As we have written before India could well find a way like the Phillips cuve in Keynesian Economics to survive n the high interest Economy, but those waiting for a revival or reveling in China’s continuing misery would have realised by now that India having chosen to jump rates in October is now intractably going to ride up the spiral killing off any motivation for investment growth from the bank rates while the rate differential continues to press on the ECB borrowings and increaase pressure on the deficit. One way we still think, out of this spiral was to learn the importance of holding rates and a HOLD at 7.50% would have done the trick. India’s diagramming in the investment /Savings trade are rather inelastic on loan fund supplies or demand in the main stem however and so growth will go on.

However, in the meantime, WPI has hit 7% and so there will be more rate hikes not impacting the residual growth GDP. Rest of Asia struggles as well with Israel cutting its GDP scored in September to 2% and the Oil economies or Africa the only refuge for high growth dependent Capital businesses. India with or without the Modi-nomists has done precious little to ramp on to the unaided infrastructure growth and is barely getting back to fiscal discipline with ratings still stuck in the 80s mode regardless of reform. The etihad $450 mln + investment in Jet including the 24% stake has taken agan crucial time off the managements available turnaround strip an India Inc is also running out of time stuck at 5% growth levels, now probably locked in till June 2014 without an escape hatch

JP Associates is a prime example of price negotiations being a sordid affair in India, Manoj Gaur doing well to hold on to deals on its Cement plants and others despite the markets probably looking for an even better price on the sale. The rresults showed again continuing growth without improvement in the CEment business. Monssoons good impact on grain and thus any residual impact on lowering inflation is again a sordid wait seeing as it is unlikely to stop the farmers or traders from spiraling up our food prices for the time being. CNBC 18 did a good focus spot on Pharma stocks in the morning, and they are doing well in this cycle, including Cipla and Lupin, the still funding trade stocks and IPCA it seems has rerated to 17-18 PER multiples. I hope they have a new drug or corporate news on the horizon. Again on inflation FinMin so can’t do anything about imroving supply lines for agri in this nation

ITC is finally back up again from 310 levels itself and is a good trade. IDFC is done till the election frenzy despite the Fin Min noise for infracos which unfortunately are still running their family businesses on the margin trade of their own stock. Network commentators have underestimated performance potential in Yes Bank and overestimated it in State Bank. The Maruti trade though is back as the Yen spirals down(up) into the hundreds again for a likely couple of months, taking care of the whole quarter

Automobile expors are doing well again so JAnuary will be quite a celebration of the tough times with Consumer Staples (Non discretionary, food and other FMCG) able to avoid pressures to reduce margins and not pass on input costs.

Last but not the leas, we are not issuing more Buys on Tata Steel but it remains a Biggie on the Buy lists and those deciding to take profits with the Domestic institutions at 380-90 levels will likely be deprived of the real cream on the cone.

India Morning Report: A little late and not better for it

Definition of Sub-Saharan Africa, according to...
Definition of Sub-Saharan Africa, according to the United Nations institutions (Photo credit: Wikipedia)

The Rupee reaction petered the rally at its 6200 floor well before the November series was out and so things do not look well for the downward pressure building in, on the news of the “cosmetic taper”(Marc Faber) deciding to take the markets for a ride across Asia. It is mostly as ET reported, because of the perceived lack of quality stocks and globally because Dollar bond yields need to rise regardless.

Yields at 9.12% do not really threaten the India story but signify a sell down which given India’s small base in FX, Currency and even commodity markets where a single import continues to equate the Indian equation to the underdeveloped Economies of Sub Saharan Africa if only in market perceptions. Moody’s and S&P mandate for India apart, this as we mentioned last week is just one or two players and hot money choosing a quicksilver trade and the Rupee as a target for such trade does not necessarily mean another big cut in India markets. Trade should pick up around 6100 levels only and the Rupee should not move to any risky levels above 64.

Gold investors will remain in surfeit in this stage in the Global markets and that need not be correlated as strongly with Growth as other crises jumps in buying.  Lack of Indian Investment demand for commodities an lack of demand at the pump in Oil in the US has still meant good overseas investment demand for Oil and Gold given the new lows

October data for Imports in this Fiscal at $280 Bln is down 4% and Trade deficit is still high at $90 Bln. The NRO/NRE Deposit swaps have apparently collected enough for a number around $20 Bln to balance this trade deficit as estimates for the CAD have been already brought down to $60 Bln. The October deficit is however just $8.8 Bln and Exports a healthy $27.7 Bln, the MOM increase in deficit probably immaterial.

The Sensex started the day 135 points down at open and is currently trading nearly flat from Friday’s big cut on Nifty and Sensex. Also, the Tata Motors trade on the positive, post results trned out to be a dud bag as we said . Shorts on the market can however pitch in, shorting the Index though IDFC, YES and ICICI Bank are quite done in independent scrips and Pharma being defensives are also on the secular buying list apart from being good India portfolio picks. IT sells will roll back in this leg as they benefit from the “India, Sell” tags

However, one still feels the /Indian yield curve and growth story were back without threat of inflation and the rate hike affected in October and to be repeated now in December to 8% on the Repo rate is the mindless exercise which is triggering this spiraling of yields and only strengthen the rating agency view keeping India stable near junk than giving its due and correcting the rating’ own regional imbalances and prejudicial biases, still favoring an untenable proposition like Brazil or Russia and a market failure like Turkey over a stable story like India.

Is India really fairly marked for a NBFC only kind of play with the coming high interest rate scenario?

 

India Morning Report: Pass around the peanuts :: Losing 6200 now(not really), I am sinking, No EMs aren’t a great buy or great “SELL” either

corus / Tata steel IJmuiden velsen beverwijk
corus / Tata steel IJmuiden velsen beverwijk (Photo credit: Wikipedia)

Choosing a daily headline is a challenge, quite so. Instead of helping and supporting you are acting like a pack of chihuahuas who have been given more than enough to eat . Write back on every post , this kind of reticent observation posts on my writing are not helping your cause (Dear Readers)

The Sun Group results, mostly Spicejet, tchah why would i call that or the iPhone launch a headline in any subdivision of this country let alone online with so many obervers, NRO accounts and eligible bachelorettes. That’s another franchise down the drainpipes. (gutterball, say!) I am not talking IPL though Sunrisers also went down rather for the same mismanagement.

Debt worries may have more to do with Spicejet losses, I would hve said on a cursory glance, so I leave that one to you . I am probably wrong as Bad Debt is definitely not my worry till I am operationally efficient and thus viable again. The entire new industry of innovation relies more on such mis-accidents and so any bank with an innovative model though feted by the markets would continue to go down in the melee and PSUs are not required to instead encourage losing sectors for Export

Each “Quimvadanti” above is a torture for any reader without ad libbing the rejoinder mind you

EM analysts are right that EMs have been scoring negatives thru 2013 and that the same will be recompensed without a Bull run though. However, India is getting inflows thru November and the so called funding trades are now just shorting down a blind alley every time for the heck of it as retail and DIIs stay away from buying. Portfolio buyers are alerady selecting known performers.

JSW Steel production counts are up to 12 MT for Crude Steel but I think the ratio of value added products , at less than 10% that in each variety ( 1 MT ea for 4-5 product “SKUs”) show the limited potential despite the use of advanced technologies in these traditional EM sectors where India does score over the more volatile China, Russia and Brazil. Rio Tinto had to recently leave after a small project to review the potential of Diamond mining among others and POSCO / Mittal have been exiting the Orissa wilderness, but the so called Economic loss may well be a gain. BPO lays claim in the mean time to furthering urbanisation as Tier 2 players post out their Top talent to the 30 odd 1 mln pop towns .

UB, according to ET, has lost 20% of volumes in TN also even as Fosters and Carlsberg move up in alcohol markets in the North. Beer and Whisy markets have plateaued in India again despite a crisis in the last 5 years , an early maturity we have long commented on , in India’s branded Consumer Staples (Discretionary) United Spirits is an easy sell though any pick on news is unlikely to last till Monday close and open positions over the weekend should be avoided, easy pickings for alt Asset cronies stymied for hedges and funding on a flat index

SELL on Private Banks like YES and Indusind or ICICI Bank (Traders 20) will fail again as the banking sector carries the seed for a lot of outperformance out ahead that India guarantees. Credit growth cycles need not renew as they are already back in India at 18% and longer term impacts in East Asia and Singapore are unlikely to trump local Indian growth in the sector as again it guarantees credit growth without the Europeans . Draghi’s rate cut though deserves a mention and the Euro has returned to growth again rapidly losing 1.38 odd levels to end at 1.33 before today’s London open. The London FX probe primarily started around the EUR-GBP cross trade ‘fixed’ by leading banks as sort of a ‘tradition’ as all global banks get busy in another imbroglio obviating the need to explain their non return to Asia.

Muthoot results boast of 620,000 gold accounts even as Gold Assets obviously went down in a bad year for Gold. Consumer recession or inflation impacts would have seen a spike in these assets held as collateral by the bank hopeful

JLR volumes up 32% are but a drop in the Ocean but any uptick post-results will impact Tata Steel holdings till Reliance results come around at least. Hold and add to Tata Steel positions

Siddharth Tewaris appointment is welcome for at least the continuity in policy it guarantees and one in fact hopes that RGR’s futher appointment as Governor indeed sets a precedent , a steping stone as CEA very visible to critics and friends and allowing a testing period for future governors and more importantly a cogent monetary policy

 

India Morning Report: Energy cos can rise despite Export parity?

Graph of the Gross Domestic Product GDP (at Pu...
Graph of the Gross Domestic Product GDP (at Purchasing Power Parity-PPP), per capita, as a function of per capita Toes. Year 2004. Data available online at http://www.iea.org (Photo credit: Wikipedia)

Here are the numbers the Kirit Parikh committee is dealing with. Export parity is going to impact GRMs by $2.30 per barrel. However, other things being the same (KP) we agree with Quant broking that Oilcos are the major drivers apart from the metals in the new bull run as 5750 settles in after F&O unwinding (hopefully). Quant Broking also reminded us of the important fact which markets latched on to in 2005 and forgot in the melee on the Dollar and the depleting growth rates since.

BPCL has managed to keep a very low price to Book multiple I would add that it also has a better cost base though the numbers have to come from a research desk hour. In reserves according to Quant, BPCL scores upto $200 bln in reserves wich allow it to be a god enough for portfolios even as the rush is already on in IOC on the strong Dollar. BPCL is es superior in btter ROI diversification thru available capital and retail distribution not available to IOC

Coal and other weak Corp governance stories keep falling through on easy catches by incoming investors avoiding a bigger standoff not unlike the Vodafone GAAR standoff in the same President’s times. admittedly, India’s unsuitability has become a more understood variable globally. However we stick to the view that it is still a better non OECD destination than any other BRICS or other markets including China and the Turkey s or Russia and Brazil with obvious fiscal holes that cannot be equated to India’s intractable sub 4% minimum

Again one on the flip side finds the idea that Maruti and M&M can thus be sold on the idea of expanding rural markets laughable though HDFC Bank would be a good idea , eve within auto loans if not for its overall rural and small town breadth, even as PSUs continue with their traditional problems.

Real estate inventory levels are scary and the market (working) definition of real estate as a market whose asset prices cannot come down because of along other things costs and commitments already incurred, make asset bubbles a fertile ground for research even here despite a healthy domestic consumption share and lower incidence of flipping with potential for more salaried young upper class buying better homes than anywhere else except China’s metros.

The other is the big solution of the CAD which has suddenly hit the saffron wannabe ET ( probably because it hates FDI in media or being stuck with sick company notices like the rest of the Indian newspapers)

Though the inflow rush is obvious, the lowering of invisibles in the import bill, the imported services, may not be good for the Economy nor a reason to not know India and would take a lot of time to uncover in terms of components and future trends. The traded deficit contributing so well that the Credit Suisse forecasts or others of just $50 Bln deficit including the public planned target of $70 Bln are both scary in their matter-of-fact-ness as well. The coming rush of export growth in the period to March even as Advance tax receipts fall and SME portfolios at SBI hit large NPAs would only disclose more skeletons in India Inc’s cabinet even as one of the world’s deepest Financial markets seems to rely the least on Corporate product for its GDP

The Rupee however, has seemingly bottomed at these weak 62.80-63 levels an may well rise back to 60 when these performance improvements land on the commentary and analysis streams in just a few days after September data becomes available ( Right now Q1 data is being release for GDP and Trade on the consolidated quarter basis)

India Morning Report: Rajan appoints committees for everything, Rupee to discover under 66 levels at open?

