India Morning Report: State Bank gets ready to report with PNB carnage still fresh

English: Wordmark of Tata Power
English: Wordmark of Tata Power (Photo credit: Wikipedia)

 

PNB ofcourse claimed to stabilise NPAs again but with INR 50 Bln more in restructured assets that are  now INR335 Bln on the Books, the bank has lost a lot of investor stars in this quarter. However, the bank seems to have acted as per strategy to release larger NPLs ramping up provisioning and so even though Profits were lower, the NIMs are 3.47% an industry best and NPAs at 3%  might yet be excusable keeping the bank firmly in our buy list aheadof Bank of Baroda. PNB bulk deposits are down a huge 2/3rds  at INR 220 Bln from more Than INR 900 Bln

 

State Bank will report much lower than expectations however as market expectations onthe scrip have been unnecessarily optimistic, its being in the buy lists always a function of its special charter and its exposure to SME always a much more risky diet for investors than even BOB, BOI and NB but the bank is the biggest in India and has been trying with great returns for its size in the retail lending markets, not in NRI deposits

 

PNB will continue trading higher provisions for lower PAT as the coverage is still 55%, lower than others in India and the only risk factor is its high reliance on the restructured book which for PSU banks has turned out to be  window dressing game, skeletons of which cupboard may be expected to be found industry wide in a couple of yearswhen they are reclassified a s NPA instead of standard assets. PNB may perform better at that time when actual results are available  and its Treasury revenues ( Gross of INR 339 Bln) remain best in class

 

Currency and Bond markets are still twirled up in a tizzy and the Dollar Index at 81 levels may continue to rise though confirmation of continuing EM inflows will change the sentiment positively. Indices flagged off below 6000 levels and Sensex may well see sub 20k levels keeping short itches alive this week after a seeming end of the line earlier in the week as trade data was seen in the right light. 11 more sessions in this series which hidden to most, has even seen Ashwini Gujral and the Institutions change their staple trades, IDFC and YES back in lay as mainstream sentiment carriers

 

I for one consider the State Bank to be fair valued at more around 1400 levels, a purveyor of bad asset quality for whicht he rub off on PNB and BOI is almost unfair and that the State Bank can be punished isolatedly instead of crowding each and every constituent of the Banknifty

 

Food inflation should e allowed to continue at 10-12% levels the CPI component having come in at 12.56% yesterday. The IIP at 2% was well below what could be and expectations cannot be lowered to where the series presupposes to lie in the coming election months. Tata Power has irrationally picked up its pair with RPOWR and Reliance Inra again, turning south after Reliance boosted its results fr the companies earlier this week

 

 

 

India Morning Report: Markets rest at new record levels, Banks catch fire

Except of course, Bank of Baroda and Bank of India, the PSU Banks who along with All Bank are in front of the NPA tether and are likely to again underperform in results announcements today undermining the market’s expectations with a definite taste of the macabre doing the paperwork accounting for to decades of profligate lending. In more operational markets language, others like Dr Reddy’s also hold the key to big moves as markets let go of smaller volume picks not in fashionable upside with institutional investors chasing Indian weightage in their indexed EM funds. That of course includes Hero losing share to Honda and Maruti making 3X profits with the Yen a big part of the story this quarter.

English: MSCI Logo
English: MSCI Logo (Photo credit: Wikipedia)

IDFC is likely to get a good post results after taste into portfolios (despite its ext from MSCI) and so it will be crucial that it comprehensively outperform as foreign investors come back to India bonds and equities unconcerned about coalitions and hung parliaments. The No Taper refinement yesterday was not material to their return either though it is not a carte blanche as the more optimistic from Asia might have expected of Lady Yellen.

Cipla bore a heavy brunt of the funding trade and drags some of the other (Lupin) Pharma choices with it while Glenmark and Cadila will continue carrying the market flag with meaningful bumps from export earnings and real greenfield growth in market development the mid cap strs have shown to be ey

The expiry day seems to be ignoring the 6350 target in the morning session but it may just become a case of having decided on its own expectations for these results candidates. Retail investors shuld not be expected to return in the middle of Diwali spending season or even otherwise. The Indian AMCs have together more than INR 8 Tln under their belt currently and like the taste for FIPS showed are not averse to increasing enchantment with Balanced Funds as Bond markets xpand(General direction ypothesis to play out till 2025)and pension players get active taste of equities along the general direction set back in 1993/2001

Banking hopefuls like Magma Fincorp and Muthoot report results as things look to get better for NBFCs. Now is a good time to load u on infra NBFCs both Powergrid and REC/PFC/PTC

As mentioned yesterday Bharti has crossed  a rubicon with Africa markets reporting profits as new Telecom auctions also level down on expected prices in domestic circles

 

India Morning Report: YES, ING Results follow up and rural consumption

Bank of Baroda at night, at Dubai Creek.
Bank of Baroda at night, at Dubai Creek. (Photo credit: Wikipedia)

PC’s conference approved PSU Bank performance over lst year with 12% growth in credit highlighted SME credit growth along specific objectives even as above INR 100 Lacs(00,000)  borrowers continued to account for maximum defaults. However that pushed most discussion on YES and ING results to the next morning. ING kept NIMs higher at 3.46%  but NII grew only 20% showing the bank’s reluctance to grow in India and CASA for ING a for IndusInd is still just 33% behind industry biggies at 42-45%.

