India Morning Report: The rest of the week is bullish again

indiaGiven Pfizer and US Authorities continuing crackdown on drugs from India ( Pfizers fake drugs lab featured Ranbaxy on Bloomberg yesterday, 100M users (see ET)  did not vote for Ranbaxy and founder Dilip Sangvi definitely has an uphill task trying to convert his $4 B revenue acquisition of Ranbaxy into a paying deal. The price even at Rs 447 was probably a face saver for Indian Phartma as Indian pharma contitnues the quest for bigger stories in the $200 mln – $500 mln molecule categories and even more and the US generics story also relies on academia to cut the costs of innovationand drug delievry with and without Obamacare.

As of now however, prices of Sun Pharma continue their rally as Ranbaxy finally stabilises at 447 (offer price) and markets look to complete their pre poll rally with benefactor Modi piping up some hot Indian curry to Foreign investors around the world. Recovery in consumption is not converting to better Auto sales apparently and poll time spend also seems to be down witht he fortunes of the Congress known well in advance.

In Financial Services and Banks, the IDFC story has multiple positives even as the markets nurse a big bruised ego from RGR’s matter of fact disposition of other applications and the Infra Financing story for India inc seems to be back on track, the Indian welfare state a survivor of other political questions as BJP promises to bring back rural employment and education schemes.

Stories like Bharti and ITC are unlikely to lose because of the changes in Political fortunes while the Pharma and It story probably come under the scanner being at market peaks and the Rupee responding in the NDF market to more than inspired business inflows and remittances from labour abroad.

The movements in JP Power., JSW Power (Nasik and Maha areas arnd Jabalpur?)  and obviously Adani Power ( Amit Shah connection) are interesting and likely to be back int he limelight as news on the business channels remains on target for a big 7000 breakout and is safe for a 6800 score by far, markets continuing to test the levels after each 100 odd points of rise, studying the ramifications and choosing a select dozen every 100 pointswith shorts back in Kotak and Hero Motors. BHEL and SAIL seem to continue to be short favorites and their fortunes and that of IDBI Bank are unlikely to be affected by market direction now.

The best derivatives strategy remains to sell puts at this point for probably 6500 levels on the safe side, markets likely to signall enough if the breach below 6450 levels in 2014. Buying risk may seem tobe in, but new investors are likely to be priced out by the constant rain checks and risk buyers from early 2014 will continue to be rewarded till end 2014 if they stick around.

JP Associates is unlikely to move upop from 56 historically a support for the stock as it continues its tortuous strategy of deleveraging its listed stock

Bank credit growth remains steady at 12-13% and deposit growth continues to outpace, leaving the changing GDP target forlorn at new higher levels and the GDP performance for 2014 and Q1 2015 unlikely to hit above 5%

Market highs around 7000 levels are however already justified by continued double digit earnings growth by top performers.

 

 

India Morning Report: Nifty futures still above 6500

Infy is available at 3350 in case you are looking at gaps in your portfolio. The twin shock to Sun Pharms from the US FDA however, broke the proverbial Camel’s back, big sharp falls in both together taking ou t the bulls hopes ( as i n fact the bulls ar e in no particular hurry) Probably from the stock specificness of the new rally in both the Dow and the India Nifty, above old highs and resilient to most investor breakdowns a fair smattering of geo political uncertainty laying the groundwork for such tests of both indices in the last few weeks, that now the indices are called by a set of unrelated stocks, not part of any index necessarily and sector led predictions still valid independently as also to  a certain extent stock specific upsides.

Downsides and new buying levels are likely restricted to the bad news dozen, currently the set including just Sun Pharma, Infy, Maruti , L&T, even Hero and a couple of the last week’s  weak entrees like Tech Mahindra which would also put traders in a likely soup.  shorts do continue in infy but one wonders if anything more than 3200-50 levels on the low side are possible. It is probably also a reaction to unrly traders looking for a fllight to quality indepeendent traditional favorites losing a lot of times in this rally with the short traders

HDFC, HDFC Bank and ICICI Bank for example continue to nestle new levels and find no dearth of long investors. SBI could have more traders like me waiting to pounce on the fresh chance for shorts to below 1300 as its NPLs are not done. Bharti like others has been able to raise quick debt this week and IDFC with the Power NBFCs remain a good story , fresh longs waiting for the couple of bad ones to play out as they are pure trades on fundamentally strong ideas and potentially unlimited longs would not change their current levels ( unlimited institutional appetite ) unless the trade wanted a clear push and will likely compelete to 128-130 levels

Fixed Income Markets will likely find a day between today and Tuesday to factor in a little more good news of the CPI and IIP scores before responding to policy day’s volatile hopes with a strong top in rates under 9% as rate cuts are  ruled out. The MCX and NSEL slugfest continues in the background, as decorous solutions to the problem seem to leave some unsatisfied yet. FTIL and MCX promoter shareholding has been redenominated as Public and a rights issue is in the offing, the book building sentiment showing in these parrying moves. A deal to sell down that holding of FTIL and MCX is still a long way to go

The Astrazeneca delisting seems to have finally seen the right levels for the stock as the last rally in listed shares starts , heightened hopes marked by FIIs holding a big block of 15% in the stock. ITC seems to be a t the top of the range and a trade from 342 to 325 levels is likely. Despite today’s defensive buys investors should avoid Titan, ttk or Jubilant Foods or even aviation picks like Jet Airways. Bharti on the other hand will see buying at thhese levels of 300 itself and not recede much beyond 290 levels at worst

The market rally will likely continue if not this afternoon then on Monday afternoon with buys firmly holding on, with better than any other rally’s chances of retaining permanent levels as the market bottom has definitely moved up to an even 50900 – 6000 ruling out further cuts int he select stocks that have created and added fresh demand in this rally, markets having carefully shucked out PSU banks, construction and other leveraged plays with no fundamental performance locks on them. The Rupee can move back from the Friday’s 61.50 levels almost immediately

Crompton Greaves turns out to be headed for the chopping block, a potential sale likely to bring in a good uncertainty for investors in the stock. PE investors like Blackrock who is strong on issuing debt to promoters trying to tide over the bad economy are already providing fresh debt to the Avantha team

In other Unlisted business, we are a little fogged as we cannot determine what happened to the FIPB meeting on March 6, to discuss Braun and Destimoney among others. The sensitive handling of the Election Code issues had clearly seen there would be no controversy regarding this meeting despite impending elections

Commodity investors (HNWI) are unlikely to be able to return to longs with the slump in that sector heightened after a half hearted attempt by gold and Oil early this year.

Investors should continue to pile into longs in their choiceportfolio including scrips like CESC, Arvind Mills and Jubilant Life ( Looks like a quick trade can get buyers Arvind at 135 -140 levels)

India Morning Report: Markets gain confidence in the rally above 6500

As expected on Monday, irrespective of weaker global cues as the Dow travels back from new highs on weak Chinese follow through, sold puts have moved up midweek to 6400 levels on way to making a bottom support at 6500 itself before the end of the week. Mislaid punts in old Economy stocks like L&T and Maruti provide market shorts ready ‘bakras’ to support bigger longs in the rally segment favorites with PSU banks, tired from all the browbeating are also ready for a short short and BOB is teetering at new 650 levels in March.

BPCL turned out to be the surprise winner as ET Now also highlighted, gaining 20% in 2014 as PMCs and Oilcos caught up with neglected mispricing in the first six months of the rally from the Rupee’s endless bottoming in the last week of August as the Rupee leads the global charge to stay relevant in a post taper world.

Along with the continuing winning stock specific plays in all the new consumer stories of 2010, Just Dial’s F&O inauguration may well be one of the sterling performances that mark a lifetime winner as Titan, Maruti and L&T head for the dumps.

SGX Nifty  continues without a hint following Nifty to its close yesterday unable tpo provide cues to the Indian markets as FIIs continue buying, adding another INR 14-15 Bln on Tuesday. Asian markets opened exceptionally weaker after a Dow falll overnight as they remain sensitive tio the situation in China and need a significant depreciation in the Yen in 2014.

IDFC remains a superb trade and the expected corrections in ICICI Bank and HDFC Bank and thus the Banknifty continue to elude any other buyers waiting as the stocks remain poised for a big upward push from 1100 and 720 levels, FII trades switching the bottom of their range to 6400, writing 6400 puts even as Naked 6800 and 6900 calls continue to get more OI now instead of Call writers who can see the end of the rally before taking a position despite higher PCRs.  A hidden Short Straddle/Strangle ranging the market between 6400-6600 may well win the day ( Bloomberg F&O had a 6300-6800 recommendation on the 12:45) in March though it is still not the recommended trade, Call writers likely though to be not penalised with global volatilities at extreme lows . L&T Finance could likely catch fire from here as goroudns are laid for the trade on new bank licences limiting itself to just key candidates.

Only 35% of Indian Cars are compliant with new mileage efficiency norms applicable from 2016. Exports are down not just in Precious metals and Jewelry but also in Pharmaceuticals. From all visible indicators, Hotels and Airlines are coping well putting the almost recessionary two year spell behind them with double digit rate increases and new fare discounts respectively. EIA yesterday also confirmed that Crude prices will remain low till end 2015 at least while Natural Gas is likely showing an uptick even as Copper leads the metals down as usual at the start of a new Chinese year spooking the browbeaten sector needlessly before the murky waters provide real hints in Chinese take outs two months from here.

Questions on Indian Exports however, seem real as Indian Exports refuse to break the strangle hold /saturation around $27 Bln a month mark and FDA continues to eye Indian export consignments with due suspicion. FIIs may also be done with debt buys in India for this segment. One has a feeling the next month’s elections may not return a unique government mandate but are likely to see the biggest turnout in recent history, with more foreign Observers looking on curiously, Crimea and Turkey, not tomention China and Russia underlining the unique prism of stability offered by India.

IIP and CPI data releases during the day set the ebullient tone for Policy day next Tuesday /Wednesday for Governor Rajan.

India Morning Report: Banks keep investment cycle hopes “flying”

PSU Banks have mostly reached the highest expected NPA levels at INR 100 Bln each even as SBI discovers the choice to sell off current NPAs in the market, giving it enough tailwinds for the stock to catch up to rally leaders as ICICI Bank and HDFC Bank work to renewed targets after a buoyant Friday when the Banknifty’s 600 points led the index rise to above 6500. Asia opens much lower as China’s first targeted trade deficit makes it on lower exports, confusing markets looking at the same as a weak signal for other Asian and Australian exports to China.

The indices can now apparently score their new peak much before General elections are counted opn May 16, 2013 and a new government sworn in. The market is however not looking to correct anytime soon even as the PCR has ticked back to 1.16 on the Index and call options at 6400 and 6500 unqind with Puts and option hedges switching to writers and volatility for the overall markets still barely above 15, despite the big move up all of last week

Investment stocks getting delivery attention ( CNBC TV18) like Ashok Leyland and JP Associates, still lag behind immediate trading up potential in Eicher and Crompton Greaves, old stalwarts since the reform story of the 90s propeled India into investment portfolios. The weakest link in the market spine still seems to be heady interest in margin devolved Real estate and construction stocks  a little ahead of the real conversion in investment interest in India outside equities. The Pharma sector sees buying interest returning with shorts in DRL, Ranbaxy and Cipla countering excessive defensive runs by delivery buyers earlier in 2014.

Continuing short covering does not preclude higher levels in ICICI Bank and HDFC Bank, with FII investment cycle also updated in Mannapuram Finance and indices now continuing further consolidation and increases in levels on use of index hedges converting to written puts at even 6500 levels by the end of the week despite it being a new high for the Indian markets starting the week with easier 6200 expiries if the markets continue to showcase buying strength as delivery interest in many undervakued index components and blue chips keeps up new bullish levels in the market. BOB almost seems like as good  a short candidate till 550 levels as DRL or Ranbaxy on Monday Morning

If markets ignore the steady stream of buying and keep 6500 levels it would definitely point to a better 2014 overall , however  an improbable choice would be a sharper run right away for quick profit- taking at below 7000 levels followed by a sharp correction ( Ashwini Gujral on ET Now had our ‘improbable’ prediction today morning)

SGX Nifty was unable to lead the trend over the weekend and waits for the Monday open at cash levels of the index. Apparently the Mid Cap index has on cue broken thru 50 DMA levels on Friday as well, broadening the rally as most index components and blue chips also continue to trade far below their final potential given the anemic recovery and continuing threats of a rate hike

SBI may also continue to react downward but the broader markets may not turn the same into an overall red tick recovering by the afternoon’s closing trades keeping 6500 marks to start the week. YES and the Power NBFCs could be still stronger with IDFC as buyers are likely to find their value case appealing for investment accumulation and Kotak likely to ride lower ticks to its 665 levels with Indusind Bank. ITC again looks like its not going anywhere at 335 levels while buying should continue in Barti all week irrespective of market trends

The Rupee remains stuck at 61 levels unable to move beyond that Friday peak and Fixed income markets continue to trade india debt a t 8.8% allowing more buyers to lock in that rate for India buys much before any Bond index entry is firmed up with current FII investment limits in Indian Gilts and other bonds good enough for now.

I agree, private sector banks will again be available at lower levels for buyers to come in the afternoon

India Morning Report: Markets will breathe easier at 6300

Many market commentator see further moves north as highly unlikely and it does seem markets have done a fair bit already including the choppy start to 2014 as buying overwhelmed short trades. However one does not see any of the selected scrips losing much from current price levels. The Ukraine crisis fade had much to do with the afternoon bullishness and fresh buying will be allowed at lower levels in most of yesterday’s increases. Pharma and Infra trades may yet break out again with Pharma yet to take off, Cipla the ‘only’ big positive trade continuing to dominate sectoral picks. IT scrips finally yielded ground with HCL falling a few notches as market spine trades keeping interest in the stock finally seem to have exited the ‘always trying’ bellwether

New affordable housing targets in China as US and China complete their budget exercises point to the realities of the new post crisis economic melee as US Arms spending takes a backseat and China continues to increase its Defence hawkishness and faces increased executive flight risks from the Smog. Australian GDP gave the Asian markets much to cheer pre dating a secular return of investors to Asia even as China is finally deprioritised at some bigger investment houses

At home, one is still foxed by the marginalisation of LK Advani in the BJP as frankly NaMo seems a little banged up for the big job and AAP is well, a one issue pony. ( at best a canard) The fate of General Elections also thus has to be separated from that of the markets as India’s residual growth and any strategic direction will never be delivered by the Legislative arm given the state of our politics. Inspiration may be missing from the Executive or the Bureaucrat/Technocrat nexus but there is still momentum for the populace per se and India remains the best bet in global equities in such confusing times, making do with a much smalller stock of FDI for it knows its limitations. Our advantages in the English language could compare to an additional factor production given the dominance of Services and along with our expertise in more intricate subjects of the business management disciplines , we can well fashion as many competitive advantages any corporation needs to win globally as required Rajnath Singh returning to Public service will be NaMo’s other card but Congress and SP have got no leg to stand on even as the issue of the State’s division holds extreme potential before it also becomes a BJP manifesto dashboard line item.

And Nitish finally replies after 6 days on page 17 (TOI-Blr)

Seeing as NaMo’s other credentials being weak are still the best bet, Nitish finally gatecrashed onto national topics, catching his favorite Paswan in his horns. Meanwhile,  NMDC has corrected more than 17% and apparently has stable lows at 110 levels to allow further accumulation post the new CERC regime in progress with the 2014 guidelines. The Power quartet had a great start yesterday as expected and may strengthen the trend in the Power sector going forward even as cyclicals try to start back for the longer trek to the top uninterrrupted by market momentum taking the index for a roller coaster ride, including the Energy infrastructure stocks and the powerful Consumer staples like Bharti and ITC which arenot going to retreat in the bull scenario while remaining a defensive bulwark

Private Banks remain the most important component of India Bull portfolios with YES Bank leading the charge yesterday and Kotak taking a breather in the secular run. ICICI Bank and HDFC Bank continue to capture market share on and off the bourses from the embattled SBI and BOB pointing to the limits of an upward move in a side like PNB even in this critical move for the bankers, as PNB continues to show good profitability

Nadar is finally offloading HCL stock as his offspring looks to focus on the Education and philanthropy sectors even as both listed and unlisted Tech  and Outsourcing businesses battle the problem of employee commute in a society where broadband connectivity is unlikely to bring any solace or a formalised structure for the telecommuting options. India thus, retains one of the greater habits of managing to jump over bigger social potholes and non lasting technologies. ( in practice i guess with cities = potholes 😉

VIX trades apparently careened over from 15 levels itsel fin Tuesday trading back to mmatching US Vol levels at 14 as the Ukraine issue was wiped off investor tables.

The Great Indian Premier Tennis League Auctions

In other unlisted business, The mega sports franchises era continued untethered with Tennis joining the ranks of other popular sports making a commercial comeback as a four location auction saw  Mumbai grabbing the top three in Nadal, Djokovic and Andy Murray at $2 million each ( less than $2 for Djokovic and Murray)

Ecommerce has enticed Walmart to India too, even as PE players move on to above par valuations after a year of job cuts and enthusiastic middle/senior management recruitment at Management school campuses and Amazon opening its second FC in India in Bangalore

The Dell Foundation makes a return to Indian shores after the Gates Foundation confined itself to outright charity in limited indian programmes. The Dell foundation will be backing a BOP Private equity set up Intellegrow.

ET also headlines India pharmas second attempt to break into higher market shares in US generics in Complex molecules that could well go to the PE companies given the investment required and the uncertainty of time horizons ill suiting listed companies like DRL or Lupin.

Aviation revenue miles are likely picking up in the final month of Fiscal 2014 and Fixed income markets also likely to accelerate demand led price increases bringing down yields as Crude becomes a bear trade and Indian currency moves up on redenomination of the dollar forecasts down for the year in 2014. Policy Day in two weeks is unlikely to be busy for the Reserve Bank of india though the Central Bank may choose to exercise a rate hie whence the yields will come back to 9 levels before investments make a mark in the Indian recovery still flatlined below 5%

 

India Morning Report: Did investors buy into the Rupee last week, and the Suntory deal

Friday’s  closing rushes on the Rupee trade could be just another chimera as the China miasma refuses to scare foreing investors from China and other shallow EMs renamed MINTs. China also reported an improved Services PMI implying the trade situation could improve for it and its partners including Aussie, USA and India. However, things overall continue to look bleak for global growth as dependent on legs of growth in China and Europe.

Europe has been importing more, however, esp as Germany probably focusees on its own consumption for a small break after a Target imposed halcyon end to 2013. Rates are likely unchanged in Central Bank announcements and Global liquidity reprieve trades, may be ephemeral at best as Yellen returns to post snow recovery prognostications to hopefully continue along the same taper gradient $10 Bln in each policy date.

However, not to be confused by the Global Economy’s internecine interactive brusqueness, the India trade remains a leader for the Global benign trend continuing in Equities and HY debt this year and is likely to turn in better performances on the bourses than any other.

The 4.7% GDP score was not so bad except that it included at its best form, not more than 6% contribution from Services. As expected, Agriculture did not continue an extended rebound from Q2 and thus contributed to an overall disappointment for policy watchers with Governor RGR still on the edge of another couple of rate hikes and CPI close to plateauing out at a high 8% itself

Radico Khaitan is one of the bigger winners as the Equity trade in India opens to new bull scenarios, we choosing to watch after every 100 points as traders fill up the gaps and bears might give up most of their extraordinary gains in the following 6 monthsas they take each plateau of waiting for more investors as an inordinate sign of weakness or overconfidence having nbrought the hcicken count home to roost

Volatility remains at an extended low and the PCR below 1, implies one should batten down the hatches as most price levels on your choice investments would carry very little risk on sold puts . SBI and Maruti also proffer extraordinary choice to traders that need financing and are not selling puts ans positional shorts in both continue to dig for lost Mayan Gold, making it at least a year or 1200 levels before they exit with profittaking trades.

JP Associates may be out of the index but is a great plus trade ( opnly post redenomination of the Nifty) while Adani Enterpricses catches supplementary caucus support from the Adani Port bull trade. GAIL may still not make it to mainstrem positional trades or transition into a defensive but we reccommend buying the stock with IDFC and YES, while ICICI Bank and HDFC Bank individually will carry the Banknifty, PSU shorts making the Index tradea patchy non performing long

Foreign buyers saw $2.2 Bln in gross trading on the NSE itself on Friday. The return of bank investors and trading rooms including StanChart and HSBC to the bull trade on the Rupee, counld confirm secular up trades in Asia even as China gets ready for a currency depreciation battle. However, first order of business would be to observe if equities can keep up with the smaller selling that remains part of the trade in the first half of the week as markets start the series at fresh new highs of 6277.

The Sun Pharma and Hindalco trades should catch fire by the middle of the week in that scenario as mainline picks remain good for the goo but new buyers may not get them at better levels . Bharti , ITC and Bajaj Auto continue to hold strength in the consumer investments story and Services PMI returnign tot he green likely for 2014 means aviation, trade and tourism could critically support the good guys from here. The LIC and ONGC/OIL buys for BHEL and IOC are confirmed but sectoral trades aer non existent on either side. Pharma’s big week returning to substitute IT is the one certainty and not an immediate bulltrade so more consolidation is likely this wek esp if the Pharma trade does not kick in. The inevitable short trade on Hero as it yields ground to a bad February sales data will only land blows till 1850 levels as the news f the recovery should kick in the sector after new excise reduction and recovery in buying from March

India Morning Report: (Closed for Shivaratri) Markets hoping to be tested again at 6250 in the new series

At 6240 levels the market achieved yesterday itself, another round of consolidation is due for the markets and with the second round of investing in November having attracted Passive fund investors while the active foreign interests remain bought in, Indian markets unlike China batting on euphemisms and an opaque economy non responsive to new stimuli, India will retain most of the bull interest as it proved at 6000 levels and then two consecutive bump ups in a testy 2014 start .

The March F&O series may see more active Foreign interest returning, but it remains to be seen if markets can continue from here. In any case, markets will increase the propensity to remain flat and one suspects the new correction that laziness induces next week, may be short lived till a volatility of 18 is reached before deep corrections are completed in individual stocks closest to heavy overvaluation, namely the SBI, BOB and other PSU Bank trades among others

I don’t believe India’s increased short term foreign debt situation is causing any fresh payment problems as Oil has decidedly planned to start a bear trade globally and in India and hot money or NDF mispricing does not seem to have the desired hook on the trend, as markets might indeed get a positive pricing kicker from the NDF markets on the currency as long as Oil trades lower and a commodities bearish cycle licks in across the broader spectrum , esp those in demand in China where domestic production has not only suffered but been officially deprioritised.

Indian Fixed Income Markets seem to agree with Governor Rajan that CPI may not trend lower as the Governor sets his sights on an ambitious training target program for inflation thru required government diktat to support the Urjit Patel report. From all signs, however RGR is a pragmatist and given that India will anyway continue under the spectre of high 9% bank rate scenarios, additional rate hikes may actually hit more targeted spots on the consumer inflation , but banks are unlikely to have increased transmission of the available liquidity to the broader markets in terms of reducing extraordinary deposits and increasing effective velocity of money as the investment cycle awaits other signals. RBI also completed paperwork on CDS issuance in Corporate paper ( IG and HY) while the market continues to look for th esecular India pull to deepen India’s debt and Fixed income markets

Expiry 2 pm trades on Wednesday had not seen a sharper cut, but the markets could easily turn any new 6250 positions of sold puts into short interest could have tanked the market back below 6200 levels to watch for as expiry otherwise is a dull newsless affair, the above discussion being mere undercurrents the markets have faced for more than 2 years now. Markets are closed for Shivaratri today

Energy cos, like the OMCs retain a default rating of BBB- . Sahara promoter, Subrata Ray got a rude shock on the delivered judgement yesterday as the court issued him a non bailable warrant and ADB signed a new road project in the backwaters of Chhattisgarh.

India Morning Report: Foreign Interest steps up to confirm the boom to 6250

FII buying, now adding debt segment purchases over the last week follows on a 10-12 session consolidation in the current play on Index Option hedges and Stock Futures bidding they have initiated as a class. At this juncture the trend needs further confirmation too and borrowing on the same strategies would make much more sense in a secular trend, strengthening their overall importance in the market as they are indeed the larger players right now, the DIIs having taken a counter-cyclical opinion as always to balance the steed and likely not buying beyond the coming 6250 levels.

Even if the DII opinion does change for all investor classes buying together one needs to remain watchful and the markets will continue to strengthen their skew towards rewarding longer term investors despite the volatility at 14 levels, an extreme low for the Indian markets and all increase in volatility negating any good part of volatility. I.e. The future of the stock markets is now interlinked with all trading margins being defined by shorts and all long gains going to investors if we just look at the definition of volatility and its reward for risk.  A new Liquidity index in the Derivatives segment of the NSE consolidates price trends across the 15  most liquid derivatives underlyings and the index is now 6 months old.

Trading longs again probably negate all their advantages with a backing of almost ready to be shorted posts like L&T and SBI, which is the reason I brought in this more technical discussion for the morning Report readers. Markets open near 6200 levels on the index as markets broke out of the bear hold by breaking 6100 earlier last week.  To fess, I was still hoping for India to prove Good volatility and I would warn others  naive enough that this is not going to be so in this rally.

PNB will likely respond easier after the call auction ended as SBI investors back off and PSUs including larger entities like Bank of Baroda remain short fuses. Banknifty remains mildly positive, lending health to the trend going up and consolidating as India outscores in the Gloom quarter of 2014, down apparently only 2% compared to other Global markets and Dow having a nice return back sustaining a comeback as snow fades away in Neverland, USA, USA continuing the dream recovery.

TCS is due for a rally but Infy’s rerating looking to ride up to 4000 levels seems to signal the coming badging of the sector as a passive defensive again with the Rupee making a comeback

HSBC global results were a great comeback, though analysts following the stock did not expect Q4 to flip globally into lower revenues and while the bank remains the bigger player in India and China, it is focussing on the UK market comeback this year, UK also having ducked the continuing gloom in Euroland.

In other unlisted business, reusing quick reports from Trading Economics, FDI inflows are expected to continue to be a strong $2 Bln a little over 50 times lower than neighbourly flows into China, but in terms of Western FDI , that number is much more equitable and ocoupled with a domestic market and domestic depth in India makes for a more Economic bang in the Indian recovery seeding which now strengthens into consolidation.

Ford is ramping up its small SUV production for Export markets this year in Chennai and Nissan and GM may be forced to follow earlier than usual in 2014 itself if the global markets have indeed completed a overall cauterisation of their expectations of a bullish recovery breakout.  They have earlier over stepped in 2010 in equities and frequent breakdowns of recovery memes since 2012 have indeed made such prognostications more cautious , lending more credence to them for investors hoping to break new ground across Global opportunity.

The G20 Australia 2014 remained a hub of big activity last week. Despite the almost fully ‘denatured’ (pardon the pun) irrelevance of the G20 ( compare with a technical irreverence like applying the law of diminishing marginal utility here, and I am on holy ground) , RGR did force the conference into adopting a aggressive reconciliation towards supporting global monetary policy coordination and the Rupee has responded strongly this week. Rajan said , “International monetary cooperation has now broken…”

I like this definition for India’s new apolitical elite, used for RGR (link): impeccably credentialed , elite.

Meanwhile, polls in Delhi confirmed AAP holds sway in any new election. Modi’s claim to India seems to be weak at the point of Gujarat vs India Inc and if Congress does consolidate around the thoughts of a Jairam Ramesh (IBN Live, Sardesai interview) it could have a real chance of at least getting the right issues to coalesce around in the campaign for the General elections. On separation of Telangana and Hyderabad II into separate states, J Ramesh reminded the editor that State reorganisation is an unqualified mandate. I recommend that the word juxtapositions apart, the only way Telangana becomes a reality and the reform beat maintained is if the issue is indeed followed up quickly with active voicing of the cause of breakup of UP, the monstrous state with 75 districts and 800 blocks. Also, yes Economic development in TN and Kerala have been equally promising if not better than the Gujarat model and this could definitely weaken the economic bloc coalescing around a non sartorial, non erudite Modi who seems to be potently  walking around with a foot in his mouth as much as Rahul himself. I believe Advanu would have been a better choice for BJP too. And Congress , waiting to welcome an even younger lot with Rahul who may not all be able to pull off tags of ‘ able administrators’ make it a  ever extending churn block for India Inc ready to forget any hopes of a consolidated political establishment as the Open democracy treads the path to a Top 3 GDP country by 2050

The US mid terms similarly could still turn out to be a facesaving exercise for the Democrats reeling at their lowest ratings just before the mid terms and the chances are about even to Rahul Gandhi actually coming back to lead He will probably take a back seat from Parliamentary politics if his party does land rights to the Opposition benches.

India Morning Report: Markets retain new bullish memes (again to 6100)

Markets will close above 6100 again but later afternoon sessions may see more enthusiasm as good economic data could be followed by expected passive investor moves and new EEM flows to show likely coming trends.

HDFC Bank is up and out of the 600-680 move with new targets to probably near 750 levels. Banks will expectedly support the next upmove too, ICICI Bank having made up new routes to at least 1030 levels, probably 1070 A look at some fund portfolios , interestingly shows Axis is indeed out of favor and Infy in a different block of memory unlikely to provide any traders with gains or hedges as it corrects to 3600 levels. Apollo Tyres, India Cements and JP Associates added open interest yesterday as main trends broke tin the nifty drop from 6150 to below 6100 levels. Sree Renuka stake sale does not seem like a trade at all, being a long known and expected unloading by the promoter. Open offer is apparently at a discount but Wilmar is immediattely extinguishing debt worth INR 12 Bln. Bharti is a great buy again in positional trades from 295 levels. Bajaj Auto will likely continue to 1950 levels for a stab at a quick double (century) The Adani Port move you heard today is so true,its the INR 80 Bln JNPT contract.

Japan is celebrating a bullish candle early in the morning as Chinese manufacturing, along expected lines, brushes near contraction levels. Fed minutes from January showed the Fed agreeable to  changing the unemployment targets and thus somemembers eagerness to discuss increasin gthe short term fed rate will likely be ignored as markets start up after a 5-10% cut since the new year. However on the flip side for India, the risk of an inflated Oil bill has increased. External Commercial Borrowing Markets are open for India Inc to increase disposition from, the CAD averted, but the small packet of Coporate External debt, now unsettling India policy markets. Fixed Income Markets and Currency markets would recover from yesterdays dip as the recovery unfolds into a more tangible item of import than just hope traded by domestic equity and consumption markets. KKR is also providing transformational capital in a new (presser in ET) bid, that could soon be emulated by SBI and ICICI as restructured assets hit a new high in the banking system.

A new endeavour at the Central Bank could see proposals to accept some or all the changes reccommended by the FSLRC. The recommendation, are likely to further aim to bridge the gap between Private sector growth memes and the larger PSU counterparts with capacity building and skills development (HR) guidelines

G20 is up later this week, IMF taking the opportunity to underline that currency concerns remain, obviating any choice of policy leadership for India at another G20 edition, India the easiest dog to put down in the revolt of the EM manger. ( twisted, yet really twisted, paraplegic choice and execution of simile (not stimuli) The Ukraine Hryvnia, the Korean Won  and the turkish lira are likely to be the largest exceptions not part of the mainstream in G20 trades and will be dominating the agenda, not to forget the Singapore Dollar which remains a unique economic substitute for the whole block ( try a whole fat analysis) and mexico a member but likely to stay silent too as Australia lead this round (2014)

Jet Airways’ loss in a sedate Airlines quarter, even as its etihad deal now hangs fire  at the Compat ( like the CCI but just the Appellate Tribunal) Jet has loans of INR 104 Bln as of this quarter, hardly $1.7 Bln but apparently 7X of the other nearest competitor. its market share is now less than 20% as it waits for deal approval. The INR 2.85 Bln loss a INR 3.60 Bln deterioration from its year ago profitable quarter, leaving unlisted IndiGo the winner with Sale and Leaseback economics still leaving maintenance bills manageable and the airline scoring on all the busy metro routes. Air Asia is likely to change that if it is allowed to fly. That would be concomitant with changes in regulation allowing all these Indian fliers to book international routes without a track record’ compulsion(Two dogs in the dogfight, Indigo and Jet, why are others even flying? – significant business case and consulting win with free markets allowing portfolio rationalisation).

And as Facebook found its Twitter-alike acquisition for mobile messaging that paid its promoters $19 Bln, India media look to another expat manager in the pile of 55 employees for the India story and there is as usual one solitary reaper, digging away in that bee hive(ant hill)

Kiran Mazumdar Shaw has taken stewardship at IIM Bangalore as Chairman of the Board . IIM also recently saw a new Director joining back from Boston University ( Sushil Vachani)

In other unlisted business, why wouldn’t a new Pharma business story with unlisted Capital or a PE try to fund a great Pharma business , not from a decade old Pharma attempts in Hyderabad and Ahmedabad but elsewhere. Cost of Equity in India is no longer that cheap as the Pharma market still offers unique advantages to scaled businesses in Export markets and domestically, while current entrants are likely limited by the $500 mln market for each generic molecule,a similar cap for the domestic market too, based on a limit to branded volumes in each drug. The model would definitely be more Chinese if it happened but it could really expand the market opportunity both at home and in the US and Europe

How about new moves in the big retail pie, which despite its propensity for political disaster, is still available in at least 4 states. One reason, hitting continuing entrepreneurship as India stands on a big comeback, holding India back would be the virtual withdrawal of Foreign banks from India, assets now down to 7% of the banking system, esp the unlikelihood of a public markets led such revolution makes it imperative that the easy flow of foreign capital to India be capitalised on.

India Morning Report: Les deux ex machina, et vous? Les fou de cirque n’est pa!

In singular, it would be the Ghost of the machine or the fool in the circus. A market of course has more than one of everything. Apart from that there is cricket too, where India turn a win opportunity into a clarion call to stay awake

Markets ‘jumped’ overnight to 6080 levels at the close, with US markets closed on Monday. The VIX trade is back again, 2 weeks from expiry, ( though the last week in Indian monthly expiry is usually the busiest in contrast to more deeper US and European markets that trade weekly expiries and expire by the Friday for Third Saturday in monthlies staying untraded the last week as most of the busy series are in the “next” month or new weeklies.

The banks are back with a bang but the Bank nifty trade is a good strangle range pick , even a sold straddle will give you a decent range (as Ashwini reccommended yesterday) as PSUs and SBI get exchanged out for new buys in ICICI Bank, HDFC Bank and Yes. While one is not sure of Kotak, PNB definitely has enough detractors yet despite the great performance with controlled NPAs and fully provisioned balance sheets at begin of year allowing improving provisions while releasing profits. That means PNB might again be a buy after the big run to 550 levels is cut on profit-taking.

I”d try a short in Kotak and let you know what happens. IDFC, Bharti  and ITC are great picks and starting from the bottom of the trading range while the Power NBFCs are ready for a move as well.

Bajaj Auto gets first mention on the Excise giveaways from PC’s last presentation, which was technically just a Vote on Account.

Excise Cuts on SUVs and Medium and Large Cars to 20% and 24% mean the gains in market will start for all automakers including the listed Maruti. The markets preferred Hero management coming out after the excise cut, but with Hero also biting a lost mandate for a grip back, Bajaj is still better off with Egypt exports hit by the import ban meaning less than 100K units to be recovered from the drop in excise duties.

The Indian Macro is easily the best poised for most fiscal adjustments to be burdened at this time and the VOA optimism could well prove to be PC’s gift to the parent Congress party in its new roles after the Elections as a fiscal deficit target of INR 5.3 T is not a shakedown or bleeding optimism in the projected Indian Balance Sheet. The nominal rates of growth at $1.10 T base in FY13 we assume may yield $1.26T and $1.44T targets for FY14 and FY15, that may very well be any other number at the realistic 11% nominal ( achieved in FY14, LV-CNBC) and 13% in FY15. However the 4.1% target look daunting esp as Food subsidies have been duly increased to INR 110,000 Crores (1.1T) and Energy subsidies understated at even INR 650 Bln (65000 crores) with INR 850 Bln scored in FY14 after the deferral.

A great Fisc performance thus at 4.6% will be greatly rewarded by the markets esp that includes INR 2.46 T and INR 1.8T only from Tax revenues but shows 100% achievement of Divestment (INR 400 Bln ) and Spectrum sale targets (INR 600 bln) and the new government make the usual drop down ravines for itsel fin beating the other government’s VoA, before trying to dump comparisons in the new Budget post general elections, All inall, not a great day in parliament for the new government as it would never sound better than boring humdrum in the whirring engines of growth that have to take over this year. A last note on India Macro stems from the continuing dissociation of Investment levels in the GDP at 34% from the true investment which has barely just hit 5% growth and mostly in the Consumer areas. Unconstrained Bank lending continues to remain available in India and interest rates are likely to continue down from here at a fair rate, allowing Fixed Income portfolios a bigger boost

There however is no comparison of the difference between any remaining expectations on Infrastructure investment in India and real participation to any other subject to kickstart India’s new millenium story, yet to begin after in stalled in 2009 and infra funds have to prove versatility in financing the new projects still blamed on bureaucrats or the Congress. None of the private cos as the markets have shown they realise, are in any position to take new project debt into these balance sheets at GMR, Relinfra or JP Associates and conventional bank lending is not the answer for them

Kejriwal and AAP brought the AAM AAdmi back but failed in their mandate by leaving from the aisles before the start of Act I.

Energy cos are getting the best possible deal with INR 1.1 T in payments despite the deferrals with more than INR 800 Bln already paid out , so they should have already been discounting much better levels, at least 250 for IOC for example as the fiscal did see a consistent unburdening of the energy infrastructure and a more rewarding marketplace, even as the Power regime gets more competitive

India Morning Report: Vote on Account does not offer anything by definition

Not to be dismissive of other efforts to research quantised discernible notes in the market, we have beaten others hands down with the preciseness of each sentence seemingly in a complicated human language. And we are not artificial intelligence, just something more  populations can understand. However, that is all a predilection of becoming  part of a deluge unless we can remember the basics. Like 6100 yesterday, 6050 today and stuck at 6250 again. Or for the currency it is an even simpler, 62.50 and broken till 63.00 now returning to break 62 on the upside, waiting to break till 61 to start a trading move in that dead market Foreign investors pass by with just a tenth of the allocation to the China which would be enough impetus for investment I guess.  That is adding the currency noted going out of circulation bringing in additional thicker statistics streams of returning investments instead of churned velocity without disposition, which remains the only unexplained flow for many developed and EMs. Meanwhile India posted a latest velocity of another 12.5% and growth of 4.9% kept WPI ticking under at 5.5% , inflation at 8.8% (and still high to merit 8% rates for the RBI policy (India’s Central Bank)

Now to get thru the market open again, HCL Tech is done, L&T is not coming back so soon, having clarified there si no better financials in the old heavy pipeline they keep carrying in New Orders. However, the note of caution from Kotak does not translate into a correction in the markets, as it is a known flaw, using subsidy deferral on the way to an improved performance and as we have always maintained to PC’s weaker arm, its not anything to forget to talk of.

Banknifty is at 10,250 but their seems to be a dearth of substitution for older SBI folios, because SBI has to go down to 1250 levels ( broader guess) bottoming out near 1280 ( our estimate – not to be confused with the statistical mark of MLE). HDFC Bank is up and out of 640 levels but no 645 it is..Pharma should not have been a defensive trade, esp as Bharti and ITC remain powered on apart from the IT scrips which can keep current levels once HCLT returns to 1400 levels. I have faith in ICICI Bank surprising in the post speech trade if India’s Financials are surmised as feasible, though it is just necessary expenditure for the six month period going forward and the Macro economic review has already been celebrated. A smaller gross borrowing figure for instance , may not be possible as that may be the only accommodating flag for the noise of governance to come. Also it would be a shame in my mostly moderate opinion otherwise, ( cooked to become the mainstream o-pin-onion like other examples of better business leaders than the half cooked Modis and Rahuls of today) if PSU banks join in the rally just for their survival has been noted by additional Capital for FY15 in this month again confirmed in any allocations. YES Bank and IDFC remain mainline (first leads) not for this bull segment but for the secular bull cycle that remains.

Nifty i s actually having a hard time at 6080 and will not drift down but 6100 is the new bear dominance levels, mostly because the media presence as Citi explains ( in that elusive to understand bid for retail investors here) requires reusing old hat ( from this trend) and the market tone is still as 6250 the normal would have been but that is a likely illusion in the distance, with markets using the distance again and again to tone down , letting shorts bound them up and show the futility of expectiung an overnight renaissance in the Indian Fixed income Markets. StanChart in the meantime has sell side macro posting the VoA precursor on ET Now since AM, looking at Government freeze to show the numbers.

I’ll leave that unedited para  in, just because I have things to do before I come back to edit it. It is just a Morning report. I may not be writing in the vote on Account speech or the dictum,

The markets may not break down, mercifully, for lack of reason to celebrate, a not new feature of beating down equities at their own, esp cognisant to those who bank promoters accounts and promoters’ who play their equity to death in a monetary degrowth, which now runs an extended life with a defined taper even with a reduced nozzle draining out the dumped in steroids, in the recognizance that US was critical and that most of excess liquidity remains excess. I wonder if one coming from my free markets background can make enough morbid adjustments, but one knows one must to explain how taking care of the trifecta is not done by just that phase of liquidity and now by the withdrawal of the same. One does note also the 16 mln unemployed uncounted in US estimates when declaring a successful 6.5% unemployment statistic from the same.

I like Crompton Greaves for the capex trade, old Mid Cap plays will be sideline for the 2010 IPO brigade in most cases. The fisc will score the most points when it reports a positive surprise. The FM should not aim for FY 2015 without thinking up options and should look to a fat target as we have probably over reached in the current fiscal itself. I would even let him off at a 4.5% target and that will not get BJP any further advantage.

Post Vote On Account satisfaction, Congress is going to be a quick disappearing loser in the elections, BJP winning it however would be disturbing not to India’s soul, cause there was not any in the conventional modern world definition of it, but it is can only be a rude awakening to India in a few years, however growth will churn in any government, because of the strong basis on which we stand up and shout for more, and the bureaucracy , the technocrats ( non outsourcing) and Private investors / Business will remain the agents of  this growth. Bank lending will never be a constraint and there is no wishing away corruption. One can even learn the vast cycles of it in local, regional and International Sales processes, and is not a equivocal nodding to suffering , nor a socialistic bite of suffrage that will make it the topic at the corporate dinner buffet.

explains: in the middle above is used as colloq/sms for explanations

India Morning Report: India’s flipsyde from global correlation markets independence

All its successful recognition as a unique misstep of policy in trunk Asia investing, still leaves India a unique place in the sun, inviting specific negative correlation from trades and investors in asset markets, marking its independence streak. However, this is just a improbable hypothesis and an unlikely share for the Morning Report (in this form ) except that Dow’s 100 point rush closing yesterday is overshadowed currently by India’s own woeful exits with the Nifty streaking a negative 80 points making the Rupee start this positive Asia morning at the bottom of its current range. Likely this is the stage NDF price discovery also tail lights trends to be in extreme discovery actions and the Rupee easily could have been at 61 levels here with trade purchases and sales in the same range as earlier years Gold would be thus in a greater rush to complete a mini rally in the reduced taper euphoria.

I am apparently getting ducked on Kejriwal and Pepper spray much like I expect Independent Women careerists to, in the office today.  But markets could have easily ignored it and celebrated the successful Spectrum auctions and the India recovery data linked with global news of India’s importance in winning 2014 portfolios. India CPI ended under 9% as the urban CPI receded well into the background while IIP was almost positive with its 189 index score a big jump on the previous month apart from the strong consistent jump in utilities.

A secular Telecom industry uptrend excluding unlisted Vodafone (in India) , is likely after the media rounds prepare a consistent analysis of all players, both Idea and Jio(Rel) having bid INR 100-110 Bln, Jio adding monopoly of 1800 waves in its repertoire against Bharti which with Voda, focussed on winning back existing markets and prepare grounds for improved pricing. Idea having won price conversion over, is unlikely to create another loss making value bid in the retail markets.

In more humane form, India again loses its advantage as it starts off the recovery with an expensive rate hike, a shallow debt market and a doubloon of proprietary traders mesmerized with no good corporates and an officious monitoring and handshake philosophy engrained in Asian culture its common denominator with other closed end markets allowing a 5X US Dollar impact and shallow development hubs. India’s WPI announcements are likely to be near 5.5% .

SBI reports midday with another INR 6 Bln in provisions for pension, INR 25 Bln increase in provisions and INR 85 Bln from an ever expanding restructured asset pipeline in this quarter again but the stock will react further post earnings tipping off a expectations rally at its nadir as it comes out improving the NIM expectations in a better rate environment for lenders from 3.19% in the previous quarter.

ONGC proved great results yesterday along expected lines, profits to 71 Bln , sales at 208 Bln just 1% off last year’s data in the 30% increase in Net profit(28%). Realisations will improve substantially in the current year. Q3 realizations having dropped 4% at below $46  before depreciation earnings. Subsidy expense was more than INR 100 Bln up 10% making the 30% jump more creditable. The company may however get squeezed this quarter as the government defers subsidies with the fisc coming into an expected range.

SEBI added lines of caution on Executive compensation, independent Directors, Women Directors, public succession plans and a mandatory whistle blower policy into the Corporate Governance Code. Along expected lines, The listing agreements at the Stock exchanges will be updated immediately.

Employee stock options have been withdrawn for independent directors and nominee directors are not permitted the dual role of independent directors (DNA India, ETNow).

IT’s attempt to woo the markets with forecasts are likely to fall on deaf years as markets already topped the range on a half rush for new Rupee levels now more likely to be equated back with outsourcing jobs as Pharma breaks out in a good couple of years.

Apparently the stock of debt in Telecom, that can be shared publicly is more than INR 2,000 Bln.

In unlisted business, Kiwis have been bundled out for 192 and India will make sure it has one overseas win in its belt this time after a thorough bashing in all forms of the gamme. RCBs fortunes will be interesting to follow in the IPL with 4 marquee players and none of the local stars like Manish Pandey and Karun Nair.(TOI Blr) Lankans were ignored for an English Summer. Faf du Plessis went back to Chennai as the Gurunath investigation proceeds. Ben Hilfenhaus, will be the likely winner in relatively new entrants this year with TV Networks and Captains working towards the same objectives, Beuran Hendricks winning the Owners’ curse taking in another quality seamer. Dravid shaking down Nathan Coulter’s bid agst Delhi. The list on cricket next atill includes only CSK rosters, duh!

KKR had some money left over too after picking Manish and Debabrata (Ist Round Mitchell Johnson) while Kings XI and The Royals probably walked off , purses safe from prying eyes. This time, even as Shikhar Dhawan is down under, Sehwag bats for Punjab who have Shaun Marsh. KKR got most of the RCB slough offs after the  Fished Fisher dug himself out 

Royals kept Watson, Binny and Rahane, while Mumbai bid in Corey Andersen, Hussey and the Zed.

India Morning Report: Agricultural subsidies are a Global Constant, bullish trend remains

U-Car 2014

Sugar Export markets ar unlikely to ruffle any other segment of the market as the issue of agricultural subsidies was settled for good in the latest renewals by Asia and EMs led by India and continuing noise on farm subsidies are likely to be brushed off by most including customers of Indian sugar. The government has approved a INR 3.3K subsidy for 4 mln tonnes of Exports of sugar in February and March.

Of course, India’s battle with Export competitiveness is past most winnable battles and we are just increasing our tendency to be a worthless ( in terms of premium) commodity exporter, as is the wont of most resource Economies as well with far more disastrous Economic consequences like Brazil and Indonesia.

India will never be confused with the likes of the same despite setting at 4.5% and 4.9% growth in two consecutive years of GDP growth and a 25% decline in currency repeated twice in a block of 10 years, a far mitigating circumstance than Brazil or Turkey’s Economic history and one could have also included China in that list but for the almost independence of policy and execution in a democratic form of government.

India equities maintain a bullish trend ( to 6100) as a cognition of far reaching reforms did barely enough to pick outstanding dozen or so large Cap companies, usually more than enough for any broad market to survive.  The missing depth cannot come overnight and Investors are more than satisfied with the new crop of 2010 IPOs in the Consumer sector including Thomas Cook now dealt with, and Page and LL continuing older trends. That also means scrips like ttk , Titan and others that do not represent the broader market will not recover interest and those with very wide off the mark correlations to sectoral growth will not be propped up despite weak governance and order book issues at L&T and BHEL. Crompton Greaves trade is likely to sustain as the Investments and Capital Expenditure segments of the GDP stay in focus.

The Rupee started early yesterday catching the advantage of depth and domestic markets back to the Indian Debt and Equity capital markets, as a US long term bond auction also registered a new faith in reduced tapering promised by the Fed, allowing Global investors following the risk money to come in without the wait and watch chip reducing their participation

Citi is betting this will transpire in India having come out on the CAD front after extended delays and qualifying others dependence on Foreign debt skewing the CAD dependence factor, however it likely to be secular Dollar dependence worries for such resource Economies which will again qualify India ahead of the “EM Basket” and China as well in this year, though on a smaller order of magnitude of FDI flows.

I would also think the Tata Motors bull trade is vulnerable to falling off sooner. However, immediately Cipla’s results have extended the trade in both Hero and Tata Motors apart from individual stockpicking decisions.Cipla reported margins that are 600 basis points lower.

India Morning Report: Pacified by US liquidity, markets gets on (to 6100)

The Nifty is up 25 points in morning trades, taking a 6090 clip to test the 6100 levels though new buyer interest is looking iffy. Selling and profit taking orders have topped out however, and Banknifty has resumed a positive bias though a trend is yet to form with the PSU block moved aside, the index being a traders” delight esp. with shorts on Kotak pressuring in house support

ICICI Bank is up 2%, HDFC Bank is in the middle of the 600-680 range strong as ever. Tata Steel continues down, renewing its correlation charts again with Ranbaxy even as the Steel sector’s fortunes have brightened. China’s remaining the question mark has likely provided long term investors with exceptional opportunities to accumulate at a stable price band.

ITC is looking like evaluating 325 marks anew for a new rush as it is safe in being a bull scrip but there is no current trade in the scrip. Bharti as expected likes 300 levels pretty much for keeps except a small downside risk to 290, and informational marking of the stock is likely to show up more often from here.

Bond investors should be interested in this Bond market but again, a short term spiking of yields is likely even after docile 10 month trade data. Gold and Silver imports have caught up to almost 2013 levels at $1.72 B and noise demanding removal of curbs has likely increased on the Central Bank. Trade deficit for January kept the $10 bln average, but the good story is that Exports at a healthy $27 Bln (26.75) are a significant improvement after being tied to a non growth $25 Bln mark and Oil imports are under $14 Bln again. Going forward the natural impetus to India growth is likely again multiplied by a continuing dullness in Oil prices and Dollar inflows may well continue headed home in the 9% yield scenario beating a few HY options a s well

Investments promoting Indian GDP growth do not look like having grown past the 5% mark. IT is buoyant on 2014 prospects but headroom is limited except TCS, well corrected for a move back to 2300 levels. I would have thought FY16 Estimates would show the gap being overestimated currently by the market at 14 multiples or thereabout (FY15 multiples are near 17)

Other Emerging markets are likely to cede to India again in 2014 as Janet Yellen looks to fine tune the taper design with a smaller cut in inflows going forward and Stanley Fischer is confirmed as Vice Chair.

Indian Media sector is probably looking a little tired at the bottom of the cycle, with IPL advertising revenues likely to exceed expectations in an overseas edition. However, in unlisted business, more gains are accruing for digital movers as E Commerce is currently buoyant with PE funding.

“Winners Curse” by Goldman Sachs analysts gets a popular break in the media for the coming price wars but the auctions process over the last 2-3 years more importantly showed businesses do not overpay for such commodities. Auctions lasted 6 days as of yesterday’s reports for INR 600 B inflows. Investors may take hope from Sustainable pricing at Bharti having lasted 2-3 quarters surviving on minutes and ARPU metrics. Both Idea and Bharti will be formidable to beat in Data for newcomer Reliance JIO which apparently has bid nearly INR 30bln adding reports in the ET on total investments. Vodafone , as a 100% business make the foolishly high premium move again to start off The Hunger Games

Maruti may be ripe for fresh shorts again in the Auto sector as exports volumes increase at Ford, GM, Nissan and VW. The markets would be increasingly straitjacketed on any up and down moves till the Vote on Account announcement and are thus more likely to be a volatile move on announcement, esp when the expected :no action: status from the FM is construed as a big disappointment.

 

 

 

 

 

 

India Morning Report: Tata Motors rebound, Markets still headed for 6100

The rally  in Tata Motors has been on and yes we would still be advocating fresh shorts on the stock. A bonanza in Tata Motors on JLR gaining strength remains the story of the day, with no news on bank licenses. Anand Sinha apparently is staying on till April just to ensure things are not done in a tearing hurry and news from yesterday’s session is awaited.

JP Associates apparently been in a two stock portfolio with Tata Motors, dropping precipitously even as Bank Nifty starts the day at 10250. Results from Dhanlakshmi Bank were not good. ENIL(Radio Mirchi) encouraging and TV18/Raghav Bahl also encouraging

JP Associates apparently could not manage earnings expectations well, leaving doubts if there is more to come inn pressure on the bottomline

Bajaj Auto is up and PNB is holding 550. Crude prices seem to have been exceptionally buoyant on the sly and a good bit of short is coming in Oil futures. The markets are still headed north as broader Bear strategies continue to create space for buying in the selected folios. Sun Pharma seems to be good for being on the buy list even at 624 levels. MCX and CFTC in the meantime cannot do enough to bring confidence back in the largest asset trades

IDFC and YES are as  good as Cipla, Lupin with Glenmark and Cadila  making a complete portfolio. Longs in SBI need to continue to be careful. Shorts in Kotak remain exclusive in the banking sector holes. Jyothy’s EXO round seems to be on a dho daala spree.

NMDC raised sales (37%) and profits, 20% on iron ore comeback

Sells on Bharti Airtel are going to be sad fails at  303 levels with the stock likely making new support at the worst at 295-98 levels Buys on IGL are not exuberance based alone and shorts are ill advised

ET Now’s suspect list for the Daily show remains ‘Pakau’ and uninspiring relying on Mitesh and Ashwini ( Bear Mama?) . CNBC 18’s Top 10 feature at 8 am is a great show.

HDFC Bank is in the middle of its 600-680 range and ICICI Bank well priced around 970 levels before index action takes up one or both the stocks. Pfaff on the winner’s curse is not going to make the real price degradation in the retail Telecom market go away. Telecom and Aviation have historically proved unprofitable with volume players shutting out sustainable pricing windows and Reliance JIO is again going to score the walls with ugly graffiti for the search for BOP without profits

India Morning Report: IT’s missing pizzazz, Auro Pharma strikes Cymbalta gold

Courtesy: BioSpectrum Asia

While the markets renew interest on Friday to get ready for the battle of wits at 6100-6150 levels, Banknifty has moved into gear with good boy PNB ceding its additional upside from 550 levels and SBI continuing down near cracking below 1500. Private Banks see Kotak going down too with Marico and Godrej losing the barely viable Western(Maha/Goa) branding attempts , consumers rejecting being shortchanged as a way of life. That leaves both ICICI Bank andHDFC Bank with YES and probably Axis but for its NPA woes. Aurobindo Pharma’s wins were mostly likely for the gains in Cymbalta and that’s a big molecule to crack.

The Foreign investors however bite into its market pie despite a 10% indicated gain at the open. Jubilant Life is also returning 3% at the open. In Banks, as desired by the broader markets BOB and BOI have also been shucked out, though the turn of events has apparently got Ashwini and proprietary traders’ older generations into a tizzy in the markets proactively readying themselves for a blood bath monday

Bullish picks in YES Bank, ITC  and Bharti continue to plough open interest as short interest is extinguished in droves before a new bite. Shorts were down 10% in REC even as PFC stole the limelight with great scores , unfortunately pushing the Powergrid story to the back. The Power and other infrastructure stories thus remain orphaned by the impracticality of raising larger equity or single entity debt for the mega project financing requirements of India Inc and specialist Finance like IDFC instead gets more important not less.

PNB remains a buy, Axis will probably continue down with BOI, BOB and grandpa SBI. The correction in Power Finance is probably understandable after the big gains overnight. Ambit Capital again agrees with us on the rate cuts remaining in RGR’s coat pockets to conjure due braking for the inflation express.

Bajaj Auto is back again but pairs would require new designs probably mixing Tata Motors into the trade as Hero exits a long term bear view on the stock. The Bajaj Auto story as pioneer however, much awaited by shortchanged Western region industry, is definitely back with a bang along with banks, with performers in banks waiting to be rewarding after marginalising of the Foreign banks in the Business and Consumer sectors

MNC Pharma will probably get into this rally for more than spectator gallery participation. The Infotech trade is unlikely to be back though opportunity for shorts in the sector or on the flip side for cadgy immature ET reporting in print is probably extinguished (opportunity)

Spectrum auctions, unlike reported yesterday have indeed turned out to be an exercise in budget restraint , bidding well for the Indian Telecom sector as Vodafone returns as a 100% owned business. Total Bids have still brought in the desired INR 500 Bln per budget targets and it was a big ask to have completed successfully with the prudence now reflecting in Telco strategies necessitating the delays in the process where Government was on the verge of bankrupting telcos with its greed.

The Gas companies will be on the good side whatever happens on Monday and some bad boys like Jet Airways have probably bottomed out while midcaps like Talwalkars, Prestige, LL and Page continue without breaking even as Pizzas break speed with Pizza Hut taking back 30% growth on completion of capex spends in new restaurants.

Thomas Cook and Sterling remain a bad story post merger with lots of work to do including printing restated financials, probably still required once the combined operations on board. The IT clawback is a temporary mirage and the sector should be avoirobably hiring plans will be postponed again as the Visa sanctions come back owith immigration reforms on tap in the US

If indeed Bear on Monday , one should retreat into Auto and stay invested in quality stocks identified here over the last year

In other unlisted business, Twitter results serve as warning to those assuming bigger volume pies from the SMAC crowd, the social space inherently low value except for big advertisers and Corporate Business with Facebook and Linkedin

Look ahead to a grand theater attraction as Disney’s Frozen takes the world by storm and ESPN after global success proceeds with better redefinition in India as well. Time for someone to get another update from Aubon pain and the QSR ilk?

The rupee is trading consecutively improved levels at 62.30 and yields are still hoping to cross 9% apparently though if we start angling for ECB debt we could score tighter spreads and renewed growth could indeed be aan easy story again for India Inc

India Morning Report: There is no hope trade in sight

But I’d say keep accumulating as the indices break through a critical 6000 mark. Many blue chips, like in global markets offer extreme value in buys even as the speculative trade fails to take off on a delayed recovery.  Gujarat’s downfall over the small matter of a receding poverty line not helping the cause of the markets rich BJP is a puerile coincidence for the markets, but correspondingly there is no Congress faction left in the markets to buno the tanabana, Markets selling the stable BJP proposition backing out for an increased negative momentum(undesirably sharp)  on the downward side

The IT trade coming into profit taking for the almost first time except for a pre results redenomination, there ae buyers out there who are ok with the premium on Infy to a low 3475 market price and HCL Tech is good for a move of Rs 100 or more. Thus if all sectors move together like the Tuesday open, markets could see almost unheard of hlevels receding to 2012 levels no longer required by the New Dolla r prices. That also means these exits will cascade the Rupee even as it holds at 62.50 to 63 levels , that being a new fresh level for the currency. However it is still possible that with DIIs coming back as markets sell off that the gradual sell off can indeed turnaround and complete the prophesied ( by certan others , also old hands) pre election rally in India. The sell trade on ITC will likely never exit 290 levels an such picks abound with limited downside even in the correction which will confuse buyers into making losing commitments so a wait and watch is necessary. F&O markets return back to index only specials and i the downmove is to be arrested by Vols at 14 this will be a small enough move, but that is unlikely leaving vols (India Vix) ranging between 14 and 16 till the first buyers return whence new VIX levels would only see increasing volatility

However as we were stock specific going up and DIIs look for bargains to pick up pieces, there are gaps in how the markets will rebuild momentum most buyers holding on to prior 2013 selections including the new Aurobindo and Sun Pharma trades( a great defensive for mopping up your prop liquidity) in IDFC at 90, ICICI Bank almost ready at 930 levels ( the next levels are around 871), Yes Bank ( bottom at 267 will likely not reach the same so accumulating should be ready  – like a dark pool premium),  Bajaj Auto, ITC, Bharti and no – not ttk and titan currently as there is much more going down in that specific market despite the penchant of the self funded margin traders in our domestic brokerages like Angel, SMC and Centrum including the overlap with commodities wealth accounts. There will be no dlf trade north, none in Jubilant foods, titan or ttk and none in HDIL or unitech much later. Axis Bank’s orphaned again being misused in the prior rallies, leaving nay of the F&O speculators heading there at great risk from those targeting their brand of stupidity after getting on the right investments. Trading as a game may try not to suffer though sharp bear phases and quick bull recoveries are not ruled out with brokers and traders living the cricket dictum of well left alone even for great value picks in Midcaps The trades are mostly in Spreads, Bear spreads in your choice made by buying Puts at the just OTM (ATM-OTM>= 0) and selling a lower put to part fund the trade. Bull spreads, which wold be due n a couple of weeks, go bought Call just OTM (ITM-OTM>=0) which reflects better liquidity as well and thus better premiums, and partly funded by distant OTM Calls ( nly one or two will have  tested and liquid quotes where you do not pay excess liquidity spreads)

 

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: ICICI Bank, Bharti surprises on bottom overriding expiry sentiment

Or rather the headline should probably not read having overridden and markets continue weaker as a Strong Earnings calendar for Wednesday in the US drowns out brokerages and analysts still following the Indian open. Asia is weak on Thursday as US Treasury yields have continued south despite the additional $10 Bln in Taper added to the Global tab by the US Fed overnight. With only $65 B in asset purchases, it is a measure of the importance of sentiment in fund counts as Global markets respond in weakness after a weaker China spectre makes EMs already in a bout of outflows a queasy place. Leaving apart those who believe India is apart of the Fragile Five, this could be a huge buying opportunity as predominantly unlisted markets like Ukraine and Turkey bear the brunt of asset volatilities. Indian Rupee has opened close to 63 and pressures have receded quickly again. 6050 levels on the Nifty make it almost not tradeable in any direction this session despite expiry

Bharti’s results were an eyeopener, and the stock should be an overpowering Buy in morning trades at 304 levels. ICICI Bank also reported positively and is duly being punished to 975 levels for its rising NPA score and a gross total of INR 120 Bln or 12000 crores in restructuring assets including the 100% pipeline ( which is a 100% count on probability) but is a great pick at 930 levels probably and adding the risk it would never fall to that place, I would have been accumulating before he spurt and now after I should continue to buy. IDFC is surprisingly again substituted out for making space in portfolios and is dull ahead of tomorrow’s results, another Overpowering BUY call.

Bharti did well to double profits to INR 6 Bln esp in catching up on Data with a INR 75 ARPU and improving call realisations to parity with Idea at 37 paisa. Quarterly losses in Africa will likely continue around the $100 mln mark (qualitative expectation) Analysts apparently expected much more from Airtel coming in and that is why the Earnings business remain highly qualitative in India and expectations score less than Economic surveys and GDP inflation estimates on accuracy.

Nifty would probably not drop out of 6000 levels, but there would still be a square chance ( in double digits) of the index not coming back over 6100 at expiry and starting North in the mainline trend, with stock specific calls in closing trades today itself for the new series. We still expect a  short trade in Maruti in the new series. Biocon and Auro Pharma have definitely made a mark with investors and Glenmark /Cadila continue to be great picks. Markets at score additions t any blue chip portfolio. NTPC announces a 20% jump in sales as Coal supplies make for better ower generation ahead of new incentive structures

Overall though the correction remains a proactive wait and watch on news from the US and China, it has taken a sharp toll in four short days. IT exits will continue es as Hiring season news is no longer neutral for the biggies and Genpact reduces its dependence on assured GE business in BPO sector

Markets are also looking at thick fund switching as Proprietary books try to fuel the Hero boom and defensives get churned from earlier in the week though Pharma has not seen many exits except in Sun Pharma. Adrian Mowat had a great story to tell in the pre open and we all wait as the market along with Hero also plays out a 10% fall in Titan’s quarterly revenues reacting to proprietary favorites in a shallow market

The Banknifty, after a single trade whisaw from 10600 to 10300 is likely to be a positive trade in the new series after the bashing on the rate cut refuses to yield anything in now undervalued plays except the NPA/PSU stock. ITC remains on the upswing, likely bottomed out in Baja Auto before Hero earnings as well ( less than 50% probability)

India Morning Report: Markets digest a rate hike and the new Maruti equation

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

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

Biocon is back in Volume breakouts from the switchout in cash

Rate Hike

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

Airtel again, Idea bhi

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

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

Sell 6100 Puts

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

Banks are a big buy

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

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

Other Results

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

India Morning Report: Out; KPIT, Biocon, M&M Finl, L&T? In; Sun Pharma, HDFC

Of course the trade that earns is a good Bharti as ITC catches a breath at 322-326 levels and HUL tries to crowd the space after good results across the seas at its headquarters. However, positional trades on ITC are advised, we still like IDFC and Yes, ICICI Bank’s journey is a bit in the clear after HDFC’s straightforward increase in spreads to 220 points on the yield curve turning south across all points. A lot of “Sell on Results” shucked out in the pre open indicators (Call Auctions and if they are trustworthy? right now we are pretty stabilised on the morning indicators on bid and offer prices you”ll get in the market hours)

We would advise, that viewers and ET Now still learn to ignore Volume breakouts between 9:15 and 9:30 as the price uptick in that first flush is usually recovered with a correction easily assigned in markets in the midst of a positive rally. Thus we do not believe in the Larsen technicals either and they should rest this one esp with the bad prognosis. L&T’s dismal domestic scores preference in the Indian markets is a lagging Indicator for the Indian Economy and its being a Capex churn probably a function of the pipeline at best and payment collection habits not a pointer of the Economy returned to Normal that the markets are forcing on it.

Biocon is  agreat pick after the “Sell on Results ” shock,. At least it is apparent that new investors did not join the Biocon rush after results which are due today. Those Mid Cap IT stocks still in the ring, better have a story to tell with the PCR still not crossing into overbought signals but the market still tired at old highs and the 8% after fatigue for the Indian charts M&M results are 0% higher on NII in rural catchments. HDFC profit was up 12%.

Barclays, CLSA and GS are already tepid on L&T but these levels are definitely not the stock’s ultintisurfeitmate bottom. No sign of bulls there or the turnaroo. Similarily for Kotak, who cannot perform as a company but shorting it remains uncharted territory. Is it right, BEES ETFs are back in play? check the volume ludes. and check the bottomline as always. Chill pill for qualuudes?..an extra u to coin my own word

Indian Pharma remains the great big bet for this rally as its market characteristics have truly changed and the Indian players have ramped up on the business of generics at least with cheap strategies for the $200 mln molecules and more in case of First movers post patent removal.

SBI is still uncomfortable at 1650 and looks ripe for Sell on rallies at these levels again.  I’d pick up Bajaj Auto again in pair trades as the trading range bottoms out again, not so unlikely at 1900 levels itself. I for one am ready to add Glenmark and ICICI Bank to big trades right away but waiting for a confirmaiton and the 6320 cap likely remains

The AAP charts can probably prove pre-cognitive abilities as donations that peaked in the new year damped out a week before the (Somnath) Bharti chapters made a big event splash India bulls Home loans are back with INR 6.95 B and PAT at INR 3.95 B, Loan books of INR 390 B are hopefully in process of reaching a better denominator in a large unbanked market like India. Axis Bank could pick up where it left off but investors do not expect any NPA debacles in that neck of the woods, sufficiently loudly demarcated as out of PSU

In Policy matters, the CPI linked benchmark idea, we will assume , was another committee suggestion ( someone converted us, right?). Affordable accommodation units and Prop rights(garden variety TDRs) in Mumbai RE did take off but have not grown as a class.

In unlisted business, opening as a secular class in the Morning Report, AS in including both Global Corps and Unlisted PE business or the unincorporated merchants and Franchisee business we prefer Mike Fries in the Global Charts (Charter Comm – Liberty Global)than the local entry of frozen processed fries(McCain), and that is a definite final No from India for McCain as it follows in Gujarat after McDonalds’ merchant production for its restaurants . The price points will be out of reach and the consumption uneconomical for Vikas Mittal’s new effort. Walmart’s independent beginning on the other hand is another new victor of he Indian sweepstakes and should ramp up faster in the next 3-4 years. Amazon FCs are in Bangalore

Tata Global rush trade classifieds are back again but no corrections this month, unless someone starts up a maruti while its running!

Oh ya,  I have finally come around. India’s problem is/was feting Jim o Neil. It’s a wonder he came back despite betting bigger on China and biting a big fat Turkey. (I have to watch how much to put in the Morning ReporT)

zee entertainment below 2odma is a false and stock is a great investment. do not pair trade in US cash equities if and when you head there to advise or trade. stay invested in cash and speculate in f&o. rice exports at 2.3 MT in rice couldn’t possibly have peaked already did they? are the quota clamps back in place or no surplus production? krbl trades may follow real-time exports/orders in the next 2 quarters

Did you see Biocon’s brush with the NHAI in the Bangalore Mirror today? Taking medians out on NHAI highways is definitely a surefire way to asininely jugaad India’s hind out of global competition. Biocon sales (updating at 10 AM post Keki Mistry of HDFC) are a 7 B for the quarter and R&D spends seem still subdued because of other limitations at INR 1.02 B but none of that should count against the investment. Principal Global may end up showing us how corp governance and voice on the board are still a flexible parameter for India portfolios as we move towards harnessing and integrating the NDF currency markets into the mainstream And hey that Thomas Bata protege is still walking, so there’s no (h)urry!

O Gao, Jan Jan (ko Chhua) Janjivan(badla)

Ashwini contributing to his own sells by recommending 6300 put sells, that’s backslapping yourself twice over as Puts have anyway likely over priced themselves out of investors by today’s close and that does not make investing on te bull side defensible today. so the shorts are likely having a needless hope surplus till Friday in the pouring rain.

PSU Bank Dividends are more than justified, if the Banking Secy needs any props and tempting fate by linking to February Capital re-infusions and Banks’ demand for reduction of free ATM transactions per month should be denied aand the number of free transactions should be increased.

India Morning Report: It was Kotak meeting its maker again! (6250 again, naturally)

Thus the market turns south from 6320 levels though there is nothing to bother the market much.

Kotak’s mid afternoon tryst(just the 9 month report) could not shake off the market assumption that Kotak’s business is all but done and that does not bode well for it in an unbanked India Q3 results showed a grand INR 35 B in fees and INR 34.92 B in Net Interest Income yet again, not counting minute variations. Adding insult to injury, where the bank almost categorically does not expect to grow any of these businesses were the unravelling NPAs on a small portfolio

Improving NIMs at Kotak are heartening and CASA is up 22% on year. The split of the Advances column is a heartening reminder to others like Yes and Indusind evenly split across Corporate, Commercial and Retail (INR 20 B) and NIMs are much better at 4.9%

HCLT in the meantime has hooked up with CSC for Application Services Delivery centers in Bangalore and Chennai. SAP continues to explore India in the mid market Enterprise space with partner innovations. IBM recently sold Daksh back to local operators

Korean GDP releases later today will probably again reset India’s FDI expectations. Bank Policy Tuesday may appreciate the inflation correction and the increasing deposits in India’s coffers coupled with Government Borrowing turning out better than expected. Foreign Reserves are hardly comfortable but higher than usual allowing RBI to spend a couple of Dollars last week (January 5) on exchange adjustment. Bank Credit update will continue to show better growth.

HDFC , Dabur and Biocon may keep viewership glued to trading software and TV releases again. Arvind and Tech Mahindra are among the fabled Volume Breakouts of the season but we won’t be looking at them till FY16 as the model and the Distribution kinks for the former are still suspect. Aurobindo Pharma has post announcement made the splash on news count into hard stock price increases and will likely hold new levels. Biocon , if you believe in a generic thread of Indian Pharma , could still be the Indian Infy/TCS depending on your version of the morning coffee.

I am still buying IDFC and YesBank. Power NBFCs come out jst before their results break or in 2 weeks as the rest of the breakers are in town with M&M Fin joining Volume Breakouts today before earnings. CESC also sees a higher clip of returns on breakout. no Zensar isn’t making it anywhere..Lupin is still bussing up and let me know the others, it’s busy season outside the markets. 6315 was holding at 10 even with the Kiwis in trouble

Network Analysts or Gang of Analysts will do better with Lovable and Page Ind(no pun intended) as the scrips move into gear after the post ipo run meshed with a consumer rush and a dearth of supply in good stocks in 2010 . Prestige , Talwalkars and JP Associates are good for l.t. accumulation. PVR hasn’t wound down so the pie for I Sec finally broke out of the clouds and will keep growing (till it rains burgers and purple juice?)

Cymbalta apparently is a Torrent Pharma revenue which posted a good INR 10 B revenues yesterday. We haven’t captured its jumping fortunes earlier, Torrent Power sharing an equally unique business advantage in the utilities space (serving Ahd and Surat)

Davos streams on cnbc and or Bloomberg(us) could have well waited for saturday programming or the interview settings could have been suitablly upgraded from luxury breaks to business interviews for those at work

At 11am, I am shorting BOB, the 6300 calls are so cheap the 6300 straddle is the BIG WIN(Ashwini/etNOW)

India Morning Report: 6250 again, naturally! O-O O-O

Asian markets do tick down slightly probably because of no Commerce in the financial sector as US markets are closed.

Even without anything much happening locally, The Chinese GDP underperformance at 7.7% was unlikely to be the markets’ concern here our export markets in China safe and the 9.6% production improvement and signs of bullish trades in Copper and other metals. India’s 6% forecast is hopelessly over optimistic and thanks to the networks avoiding the entire China update the fact of FDI non interest is unlikely to bear on market sentiment, and today, and in all 2014, this is a good thing! WPI hit a sharp floor at 6.1% and may breach much lower lewels with core inflation already below 2% Core inflation was basically flat.

In the midst of results season, the positive surprise markets did not expect and despite attempts will continue to be marginalized, is Wipro’s back to back second quarter of gains of 27% on year on profits but F&O markets are trading that and the last weeks IT news pretty feverishly /robustly. However, this interest is mostly maintaining shadows of activity while the Bank stocks get reassessed yet again. The realization that Markets were going to hold 6250 was all too evident in the one way candle of Friday, the 6 hours of sloping down, accelerating wantonly almost after 1430 hrs to achieve 6250 marks

Interestingly, a well-developed hedge fun industry would certainly have seen a short strategy for IT esp on WIPRO from some entrepreneurial trader after this bout of strong results, esp with WIPRO tempting fate and unlikely to beat history ( like Morgan Stanley did, Friday night)

Bajaj Auto and IDFC are my longs this week and will probably score very high as new funds enter the market and get earmarked to the new universe of stocks added in the buy lists ( ET’s Volume breakout series is a helpful ready reckoner, but I doubt you’ll easily find those mix tapes /snips on the ET Now carousel. Go figure)

Actavis may be a strong boost for Aurobindo with almost $8 in earnings in the last four quarters. However Aurobindo is buying its European operations with a EV of $1 Bln apparently ( $320 mln in annual sales) and obviously an easy divestment for ACT and the news has seen a $14 or 8% jump in the week’s trading in the US. After hours trading added $2 on the news . The synergies come from the operations tie -up with the 200 strong pipeline at Actavis

Gold’s busy start in this year’s trades, enthuse Indians but they have traded less of the metal under clampdown driving prices down in 2013 and the story is likely to repeat from a higher watermark below 30,000 this week

Comm stocks lead the indices back after a quick crash mid week on ticker news. Isn’t Debt trading news looming from the Central Bank?  Meanwhile if IRFs had been actively traded the rates started the great slide from 8.8% levels and would probably close  a 100 bp lower in due course whence RBI will return to relaxing the 7.5% Reporate ( excluding the 7.75% last tick forced on by the new Governor) Floating Funds would have a few investors more and any survivors of regulations may have new FMPs to this sector, but will likely be late again. Meanwhile the 10 year can well trade below 8.5% this week.

Energy stocks looked good for this week as well, but it seems there is a new LPG subsidy likely on the ticker for them. Kotak and a host of mid-caps report tomorrow and Dabur and M&M(Fin) follow HDFC with Biocon also reporting on Wednesday.

Midcap indices will probably harness a lot of gains in the week, none of them ready for a harvest of Sell on news tomorrow or Wednesday Avoid the L&T trade tomorrow unless you are fairly clued in to a tepid results expectation in the market

Edelweiss also reports Friday but the crown in the jewel should be Glenmark, that has already up since last week from 500 levels

India Morning Report: Gold Loan Norms for Muthoot & Mannapuram, Infy at 3400

Markets at 6200. Nothing would seem to have changed during our 2 day break this week, but for the fact that markets after declaring tiredness have found the will to come back to 6200 from a dip , probably to catch some Deliverable trades in the wind down as the Shorts get their day but most are bought into the 6000-6300 range. Option ladders have given way to Bear/Bull spreads and cheaper strategies of any combination in OTM Calls ranging a 6200 with a 1:@ ratio call ( from namesake Amit) with 6300 ( neutral on cash) or  a similar strategy on puts at 5900 (ITM) sold to higher Puts bought near the range as the markets are not excessively bullish (6100-6200)

Meanwhile, true to last week’s draw ins to our short list, Sun Pharma and Lupin/Cipla/Aurobindo have taken off/ are ready for a big run discounted for the weakness of the rupee being their marker as the Rupee is at the bottom of the range at 62.1-62.4 alternately. Divis’ is a great pick and Cadila is still in but some market movers would put Glenmark on watch with profit booking in place. Ashwini is off Jubilant Food again for the same reason maybe, but he is trying Jai Corp today I managed to note. Aurobindo is still good but I fail to understand the hankering for Ranbaxy again with promoters from Japan raising the issue of misinformation and misgovernance publicly

In the Zee vs PVR vs Eros /BIG and the rest again I find the PVR cosmopolitan equation still daunting and Zee the only balanced out performer despite attempts by Sun TV and the sports czars like Sahara and Kingfisher. Private Equity has a chance to prove itself again in India in Entertainment, Media and Education, the Y sectors but as of now has come out only in select E Commerce venutures in over a decade

Muthoot and Manappuram would be great plays even after this first CB. As per the new guidelines, LTV has been rolled back to 75% allowing both to lend more on existing accounts and having also gained the RBI seal of approval for moderating portfolios.  Disbursals are still by cheque for high value cases ( Same INR 100,000 benchmark) Apparently Ownership Affidavits have specifically recommended by the RBI as NBFCs probably pressure customers /claim troubled custom for original receipts for Gold more than 20 gm

IT firms would probably end the correction as Infosys result day is now key with Infy at 3400 levels. Both Product platforms and Consulting have failed to take off for the new no. 3 of Indian IT. However buy in select Mid cap ventures ( for the same tired reason, MindTree is still an in) continues as the Rupee story has unfurled. The smart correction to 3480 may be safe but the range remains between 3420-3480  and any new rally pre-results would likely be sold back to these levels. Similarily the short on YES Bank (Mitesh) may again fail as Banks manage to boost their share outlook on Private sector and credit performance in this week after a very dull prognosis again prompted the pick by Mitesh Thakkar (TGT: 340) and others. YES will still be a good buy and IDFC is again available at 102 levels so both should be bought into at these levels. YES commentary would be key as Indusind retail portfolio gets colored by being mostly in the sharply down CV sector. ICICI Bank may not keep the elevated 1050 /800 levels in earnings season this quarterly review but will remain higher and be guarantors of Indian performance both in markets and in the overall Economy with IIP and GDP rates still subdued and inflation a big part of the continuing growth imperative

Except for trades on exceptional earnings and sell on news, select stock picking remains the order of the day, going into earnings season next week.  Infy for example will suffer if the promised margin expansion of 100 bp and higher guidance for the full year is not delivered with or without commentary on taking out the Executive council from the company’s governance model. Bajaj Auto may see new highs as it remains important in portfolios with new picks in the other Bombay car/auto maker M&M. Bharti and ITC continue to see some exits but have more or less become nerve centers of a trading move despite the expanding dichotomy between Mid-Caps and the Large Caps

India would be happy enough with $30 Bln stock of FDI in the Calendar year 2014 as well and marekt expectations do not include any redefining execution elements into the stolid infrastructure story nor any PSU ETF can bring bank PSU investors or the BJP euphoria in a hurry. T2 has been commissioned in MIL in time howeevr, taking capacities to 40 mln passengers per year, while KIA is already expended into T1A with an overall capacity of 25 Mln pass per annum. GVK in the meanwhile , tries the land monetisation plan first at MIA while GMR continues to consolidate international and national bids ( Hyd and Bangalore) in it aviation subsidiary, the only post MRT/Metro good news for the sector now four years into its relaunched modernisation drive, where BJP assumed it will get the mandate to do better, but it looks likely that the electorate saw it was equally impossible before the Election mania picks up (after the Vote on Account).

(Anyone wanting to edit the Morning Report is welcome to formally request myself and email the direction/editorial choice parameters as well as the time constraints)

India Morning Report: Rollovers underline a strong Thursday close, Merry Christmas India

English: Eugene Fama receiving the inaugural M...
English: Eugene Fama receiving the inaugural Morgan Stanley-American Finance Association Award from Rick Green (Photo credit: Wikipedia)

Inflows have been strong in second half of the Calendar year and Net Exports have been rising (nice, Manishi RayChoudhuri/TV18) . RGR was a brave face as he shot down the traders bamboozling him and the follow up interviews by the Guv on both CNBC India and ET NOW are great hits but without Investment to the real sectors and not real estate or Financial markets the return to 7% growth levels is a shard unwritten.

I hope he can stay off some future rate hikes too even as the auto sector underlines that the recovery has not happened tomorrow or this month(January) either. Fixed income yields still have a chance to return to 8.5% but then thats me hoping in counter balance to markets hoping for free money on a tree, any tree! (lolz)

New Open Interest at the start of this week even makes a 6500 close to the series possible but probably we will stay at around 6350, no less. HDFC Fund”s INR 150 mln-200 mln purchase of the Morgan Stanley funds is like showing up how tough it is and will be ,  while hiding the almost nationalisation part of the transaction, allowing a stuck Foreign fund an exit from an incalcitrant (Recalcitrant plus contumacious plus that commission factor?) market it is unable to grow not unlike Fidelity as entry loads bring bak the downselling to th slow growing asset markets that have still grown from INR 5.5 Tln before the crisis to almost INR 8 Tln today, the indexes barely having moved on the round trips in between. HDFC Fund’ last big buyout was when it got the top performing Zurich funds and till now has been masticating these previous transactions without any growth and is unlikely to start growing from here despite the 400,000 new customer accounts left high and dry. Market sentiment is indeed positive and getting better and may the DIIs forever looking for a bargain keep cash and money markets running to good demand for Indian paper.

Back in equities, the markets are busy rolling over their bullish positions on the penultimate day of trading in the series and the shorts have to probably fall out except for the 6500-6800 Calls on the Nifty which can be written with certainty till expiry, now predominantly in the January series, given the markets are eager because of the safeplaying, to turn boring January into a contest of Fireworks from both bulls and bears but probably with a 6300 bottom till some big negative news plays out not counting out inflation as Rural CPI may still sike and Vegetable inflation may still fall behind the news of prices going down last month

YES is a great buy even without a new IFC contract signing, IFC’s co lending probably its most profitable program in the subcontinent and its return augurs well in the last decade and more in jumping up Investment in India but with intthe currency hanging it will probably take a few more Dollars from them to move the trend to the Indian waters this time around. Hopefully, EXIM Bank does not need allocations from the Government in this quarter either to move export credit and keep double digit growth in Exports on track even as the gains from a gold clampdown disappear

Individual stocks

The sells on Jubilant Foods may not be needed for substitution of ITC into buy portfolios betting on the recovery nor do straddles get anything in the 6300-6500 range in January ( Ashwini still out of depth a little like the DIIs without a correction, though there  has never been any benefit to markets in acceding o their demand for lower levels , tabs , whatever. Interesting downtick in Volatility this week, One thought/heard positive volatility had disappeared totally. The only remaining downside risk to the market now building up is the jump in Canar Bank stock and such investors and advisors now again rooting for select PSU bank stocks.

Update price not disclosed, the MF purchase cost HDFC Funds upward of 4% of Debt fund AUM

India Morning Report: Bad Boy shorts in more trouble, Rupee at 62.50 ‘lows’

Green Energy (narrow)
Green Energy (narrow) (Photo credit: Truthout.org)

Dow corrected its Wednesday closing reaction welcoming the taper and Indian markets will likely realise they had shorted the markets unnecessarily and move up with IT stocks back to 6180 levels on the last trading sessions of the week. That means bad news for Angel Broking as Ashwini with them, keep digging for lower levels and markets hold above that 6150 support and move back to 6200 levels.

IDFC and Reliance are special mentions in the Morning Report today. IDFC as ET and CNBC18 report struck the alarm bells when hitting 50% in Foreign holding took it out of the bank license race. It would be applying for bringing down the foreign holding limit to 49% from 54% now. The overall foreign holding limit will be bumped back if the Central Bank refuses them a bank licence

Reliance GAS price hike of $3-4 per MMBTU seemingly translates into a sub Re 1 increase in Power Tariffs(Tulsiyan, CNBC) while Reliance increases profits on its current 20 MMBTU production (CNBC) by INR 25 Bln but its production does not increase till FY20 materially and it will thus shuck out of the Winning XI again by next week. The Gas Price Hike was approved today allowing gas availability issues to recede from April 01, 2014

On the diplomatic front, I think serious gaps between diplomats have surfaced that take the India US relations South as the focus has shifted to getting the charges dropped. The US side will thus focus on legal issues as well, where probably the real issues of employing domestic help in the US within the Embassies should probably be addressed more in the ‘face saver’ agreement, wilfully skipped by both parties showing up both sides in the Foreign Services not being live to real issues in the quick and quiet undercurrents that matter so much

Powergrid says it will be worse off by just INR 1.6 Bln on new CERC availability regulations a very small road bloack and that gives us at least 3 sectors going strong apart from the ephemeral IT and the longer term moves into Energy and metals which should completely rule out any shorts on the Nifty which continue to ride December series. Pharma is good for immediate trades, as is FMCG including ITC available at trend lows at 310-12 and Bharti at 320 levels as well as Power which almost welcomes the hike in its Gas prices as that is definitely more realistic than the $4.20($7 incl taxes) rate expected per MMBTU in the MSAs esp at the GVK Hyderabad plant example which would also benefit from the Powergrid reconnection in the South.

The India Rupee has likely bottomed out again at INR 62.5 levels

India Morning Report: Icky Spider on the Wall, why is this the fairest of all?

Česky: short straddle
Česky: short straddle (Photo credit: Wikipedia)

An unheard limerick, coined by yours truly, till some claim is authenticated on the same, roposes the current scenario and the base reasons for the same vacillating non volatility trade winning 6200 mark again. We had planned a kudos for the F&O analyst for proposing the 6100-6300 straddle ( Sold put – sold call) after Vol (India Vix) reported a low 15-17 score befor the weekend and 17 on Thursday. Though the Economic data is baked in however, the index challenged by us to stay the course around 6200, is finally hanging on to its gains after some again ventured freely on the shorts ( even the short straddle is a double short but bets the markets are ranged in 6100-6300. If the markets indeed die at 6200 the strategy would be a magic marker for the India F&O market that will be a good point of reference to repeat in any new intermediate cycle  or waiting time as the case may be. However as of now, the strategy is a little stuck in the mud. Also when switching this strategy in a bull market currently, one can even sell twice the 6200 puts as the never yet suggested bull exit indeed comes to fruition

Long Straddles won the day marginally(Long 6100 call, Long 6300 Put) and Sold 6200 calls are also in the money over the weekend( Open-Open comparisons) The 6300 Call has come down from 270 to 30 from last Monday (Open – Open)  though OI has decreased in the market after a hopeful Friday Ramp by a 3/13 ratio and sold calls would have generated

”                                                                                                                                                                                                                                                              ”

”                                                                                                                                                                                                         GAIN                                   ”

An option payoff diagram for a long straddle p...
An option payoff diagram for a long straddle position (Photo credit: Wikipedia)

INR 24,000 per 2 lots (100 Nifty underlying) as vol has disappeared from intra trend highs and turnover is steady though considerably lower than the bunched OI at 6200. A 6100-6300 short straddle would have gained 1300/- from Friday Open to Monday Open with the 6100 Put losing 700/- [All calculations made at the same 2 lots = 100 Nifty underlying each leg of the straddle].  A long 6100CE/6300PE straddle would bother an INR 26.1K investment and would have been worth INR 23.4 K on Monday morning.

<– LOSS 

Good volumes have been traded in Havell ( as the Morning report comes to you late today for unspecified reasons) as the scrip gets select attention. Similarly NB, PFC and other select universe scrips have seen important moves from Friday levels upwards even as Nifty Calls seem to specify maturity of the short Calls especially at 6100 (still at a premium above 100)

The Rupee closed at 61.75 on Friday and is a t similar levels in Monday afternoon trades and both banks and infracos have seen significant moves after a 25bp rate hike has been priced in by the markets at 8.9% yields as the Bond Index entry for India issues is also under review

The Tech M sale announced last week as Executive (insider sales) Vineet Nayyar, exited half his shares ( Sale of 500,000 shares) timed perfectly with the peak price for the stock and as we expect bigger shorts in the scrip , one should expect the longs on IT to continue iling into the doddering scrip nevertheless.

The Title reference, to dig into the simile, shows up the underlying insane spells in the India markets, showing u more in skeletal volumes and defining why retail and even Domestic institutions have been priced out of this market..I am still to design any research around such a proposition, but it is likely not difficult. Let me know if any of you try.

Tomorrow might be much the same after a second day that the Market opened near 6200 and returned to 6150 before closing trades were executed. HDFC Bank has hit a 49% foreign investor ceiling nd is  losing purely for lack o f allowed buyers today. PSU Bank investors will not be returning for a significant part of 2014.

India Morning Report: I wonder if this freewheeling, Really is an enlightening thing (Dubious , Vikram Seth, NDTV 2013-12-14)

English: syndicates @ work
English: syndicates @ work (Photo credit: Wikipedia)

Homage to Sec 377 controversies apart, it also expresses the universal angst and one shot propositions(Sec 377) that refuse to delineate the difference between the Buys and the Sells and the Holds and the currency and the coin) SELL THAT MIDCAP now (and come back another day)

The markets tried again in the Pre Open today and will sooner than later again snare buyers on a higher price near 6200 but till that happens, Bulls having just defended 6000 levels in the Option premium market, not underwriting 6100 or even 6200 that they had started last Monday on, it leaves an uncertain gap in between.

Market buying will of course definitely ride a 6.5% WPI data in November riding the gain from Core industries lasting around 2% for almost the entire year now, and Primary Articles skewing the deal with a 15% tick, also underwriting that retail inflation is not wont to come down at all in the coming two years of a changed fiscal and political regime either. In India, we follow the natural order of things, yes and in the long run we are all dead , definitely, but increasing rates because Onions can finally be sold for  a better price, it is more autistic than you think and once we are part of a Global Bond index, such follies will get a force multiplier we do not worry about / or disavow when we make that policy.

GSK deal again caught buyers on both sides even as a 30% arbitrage was available on the GSK Pharma stock which closed on Friday at 2400 levels as GSK Consumer tumbles from speculators exiting at 4500 levels. Both scrips are closer to the offer at 2950 and 3500 respectively in the pre 9.30 trades on Monday. Any open offer in GSK Consumer will unlikely exceed 3400 and may even be lesser after the INR 64 Bln is spent on GSK Pharma. Apparently the Midcap deal buying Elder off Torrent leaves Elder with the low margin API business and Torrent stock is unhappy about the value bought over while Elder stock is not so happy about he cash coming in/debt closing out.

Anyway, before we proceed, the other starting up sub text today was Sell the Midcap. A sure fire winner of a strategy given the markets vacillation, as those who are Hungry are bound to die till they are served with Capital inputs and Market responses that allow a rally

Wednesday’s rate hike will probably peak out the ill advised strategy ad retail inflation will continue to iron out the poor gap even if the government can’t spend and hopefully no party feels like lifting the Gold curbs too soon. Europe’s death spiral should wean out some hot money before he Euro peak s out but the Dollar will continue south and thus the taper threat will pass off unnoticed by the non market watchers in the middle of the week. Did you notice the flurry of big bank settlements that have passed us by in November?

India will act decisively to set the global context in 2014 reflecting the markets outperforming in 2014 while US markets follow tamely yet maintain last year highs. The Europe sell off about to begin soon, will leave us unaffected giving the world another chance to dig theimselves in, but ignored india will manage with another $20 Bln – $40 Bln in portfolio adds in 2014 as US Bond yields rise to meet the challenges of a real world.

Also Ashwini is a the cusp of a rash with all his misplaced bear picks again, and you should buy into the banks now. I go with SS(CNBC18) decision on the trading rink, markets waiting at 6175 at 9:35 for the confirmation that 6150 bottom holds and markets will move up thence. All that shucking, it is finally closed so the good guys we all noticed are set to move up ( and no IT moves are expected from here),. ALso, th last headline PSU Bank investors are not coming back, holds.

HDFC Bank ticked in the early bull report on Advance Tx, but then HDFC Bank was always expected to headline bigger growth numbers than the rest and it may well be the contraindication leading India Inc to slower revenues for the third running quarter

Any others eager to read the Drama Queen by Suchitra Krishnamoorthi, it’s a good idea this broadbasing of Indians’ views on their own history

Achha, what’s the deal – Jaspal Bindra wants clarifications on Subsidiarisation? HSBC, StanC < Citi and that other, will they ever come back in India and China retail or is it just Transaction Banking now

India Morning Report: Markets slip as PSU bank investors stay away

Is Inflation the Real Problem?
Is Inflation the Real Problem? (Photo credit: Wikipedia)

Active index and Banknifty balancing in a stable India economy above 6% growth involved the usual confidence investing in PSU banks a two thirds of the Banknifty to and or xis, HUL and a select set of defensives , that have disappeared as markets fall thru additional support levels. Apart from the loss to Ashwini Gujrl’s set of picks seen over two – three weeks post ‘shucking’, any other impact on the markets is lacking. One feels the confidence shown in non leveraged High Operating Leverage businesses in small and mid cap sector is also misplaced. Such High Operating Leverage Businesses with more than even 75% Op Margin in cases have time and again shown that less than 1 in 20 such businesses , even with deep pockets like Jyothi Labs, convert into a brand and a business like Bharti.

Bharti and ITC lead markets back and Lupin has a lot of strength left in it. Expectation have come back to a 360 Cipla to kick off the game for this rally segment and ICICI Bank and Axis are also losing ground from a probable low yesterday as the Banknifty sinks into 11,500 levels. However, the end (of the shorts) is nigh. This observed bear extension on Thursday is a direct concomitant of a stable PCR near 1 levels leaving writers hungry for more and writing calls is always easier than underwriting puts at new market levels

Tulsian’s faith in the ‘shadow stockings’ ahead of Christmas is also back, but we don’t think  UB Ltd will be compensated fr not rushing returns in the merger and bankruptcy melees of the crisis Olympics. However, it would be  good idea to sink into HDFC and Siemens.

Also Barclays Capital, as we have been following got in  5 out of 7 the same selection of 2014 picks. We already made it clear Tata Motors is a big sell on 2014, probably bigger than the Jindal Steel breakdown which will stop out of the ‘bear cartel’ push at 225 levels The Energy trade should be pushed but the Fisc is already distressing and the release of Fert subsidies at INR 50 Bln  was already a razor edge detail for the Corps watching India’s clawback on global fortunes. Assuming NTPC would not be ready to immediately step up on reform gear and leverage growing efficiency, we would disagree with buys on NTPC.  GMR is back in the big bids and the big bullish candle moving GMR, RelInfra and IDFC together with JP Associates should land on the next bevy of drones.(any independent rally segment up or down can be ascribed to a virtual set of drones picking the right calls). Bank of America, the other who nailed the Economy without attention to thoughts of a wavering Rupee (more than required) will also be worth tallying scores in 2014

The 15% Food inflation and the 12% contraction in Consumer Durables (read our earlier monthly commentary on PMI/Inflation) put paid to any thoughts of a recovery improving despite news of a Q3 debacle already factored/expected for October 2013 and probably till December 2013 s this includes our festival time data. November Auto sales disappointed for all though retail inflation has been strong (good demand indicator) in Consumer durables items on existing stocks as production has been subdued for more than 6 months now

Again, despite the policy tightening, banks are unlikely to need rate hikes as they have weaned off MSF rates. Also retail inflation will continue fueled by higher Food inflation , in double digits due to supply and other economic concerns for small and rural businesses. onion rices have corrected sharply in the meantime and Food inflation data for the month was likely overstating facts, returning to lower double digit levels in the remaining 5 months of the Fiscal.

Oh yeah, we may have forgotten, in the search for Economic employment, the Global recovery of 2014, is not happening except in US Equities as Europe proves its a dead continent and a usurius currency. China thus also fails despite a better share of its own currency in exports again and that leaves US and India and the ROW without business ends to close deals beyond a hygienic rise in Trade led growth. US is also stuck at 3% levels despite the mentored lower trajectory for Currency and rates which a good motivator but the currency is unlikely to be allowed to get eweaker at least from the current Dollar Index levels, probably never below 78 in all of 2014 even as Oil imports stop for the Superpower of the 20th century. And that, is despite the taper.

India Morning Report: Volatility(India VIX) has another 40% upside, the last series is a rush

Maruti Temple
Maruti Temple (Photo credit: Terry Hassan)

When markets opened yesterday, the PCR reported was an even stevens at 1.0 and the rush for Open interest additions in All calls from 6200-6800 or all puts from 5800 to 6200 by writers meant the VIX continued to jump in a flat market remaining at 6200.

The trend continues today and with a bull spread easily assimilated, Bullish positions will accrue in the flat market till the written calls can jump the markets near a 1.2 PCR level which means actually a lot of money to be made in this derivative series in the last month of the Calendar year as the Dow unwinds most of the gains in the previous two weeks.

Indian markets will drift but look like making all time highs sooner than later as the bottom catches up with 6200 while the VIX continues its move up. If you notice, in the calls for a saturated market the buy calls today are  a distinct extension of the same stock selection begun in August 2013.

PNB has finally been given the green light wth its better provisioning implying a bigger bull weight to the stock esp as PSU banks remain a big no and that means a lot of exits. The market saturation commentators probably used the SBI series to make the point but the same is more an indication of a fundamental disavowal from the State Bank stock as it remains a primary conduit in the highlighted Asset quality factors Fitch underlined in yesterday’s report to 15% NPL levels by March 2015.

ICICI Bank remains a buy on longer terms and if indeed it is available cheaper from 1080 levels it will be at the erstwhile 1035 for the day traders and accumulators Delhi goes to the polls tonight and next Monday counts will be in from the State Polls, lending  strategic beginning for the incumbent Congress and probably its last chance even as Modi makes a fool of his self in oratory and may cut his speaking engagements towasrds the end so his work record can be taken to the elections. A distinctly uneasy feeling to hear that sound of voice and it is likely to set in as a big fail for BJP on the national stage in some vaguely deviant way wihth a confused young electorate holding the keys to the next Government in Delhi ( Centre, not state)

Back in the cash markets, stocks selected are likely to gain fast colors soon as the Manthan is almost over and equity inflows substitute bond outflows near the next inflation rate hike as Money supply remains subdued and counters the rate hike rate cut philosophy underlining the wider disenchantment with trying and making money esp in India and the recovery looks to run sharer this quarter bringing banks back into mainstream picks without the PSU weighted Banknifty dragging individual winners

HDFC Bank has also suffered in the negative sentiment in aut markets and while the CV market and its loan portfolios like NBFCs and Indusind Bank remain sluggish and give of fthe all pervasive urge to cut weights in India, the rest of the retail Auto markets and Finance majors are probably set fro an upturn. November sales were especially cruel on Maruti and even Hyundai even as Ford rested on a steamed u 4000 units i export, resulting in almost 12k units for the month near its best yet.

Domestic shares of auto companies continue to shrink for everyone vbecause of the troubles with buying a Hyundai a Tata motor product like the Nano or anyther Three cheers to Darashaw Technicals for catching the exit point in HCL Tech. Notice again, the veracity nd the preponderence of select buy calls showing the winners of India Inc, this is the time to build the portfolio. Motherson Sumi(speaking on ETNOW) is one of the select auto ancilliary mid caps that will also build a market catch all in this specific turnaround time with strong order books and improving margins.

India Morning Report: A thorough shucking, and 6200 it is

English: A 10 rupee 1902 stamp of India.
English: A 10 rupee 1902 stamp of India. (Photo credit: Wikipedia)

A week of thorough shucking and more (unfortunately extending to free enterprise attempts in the Indian markets, that really got shucked these five years) and JP Associates is in the lead for an extended period after a long threefour years where it played an also ran stock to many other daily trend leaders, and none of the rerated stocks over the last 5 years are seen as rising further from here, keeping the best dozen in abeyance.

Despite the perseverance of these players however, the stocks selected are not really getting through, and instead the residual charm of the retail economy from Jubilant Foods’ era competitors like Talwalkars to the Jyothi Labs, the new Quetiapine powered US launch from Jubilant Life (looking healthier, everyday than its similar named cousin in pizza) and the MNC phama stocks celebrating a new strategy for domestic markets with Pfizer and Wyeth getting together meaning the delisting mania is probably done with  at least for this trade

The Rupee is ready to move on after the post festival haggling and Oil demand is the risk India will watch in 2014 when tapering happens. Now Rupee should be able to break back into super 60 zones as the Infra party gets totally dissociated from realty plays. Thankfully retail and FMCG is back, and Shoppers Stop is definitely a deserving venture.

Glenmark Pharma and Cadila remain the better picks from their strength in Domestic markets, ITC is likely to be bet ton to at least 350 after its upmove. REC has tak first rund of Power NBFCs again to 222 levels but has no potential to break into the 40s let alone 250 levels from here

Chetan Ahya’s(MS) predictions(and analysis) are also resonating with the market. He showed that a 3.5% expenditure growth in H2FY14 will push India to its utmost if fiscal disciline is still at 4.8%, and probably PC won’t get an out despite the good CAD achievement given a sluggish revenue Q2 after an equally discouraging Q1

The Darjeeling Limited probably does not have much sway right now in the markets with most strains of stocks bearing Midcap or Corporate Governance issues now on a defined negative list. On the other hand the tourism industry fix seems to be deepening and India’s Hotels are getting the short shrift fter a long decade of seat increases coming to a head in the next two years ( in Deli and Bombay from n ET report). Occuancy rates of just 61% in a business destination that does not even have the extended holiday season the world enjoys is a petty misnomer for India’s effots to exit this detrimental global cycle as Europe falls off the investment (origination) map exxcept for ECB(External commercial borrowings) debt

The times of Robinhood are no more? ___________________>>>>

English: Remains of village stocks in the chur...
English: Remains of village stocks in the church-yard of St Mary’s church, Honley, Yorkshire (Photo credit: Wikipedia)

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!

Related articles

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

India Morning Report: State Bank and PNB ride off BOB, BOI earnings

A Maruti Driving School in Chennai
A Maruti Driving School in Chennai (Photo credit: Wikipedia)

Markets remain equally challenged after a victorious close to the series as there is no sign of retail investors ever coming back to cash equities let alone Futures and Options but BOB’s great recovery earnings built on the same devious Syndicate Bank strategy of reducing here to fore provisions to a large quantity as they are no longer legally required to keep higher provisions. BOB gross and Net NPAs continue to grow sharply with NPLs reaching more than INR 105 Bln, and still rising ven as the street celebrates its doubling of Net from a year ago after a long hiatus of subdued quarters. BOI seems to have really made inroads but here again the restructured asseets shot up to more than INR 10 Bln on advances of more than INR 2000 Bln in the September quarter. Net NPAs actually climbed down for BOI and prompted the big rally that took markets to record Sensex levels since Jan 2008. Unlike US banks making profits out of reducing revisions, BOB will likely have to make fresh provisions in the coming quarters as the NPA rates keep up.

Sun Pharma has grown to 5X times its prices in the 2008 boom and mor such rerating in the index shows a more focussed approach in the Indian markets as retail faded away in this edition of the Global crisis, Tapering fears still on tap after having induced a crises from withdrawal of excess liquidity over the summer. Lupin has also rerated up 6X times

PNB has climbed a further 5% in the morning after a 8% climb yesterday. SBI which is still unlikely to report a great comeback next week gained a further  5% yesterday to near 1800 levels developing into a ripe short even a s performers like PNB finally get their due from the stock markets after having survived on a dedicated core following as it gets sidelined in favor of the macabre theatre of the underperformer s who apparently provide more value from the sharp cuts they faced. Bank nifty  started the morning beyond the 11,500 levels it closed on expiry Thursday. BoI is a good investment. Allbank and BOI both reported 2.93% NIMs for the quarter below par but rising for BOI while ll Bank continues south in further NPAs that are likely to hit the INR 100 Bln mark before  the rot stems

IDFC as expected has taken to the bulls in this month’s series at 108 and YES Bank broke 360 levels to go north. Meanwhile as moneycontrol informs automakers Maruti have jumped turnover 2.5 times to INR 100 Bln since Q2 FY09 when the Sensex last saw these levels. As F&O analysts informed the Network audiences yesterday thi s series is likely to see further inroads into the Sensex and the Nifty will easily cross the 6350 levels. Th long term targets of the Nifty will thus be closer to 6600 peaking between 6650 – 6750 come 2014

India Bank Earnings: HDFC Bank Q2 2013 jumps 30% on year

HDFC Bank Net Income jumped INR 420 crores to INR 1982 crores after a bigger jump to 1560 crores in the year ago September quarter, NII was a healthy INR 44.73 Bln, provisions reducing to less than 4 Bln down 20% and Gross NPAs seemingly under control at 1.1%

CAR is down at 14.6% hopefully as the bank put more capital to lending from a linked quarter low of 15.5%. The NII is a 1% higher over June 2013 to INR 44.7 Bln and the NIMs have stayed at 4.3% over the 4.6% score in June 2013.

Nothing else would have changed in the bank strategy implying a steady 20% plus growth in credit but for the economy scraping the roads on its last legs(wheels) and HDFC Bank gets under the flak /slag button the bank earnings game show (much deserved for skewing and shilling the India growth equation)

They had improved growth in the retail book by 25% in the June quarter  and 15% in the corporate book. The Corp book has very recently returned into growth again after MSF rates were cut and TCS posted a cycling 23% growth in quarterly arnings after a bad Q2, i’ll let you decide if that is worth taking banks out of the Page 1 as we scrape legacy for 5% of the Global outsourcing market in TCS and Cognisant.(and Infosys)

Consumption data aside, rural inflation is still under 10% and though one can imagine the editorial changing perhaps claiming to a new generation ( that appears for CAT within a month), ducking HDFC Bank ‘s sterling results under the TCS performance was probably more than just a journalistic travesty. HDFC Bank performance was a good showing esp as Derivatives volumes has clipped up to INR 5 Bln in volumes and securitisaion though much maligned can relaly spread liqudity around. The Bank showcased a  bottom of the  cycle 16% retail in growth even as NBFCs like Bajaj Finserv and Bajaj Finance jumped lending and bottomlines like any other growth quarter , ensuring the success of festive season this month and next with the big Deepavali celebrations and then the roll into Christmas and New Year with school holidays.

HDFC Bank may have lost cosmopolitan markets but has not lost its magic and keeps the 30% bottomline growth faith within a reasonable band because of its power of distribution keeping the primacy of retail in the bank at 53% share even as Corporate and Institutional Bank steps up to the plate. Going further into the 20s it would not hurt the bank to get an existence outside ‘branch banking’

India Morning Report: No Taper and Nifty on to 6100 levels

A rather unexpected reticence by the Fed, allowed Global markets to uncoil their expectations of a taper and the Indian Rupee opened at its best price of INR 61.5 today barely hours after the announcement. the shorts on banks disappeared overnight as did the opportunity in depreciation lit IT with the Banknifty finally moving 650 od d points to above 11000 today and the 7% increase in ICICI Bank to 14% in Yes Bank possibly still allowing steam in the rally to 6300+ levels and a long awaited rally in the banks with the liquidity measures likely to go away. (what if there’s no taper?)

Apart from the bigger damage to shorts on Banks, the rally has caught most by surprise and thus some may wait out for lower levels to start again, but stopping market enthusiasm at 6080 levels itself is likly to fail with the momentum of the event generated uncoiling allowing immediate 6300 levels. Also the taper remains on the horizon for the US Fed as it tries to tackle the question from a new structural cap to growth in the US and the  Rupee may be allowed to break below  to erase the damage since May

F1 Australia Grand Prix - Thursday
F1 Australia Grand Prix – Thursday (Photo credit: Wikipedia)

Indian yields are back to 8.16% levels. ITC and  Bharti have continued investor fueled upmoves at 350 levels, while Sun Pharma and ONGC and the Energy companies rebound to 2010 levels. Investors also found the chances to get back into Hero Honda and Maruti, both of which may easily by rejected later for Bajaj Auto in the Auto/Two wheeler sector

The Rupee might close a little lower but above 62 till 4pm and in RBI trades after.

India Morning Report: 5550 and nose down, Banks give up consolidation

FO Update: Bifty(BankNifty) strangle could be a good sell so vol moves are up but one should stay away from buying bank puts individually or shorting banks per se. They are quite in line for a jump and won”t be characterised as the villains of this move

The day started well enough Banks shifting chairs with HDFC Bank and Kotak taking over the upside and ICICI Bank facing a small (less than 1%) correction and Axis Bank moving up smartly as well, but as we prognosticated, the Rupee is touchy and tus 5550 seemed like a top off, barely opening at 5573 before trending South. On the bottom again, the move is capped at 5400-50 and the Bifty could well stay above 9000 throughout esp if the Rupee manages to keep the bears happy at 67 levels itself, as the markets decide the new direction of the move in the rest of the Financial Year (Fiscal).

The Rupee has received considerable global attention it has yearned for and sellers have been keeping quiet not because of fundamentals or flows but for the attention alone. ( Any study ignoring other parameters and attending to the correlation with global fourth estate exposure would thus be able to prognosticate the new founts of pressure on the Rupee. Oil is going down and 4% GDP is post a not so tough Oil Bill prognostication at the umpteen downgrades that heralded the start of the week. IT is almost overvalued again, one windfall quarter per 25% loss in Rupee value (YTD :D)

GDP (PPP) Per Capita based on 2008 estimates h...
GDP (PPP) Per Capita based on 2008 estimates http://www.imf.org/ (Photo credit: Wikipedia)

On the market performers, accumulation of a disordered undervalud opportunity variety has started making itself felt in Caital Goods companies and infracos equally as Reliance industries which may look to E&P approvals in 6 different fields. Thus the sectoral technical picture is additionally cluttering the fact that no policy decisions would be forthcoming till after May 2014.

Savings in the Oil ill are coming  from the 13% share of Iranian oil, which because of shipping lines and insurance issues, are unlikely to be raised. True to form, Irnians do not really want t o use Rupee payments made to buy Indian exports except for its rice and tea demand.

Auto sales jum is more a victory for the two wheelers again, Bajaj Auto recovering Exports to 144K ths month and domestic sales on breath with value #2 Honda (301K). Maruti’s jump back to 87,000 units is still a poor performance below its run rate of 100k cars on average  pre 2010 itself. M&M tractor sales have dropped to near ZERO at 14,000 r month and Hyundai has been wiped along with Tata Motors for all the improvements in traction at GM, Ford, Toyota and VW.

Glenmark Pharma is a good pick to start the mid cap ride. Yes Bank and IDFC should e among the non controversial movers and shakers as the markets operate in an unwilling tight  rang waiting for the Rupee pain to go away. Sun Pharma will bottom out above 500 levels and start on its promise again as it builds on the INR 1 T capitalisation. The September trade data for India is due in a week

I do have a couple of questions on the detailed NH survey on housing price trends released yesterday. The 670 mln sft inventory for example seems to be a little bit of an over estimate and prices in Bangalore ,Bombay and Delhi are unlikely to move down despite huge inventories in residential , affordable, commercial rental and commercial spaces overall

Also ATF prices ( 71k per kl in Delhi and 77k per kl in Mumbai) are probability going to  strain the almost barebones domestic aviation pricing again and UDF are up for renewal. These are likely to remain hygeine factors to the India story ( low growth high cost aviation and high inventory of property) because of obvious inelasticities in the real estate pricing and the elastic nature of demand, roving a sea of red for aviation in the last decade. Thus inflation fears are probably dead in the water with Oil and Gold moving down globally.

Metals esp Tata Steel is back in the Buy lists in this run which will probably peak immediately after mid 2014 till September 2014

India Morning Report: The next sharp move in the Rupee is still nigh

The Oil wars are and with US Supplies stockpile engendering a highlighted war equation, the situation could turn grim. This Friday closing is thus not like the other weekly closes in terms of markets losing short positions and trades, and it may instead see profit booking in larger dollops. One assumes therefore the sharp increase in Open interest would remain with the likes of HDIL and Sun TV and the banks open interest would continue to rise much more slowly and the 5400 cap could in those trading terms alone, define the entire September series hitting the wall at 5300 in favor of short interest to pick up once the market dips from 5400 to those levels, which has started off on a clean plate, only longs rolling over.

The advantages to shorts rolling over are the market pricing more finely in those conditions with the added liquidity(depth) to trades with the premium esp in the Indian market removing rational investor interest rather soon in the Futures and Options derivatives markets. Witness, even in the currency the only trades that made it were structured Double or Quits and higher multiples.. excluding even a lucrative CDS market in India Bonds and Sovereign. Oil swaps come with the caveat that payment problems exist to the same extent with International payment systems complying with bans es for Iran and one can assume Syria

Airtel Digital TV Review [Updated]
Airtel Digital TV Review [Updated] (Photo credit: code_martial)
One can assume also that after a 14% cut in FMCG in August, ITC’s ‘comeback’ would also bring back interest in brands like Bharti ‘Airtel’. Though GDP Q2 data would not be a trigger and long interest remain with such undervaluation

The 75 target for the currency is here from BofA ML and as I said below 68 the box is from 70 to 77-78 levels before the market interest outlasts any post analysis of the fll. Those thus aking this 68 level an occassion for post analysis would likely be lost even without any sizable crossfire in the battleground! Lets face it we actually need exports to grow a sizable bit in response to any depreciation for more than IT profits of the next quarter for India Inc

Watchmen: The End Is Nigh
Watchmen: The End Is Nigh (Photo credit: Wikipedia)

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: The Rupee, it counts 62..63..64..65..66..67..68

English: Cumulative Current Account Balance fr...
English: Cumulative Current Account Balance from 1980 till 2008. (Photo credit: Wikipedia)

 

Fixed income Desks at Banks of course would like others to believe everyone was trading the 9.5% -10% range probably but closer to the market after a small tweak in SLR and the confirmation of lack of MTM losses excet for the 5-6% in AFS, desks returned to trading 10- year yields between 8.33% – 8.5% and the OMO tomorrow may revert the auction yields to same levels after the 12.27% auction on Monday. The FOMC was crystal clear in its depositions as seen in the minutes that the markets were in for a leaner September and so it will be, will be as Asian currencies suggested in the morning before Indian markets opened. . There may not be many trades at the 64-65 levels even as the interlinked ‘100% plus’ correlations pushing the volatilities out have receded esp with fixed income yields above.

 

The lesson for traditional Economists and probably our Chief Economist C Rangarajan also that the Indian Economic Cycle does not really lend itself to the trade deficit being the Consumption Gap. As one might see in this year’s turn of events in June itself, the drying of consumption had absolutely no relation to the high prevailing CAD which is more directly linked to Investments in the Economy and Savings, leading from curb on Gold for lower deficits till such imports uncoil again and jump the deficit forward propelled by high Savings and zero investment. CPI again showed that Non durables will be able to transmit pricing shocks but all is not well with Millers as they pay for pampering farmers in UP across successive state governments.

 

Energy Companies lead the second tier of the rebound stocks as Bharti and ITC reach their true value at 300 levels and metals lead the banks to improving cognition of the market ( witness Banknifty at 9350, though the 9600 mark was reached and lost as if in a dream) There is actually no way to call a bottom of a currency where nothing is bought and domestic consumption is so independent of imports. And the Dollar will stay strong thru September from the looks of it. So, 70 is just the mark they can see right now probably without pooling selling interests across the dozen odd active desks that at least follow the currency. Linking that to NPAs may similarily not work because the stock of Private Dollar debt is mostly fresh and definitely ss than even $50 Bln despite all the new issuance. If old models were to be followed, the irascible Oil market’s considerable control in price increases is all but lost and Rupee could eve start rising back but that is no longer a valid reason for anyone to hold as a single seller could control the market till even 80 levels and Export volumes are not corresponding to increasing import requirements

 

 

 

 

 

India Morning Report: A dark light envelops India Markets as the longest tunnel is in play

The New Sea Link
The New Sea Link (Photo credit: Prashant Menon)

There is a light at the end of the tunnel. After all Sun Pharma has retraced to 425 and Ashwini Gujral is recommending a short on Axis Bank, with the Axis Bank bulls freely shorting probably the naked shorts that make up a new residual market of speculators as PCRs stay in a lower range with FIIs not adding more short hedges.

VIX India is having fun at everyone’s expense getting back at markets for being called bad all over and staying increasingly bad. The Morning has already see the rupee enter the new range box between 64 to 68 and so it is unlikely that it will recover to 62.50 or that this is the last stage of the capitulation move.

But yet the new negative momentum in the indices is looking to close out this move in this week itself with a $100 Bln exit by FIIs on Friday necessitating a grave distance covered on Monday and now on Tuesday the same is likely. That means the indices could well compete with double digit yields targets on 10 year paper and the currency targets ( if any) to hit 5000 by Friday close and provide a respite week next week.

JP Associates and infracos have not started back and private exchanges and therefore promoters linked to that may not yet ever make positive lists again

I am like a kid, hoping the Banknifty cut today means the Reserve Bank has thrown the banks out to the wolves asking them to mark all holdings to market and push out a mandatory minimum to AFS portfolios. But then there are those that still think below 8 yields will be back

Buy Power NBFCs and Bajaj Auto has also finished its last moves. LIC Housing for one other NBFC can probably not move down after it hits 130 levels

Vidyasagar Setu, commonly known as the Second ...
Vidyasagar Setu, commonly known as the Second Hooghly Bridge or Second Howrah Bridge, is a bridge over the Hooghly River in West Bengal, India. It links the cities of Howrah and Kolkata. The bridge is a toll bridge. It is one of the longest bridges of multi Cable-stayed type in India and one of the longest in Asia. (Photo credit: Wikipedia)

India Morning Report: There is the Rupee and then the equity markets…

Map of South Asia in native languages.
Map of South Asia in native languages. (Photo credit: Wikipedia)

 

Frankly, there is nothing much to hold the markets after they broke 5500 and the markets below 5000 Nifty levels are likely though still not extremely likely as values identified in the Top 20 liquid counters will probably include those already having fallen to their lowest levels of this rally’s beginnings or within 10% of the same as ITC and Bharti Airtel indicate. That also means institutional buying that has resumed in bits and pieces will characterise this market thru the breakdown. Even though Bharat Iyer of JP Morgan also put on a brave face and assumed Fixed income to be just duly following the currency mechanics, structurally markets are ready to ignore the falling Rupee between 64 and 68 once it starts that leg. I personally do not think interest rates derived from FX have any significant accurate behaviour, esp where in India both markets are relatively illiquid and dependent on key PDs for volume business

 

Though nominal growth is unlikely to be the promised 15%, shift to it sector has created an exchange that is leading scrips to oblivion and not really any structural factors as they remain exactly where we always were. Infrastructure and Metal sectors are actually at their best take off points now both for Fixed income and equity QIPs the latter a little harsh for promoters, and secondary market floats in infracos could find considerable long term investor demand soaking it up.

 

Similarly, rating agencies’ almost junk BBB-/BA2 ratings on India are in fact already indicative of this breakdown and may not need a correction giving the rating agencies to correct their now identified goodwill gap in asia esp india and South Asia, that can thence merit a suitable upward notch everytime CAD is actually brought into control. Strange, but true.

 

Fixed income markets are set to lead the way meanwhile to double digit yields on the 10 year bond already hitting 8.95% in morning trades as Rupee takes up 62.3 levels before moving on to 63.30 ( TV18/CLSA) as the next Technical target. Banks presumaly are also paying for their investment portfolio breakdown in this move and do not have fresh cash to borrow and place in the 11% short term and even the 8-9% 10 – 30 year bonds for substitution of current loss making AFS and not taking everything to HTM.

 

One year down the line, with a stable government maybe instead of hiking deposit rates we will see the yields going south again. Oil is back above $110 levels and Indian buying will comfortably take out 67 levels for the Rupee

 

 

 

India Morning Report: State Bank of India results scare, IIP for June -2.2%, $12.27 Bln Trade Deficit

Taj Mahal, Agra, India. Deutsch: Taj Mahal im ...
Taj Mahal, Agra, India. Deutsch: Taj Mahal im indischen Agra. Español: Vista del Taj Mahal, Agra, India. Français : Le Taj Mahal, à Âgrâ, en Inde. Русский: Мавзолей Тадж-Махал, Агра, Индия. (Photo credit: Wikipedia)

Banks growth constraints from old and new NPAs came to be the most heavily landed blow again with INR 150  Bln in fresh slippages to 2.8% Net NPAs and a 5.5% of Book in Gross NPAs for India’s largest bank as markets at 0.9 PCR look to bottoming out with 5500 Puts still popular and Futures encouragingly becoming short hedge currency again for Institutions.

SBI has managed a NIM of 3.49% this quarter and investments currently denominated in low yielding CP will significantly buffer the margins to end of this fiscal according to the Bank resident’s statement defending current results (ETNOW). Auto Sales of 131k cars and less than 11.5 mln two wheelers as MUV/SUV sales plateau and trend down in the last bulwark crumbling for the 12 months are just part of the degrowth in the economy as a whole as May IIP was revised downward to -2.8% and June IIP came in a -2.2% showing degrowth of -6% in Capital goods and taking the April June quarter to -1.1% , negating any growth from the rate cuts before the rate clamp shutter down business in July , August and probably September

Consumer durables have been double digit negative in both May and June degrowing 10.5% on year in june with non durables up robustly another 5% allowing them to improve inflation. Better news from trade with a lower import bill from less than 3 tonnes in Gold and Silver imports each makes a crawl at lower CAD possible as also more controls return to the Economy after 22 years of reform under Manmohan Singh

Dabur and other FMCG could return to strength given the consumer non durables sales upticks and continuing robust inflation in the categories even as input inflation subsides. a 9.64% CPI does not discourage category leaders HUL and ITC also from continuing to improve realisations even if the Rupee completes its move only beyond 65 levels

ONGC results were bearable though the markets are unforgiving for the iNR 200 Bln quarter as realisations are likely to remain near this quarters $40 a barrel than last year’s $45 levels and the coming investment uptick within the week could see Oilcos picking up