The change in Monetary and Fiscal policy stance is fairly well obscured by the need for consensus but with Overseas Direct Investments retained at 400% of Net Worth and removal of hedging restrictions by allowing rebooking for both Exporters (50%) and Importers (25%) or Dollar Swaps at 100bp better rates with the Central Bank for FCNR deposits till November in existing schemes could just be a sign of old policy pieces being consigned to vestigial life, though such reform reaams have come and passed India Inc by for almost millenia, and at last 67 years f independent India. However, these limit relaxations typically let th Rupee sales accelerate into a new orbit usually and that is definitely unlikely

as predicated last week, S&P, Moody’s have been watching these developments only as a fallout of their prognostications of India’s twin deficit weakness and are much reiterating their last assessment when S&P had recommended a negative outlook based on a 1 in 3 chance of downgrade which USA had barely avoided. the Ratings firms are likely to be under pressure to change their ways and the step difference between Asia, Europe and probably from office to office of the agencies which reflects a woefully inaccurate picture in ratings , that are still catching up with munis and structured products n US and Europe and illiquid CDS in Europe and Asia

IMF Economic Counselor and Research Department...
IMF Economic Counselor and Research Department Director Raghuram Rajan briefs the press on the World Economic Outlook on April 13, 2005 at the International Monetary Fund Headquarters (IMF), Washington, D.C. (Photo credit: Wikipedia)

The Land and Food Bills have passed both houses seemingly without riposte and the Pension and Insurance Bills are next. However, back on Rajan’s first day, some other welcome proposals include allowing NBFC Prepaid cards for payments, starting national Gyro payment services (Nachiket Mor -Inclusion)and Rajan himself sitting on the committee to decide stringer  norms for NPAs and concerns on restructuring yielding more NPAs than normal accounts. Banks will be investing lesser in Gilts and SLR rates going down could be still a long drawn process while Branching being freed may be some incentive for Foreign banks also to execute subsidiaries. Most of these proposals will be overseen by various Deputy Directors an ex Governor Jalan will head the committee on  new licenses due soon after Jan 2014 when Anand Sinha leaves.

Markets otherwise keep responding to new signs from metals after a record comeback month in July/August and the banks will show their hands on the policy through their price movements the remaining two days of the week. Liquidity restrictions are still on and India is fighting the worst currency crisis of the last six generations

Indices again moved the entire range crossing 2% from 5340 to 5450 levels by the close and Wall Street enjoyed one of its best jumps overnight n Auto sales data. European PMI cements the days of crises as past though growth is yet patchy and China is the pod the global investors still look to, despite their repeated equity failures in the market

 

India Morning Report: My right shift key doesn’t work. Will the right UBS please step up!

The McDonald Happy meal is still Rs 20/- and the $5 Big Mac Meal still under INR 200 all taxes paid ( Large fries and coke), so it is not PPP. However, Bhanu(UBS)’ target of 68 is very near and there are no buyers in the currency yet, thus the new Box from 70 to 78-80 should be in play in the coming week. That should also see the traditional Exports rise because of depreciation an import spending goes down finally proving true before the policy implemented is taken seriously by those still trying to understand India from an investment point of view starting from Ford which began in India in the first wave of reforms and is still unable to use it as an export base or get a competing model up against Suzuki.. but the three traditional arguments above hold no water because of the vast difference between reported statistics and trend forming prices, markets and the still unexplored new CPI barely a year old. Bond markets have traditionally neglected volatility especially in Valuations and recovery LGD models from KMV to other modified Merton and non Merton / non Fama-French models.

Domestic consumption is firmly isolated from the one fifth of GDP that is Exports as long as oil prices stay south which looks likely as even $15 Bln less in buying is hardly to be noticed except for the improbable hysteria still not shown by markets. one would probably see Fed buying reduced by half by the end of 2013 in the strongest such scenarios and the markets have broken trends enough to stand tall in that event nullifying any tail risk or God events as a result. Such rabid unnecessity aside, Indian commentators are not expecting a recovery in the currency, and with Foreign interest likely to return in to the investment cycle and in ETF inflows to India and the EMs in the next two months, 80 thus could be my ventured level for the currency, 60 being overshot long ago. A long recovery trade in the Rupee could in fact still be impossible at those levels and any attempt to recover the 60 levels might not even be theoretically feasible right now.

UBS of course has lost all pretentions to Investment Banking and its PPP valuation of 78 is probably a non starter even if they receive 100% of revenues in bonuses as a stay away handshake from the European Private Banking Management. credit Suisse is still due for a hole in the shoe quarter as its ROE calculations seem to suggest this quarter and th Euroean trend t increase bonus percentages flares the remaining  investment bankers to a quick relapse of their own holes. Traders at Deutsche bank of course would have ore room to create a new stand in Asia after having completed restructuring and HSBC may not have deprioritised the same as well. stanchart does well with a long term view so it may be planning to sit out further bullish rupee moves too.

India Morning report: This week in history of 2050: The sun rises on the east India Company in Asia

With half-hearted restrictions on Dollar flows talking of Capital controls and engendering a Rupee ‘addition’ to the value of the Dollar and European Banks getting free after a couple of years in Capital wilderness, India could be a bigger part of Asia when Banks get into a new bout of short term credit , not just Transaction based Banking which s already operating with preference to SCB, DB and Emperor HSBC in the area. The new east India company, third edition would thus be the rupee benefactor with true self interest reserved in trading than the hitherto close coordination with businesses and governments on policies in the countries in the region. We have in Asia however successfully staved off such pressure since 1987 esp outside the East and North Asia belt where foreign interest makes up a dominating market share of the Financial Markets in debt and equity

The Rupee runs close to half its weekly move at 66 on Tuesday afternoon itself leaving very little to the imagination as conservative and HTM Indian risk offices as they price in the Dollar at between 70 and 75 for current short term rate planning, which hastens he move to 78-80 soon. The nifty pre expiry range has broken own in the same hindsight and with 5500 inaccessible, technically markets run another steep wall o try and find stable levels especially with long futures holdings from offshore desks dominating in the morning . The 5325 index may well stop south of 5000 as the longs were never to be rolled over in any case and the cash buying will unlikely be sufficient in volume to increase index level prospects in the September series.

East India Company (video game)
East India Company (video game) (Photo credit: Wikipedia)

Banks suffered for the active monitoring feared by Expoters and importers trying to go the extra length made available by the steep wall in Dollar Rupee trade ad all of Asia is a little straaped for Dollars as investors respond to fund exits and rebalancing of the last full QE portfolios. The East India co though like all Capitalist colonising ventures do not invest in local quality anymore, which the Bombay club has long neglected but in true 2013 models, there is no growth yet to justify keeping the depression ship with increasing investments and growth in Exports still easily outpaced by the cost of imports leaving more rupee for each Dollar till it does. Government Spending has improved and i would aver short term interest rates are helping in ensuring immediate focus on the Capex cycle as well but investments will come only when higher realisations are available and so inflation may even need to be roomier as in a new frankness in pricing Gas and diesel, that has enabled that consumption cycle without any political fallout. the Cereals and Milk have gone thru the supply bottle neck based realisation improvement and vegetables price hike may also be done in 2-3 months

 

India Morning Report: Markets staying the course as US responds to GDP

US Markets reaffirmed their commitment to stronger equity markets going north from here as the Fed noted inflation concerns on its latest FoMC release. Of course US is worried about falling for the stagflation/deflation trap before withdrawing excess liquidity, while Global markets having been awash in that liquidity without it reaching industry, reacted by exiting US Bond investments in a hurry.

The Indian impact due to Oil and FX is still unfolding and today the Rupee made further inroads from the 61 levels of yesterday while Oil might remain low priced for times to come because of the ‘disturbing’ innovations entering higher shipments of the same into the high seas from the erstwhile importing only US oil industry.

The difference between Brent and WTi has vanished too and thus crude mechanics may not be able to force the desired course esp for the global economy if India can withstand the onslaught for a few more months and in fact strengthen from here.

July auto sales are down 21% for M&M including exports, as are two wheeler sales with the deep cuts across the industry but an improvement over June as Bajaj Auto remains above 300,000 motorcycles for the monthand honda would have gained the continuing depletions in Hero Moto that has moved down to 490,000

BOB NIMs have come at 2.4% and the ain is not going away for time to come.  The indices at 5750 have again exchanged productive businesses to the downside correction bringing back supernary outsourcing valuations with HCL counting its frst inr 250 Bln score in revenues across the full year.

Banks are a great trade and investment as 5750 holds and though traders that finally saw the rush from shorts in the green may not be able to start new shorts from the weekend trades Friday before great Volumes return in the next weeks. As mentioned yesterday FIIs are already covering index shorts on the hedges.

The Goldman Sachs downgrade does not match its own long term review of the currency pinnin g65 to 2016, a fairly bullish evaluation and investors would continue to bit at these levels strengthening their exposure askets to india which have remained underweighted probably related to finer point correlations and larger unlisted opportunities available in east Asia and others including Mongolia and turkey that must return to normal eigen values after the beat down because of political rushes showing up governance in a bad light

 

India Morning Report: A ferocious return to the nineties, and bye Mr Singh?

The Nifty Nineties
The Nifty Nineties (Photo credit: Wikipedia)

Ajay Srivastava of dimensions woke me to another nineties dictum we used to abide by. The higher the interest rates, the more money for the banks to make. Of course the transition will be difficult but it may well happen that while the markets readjust sharply (and hence the ferocious return above may well be antsy pantsy horrific and squeamishly fragile)

The Dollar has finally found its match of the Indian Hockey team’s heydeys. But before we go for the corny stuff, the details as we see it. interest rate margins will expand as banks , esp midcaps start the healing process for themselves by raising lending rates (YES has increased base rate today by 25 bp) The capital markets will continue to slide but once the banks break their downtick as the rupee’s downtick will continue beyond such levels till even periliously close to the 70s whether India’s sovereign bonds borrowed in rupees or dollars.

Banks as they are wont to, will soon be found readjusting faster and in a position to look at the bright side of things as India Inc wakes up to the new levels to operate International business at, and markets will even return to celebrate another round of robust reported results from Bharti today morning.

Double digit rates are probably not so tough for India Inc but that move has definitely failed for the Central bank and for the Fin Min. However the UPA/Congress has had  a few laughs in the last few days and its still not party time for the NaMo face to take over the Indian mindset.

Indices are probably not going below 5300 levels but those looking for a return to 5800 may be a little buzzed by unwanted attention (and crank calls, maybe) to their person and offices. Markets will probably wait to rise back (and will keep falling as opposed to nursing the morning’s wounds) till the close of week operations but FIIs had probably started closing out their hedge positions last week and yesterday so the indices will know how much exactly the rupee exchange matters. however at this end of the business cycle, credit growth is definitely unhindered from here. Also it is a relief  to see DLF fall back to 150 levels , though at a very broad market cost as the distinction between infrastructure investment and constrction growth finally gets encilled in on other India experts. Funnily enough even REC is also 150 levels right now as NBFCs will get boxed in by their banks again the fastest, in the most efficient leg of the rate transmission workaround and banks will also probably reassess the advantages f having increased monetary transmission to retail and wholesale markets as they had ample liquidity for more than 12 months whence rate cuts cycle was squeezed. rupee well nigh opened to 61 levels in the morning nd it is atleast one market where the droping vlues have not poduced many losers yet (ha ha!)

Bank Policy Tuesday: Quarterly review cannot shake off jitters – Taking on the mountain

..and not the molehill

 

Fiscal policy
Fiscal policy (Photo credit: Wikipedia)

 

 

 

This is that kind of belief that turns policy makers into Monster characters as most of the markets are certain of a humdrum ho hum restrictions will remain for some time with an even optimistic note or two in tomorrow’s policy announcement.

 

But markets cannot help but respond to the coming policy event with trepidation and declining interest as they try to still assume a worse scenario. It is however not changing the fact that Rupee is under pressure and the policy easing initiated one policy date earlier than required has died an equally abnormally death and will not ensue to support any domestic investment growth.

 

As has already been proved however, much of Corporate India was actually not using credit probably already on its books as credit flows slowed to an all time low of year/year growth of 13.5% last month and has improved since.

 

The Reserve Bank of India thus having responded worthily to a Hobson’s choice is now more or less resigned to following it up as a Global cycle of lower growth and incomplete recovery has probably been ignored by the markets in the assumption that India’s outperformance therein was because of only its global trade posits and thus new investments continuing to elude India just turned into a chaining of expectations gone awry from no new investments making it as a suspended fiscal policy and reform because of political middle of the line voting lines cannot be repaired by any Central Bank. However India’s Hindu rate of growth posit may also be tested despite the recognition of this failure widely (and the completion of this government’s agenda by political fear) in terms of a requirement to carry Interest rates to double digits for at least a decade or two as there is no new consumer credit or consumpion demand except in unsecured loans and Housing and Auto markets suffer a chaied breakdown from the slowdown improbable but still awaited in th event growth recovery does not come.

 

Infrastructure investments should not have been shot in the foot midway and the wholesale bank  portfolios are unlikely to be able to stand to the situation in case Deposit rates start rising further from here which is always a binary possibility thus making it a half chance too.

 

 

 

India Morning Report: The new series gets no welcome!

English: The Local Head Office of State Bank o...
English: The Local Head Office of State Bank of India, Mumbai Circle. (Photo credit: Wikipedia)

 

US equities are holding up as global corporations despite the mixed economy, find leaders finally surging ahead in Sales and growth at Ford, Starbucks and eve Amazon. The net result of this might be bearing on India too as weights might shift back in favor of the big rush in US equities to counter the initial down impact to growing interest rates. India’s results already destroyed by Dollar moves even as exporters fail to catalyze on the new opportunity with current goods, the markets that have been and continue to support higher values on the eigenvalues of growth seem to want to give in to pressure to develop the fangs required for a big equity move north more than bearing south.

The Banknifty corrected fast to below 10500 after Thursday and thus is spirited for a north move but has probably squeezed the wrong bull or two which remain the important bearers of Options liquidity across global markets, writers “capitalizing’ on the lack of buyers with prices quite out of subsumable range factoring in their safety in higher prices, that refuse to let markets and VIX become an enabler to trends.

Apart from these silent trend breakers, that usually provide no barrier to any defined move, markets are getting bearish just from the wait. The policy announcements today by being in the continual mode will further drive the north move in the Banknifty and ICICI Bank, probably HDFC Bank better than most, and even SBI and PNB whose results were no disillusionment of its backers, SBI and other PSU banks continue to shock most headline followers through 2014 and 2015 as they continue the long drawn process of declaring their backed up system NPAs holding out media hope of starting the up cycle all the time thru at least December 2013. Forex reserves are down slightly at $279 bln and China order activity is the slowest as Asia starts the week in deep red territory. The Rupee could not hold north of 59 levels and still holds negative risks south with trade deficits now proving to be crucial data points for every dollar north or south counting in days of plus and minus moves of significant size(30-40 Nifty points) or in flash corrections on either side, worrying economically intelligent traders even more into a flat dropping market zone.

The Jet move up takes Indian aviation firmly to Air india – Kingfisher axis of south south on governance as the FDI proposal cannot be corrected enough for the desperation to sell out to etihad. Investments from the comfort zone is probably non existent and new FDI will come with too many strings of control the situation of Telecom and now aviation sharply negative portends for any robust escalation of FDI inflows

Credit growth has turned positive and 14% is a good start

India Morning Report: Markets watching the airlocks at 1.30 PCR

Русский: Дорожный знак 1.30 "Низколетящие...
Русский: Дорожный знак 1.30 “Низколетящие самолёты”. (Photo credit: Wikipedia)

The Put Call Ratio, never an independent trend saturation indicator per se is nevertheless impeding most new buying in the Indian Markets as a higher PCR indicates the highest levels of puts sold and comparatively a negligible strength of written calls to initiate a downtrend. Given that the banks have recovered the sentiment to 11200 levels though, the unique topped up situation will continue to walk a steady tightrope for the markets at this point because unfortunately  traders are sunk for short ideas except for targeting the private banks again even as the perfectly engineered ride up to the market has left value in most rivate banks and in most blue chips.

Bajaj Auto at 1870 is hardly compensated for its Margins of 18.65 and Hero Honda is no longer overvalued. Reliance is again hardly left with any steam on the upside but with investment eigenvalues in India rarified Himalayan peaks, such stories are hard to come by for India and will unlikely get short interest even on their Q2 results day when they report barely coming back to /staying at normal profitability levels ina challenged environment. The INR 44 Bln sales at Bajaj are only bolstered by the new rupee and so also for petroleum cycle bled Reliance as oil starts going up after a barely 6 month breather to importers like India

Manmohan Singh did a great job holding 8 channels to task while inaugurating the ASSOCHAM session today morning, taking of true reform ably effected in  energy and the rupee levels helping export volumes 9 again, without discovering that direct relation to be not more than a fond hope anymore) as commodities continue to sink globally except for Oil, led by Indian exports of Cotton and copper also losing value and market like its exports of Tea Coffee and anything else non Gold as the quality is exactly what the buyer did not order, good or bad

English: A rectangle 270x180 pixels which has ...
English: A rectangle 270×180 pixels which has an aspect ratio of 3:2. (Photo credit: Wikipedia)

Me, I was even thinking it s saturday all morning and the markets are virtually closed..ET’s report on July currency trades this Monday..

The data shows that average daily volumes for currency options have fallen by as much as 79 per cent for one of the exchanges so far in July, but another bourse have witnessed a hefty drop of only 35 per cent.

Meanwhile Raymond and Indian Hotels are not going to be traded derivatives from the Octoebr series

India Morning Report: Banks react well under pressure, buy levels established at 5800

NSE Logo
NSE Logo (Photo credit: Wikipedia)

Banknifty shennanigans did not disturb the market breadth leading to a further decline in volatility and your short strangles are doing well. Shorts on ICICI may not pan out for traders but SBI will bear pain for continuing on bad debt downhill slopes even as the PSU crowd per se led by PNB and the private sector biggies improved their NPA score till FY2012-13 to 3.33% as discussed by PC yesterday. Private sector banks have done well to bring down the cost of Top 10 NPA accounts to less than 40% of the total and the Foreign banks continue to focus on Trade banking as is their success mantra in Asia overall with High NPAs in select accounts

IDFC and LIC Housing as expected did not yield new licenses but one should continue holding these investments as the current cut is unlikely to turn into a run. Unfortunately India Post also has to do a lot to convert its vault of small savings into a bank from the signs.

Banknifty may well not move down below current levels esp if one constructs an index of profitable banks from the current index and neglects SBI, United Bank of India , BoI, Vijaya Bank and a few other borderline red marks in the current BSE and NSE indices. I for one eagerly await new volume in the BSE 100 and even MCX to test options though Nifty remains a key barometer unlikely to lose significance.

India Morning Report: Auto exports pick up at Bajaj, PFC, L&T and IDFC lead plays

The headline tries to get at the difference in the consolidating market of now vs. that of three years ago in a similar situation i.e. within this cycle as the prospects of infracos having taken a nosedive and that of auto sales having hit a rock or two still have not dented or revived the case for an explosion of demand and the few selected beneficiaries in each sector. As always the moves are helped by Banking, in this case new bank licences even as Bharti, ITC and YES retain investor interest but have lost their lead as momentum creators in the market. Jet Airways was repurposed by Tony Fernandes’ claims countering Jet’s path to growth in the last 10 years taking unused Tier 2 cities and airports as model bases for its expansion starting at 3 aircraft and proposing to add 10 aircraft a year. Vodafone’s unilateral attempts on the other hand remain wierd and misrepresented to say the least s they make no sense of price or commodity in question probably trying to get a buy one take one free from the judicial process with the tax case still not settled on the m&a either.

at Airasia fair
at Airasia fair (Photo credit: Wikipedia)

In Energy, brokerages try to play catch up and set a mini trend but with 10-12 more hikes in diesel any fundamental rerating except the positive drfit up ensconced currently is unlikely. UBS upgraded BPCL and Citi downgraded ONGC to neutral. In Auto xports, Maruti continus to scare with losing the plot over old established exports continuing 2 years after the shift t diesel and D’sire models in the Gurgaon and Manesar plants but the MNCs and two wheeler/three wheeler companies ride growing marking of production to exports

But back to index based investors and statistics, now would be the time to reassess the significance of India in Asia and global indices though company based weights have been switched around earlier in April. Volatility should subside and give rise to a positive volatility based move sooner than later after core growth was par for May at 2.3% and Energy prices were realigned without protest. Global Oil and gold prices continue to trace lows and new banks from muthoot finance or others however be unable to get out of the success of their nbfc counterparts while establishing retail having to take existing operations to the bank.

That should also mean more new licences as each of the 26 is also a regional in one way or the other apart from leading from one business segment.And, importantly there is still chance for finance m&a albeit after grant of licences, while Sundaram finance /Shriram finance continue to try and refashion their book to get RBI’s nod currently not available for the deleterious mix o securities from refi considerations. India may ass this lull for ECB finance sooner than later as it materialises that the rupee level is unlikely to improve and thence investors, already back for the ride may get to cook more for the gravy train than 2012 offered.

Also, a note to sovereign asian investrs, this could be the last chance to get into the India story at these levels, and more attractive with a weak rupee as these funds hld more of foreign currency than local currency losers in fixed income and currency

India Morning Report: July series catches with investors, Investors coming back?

Large moves in ONGC and Coal india restarted the bull fuelling of the markets, traders assiduously avoiding the to be rally heroes and leaving value on the table in YES Bank, IDFC and other banking applicants while taking the recently hammered value picks in the indices back with defined pairs available to sophisticated and wealth investors and shorts avoiding the markets.

It allowed frustrated “no go” traders like Angel broking who tried a short pick on IDFC yesterday to leave unnoticed while long cash equity futures seem to be a prelude to another rally in the bank nifty. Of course 5800 could still be a level to short the index for the pronouncements of today for coal India and gas prices could still not translate into concrete action in the election year but that looks increasingly remote.

The turnaround is here in process but there is unlikely to be immediate jump in economic data except that future months could see better traction from investors with sticky inflows from the last take on the markets seen in the June expiry above 5700 around 2:30 pm

Gas prices are set to rise in 2014 to market linked levels starting at around $8.4 mmbtu according to the new policy. Bajaj auto has recovered smarty in 2 sharp moves of 2.5% and is still agood nvestment and trade at 1880.  iCICI Bank similarily has a good value at 1050 levels

 

 

 

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.

India Morning Report: Chidambaram kicks off mmtc 9.33% divestment

Banking District
Banking District (Photo credit: bsterling)

MMTC might be a success but the market is not putting much score by the Fin Min /CEA appearance in the media today while Banks have finally given way after a 45 day wait. One notes the posit by market makers that value retention by the select scrips already counted as good is not doing much for wider portfolios as most had treated this climb as the milestone before the rally and not the rally itself and does no in any way would have resulted in  a bubble.

Also the Rupee being stronger yesterday, the overall month long move across currency and equities seems to be trying to compensate the news view that India has survived the move in Asia as was the norm in the oughts or the reform rich period before that and has somehow become a threshold for Emerging markets portfolios as and when dictated by the once a year or fewer occasions of a rupee correction and is unlikely to again preclude the fact or erase the sustenance shown by Indian equities as a class because of the depth of our markets even as Nikkei, Hangseng and Korean markets lose heavily on each currency move because of the less than dozen companies going around for Korea at least and the richness of fixed income portfolios one can safely assume in the bigger markets in Nikkei and Hongkong

The Stanchart reference to inflation risk however remains misplaced as Oil prices are still very unlikely to trend up again

However, staying on the mundane market data for the daily report, Indian equities are losing all expectations of political stability and any positive rally till september as the year’s second half will offer first hope of growth or economic performanceThe import limitation on Gold in the meantime does not impact MMTC plans in Gold and thus strengthens the public channels for Gold trade in India ahead of its disinvestment exercise

Meanwhile FDI flows in China, India and Brazil have been more robust than any other class for all global investors even as Russia scraped the bottom of the barrel bringing the BRIC average growth below 0 for the year. Markets in Asia will continue to lead exits but as the speculative portion from India has been wished away almost immediately, not much move south in bonds or in equities remains and as can be seen in any current charts, Indian yields are down in the same 5 week period and will continue to trend down for the year. Banks, ITC and IDFC remain good investments as also Bajaj Auto, all mentioned except ITC having lost their share of speculative investors / price premiums already.

Shorts on Adani Enterprises are well placed while Gujral again has mentioned buys on Lupin and Cipla / Lupin are real return stories of 2013 from here as Sun Pharma finally pays out 805 of its cash for the settlement with Pfizer/Takeda

Rupee impact: The Free fall continues, small snag on equities

A world map of countries by gross domestic pro...
A world map of countries by gross domestic product at purchasing power parity per capita in 2007 from the International Monetary Fund. (Photo credit: Wikipedia)

Unfortunately, with India inc again adding only probably less than 10% of its External Borrowing Capacity in debt, the Rupee and the equity markets have consequently snagged on the  Asian free fall, and now pro bably rupee has a trading target of 4-5% in this move to achieve the new 2014 equilibrium. While the stabiity is currently lacking it is primarily because for the Rupee it is not a daily volatility that is germaine to the currency markets and the trading range is much smaller than the other asian markets while it is still not picked upa s foil to the ultimate managed currency the Yuan which is a precipitating event of greed in the “Currency Wars” mechanism

Having said that, if one were to herewith propose a new rupee exchange with its limited degrees of freedom, the government cannot and should not bother about stepping in till even 65 levels and find meanwhile a longer run solution to the CAD, while the markets will take the Rupee down to 65 and fundamentally destroy the entropy required for recovery to resume in the aftermath and while it may be a jurassic/triassic notion of yore , destory the eigenvalues of Purchasing power parity much before the global market engagement is  increased   to a true equilibrium.

Mumbo jumbo apart 58.50 should hold because of the stability of governance and the defeat of inflation but if it is whirled through the week, it will tip to 60-61 levels and thence may not ever return to anywhere near Friday exchange levels because the fifth of GDP that is exports will straddle the rupee for the remaining term of FY14 for Global trade agreements for the year

Graph of the Gross Domestic Product GDP (at Pu...
Graph of the Gross Domestic Product GDP (at Purchasing Power Parity-PPP), per capita, as a function of per capita Toes. Year 2004. Data available online at http://www.iea.org (Photo credit: Wikipedia)

On the equities front, today’s event of correlation in moves actually mirrors the hidden correlation in capital moving out primarily from debt and in probably a stabilised form of market prediction from JP Morgan asking that the recovery bottom has not happened and will happen till now. While the RBi therefore is discouraged from rate action next Monday, it has put in motion a cascade of rate cuts which it must follow through and avoid running into damage control esp as Fixed income Markets will continue yielding lower on higher demand despite FIIs leaving Indian debt in the first pike exit of QE linked withdrawal from Asia as the lowest volatile investment and thus unlikely to produce ‘abnormal profits equated with Asia’. The PPP map of the world in the meantime as reproduced here from a long left to be updated web provider of images shows the fast losing relevance of this indicator and probaby needs a trading measure to it to harness its gains.

 

India Morning Report : (Friday, Pre Closing Update) All round recovery from global mini crash on Thursday

Map: Asia (location), subregions as delineated...
Map: Asia (location), subregions as delineated by United Nations geographic classification scheme, except *: Northern Asia* Russia in Eastern Europe en:Central Asia territories geographically, wholly or partially, in Eastern Europe Western Asia territories geographically, wholly or partially, in Eastern Europe, Southern Europe, and Northern Africa Southern Asia Eastern Asia Southeastern Asia territories geographically, wholly or partially, in Melanesia (Oceania) (Photo credit: Wikipedia)

Asia in general recovered smartly after Amari’s comments were seen as blown out of proportion and BOJ followed up with huge injections of bond selling. Of course, India markets reacted similarily but are sure to go their own way from next week as the common thread from continuing global liquidity is bolstered by the local growth stories, continuing FII interest in India and a heady  IPO market led by resurgent demand including cross regional deal interest out of Hongkong, Qatar and Singapore.

Still on the yen machinations, China’s plans to go global to keep manufacturing competitive and flagging imports also add to Japanese and Korean discomfort, making local QEs a last build option that will grow in size for the late starters despite protestations yesterday of a synchronisation with G3 interests and/or the disaffection shown by the BOJ governor Haruhiko Karuda , leaving BoJ in early 2014.

The Yen at 101.7 again , the rupee may slide to further lows on a trot next week as the adjustment trade to make exports competitive is out of sequence of the improving fundamentals and the weakness of the US Dollar, an event unlikely stopped by this week’s global inverse trade days of Tuesday and Thursday . Amid the differences, one could see trends in currency markets continue to elude India inc but definitely RBI plans to grow an international role for rupee and continuing interest in rupee positions from emerging market bank trading desks incl hsbc and stanchart are not just paper scapes as india grows it trade pie in global trade.

However apart from equities and now a little bit of debt, India needs to open to more global currency products for a sustainable self reliant trade to emerge in chosen currency pairs to exclude the recurrent window ofdeep depreciation adjustments of the rupee especially as it is engendered by payment pressures alone and not borne by the strength of domestic consumption and growth as can be seen inthe people’s frepublic off that side of the Himalayas. Jet Airways and spicejet also report tonight though Jet traders are convinced of headwinds facing the airline’s deal with etihad

Results season is busy yet as a flurry of sells/hold ratings on SBI because of the continuing slide in Net NPAs ( now 2.1% from 1.8%) are still misplaced after yesterday’s 7% slide failed to take into account the bank’s growth in credit at more than 20% on a INR 10 trillion book even as the pressure to exit the restructuring habit of marginal corporates and the over dependence on SME accounts is still under process. NIMs have pegged lower on year because of pension liabilities but quarter/quarter decrease is still evident because of deposit costs

Full year consolidated profits at INR 180 Bln are not a trifle and help the bank establish itself in an important quasi policy role much like the dysfunctional governments we withstand as a non functioning opposition continues to get closer to leadership in parliament because of its non attendance of parliament, a sure sign that the upward climb of fundamentals in India is feverishly capped despite growing roots of literacy and a much more aware bueaucracy than is available to our neighbours

 

India Morning Report: Just Dial IPO great hai ji, Rupee feeling quiggly

Image used to convey the idea of currency conv...
Image used to convey the idea of currency conversion (originally from en.wikipedia). The signs are (clockwise from top-left): dollar, euro, pound, shekel, đồng, yen. (Photo credit: Wikipedia)

Markets opened to the new week’s excited chatter for a change this morning after a few weeks but the better IPO prospects and improved FII flows already more than $2. B this week could not excite the Rupee and it again opened at its lowest for the week above 55 as Forex broke on last months Gold data and apparently has become the exit for bears that know they are unwanted, trying to break the cosy relationship between currency and equities in Asia and dragging down equities towards the afternoon. Rupee, with my apologies to the surfeit of economists at the top Mr Prime Minister, is just reacting to India’s weak international diplomacy.

We should have probably given you a heads up in the morning, but revenue and subscriber prospects fail to excite indian angels into backing such ventures as ours, bent on writing and interest in firings at ecommerce carts or exits from PE investments of the last cycle not enouraging towards commercially viable prospects for analysts, writers and discretionary advisers. IPO sizes are getting comfortable around the INR 1000 crore and above mark and went thru with out a hitch despite a surfeit of promoter buy backs and appetite for indian debt has also increased manifold in the last two years

Bullish straddles/strangles are cheaper and you should not fund with calls unless beyond the 6400 mark. China premier Le Keqiang’s visit to the Capital could have been much more fruitful if the premier had tried to get more pulic awareness around it, India of course happy to have exited US defence exercises to get status quo in play at Ladakh ahead of the visit. No that China is looking to allow India banks or exporters further as it continues to keep a chinese only list for government tenders and machinery ( esp green power) bids

Those who thought Indus ind would catch again would have retreated after these two weeks and especially because apart from the positive wall offered by YES, it is also a better choice portfolio for pickers across infracos esp those looking at idfc, itc, jpassoc and gmr where buying would be perfect value plays esp if any DIIs had been carry cash for the redemptions and the volatiity turn awaiting

No, the Rupee is not going back to 52-53 levels immediately though S&P’s reservations have not been of interest to any FIIs and we would like to err on the side of caution ourselves with the CAD at ever higher levels though as the CEA mentioned the reduction in CAD faster than the reduction in Fiscal should help drive growth come 2014 And yes, Lets not forget our natural advantages as a consumption and trading economy at the bottom of the commodities cycle unlike the competition

India Morning Report: Infosys shows a lack of forebearance in a sack sack play

English: By Nikhil Kulkarni
English: By Nikhil Kulkarni (Photo credit: Wikipedia)

 

As expected, Infosys rerated the recovery rally with a 15% cut on open pushing thru a 1% increase in US and overall Dollar revenues and beat in Net profit based on other income offered as bait to speculators while the stock possibly returns to its #6 position in Nifty stocks based on Market Cap.

 

The market rally is intact though with a PCR at 0.93 hardly near enough after a smart move from 0.80 in less than a week. Axis Bank though is unlikely to be used by speculators to fill the coffers of the empty Nifty and a Bank Nifty run highly probably for a 1000 points after Indusind Bank reports on Monday.

 

Those looking for a 5650 cap for the Nifty may have been superceded in Nifty targets but for these results but with the PCR provisioning the momentum for earnings outperformers, once you factor out the movement of infosys alone fromthe index values it would still proceed to 5750 levels (ex infy, mail me if you are willing to do the exercise?) The Power NBFCs and the outstanding picks like ITC and IDFC are expected to outperform in business as well not unlike YES Bank and thus are likely to be chosen with ICICI Bank and HDFC Bank as bedrocks of India and Asia portfolios.

 

Critically though, India’s successes with damage control on key attributes of low low information sharing gets a boost with Infosys almost deciding to scupper guidance and India’s data engines will have to work on broader strokes for a long long time to come. Banking, Credit, Economic guidance or otherwise the India forebearance model is equally predicated on old Colonial forms of information blackouts in the public domain and the bedroom entrepreneurs of the country like it that way more than the failure of Bombay Club would have you believe. Granular data is in fact available on more counts in India than attention is given in the press but policy mechanisms and successes of ‘no crisis no new score’ strategies globally in any sphere ensure that the India dream lives along higher interest rates and a hindu rate of growth.

 

The US budget exercise on the other hand , in larger control of global Economic vicissitudes is underway despite the gridlock and with a barely $500 bln for Defence in the Budget proposal and $47.8 billion for State Department ( earlier read as the War Budget) while being part of the larger 2.5 to 1 cuts to revenue based $4 Tln spending cuts managed to increase focus to Asia. That unfortunately means large increase in Iraq, Afghanistan and Pakistan in turn showing the large gap in US understanding of Asia bigger than the wholesome ozone hole created by European Capital flows. The rest is too technical to imagine and should probably be appearing in bit and pieces in future India reports or economic discussion at advantages.us

 

JP Morgan reports when the sun comes up in the US later today probably cementing the big rally banks had in the quarter despite the changes in the mortgages refinance volumes. Derivatives clearing impact starts appearing in global banks in 2014 only as the war for granular bank regulation enters a predetermined longish rollback phase.

 

Contraction in Singapore this quarter (based on Advance GDP), followed by negative IIPs in Malaysia and Mexico are likely to cascade into 2014 after the rosy start post Christmas was wiped out in the vast Asian predilection for property growth as the be all and end all of the ‘organised economy’

 

Infosys destroys brand equity with 8 pawn gambit? Or Infosys lives dangerously?

 

Guidance is actually available in dollar terms rather transparently and infosys has again made a play for Brand infosys by pushing a too muted a guidance in a bid to allow it wiggle space in the client boardrooms and ask for high value business and try and keep its uniqueness intact.

 

Infosys has chosen margin impact in the current quarter in onsite wage increases folloing on increasing White male employment in the US and Europe geographies earlier.

 

Others in Indian IT have long given up, NASSCOM being under new management with MindTree CEO KK Natarajan taking over at its helm , and CTS and HCL looking for volume on negative margins. TCS is unlikely to follow transparency in similar terms when it mixes it up for the fourth estate and the investors next week and try to capitalise on what looks like a sub 20% margin for everyone else except TCS as infy is already down to an op profit of N 26Bln or 23% EBIT and HCL and probably Wipro are sure they don’t really want to push it beyond 15%, settling t a vastly improved 17% in the first case.

 

 

 

India Morning Report: Sorry Bears and Cartels, Bulls are still hiding in the Indian woodwork

Yes Bank
Yes Bank (Photo credit: Wikipedia)

 

Network analysts sitting on lower support levels and betting short on most new blue chips having seen the infracos slide, are in for another shocker as the march series looks to inch closer to 5600 on expiry day before closing out comfortably ahead of August 2012 levels. Both Sukhani continue on the second month of watchful short betting SS targetting YES Bank further from today while Bharti and some others responded in kind to the lack of interest to back the market interest to significant lower levels but the buls seem to have won on real strength of fund inflows for the time being. Markets will correct but not by much in April and while the upside was capped to 5850 levels by the weakness that just means the lowside is still as high as 5550 even for safe investors and 5500 puts should be real rich making sells for bullish investors. (We personally are not conflicted by any position here)

 

Five Rupee Coin
Five Rupee Coin (Photo credit: Dinesh Cyanam)

 

BRICS Development Bank aside, which we look to fund the Indian Infrastructure gap in due course, India inc starts off results season in a week and its profitability scores that already improved on identified sectoral leaders in Q3, are the ones that will be identified with the successful India story and not the politicking as enough stability and forward looking governance is guaranteed by incumbent ministers if not the party flags.

 

The Rupee keeps most of its strength in the new series and the may series may give pointers on the new range for the currency as Fixed income yields cross back into the 8+ range having lost the rate cut and pushed the bank to the reverse repo rate on the corrridor

 

Given the strength of equities and currency going in, profitability concerns of consumption and auto plays should be watched closely for bear victories even as IT forecasts and IT results will remain damp and not affect sentiment. Healthcare could lead stocks nose down but not up even if it maintains good profitability and revenue growth and any weakness in bank performance including Q1 FY14 forecasts will be a deal breaker.

 

Infra debt funds have indeed taken off and execution perofrmance of projects still hanging will come intpo play on the bourses also in Q3 FY14, QIP fund raising shifting out from infra and bank fund raising to NBFC or Capital expansion plays across manufacturing and services businesses with CDS holding sub 200 levels , a great performance for an isolated Asian performer.

 

 

India Morning Report: The meandering world’s progress condensed in a fete of ‘immediate payoffs’

The Seal of Salt Lake City depicts the building
The Seal of Salt Lake City depicts the building (Photo credit: Wikipedia)

With Goldman Sachs moving its next meeting of shareholders to its other back office in Salt Lake City, Utah, India’s sloth in an optimistic IIP growth of 2% and FY 14 downgrades to 6% by a couple of foreign brokerages it was all but sure that Monday’s bad openings would be followed by a tirade to the finish line with Network analysts from Ashwini to SS and Udayan Bose (TV18)  pining for the 5500 mark to make the uncertainty go away. Of course that also unleashed the India outsourcing Bull with IT companies a safe bet and TCS the largest Market Cap company ahead of Reliance Industries.

However, sanity has returned to the market since with interest and eyes returning to Indian equities and the Dollar index having recovered its paces since the Yen correction at the start of the series without the Yen losing any of its pressure to cross parity to the Dollar and the Euro denizen of Germany proving that it is unlikely to feed its south neighbours including France (conceptually) anything other than Target liabilities for the growth spend everyone was sure Germany has keeled over for. Germany preponed its budget exercise to reaffirm its primacy of fiscal discipline as the Euro recovered last week’s blues since and the EU summit failed to move on any of the agenda items. The European economy still needs to work out a longer timeline for its recovery.

Trade deficit data however points to a tight cap on US GDP growth for 2013 and similar warning bells toll for Exporting countries like India and China though EU and Japan look at the small recovery in both Capital Goods exports and imports numbers for US in February Capital Goods trade up by a net $1.1 Bln in the ever increasing Trade deficit and a bleak month for the US in terms of the shored up Fiscal surplus breaking down along expected lines in February’s big Fiscal deficit.

India too therefore looks at a larger trade deficit even as Oil prices come down by over $10 in the last 30 days with Exports barely maintaining the newer levels it managed in the last throes of 2008-2010 and February’s deficit of $14 B is likely just an aberration after January’s $20 B hit.

Markets look better in equities from banks climbing despite the fourth estate coup against the top 3 private banks looking to make a mark in wealth as brokerages rang the bell for State Bank and the stock climbed up 3% in Banknifty’s climb back above 12000. The attention on ITC which was almost a giveaway for the lack of short interest in the broader market also encouragingly continues and the picks on Bajaj Auto should also bear long again than continuing south or short as last week. NALCO and RCF Offers for Sale also look lined up to complete successfully with LIC’s participation in the OFS taking its stake to 6% in RCF. The residual stake sale in Vedanta’s BALCO and HZL investments could really brighten up India Inc’s balance sheet in the current fiscal itself but one cannot gauge the impact of continued market confidence to the T given the fourth estate’s penchant for equating accountability for the government with all lack of information and analysis on any story /subject

India Morning Report: At least having followers ensure you don’t get to listen to sermons on Destroyed Value from rising indices

English: Wordmark of Cipla. Trademarked by Cipla.
English: Wordmark of Cipla. Trademarked by Cipla. (Photo credit: Wikipedia)

No one would have thought that Oil short targets would again appear at only above Rs 5150. In fact copper watchers and other commodity watchers would also aver the current bullish cycle in the doctor of metals and the rest of them are also tentative with global pricies still moving up only to $3.67 a pound expectations, implying  asteady discount at higher levels in the indian market. A sell off in Gold too underlines belying of Domestic expectations and will with sucha broad thrust be able to move the Rupee up as a better balance sheet beckons in March and an equity rally is pretty much out of the question

Cadila and GMR results disappoint and the former’s doubling of losses though expected by many,  was supposed to have completed restructuring of its structures by this time to spread the debt load , Male notwithstanding and the latter is much a shocker after Sun Pharma climbed out of its stagnation pit almost on cue of ithe global business cycles improving. Sun’s loss of Taro control will continue to bite as others like Glenmark continue to come up in the domestic ranks and that anyway leaves Cadila on the back burner with no visible leadership in either international or domestic segments but would be on as many buy lists as Cipla and Biocon with bigger and better stories because of an assured growth clip while others are subject to volatility from innovation and automated trading as well in a traders’ frustrated market series in February 2013 when the pre budget rally has been scotched but the India report card is sunny as ever, when Asia FDI will start retreating as China peaks but India FII and FDI interest is safe in the pockets of stable acquiescence we engender in the world investor community.

Global High Yield and Yuan issuance seem to be good for Asia in the four quarters thru to 2014 as well and if that survives, Investment grade Debt and gilts could also come back on the strength of the currencies in the second half of the year

The morning Olympics have been a subcontinent show with only one or two comments in almost rabid monlogues making any sense, almost making one feel like a backbencher has been allowed to speak and you must just suffer through. Of particular delayed incapability and thus high Avodance quotient was the so meandering opinion of parrying institutional investors who are later than the last back bencher in grasping the importance of investing and if the same backworking backbencher theorems are applied and still make sense, these would produce more defensible evidence on employing of research teams in advance than jumping on to available decisions already in action, and thus the morning has been an almost entire waste of time and as readers can pick and choose when to survivve my opinion than comment on it as is being written, I was the only one who suffered. IIMA recruitment also back those wanting to get into a research career and I am still wondering Iif I will have to go thru an entire Ph D program to get suitable rich to be employment. Research for trading desks intermingling now with Front Office Quants, look like much more succinct and concise and thus productive except for Risk managers hoping to write a book on avoiding risk.

Hexaware has finally survived a s a reminder of the annuity business IT and BPO bring, the sector surviving the month of Rupee appreciation only because Auto consumption is still on training rails on the takeoff leg of the runway.

Seriously though, what is it about Capital Markets, Banking and any other tenet of GDP growth that gets so much negative attention. And why do they continue to hog most of the GDP growth then. Execution? Kudos to MCX SX on launching th SX 40 indices and starting trading in over 1400 scrips. Unlikely though but they would be going all out to get attention for “real” institutions, to grade up the edigree of their promoters who try to come out of the shadow of harrassment by regulators and use of free market critique of regulation as overpowering spices to mask any cooking in the rice below.

India Morning Report: 6000 is broken, FIIs are not buying, 5950 will hold

Asia
Asia (Photo credit: slagheap)

 

Oh no, FII investing in Asia scrips again

 

And this time India story is still alive and well. Firstly however, out apologies that there was no India Report yesterday and the day before and while Asia was hot, most commentators would be wont to assume that it was just the Yen running to 94 levels here and the markets having broken down in India, Apple having broken down in the US listing, and Einhorn having broken down just on the news of having lost a sure Cash hoard to the company after a new preferred issue was scotched forever by the management even as Einhorn’s holdings grow. But that just hopefully shows that Apple has enough managers to not lose it to cash hungry private investors like David Einhorn who are mostly coming out on heavy losses in 2010, 2011 or 2012 or more than two of these three years on deals from Greenlight and other PE investors like Sears’ famous Bruce Berkowitz, now safer in Financial scrips

 

Though banks have not found a stable foothold in 2013 globally, the profit measures outperformance in large diversified India is hard to miss. At current levels Banknifty is just about done preparing a good takeoff f for a sustain rally from 12400 to past 13500 levels into new skies. Leading them would be YES Bank and ICICI Bank, loners like SBI, Axis, HDFC Banka nd kotak on different legs and ably supported by independent almost movesof Indusind and ING, PNB and perhaps, one more PSU bank which has cross the tithe to move up.

 

BOB and AllBank are on watch as they report long lost NPAs and a fast deteriorating balance sheet seems to have been expected by the markets but despite estimates of quantum of such bad loans and disappeared market segments ( in the case of BOB, like Africa ) are treated as fresh carrion for short vultures deprived of a good meal in the ne levels despite DII pressured into selling faster and bigger at every leg of this rally. However, DIIs would soon be forced to buy as Domestic inflows make a comeback, probably earlier than the comeback in GDP if wholesale investors or Corporates have their way. Liquid funds being limited now in Bank treasuries and in the shadow banking system, the degrowth in Deposits as rates come down is likely to be cited as a  non fungible risk in ongoing trading reports and keep markets cautious as the bull run builds up from this level and skips the pre budget rally as lack of time forces markets out and short interest is just about exited at flat levels here below 595. Markets are flat again for another week or month even

 

 

 

 

 

India Currency Report: Rupee catches the leg back up for Asia

Korean Won’s early lead in the currency scores in 2013 was blockaded by reports of a failed GDP revival in the Economy last week, while seemingly Asian currencies have kept the sell down of dollar more widesread than the Yen. While European banks do not have large operationsin ‘Asia anymore, many of their important clients and Global Transaction business originate in Asia.

The buoyancy in Asian currencies therefore is likely here to stay putting Asian exportes in a bind but Export volumes, already at all time lows with shutdowns in China ( for commodity exporters) and Europe ( for Consumer goods and more price sensitive exports) in 2011 and 2012 are unlikely to fall through from here and may be able to sustain on the rising currency.

Indian Rupee is likely to stick around its neww range between 53 -55 and if it does use this opportunity to break from 53 on up, it would be because Oil is tracking down in the Global markets.

After having factored America’s Oil independence in a falling through till late 2012, Oil prices have recovered, Brent as of npow keeping its “transport cost spread” from the West Texas WTI Crude rates Thai and Malay economies are already worried about rising currencies while Singapore is likely benefitted by the rising Sing Dollar and looks to reap some benefits from the post crisis Change agenda.

The main agenda item supporting a high recovery in Asian currencies is of course the reopening of trade wwith China as it helps other consumer Economies from both North and South Europe and developed Pacific nations including Australia to revive imports as they plod towards a non recession 2013 with GDP contraction decimated by the brilliant move up in Germany’ s Services PMI last week though the currency market’s deccisions to discount growth in the UK look to shoot the Asian moves in the foot as any such speculative recovery will have to support a stronger Pound also and not just the Euro which is stable at 1.345. The Pound fell to 1.5800 levels Friday but should be looking to come back to 1.62 in the course of the year and the Dollar index likely to remain above 80 with the Yen crossing into the 100 s vs the Dollar.

In local reasons, India’s rupee was helped by the global inflows caused by optimistic readings of recovery as Diesel was decontroled with a pledge to increase prices by 20% for retail in the next 15-20 months ( To reach bulk levels of 56 per liter as for bulk buyers)

India Morning Report: Recovering India’s growth, Reminding populations of death and poverty and Replacing lightbulbs

ONGC India Ltd, Kakinada Branch office
ONGC India Ltd, Kakinada Branch office (Photo credit: Wikipedia)

 

Seriously, How many people does it take to replace a light bulb? If you are Duvvoori Subbarao and replacing the lightbulb is the “rate cut” direction, a likely dozen spring to mind including annointed commentator and Bankers’ Trust columnist Tamal Bandhopadhyaya who after more than 20 interviews with Head Honchos of Banks has finally broken through in at least he believes he can also cast Subbarao’s mind with absolute certainty and get friends in high (street) banks.

 

Holding on to the Capex Cycle for Growth

 

Investments that seemed to start to recover in the latter half of the fiscal, January’s FDI flows still an enthusiastic affirmation of India Inc being the growth engine for the globe esp with most looking askance at China for investment growth from equity and bonds. Indian bond markets could well be on the verge of a colossal turn down having locked in a rate cut and equity markets enjoying a flurry every intraday as traders make sure there is a volatility iller with extreme moves intra day souring the longer run investor to no end except keeping busy before the definitive move Tuesday.

 

Bank Policy Tuesday apart, Capex investment in India has also not recovered because of other substantive reasons including lack of executive approval, seminal moves like the ascension of NaMo to the Centre for BJP and the continuing dissing of the Welfare Economy as unsubstantive and too short term for India.

 

Flagging India Defence

 

Naval approvals to be refused to KG6 and other Reliance Gas wells off the coast of Bombay bring out the real Mumbaikar and Reliance supporter who would rather point to Corruption in India’s Defense ( which unfortunately may also be one of the main reasons) than having any substantive debates on India’s security concerns precluded by the Indian proclivity for secrecy which unlike the US or NATO or even Pakistan, seems to be at the detriment of National Policy in the area so that industrialists like Ambani or Mittals or the Executive team at Maruti can duly come out with Joint methods and at least look to be in sync with governments in 8 out of 10 cases while the Defence establishment is probably still awaiting another pay revision and finding other reasons for supporting outdated Russion technology for its Defence plans. Not that M&M is actually proceeding with its businesssin domestic Ordnance but even that was such a coming out for India inc in the sector. Intelligence of Chinese supplying India’s neighbours like Nepal and Bhutan read alongside news of Pakistan ceding territory to China is a real threat and must be realised more substantially than total bans and outright decisions with a falling out later that has destroyed years of planning while China throttles ahead

 

Live issues for India Inc

 

Doubling royalties and ITC’s not breaking even on its FMCG products are ofcourse known hurdles we have discussed but markets also move on other things than Energy’s resplendent freedom bid that is moving ONGC and OMCs currently . Banking will be key to India Inc’s move to new highs likely in the first half of 2013 itself as Profits grow but Sales growth , in double digits in the December quarter could likely continue declining further as industrial production  recovering on controlled costs and higher profits, suffers from flagging demand and Inflation is unlikely to reduce to any 5% level on WPI and will plod around 7-7.5% for the next 18 months one can look ahead

 

 

 

India Morning Report: The Fiscal cliff unbuild, bright eyed investees and a chirruping economy without auto sales

Exporting planning cards
Exporting planning cards (Photo credit: plantoo47)

 

POSTEROUS server shennanigans and untrained hands could not factorise this autopost in time last weeek and have been packeting it into wrong dates and times. Hiya, have pity on them folks and try aand understand their motivations. let me know too

 

Post festive season Automobile sales are still not taking off though the monthly sales data for December is unavailable. Indian Auto Sales have stayed on a neww 220K cars per month plateau for well over three years and we do expect the new plateau to be 260k cars per month or even 300k per month by 2015 if not in 2013 itself that can last another 2-3 years. Meanwhile Motorcycle sales across the Top three is likely to reach 900000, 500000 and 500000 in the same period and Export markets are likely to add volumes

Global macro has improved just in time for a happy end to 2012 with good Economic grip and Corporate results also likely to report a fat crop after the dim prognostication of Q3. Europe is likely to move into positive territory into the second half of 2013 as Greece loses concerns about being left out and gets upgraded at S&P to B+

European markets in trade exports are likely to be replaced by new markets in Asia, Middle East and Latin America especially if longer term negotiations are completed instead of trial batches for the likely two wheeler and 4 wheeler exporters. Trade Exports are unlikely to rise above the current holding levels in India till Second half of 2013

Indian businesses continue to be driven into a bigger future and as was mentioned on the TV18 morning preopen as well, Healthcare is likely to be a mainstay for investors riding the indian currency.

The Fiscal cliff negotiations will hopefully be really completed before Christmas and those investing into the depreciation of the Dollar may like to spread it to only the weak yen through the Euro JPY trade in addition to USD JPY which remains headed to unthought of levels as Japan gets locked into a new export strategy and the Risk on trade in Equities keeps Dollar weakness a primary profitmaking failsafe for global investors going into the new year and Euro responds to its new hope, leaving the Indian Rupee safe from Crude manipulations

 

 

 

India Morning Report: More Fiscal uncliff, more detachment for India Inc ( Re Global Auto Sales)

Village Sasan
Village Sasan (Photo credit: Wikipedia)

Fundamental structural changes notwithstanding rating agencies globally keep getting the same standalone cues for India and India fortunately or unfortunately remains studiedly isolated out of world karma.

For instance, the new Dy governor of the RBI, Urjit Patel might have a hard time marrying the global recovery in auto sales with India’s first Chinese imports and the M&M resurgence as part of any global trend even as China runs ahead to a 19 mln Cars in 2013 projected higher than all of Europe

But then inflation is unlikely to go away as a critical agenda item soon and another is the return of Net Investment by Corporates in Infra or otherwise ( I heard the Infrastructure Commission has been redesignated as the inter ministerial committee on Investment or some such thing, equally incapable of moving the 1000 odd projects waiting for final approval(s) for financial closure and take off. )

The Rupee in the meantime responded to the great optimism in the PMI data and reform cues even as details continue to elude and the question of criminalised politics, a tell tale barometer high mark of inactivity on the horizon become the key issues of the day despite shorts trying for a quick comeback from the new 6000 mark and probably encouraged to journey up their stakes on the ennui coming into the new year.

Lupin and Glenmark remain good picks in Healthcare and Ranga committee’s answers for future Energy projects and thus Gas pricing get closer to being implemented. Reliance Power has already crossed the hurdle where it can now repurpose coal allotted to Sasan to working projects including units at Sasan. The Diesel subsidy degrowth thru steep increases may see light of day only in the second half of the year while the 30% + deceleration in Gold imports by nearly 50 Tonnes per month is apparently not enough for the Indian currency to come back meaning Gold smuggling may have further skewed the data.

Stride Arcolabs also celebrates another good day on the bourses, we also remain optimistic for banks even at a 12800 Nifty to keep getting rewarded for being private sector performance and get questioned for being PSU unless you are PNB or BOB and we hear BOI. The last two could not hold on to any semblance of performance in the last quarterly results either and PNB itself is struggling with increasing NPLs while others seem to be dead in the water including Canara, Syndicate and UBI & UBI.

Credit card spending (ttm November 2012) has recovered but is still 20% below 2007-08 levels and more encouragingly Debit Cards seem here to stay. MNC banks have restarted consumer credit operations as ell but their market share remains below 5% including their strong Corporate Credit business and strctured risk sold to corporate treasuries

Education and Healthcare spending are unlikely to cross the 1.5% mark of GDP for annual spends till the end of the current plan period in 2015. The more things change, the more they remian the same.

India Morning Report: The short stuff stranglehold and more consolidation..

Those hoping for a correction as DIIs called the market wrong 2-3 times before the markets left them selling into a rising market and handling redemptions but based on the predilection for that correction shorts have already bled in trying to sell 5800 Calls and had to roll to 6000 calls in December series. That ould seemingly have been a nice time for an exit and now, new top range of the market is well settled nearer 6200 where the new Sold calls set up the top of the range while those holding the 6000 Call premium of about 100+ are likely to be trapped by bulls and doused fully in the run past 6100.

English: India's Minister of Finance Palaniapp...
English: India’s Minister of Finance Palaniappan Chidambaram is the special guest at a plenary session titled Risks to India’s Economy in a Post-Crisis World held at the World Economic Forum’s India Economic Summit 2008 in New Delhi, 16-18 November 2008. (Photo credit: Wikipedia)

Nifty hits 6000 on way to 6200

That of course is just more details of how shorts including DII managers like Madhu Kela who were long on the Indian economy but haave been battling continuing redemptions and the lack of opportunity to buy will be hurt in the January series before the markets start a downward trend most likely post budget as euphoria over policy finally dies out only after new budget announcements and tolerance for fiscal slippage and the new range for targets for FY14, 15 and FY16 that governments across the world and P Chidambaram must use wisely. Avoid IT esp Midcaps as shorts would concentrate there while the market achieves 6200 to help them fund their trades to the North pole

That also means that markets will likely remain above 6000 in the run up to the budget and supports at 5900-5950 are likely to hold allowing Indian currency to catch up on the bad year past in 2012 and strengthen in the periods the Won and the Singapore Dollar create as they continue to run up past the US Dollar on continued good performance by Singapore and hopefully bad December trade data turning out to be a chimera for Korea whree the WON nearly ran up 10% on the Dollar in 2012 on trade resurgence but China may be looking to other trade partners at the beginning of the recovery while Korea has to wait for the consumer boom in China and its other Export markets.

Asia leads strongly in today’s open as Europe is also likely to rejoice on the postponing of all arguments in the US Senate and House for another two months as both Republicans and Democrats try to get a hold on their contribution to a longterm restructuring of the budget deficit.

Meanwhile LIC’s investment charter is likely on target to receive the policy endorsement needed to own up to 25% of a company in equity and the Indian state gets a strong ally in Institutional investors resulting to that.

Manufacturing PMI data to be released later in the day may not be able to hold on to its gains at last months near 54 performance and December’s lukewarm auto sales ( to be confirmed by Bajaj Auto and HMSI) with TaMo scoring just 15000 sales for the month and Maruti sticking around 80,000 vhicles for the year near its recent bottom for the year. Hyundai also reported sales of less than 30,000 for the month while M&M nearly topped off the 50,000 mark in a strong performance and its new SUV range indeed catchs on the fancy of the budget buyer, a big category in India’s consumernomics.

India Morning Report: A Hindi speech for another wannabe and more such stable tenets of Indian realism.

icici bank
icici bank (Photo credit: Wikipedia)

NaMo made it to Gujrat’s top executive post again and likelyy will last there for a couple more terms after this new term is also over but those that can see around the media carnage opportunity for the new PM wannabe, I am still very clear that India will not accept this strong PM much like it doozied Sharad Pawar and Jyoti Basu’s candidature earlier(Jyoti Basu refused to move to the center despite being the kingmaker and a strong government in Bengal for 32 years).

A pan-Indian institution like HDFC Bank or new investors (domestic) like Tata Motors may enable however an Economic armageddon and even a Non Congress/UPA government at the Center as a viabel non coalition alternative. Rating agencies howevr inclined they may be to use that as a peg to hang India’s political instability on in the 23 country band between BBB- to BBB+ that includes Turkmenistan and Kazhakstan and other such resource only single product economies would still be continuing on a longer deeper folly they stuck to when India was actually near default once in the late eighties.

That leaves you with the question if the Nifty will indeed move in a new direction sooner and the seet answer is that despite such lengths of staple yarn wrapping this Tropic, 5850 is more than a stable support and ready to rush the bastions near 6200 and nothing else. Today’s 47 point correction as of 10:29 am however, gives you a chance to case the two banks HDFC Bank and ICICI Bank for a new run and Yes and Kotak to fight for that mid cap pie as they treble their deposit bases to become viable before the new generation banks grow into viable competition.

Consumer spend plays again rely on Airtel and the India’ economy again will not become a tireless skyscraper for DLF itself so the weak moves in the Alternate bucket reserve as the blue chips of this rally idle when the market tried to move with Axis Bank since seen as overbought at below 1200 itself or the continuing return of TaMo after the battle of Sanand and the battle of inventories not to mention the moving on of CE Ratan Tata.

The lack of clarity in healthcare plays as the Dollar driven scrips become a crowd show the rare space when speculators are having a field day and probably the entire half dozen of scrips where sell side domestic research ccan still count. Consumer spend and Domestic Pharma markets are likely set to break out of the hardly $7-8 B market they make in the branded sector finally for both FDI (Retail) and good old

Jyoti Basu (8 July 1914 – 17 January 2010) or ...
Jyoti Basu (8 July 1914 – 17 January 2010) or Jyotirindra Basu was an Indian politician belonging to the Communist Party of India (Marxist) from West Bengal, India. He served as the Chief Minister of West Bengal from 1977 to 2000, making him the longest-serving Chief Minister of any Indian state. This photograph was taken at Science City, Kolkata on traditional 35 mm film; the negative was scanned by Nikon scanner after 10 years. It is a little cropped image. (Photo credit: Wikipedia)

proliferation(domestic/ price control/insurance/diabetes cure/cancer drug availability spread) reasons

India Morning Report: Imported Durham Wheat and the JP Morgan BPO

Canara Bank Near Town Hall
Canara Bank Near Town Hall (Photo credit: SumaVV)

What would your friendly neighbourhood snitch or hag have you see in India’s future now? BPOs recruiting for Voice processes and documentation work or captives claiming they are not BPO for the same work and a hoard of imported foods you buy now but will not afford on a salary six months after.

Unfortunately, our elites continue to get such side issues with  India education after being worse than a blind bat and halfway through their work life but one should not lose much sleep over such influences in your life as more and more recruiting shifts out of the magical BPO/IT abyss and returns to active traders, banking sales and i am sure a lot of non business administratives already pulled into quasi business development roles at one man MNCs having finally run their roost.

At least in the shadow banks and the foreign brokers we have been increasing recruiting breadth for the last 5-6 years despite shutdowns at Citi , RBS and UBS. Of course the recruiting profession itself and over the hill 50 something bankers remain unqualified in the new world so the global strategic direction is unlikely to be set anywhere nice soon so be careful what you wish for in a job or you might get performance linked appointments with fancy names and quickerr shutdowns than the Sasketchwan scare in North Canada

ICICI Bank is picking up the slack thankfully on a stronger day at the bourses and more thankful because that means market interest in SBI or PSU banks is increasingly turning merely technical in nature and ?india’s story of future consumption expansion in the hinterland is not making anyone secrete excessively rooting for SBI and the dud dudders from Union Bank to Canara and Syndicate, Dena, BOB and PNB hardly looking like having recovered or improved from their unholy business ethic of the last two decades which they were seemingly not a part of.

skyrise
skyrise (Photo credit: Brennan Mercado)

Etihad had another finger in India’s aviation pie though the reporting team got busted as a Bombay Tabloid by the last century’s sole network on Indian equities and is actuallya  scoop by Mirror  ( the city based TOI daily magazine of local specific mantra)

India Economic Upgrade destroyed in time for a questionable “manufacturing revolution”!!

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

The Indian Services GDP is probably in threat as India loses its leadership of the incipient global Services sector growth, where it now enjoys a barely positive PMI at 52 after a big slide from 54 in October and instead the remaining almost vestigial 18% of Indian GDP that is manufacturing has taken pride of place with a more than 54 clip in the PMI sub indices in November, leading KV Kamath, an industry doyen one would not belittle or argue to claim apparently that India’s manufacturing sector is resurgent. Which again, reminds of some other key mistakes from organisations like India Inc’s ICICI Bank and Infosys which have made other such weak claims earlier in the nineties and the noughts while using other selling strategies to actually gain power of mind and mindspace over the budding markets they have indubitably created.

Not that market development has gained any recognition in the meantime but there are many other areas not forgetting major discrepant growth inputs missing from India Inc like our FMCG sector and Retail where both branded output is still stuck at 15% of market after two decades of reforms and is not growing share of voice or market even at a resurgent and well nigh bharat consuming and growing at twice the pace of Urban India albeit with unbridled inflation in urban India than any other reason to blame.

icici bank
icici bank (Photo credit: Wikipedia)

Is the real consumption franchise anywhere near increasing and is any growth in manufacturing paradigms really possible. One should be careful in using carrots for a generally more educated and access powere urban and rural market in India before making such superfluous conclusions the mainstay or athe retort you have as a personage of voice int he Indyustry and in the nation that is busy pinning down its real core advantages and probably needs more focus on items of Services, Welfare and Infrastructure than Construction and whatever manufacturing we need here to survive.

English: K.V. Kamath, Managing Director and Ch...
English: K.V. Kamath, Managing Director and Chief Executive Officer, ICCI Bank; President, Confederation of Indian Industry, speaks at a plenary session titled Risks to India’s Economy in a Post-Crisis World held at the World Economic Forum’s India Economic Summit 2008 in New Delhi, 16-18 November 2008. (Photo credit: Wikipedia)

 

India Morning Report: Really, you want BHEL and L&T back – the new bust cycle

Bharat Heavy Electricals Limited
Bharat Heavy Electricals Limited (Photo credit: Wikipedia)

 

The previous one of course was having to sponsor harmful, noxic ( noxious, toxic and a mouthful of names for the new knowing breed of Indian broker houses) but powerful psu banks even though they were improving on NPAs. This cycle though we have consolidated well, so called speculators find an excuse for misgoverned and misadroitly travelling comets ( limited shelf life, bound to fizzle and skizzle near ones) in BHEL and L&T governing models of both are beat and got propped up only temporarily for a few and now do nothave the dime to last the bad times coming probably. Un fortunately, that also gives the excuse to the noxic PSE banks to be speculated from their “new” bottoms but they remain negative accretions to your portfolio and India GDP even at the new prices

 

However, that bust cycle could be a long hill trek away as India manages to snag the plus flow cycle from competing assets in the nearby shallow and giant yielding emerging markets with the same return with the slightly elevated interest rates around 8% at their best. Fixed Income markets would repsond positively to this expected change in flow as the change is a stable one. Bajaj Auto remains a top pick but would be a slow accrual apart from its speculative bursts and more or loss maintains a very small edge over the Munjal company ( Hero motocorp) even as the Munjals hope for more motivation for their dime in the compete with Honda which will continue to ddrain the big bellwether

 

Deutsche Bank has lost its banking mandate int he subcontinent and as boutique firms are now few and far inbetween in dispensations like India one should be careful of their current foray of picks into the india consciousnervously ready to get forced to withdra further despite the increasing eight for our diaspora in Asia governance and Anshu jain’s inspiring knowledge of Emerging market superiority in the new equation.

 

But then this opinion was probably wasted in a morning report and further detailed analyses are unlikely to follow unless pulled into the dime

 

Biocon is on loose but so is Stride Arcolabs Orchid and Optocircuit as also the Lupin Lab and the Cipla teams which thankfully seem to have let go of a divestment opportunity because they realise more premium is deserved and were not clubbed into a distress sale as was Jet Airways lasting the seige to come out with a 24% stake for etihad. Of course, that means that Spicejet and Indigo have the best possible premium likely in the hunt for the next deal esp as Emirates egts into a twirl over etihad’s close on the deal. Meanwhilw, thankfully the rush for Africa has not resulted in new redfining markets as the India story has hardly corded into the move to build and operationalise the right infrastructure

 

 

 

 

 

India Morning Report: And here we are 5850 and nary a huff puff break!

The early morning run for the Nifty has panned out really well, with the 5850 mark looking as enticing aas the hitherto 3800 mark(5600 from August) and no employment for traders yet again on the upswing or as now most would like to say in the week of consolidation after it ends the day after expiry without new brilliant moves of mathematical elasticity of direction brought about by Expected returns of each stock. algorithmic/Program trading however is different yet and with new regulation pon HFT preceding other countries’ attempt at controlling the HFT beast, Goldman Sachs trading rooms and that o f JP Morgan will continue to resemble SOHO offices trading the solitary Gilt in action.

The OMO scheduled as promised after a big break that definitely helps the cause at many ratings analysts’ desks is still required though for what would have been $3 B but is considerably depleted in Dollar terms . Similar problems with credit growth data also top up your and my morning cuppa as the absolute growth of INR 300-500 B every fortnight is now going to be a below par performance especially for one of Asia’s Top 5 equity markets of 2012 and probably the Top 3 in 2013 as Phils and Thailand are probably over the hill from all the buying un abated since china’;s slow poke began in an atmosphere of  European banks’ left with Asia as the only profitable franchise in 2010 and continuing through their liquidity squeeze on Asia and post the ne liquidity moves of 2012.

The Euro is king right now among currencies and that means the Gold and Silver tunder will be missing for some more time though buying has begun. China’s industrial demand for silver had thoughtfully started increasing this quarter but accordding to somenon conventional indicators china is still a long way away from a beneficial breeze starting to blowin new custom even as impports continue to rise optimistically keeping retail sales steady on month.

Back home in Mumbai, Bharti infratel IPO is finally up and running and seeming there is more clarity in the CDS market for insurance cmpanies as well which could be the leather for the leather hunt required in fixed /income markets to keep the comeback int he currency markets esp for those longer term rupee investors which have stuck around after banks withdrew fromtheir Bullish rupee positions just last quarter albeit a bit too soon. Despite market movers, I am not very fine with the move in Canara Bank or other PSU banks that are keeping the Banknifty abreast. Its pure sacrilege of the same variety that brought the house down last time. NMDC should be a good issue and good pricing will bring good treasury gains to banks supporting Divestment OFS issues like the one priced at 155 last fortnight

India Morning Report: A tough act to follow!

The resilience of the markets is absolutely breath taking if you can let go of the greed of the trading tick and forget you could have created 10-15 more points in any move of the last 2-3 months. INVIX must be one of the most stable volatility indices needing some good data training over the next 2-3 years as it gets two distinct levels along 2012 and tries every other vol input inbetween except the limited market range, setting it independent of market levels which becomes counter intuitive after this length of time.

Business volumes on the NSE are holding and MCX equities seemingly will only add new volumes from its 300 registered members as and when they start with the same 1000 scrip universe ( NSE has 1600) . Chinese data was actually positive but the markets wanted to see a bigger difference and local shares continue to tank from 3 year lows in Shanghai /Shenzen.

The Thanksgiving anti trade in Asia and Europe will likely fade away till Monday when US markets open as traders await the big news from Europe and EC takes the weekend time to solve the big problems UK has with the budget. I ndia is now actively interested in these negotiations with its EU trade droppoing at the expense of others and its Trade GDP seriously affected by continued recession in Europe which it is hell bent on following up with large spending cuts on the EU Common budget and the slow dribbling away of the banking union while UK firmly in saddle strengthens its local EU trade in Spain, Porto and Italy

Bajaj Finserv morning interview on the networks was a great segueway into the stock but comes a little late even with new business premiums growing at 18% and Allianz interested in increasing its stake. after an almost 100% rise in the year. Like PSU Bank Capitalisation and Drug Price Control, Bill impact from  FDI increase in insurance is also likely to have been played out long before its actual play in the House and is unlikely to move the bulls or the bears sitting on selected positions.

The underpricing in Bajaj Auto continues to be a big surprise and Biocon is a good long term buy at these levels. Why are Orchid and Opto out of favor? One fervently hope it is not because promoters are hoping to be bailed out on their personal loans

 

India Morning Report: Markets to follow up another uptick from 5650

The Rupee started the week well and set the tone but the ‘missed’ opportunities to churn the portfolio finally got to traders as the index is definitely not more than range bound though biased to the Northerlies taking it up. The resulting afternoon correction should not have worried you unless you were the few who entered this week in the last INR20,000 Crs or 200 B entering the cash market, which is going to be in a little trouble as the downward trend for Hero and the continuing travails of Infy emerge again with IT scrips getting hammered for prices booked in September in their quarterly results.

The Rupee hopefully will get to stronger ground nearer 52 than 53 before Oil prices rear their ugly head again, precariously poised at $92/$116 for WTI/Brent per barrel and India staring at just concluded well priced contracts askance if they could still bite on the WAC cost of our rising Oil bill. The September deficit climbed out of the hidden trenches on mass buying of Oil atleast as it seems from the monthly deficit and the growth in China’s exports can only do so much for our exports to Big brother.

Obama is back in the reckoning and though that does not mean good things for outsourcing followers, most IT companies have been hiring locally and settling down in the US as local color than exporters of manpower with a more than 10% bench at Infyand hiring for special skills in larger accounts now more than remotely likely. Banks and global financial services majors have much more bandwidth going into 22013 to expand footprint in Asia again outside of Goldman Sachs which is already fully invested in growth portfolios and the Deal markets should help further FDI/FII interest too.

India has managed to get extra flows without affecting prospects for Mexico or Turkey showing Emerging market inflows are more collaborative than competitive and US equity inflows should not impact the flows adversely either but worries come from the coming increase in share of the Commodities complex and the Japanese commitment to keep buying US Treasuries. Japan’s currency’s new turn is alsoa great story as the over valued currency seems to be in line for a big correction in value as China gets left behind in the list of US Treasury holders and the regional argument between China an djapan is balanced by the weakness in the Yen for Japanese and probably Korean exports as well.

 

THE 11AM UPDATE – MORE NERVOUS ENERGY IN THE MARKETS! (SP pledges issue based support)

A nod from SP as expected and Financial markets actually jumped and are 100 points up on the Nifty today. It just shows when markets refuse to go down after a stinker they really can bounce North very quickly and for literally something that was ” no big deal” as i thas become for players and commentators of Indian polity. This ould have been a chugging along at 550-5600 day except for the move and elections aren’t farther awway than when the day started

India Morning Report: A Resurgent India, A Resurgent Festive Season?

English: Prime Minister Manmohan Singh in the ...
English: Prime Minister Manmohan Singh in the Opening Plenary – Resillient india: 25 years of Economic and Social Progress. Participants captured during the World Economic Forum’s India Economic Summit 2009 held in New Delhi, 8-10 November 2009. (Photo credit: Wikipedia)

Bad news economics may have won both 2011 and 2012 but 2012 has come out strongly with India emergingas one of possibly three-four investments with a continuing positive return even after a 20% return YTD. Of course netwoks are trying hard to stay relevant during the bull run with all the blue chip[s having run off the top in the last week if not before and the rest of the rally looking like receding as the reform news flow is kept up by a government ready for the Election battles looming up ahead.

Straddling SP and BSP unfortunately does not give a clear window to bears and again their ould be heightened risks of a last moment cut off ( a sharp sell off) in the market when eventually Manmohan Singh “runs out of options” As of now 10 states have shown that other parties really have no hope and that these changes to India’s fabric are irreversible

A slew of festival holidays should keep investors relaxed thru october and november before Global markets slip into holiday mode while mid cap IT and HCLTech will be  hoping for more weakness in the Rupee. I am expecting Healthcare to make a return tothe buy lists but not CIPLA and DRREDDY

The Rupee has really strengthened int he opening , however likely just a calm before the storm as the weakness in Global crude benefits FX reserve poor nations like India on inflation and Tdeficit fronts equally fast but at $92 it is unlikely to last too long. 

India Late Monday Morning Report – September 10, 2012 – Billed the next Superpower, India likes to trudge alone.

 

Image representing SAP as depicted in CrunchBase
Image via CrunchBase

 

The One hour saturday session did not help nor the coming Liikanen report in the EU scare banks and investors on the Asia story as Monday began apparently without due cause or available discretion. Not to give in to rabid bursts of disgusted incompetence but, india remains patiently in wait to distinguish itself from the Asia story and though stocks will trudge up to 5500, Banks from Europe could be otherwise occupied in the coming opportunity of the Spanish liquidity event as unlimited bank buying replaces and supercedes all current monetary supports and back in Bangalore Infosys catches the scenic express from

 

An HDFC Bank Branch in Hyderabad
An HDFC Bank Branch in Hyderabad (Photo credit: Wikipedia)

 

Zurich buying SAP and product house Lodestone. The Swiss Lodestone ‘s 850 consultants do not work for bugger or private banking clients but in manufactuing and automotive verticals with it also missing the in fashion healthcare business of the scenic Alpsdespite being in Swiss.

 

The Liikanen review needless to say, adopts a lot of the Volcker and specifically it pays heed to the Britishconstituency and perhaps brings UK closer to agreeing with the EU on Financial sector reform for all in one size fits all as the struggling EC wants to. Vickers had recommended and had been approved for a new proposition in UK banks limiting trading assets and non business banking assets from participation of retail banking capital However anyone with trading assets less than 5% of (RWA?) assets could keep the trading business in the same company

 

Meanwhile a new staying power has apparently been reached for the Jobs exodus as a less than 100k nonfarm payroll addition in the August report from the BLS did not cause much accidents while we were away unless the Euro shuts down in European trading n a couple of hours.

 

The Saturday session was evetless and the Index has hardly moved shape or sectoral preferences from

 

Bank of America Plaza
Bank of America Plaza (Photo credit: Frank Kehren)

 

Friday. However, banks completed a little ceremony where Dun & Bradstreet asserted HDFC Bank as a overall no. 1 bank for Fiscal 2010-11 and ICICI Bank and SBI split 3 awards each across categories with SCB winning the best Foreign bank ( parameters incl Quality of Assets) and Citi the best Foreign bank in retail ( old hat, new takers?)

 

 

 

The 11AM Update – Well I can’t tell you I am buying, hushh! Bajaj Auto reports good growth

A dull day nonetheless and without any buying data from market internals , it might well be the cliff OECD nations are facing for the next  20 years. The Power saga is especially threatening stability in Lucknow, Jaipur and even Bangalore, the new richest city in india measured in per capita income

Mining ban is due to be lifted soon but with state coffers empty and the Centre showing its hand by decisively asking ( MSA at head of PlanCom) for states to share the Debt restructuring burden in such a situation with SEBs is a trifle daunting for those waiting for reforms to be actioned before the markets move up

Indian states with younger CMs might be evaluating official bankruptcies already though India’s long federal history gives the traditional politician enough ammunition to get out of such triflings as another INR 3 Tr in unaccounted spending.

If I were in retail and could pass on prices to consumers as I proved i could, definitely I do not need to suffer much more pain on the exchanges.

Bin that bullish note on the Indian market, someone else got this FII investor / QFI (though he is still headed for India) 😀

A dull day nonetheless and without any buying data from market internals , it might well be the cliff OECD nations are facing for the next  20 years. The Power saga is especially threatening stability in Lucknow, Jaipur and even Bangalore, the new richest city in india measured in per capita income

Indian Rupee Symbol
Indian Rupee Symbol (Photo credit: vishuhospet)

Mining ban is due to be lifted soon but with state coffers empty and the Centre showing its hand by decisively asking ( MSA at head of PlanCom) for states to share the Debt restructuring burden in such a situation with SEBs is a trifle daunting for those waiting for reforms to be actioned before the markets move up

Indian states with younger CMs might be evaluating official bankruptcies already though India’s long federal history gives the traditional politician enough ammunition to get out of such triflings as another INR 3 Tr in unaccounted spending.

If I were in retail and could pass on prices to consumers as I proved i could, definitely I do not need to suffer much more pain on the exchanges.

Bin that bullish note on the Indian market, someone else got this FII investor / QFI (though he is still headed for India) 😀

BAJAJ AUTO profits of INR 7.2 B is good enough in the current situation esp the added challenges in Sri Lanka exports which are expected to fare better from here. Cons profit at INR 7.18 B infact beat expectation and buying has begun ( after some confetti on the wires, buzzed traders) Net Sales of 47 B or $1 B within a Quarter and Other Income is actually up using only month end forecx translations at INR182 Crs ( INR1.82B) up Rs 5 since i printed that buy intraday , now 10

Happy Thursdays! Infosys alone cannot change the trend

Tata Consultancy Services - Ferrari ad at Hyde...
Tata Consultancy Services – Ferrari ad at Hyderabad airport (Photo credit: teemus)

Bears had fun in the markets today poised to take the markets below 17000/5200 tomorrow or day after, but the results from TCS could change all that. The IIP was a nice positive surprise too and it seems not just consumption but some production and some growth in basic and intermediate goods was underwritten too. the Fiscal and Current deficit should also have crawled out of the hole of worry and banks set to take the lead in an Economy which they have nurtured. The growth in Credit for the week is lower only because the ebnd march ramp has to die out anf is still a globally leading indicator of the goods Asia can bring home with 14% growth and a M2 also close to 14%

However, that Infy results were cathartic for the markets cannot be denied, and I am aching to buy some good infra and banking stocks onthe pick up again, esp if I can be a keeper for 6 or more months, this not proving to be but still looking like the bottom we had in the second half of 2009

TCS reports a volume growth of 3% in USD terms and ofcourse double digits in Rupee terms even as the wage increasesaffect the EBITDA. Also MindTree may be back to a buy level at 632, so print the upgrades and lets get going . Of course consolidations, almost discouragingly last at least 4 more sessions and a quicker run up may only trade so llok for a weekend close towards 5200 or at least an intraday dip after we have celebrated TCS and Infy starts back above 2300 tomorrow open if TCS results do fine,

India Morning Report (June 28, 2012) – Expiry Day is here, Nifty on way to 5300

The Big Thursday is here and stocks still have potential of a positive run despite a continuing more tentative move that seems to be taking Nifty the hole 9 yards to each new high especially ith the Dollar linkages still in the equities segment. Dollar should be weaker in CDS trading today as the upmove is confirmed and most tail events behind us with the Presidential battle on. The SGX is enjoying its moment in the sun as a leading indicator of the collective sentiment and Sensex futures are doing fine too in this and the July series. July series positions include good rollovers in Public sector Banks like Bank of Baroda, big moves in the Big Four in Banking and that could mena a big upward correction for Axis in which shorts continue unabated.

Reeforms are not likely to be germaine with  a valid impact on the markets as most would be actions on direction we have seen turn out to be wishy washy temporary cliffs for bears in the wild. india however continues to hold the solitary hope for a global recovery with China yet not buying and the BRICs sentiment challenged globally by fears of hyper inflation which india watchers and India bulls know to be unlikely in this part of Asia

Reeforms are not likely to be germaine with  a valid impact on the markets as most would be actions on direction we have seen turn out to be wishy washy temporary cliffs for bears in the wild. india however continues to hold the solitary hope for a global recovery with China yet not buying and the BRICs sentiment challenged globally by fears of hyper inflation which india watchers and India bulls know to be unlikely in this part of Asia

Fixed income Report: O India! Is that how it will beeee…!

Indian yields settled down to 8.5% comfortably after a run on the Indian bonds brought them back above 8.5%

Does it have an hackney licence? Parked outsid...
Does it have an hackney licence? Parked outside Rolts Garden Centre, Clacton Road, Elmstead Market, this is a Bajaj RE three wheeled passenger carrier. Back in its native India, they are used as taxis. (Photo credit: Wikipedia)

when the Dollar ran up a big 1% wall and kept the Euro from crashing in Indian trades. The recovery in rate sensitives may now have a stronger reason to yield to Export heavy businesses like Bajaj Auto and Infosys but whatever be your sectoral poison, the Indian markets will accept all inflows and the inflows will keep getting stronnger from these levels in the equities market.

And though no one would bet on the Rupee’s recovery, the RBI would come in only once and thus that currency equation remains weak for us under

Bajaj auto rickshaws in Adama, Ethiopia.
Bajaj auto rickshaws in Adama, Ethiopia. (Photo credit: Wikipedia)

pressure from hot money as always. Asia leads global recovery and in the Asian recovery, India leads from the front followed by China and its ASEAN friends with Chinese investment

The Euro unfortunately complicates india’s still effectively Dollar pegged currency as it wants to protect the interest of Exporters dependent on Price for European demand for indian goods for reasons best known to India’s specific non Capex led dependence on Exports.

The import basket continues to offer super deals to aid the india inflation story and that has definitely eased the pressure on policy planners. But trading whipsaws keep India inc busy rather than new business paradigms. Facebook’s $104 bln IPO or Piramal’s INR 35 bln purchase of Decision Resources Grp become easier to appreciate for predominantly consumption Economies in the USA than for the Indian palate. 

India vs China : ( A likes comparison) Chinese inflation ticks down to 3.4%

 

China Premier Wen Jiabao deliver the Report on...
China Premier Wen Jiabao deliver the Report on the Work of the Government at the Third Session of the Eleventh National People’s Congress on March 5, 2010 (Photo credit: Wikipedia)

 

While Indian inflation is likely to step out of the sub 7% mark on the wholesale levels to more than 8% following the retail index, Chinese inflation ticked up to 3.4% leading to a reaction in the morning’s Asian opening. Chinese imports were up only 3% like for India at $37.9 bln with not just Oil but in India’s case two thirds of the Diamonds and Gems trade shutdown and Gold and Silver imports are down by a third from a government increase in import duties. The tradedeficit thus comes to below $160 bln at the cost of over $100 bln in Exports according to the trends explained by the Govt official,  after the first month of the Fiscal at Data release yesterday

Chinese inflation easing further may not be a good thing as it also follows a drastic fall in demand consumption, the bulwark china is relying on to stimulate growth though outgoing Premier Wen Jiabao has been vocal in the last few months against the culture of imported consumption items in China. We felt more comfortable for China at the 3.6% mark for inflation in March as it was within the 4% mark and Banks though restricted by opportunity on Lending had still managed healthy Q1 profits

Asian Economies of India and China’s leadership in growth is a required element for the continued recovery in Western markets and limiting of European troubles though European trade continues to favor banana policies and non South Asian economies for trade and investment hopes. India on the other hand reported new FDI of $ 8 bln in March but the Exxport slowdown and the increasing inflation from the 21% depreciation in the Rupee  int he last six months will hurt growth and consumption with Automobiles sales in April already down to 4% growth or 235,000 units for April including Exports. Ford, Nissan and others would be increasing exports from the added capacity in their indian plants from this year

India is hoping to get a further $1 Tln in Infrastructure funding from private funds to quasi SWF structures sponsored by banks and government

Related articles

India FDI Report (March 2012)

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

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

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

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

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

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

L&T Wins again!

The unlikely bidder and a past promoter of UTI, L&T thru its Finance arm L&T Finance Holdings bought up

Southeast Asia with Pakistan, India, Nepal, Sr...
Southeast Asia with Pakistan, India, Nepal, Sri Lanka, Bangladesh, Myanmar, Thailand, and Laos highlighted (Photo credit: Wikipedia)

Fidelity earlier yesterday. However Fidelity MF in India is just $2 bln Assets under Management so I don’t know why they wanted to move from INR 35 bln to INR 135 bln making them #13 if ET is believed. AMFI India apparently has reduced the frequency of AUM data updates a s have multifarious departments as India realises the direct investment options to foreigners are not just achieved by allowing them legally inside and FDI figures look like that of neighbouring Pakistan as mauch as us and behind Sri lanka and Bangladesh. (SOUTH ASIA)

Where’s everything headed, then?

We as india writers have pushed out everything with insight in the last three four years, short of  the unworthy Indian infrastructure which could not attract even $100 bln in Gross investments yet with two debt funds of $3 bln each and some older established PEs like Macquarie and 3i and the Govt of India grants of INR 750 bln. Short because Indian Infrastructure sector with all the public enterprises involved is very short on the details and as it works without meaningful graft like the Telecoms, the Roads, Power, Aviation and Ports infrastructure continue to work with construction companies like our FMCG sector works with $500 mln brands from HUL, P&G and ITC and we are the wrong ones because we criticise something as if it was the end of the road for the sectors in each case and nothing else going to happen because it is not.

At least that is also what the Dy Governor of the RBI, Subir Gokarn seems to feel if we read into his new timetable to plan out Capital Convertibility for India. FDI in India has always been able to attract the bigger dollars irrespective of investors’ fascination with issues like the retroactive introduction of taxability of transactions and the impossibility of investing more than tokens of currency in our banking sector with restrictions of M&A or the recent failure of FDI in multi brand retail/ defence, healthcare and aviation.

The true problem comes in India’s cultural intractability compared to China or Signapore or others total rolling out of the Carpet for the bbigger dollar including the State sponsorship of the project, and not an immobilised set of half dozen land reform and Tax reform bills, and the Private state and comsumer acceptance of that way of life that the investment unwittingly imports itself with. Being open to cultural transfusion, this is a real anachronism always heaped on  the middling old politicians who could not run coalitions but it runs deeper as the next few generations will find out.

Probably what we need to bring in each sector is like the perfect storm, at least two representative investor in each such sector, like probably Yum with KFC and Pizza Hut and Tata Global – Starbucks and or Dominos with the Bhartiyas where there are unlikely to be any hiccups with all three biting the bullet and all government departments, consumers and politicians able to sell and compare. I would even aver that the 2g  experiment is still very much a success for the FDI story right now. A similar base exists in Banking where the world’s Top Banks are increasingly looking to Asia and India in particular to roll out bigger base staff or the magic wands that the local and global Harry Potters need to win the magical sorcerers over at state and center.

Whether it is International Quality standards for Highways or structured products in Banking, Indians more than other s are Comparison shoppers who like to think their Point-Of-View is appreciated and part and parcel of the product/standard unlike others who let FDI build a parallel Eco system, much like empty highways and cities outside Bejing while the Eastern corridor esp  around Beijing keeps cars stuck in Traffic queues that take three days to move from end to end, or even more

The simplification stated in that, is to be taken with the usual detailed quid pro quos and the details of a contract like bringing the capabilities to service rural consumers becoming a new reality for banks, auto and credit card and durables/discretionary sector plays from Pizza to That larger personal loan than the $500 on my Kissan Credit Card.

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

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

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

NRHM allocation INR 208 bln

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

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

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

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

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

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

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

Benami Transaction Prohibition Bill to replace 1988 act

Narcotics control provisions to be also updated

Rest Tax performance after study, review and analysis

Woeful india presentation and Analysis – Bloot!

And I do not refer to the ministers, Trivedi or Mamata, I refer to Rishad Sembhalan and otherwise insightful Asia commentary that fails at knowing India or its concerns,. Rarely has something so pathetic been allowed by the Channel as its commentary on India as the lady with the rose for India’s Railway budget ( It was an

Mamata Banerjee's signature.
Mamata Banerjee's signature. (Photo credit: Wikipedia)

obituary rose, and this is an emotionally charged comment, but yet I seem to have hit the nail on the head more than anyone else for the last 4 years and this is another from that cartel of 100% tricks, that Bloomberg Asia or anyone in Singapore not be allowed to speak on the subject of India.

On the flip side, the entire SE Asia seems to come out trumps always with that cliched view of an incompetent India and its incompetent ministers everyday and we know it is that Economic growth continues to happen despite policy not with new  policy by now. . ( and this time Pictures of Mumbai laborers…1!! ) while we filled with hope remain with pen/ keypad at hand, building that movement.

Predilections: Manufacturing a perfect pre budget rally

Mutual funds in India
Mutual funds in India (Photo credit: Wikipedia)

Unmindful of the gross excesses reported by falling revenue and growing imports, the large $50 bln subsidy bill in FY2012, the uncouth handling of the elections by the incumbent government hitting chances of a reform friendly budget and the low scratching IIP ( irrespective of statistical aberrations) the pre Budget rally started at an equitable 5300, not waiting for a lower tab, allowing reasonable hopi chatter on the networks and making budget experts out of such midcap CEOs that are rarely heard, the mdeia will get the maximum mileage out of this pre rally as the content is mostly fit for filibuster with an insipid agenda ensuring that budget day will find everything on a bullish cndlestick.

I expect today and tomorrow to be more about finding the right mid Caps for a good bang for the buck for India Funds which remain few and far in between, a random occurence in between US entries and exits, European analysis and Scaremongering about China with every $! bln of the $10 bln reaching the middle kingdom every month, while India fights for every cent of interest

The miss India missed to nail down again

Rather to the detriment of the Indian purse strings which are a little stretched as always, we were unable to even attract real portfolio FDI in this current run on Equities, with $7 bln hardly enough for the kind of momentum we talk to. China definitely has the edge on infrastructure but more so and back on the same drawing board, it is our spin control and inability to adopt a senior group of such investors and give them what they want that is the problem why we at our best our no more than a 5-7% in the MSCI Asia index.

Indra Nooyi
Image via Wikipedia

We need to cultivate mroe than the process and more than our seldom far out daspora like Sameer Arora and indra Nooyi / Vikram Pandit but more so, we need to sit with just one group of a dozen FDI and FII investor advisors ( just the latter is required with a commitment to bat for both FDI and FII) and not just feed them the public press but go all out to make them commit at least one fifth if not one third of their global investments to this new #2 in 2050 as reports mark our future growth. It is what the ASEAN and more importantly the Chinese have done right.

English: Vikram Pandit, Chief Executive Office...
Image via Wikipedia

The mandates, and they are not banana republics or banana billtons any of them, just the mandates hwne given have been complete and thus the investors were able to roll bigger cash into the Taiwans, the Turkeys and even China, poor at $10 blna month in FDi and considerably much more in Portfolio investments at the low end of the cycle with local governments, fund management companies and despite pecuniary duties on imported auto which does not stop th others from brining int he big investment to China

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