Yes on the other hand grew advances to INR 477 Bln and deposits to INR 672 Bln posting  30% higher NII to INR 6.72 Bln. Non interest income booked a swap income of INR 1Bln even as the HTM AFS transfers were already accounted for an INR 1.12 Bln loss in June making linked comparison moot and setting up for a bigger NII jump in December from the running gowth maintained by the bank and better margins from reducing MSF corridors as RBI policy rationalises. PNB became the firat bank to tap the ECB market in the last six months with a $500 mln QIP this week in short debt YES did not report any restructuring additions even as ING added one from NPAs ack to CDR approved loans which increased provisioning power in the balance sheets

Meanwhile short cash picks led trade from 6200 levels in lackluster morning trade though multiple analyss finally rallied around our long lost Nat Gas pick in Gas authority presumably as the pricing decision is finalised. Pharma scrips are up to. This correction with 50 points eaten in half an hour maybe the result of IT scripts uptrend being limited as they prematurely bought in interest into the market and topped off at yesterday’s levels. Also suspect is the long in Bank of Baroda, still dumping old NPAs into the wheel an the return of interest to Allahabad Bank which also uniquely invites shorts back on unseemly shouts of overvaluation

Tales of a repo rate hike are over rated. Also the markets may be back in the afternoon as HeroMoto rides back on rural consumption growth after a good monsoon but the probability is limited as the urban Bajaj Auto has rather created a schism in earlier running analyses on its potential in the future as the post split Honda climbs back every month on higher market share The monsoon also hits Cement stock prospects badly even as they were already in a lurch following  weak pricing trends lasting over 2-3 years now since the industry was hit by record fines.

Sugar production has risen only in UP producers this year after decontrol. WIRO shorts seem to be on the mark as talks of improvement are unlikely to last the stresses of recovery in the industry

The rush to SBI shows a funding trade that is likely to lock the market to 6200 levels as the bank will inevitably rear up on ugly assets that hold sway on the biggest bank balance sheet in India even as ICICI Bank could power ahead in that wake and market targets for November post Diwali at least remain 6350

Bank Results Season: India Earning Surprise:(Flash) Yes Bank Grows Lending Income By 37%

Yes Bank grew NII by 37% over last year in the latest quarter, a high number eve for smaller nimble banks as BoB reported struggling with 3.23% NIMs in the same quarter. With frequent Tier I and Tier II QIPs, the Bank’s Capital has hit 17.5% and Tier I Capital is also high enough to load even higher growth digits as Gross and Net NPAs fall off from already minscule levesl to 0.24% and 0.06% Net Profit is INR 3.06 B the jump of 30% over year also translating into healthy linked/sequential growth

Of course with banks like ING Vysya almost degrowing the Loan assets , static at around INR 300 B and PSE Banks growing NPAs to significant 1% levels at the best of breed banks, the room at the top is definitely available for anothe top notch bank from the 2000-04 ‘era’ to make an impact when new banks with existing lending books and rural branches join the club in a few months

UCO Bank may have disappointed but PSE banks have shown that the markets do not expect more than 20% Sales growth tat best of breed banks and a growth in the range of 40% matched by growing Other income does hand the challenge to established lackeys at Kotak or the survivors at PNB at the bigger accounts as MNC banks also struggle with financing the Global Indian Corporation and India’s trade grows to 3 times the current levels in the coming decade.

BTW, apart from auctions for ECB lenders to quotas for buying bonds in FII acocunts which grew the possibility to OINR 250 B RBI also lent INR 77000 Crores or INR 770 B in today’s one/ten year auction

NPAs from the Deccan Chronicle account may be t o the tune of another INR 1 B at the bank but are unlikely to pressure the balance sheet.

 

Morning Trading Strategies – India September 17-21, 2012

Trust us. it’s not time to sell into the rally yet.

Banks are again the biggest victors of the Reform story. While Telcos will be apparently in with 2G licences without missing a beat including Uninor and Sistema buying Aircel, Bharti would be benefitting more from investments in retail and its IPO getting investors out of the 5 year old Bharti Infratel restructuring

Stay long in Banks and the uptick will be tempered as we go along. Indeed some may again try a Bank of Baroda trade. ICICIBANK and SBI are the best picks going up while HDFCBANK is the one likely to lose the least value

The Rupee is below 54 even in the September series and that is saying a lot apparently as Udayan puts it from INR 28 B in one session. The gain in the Rupee is not capped yet either till December

The infra stocks ill be part of the second coming and will be from among frontline stocks only from IDFC to JPASSOCIAT and maybe GMR and RELINRA

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

Up ↑

%d bloggers like this: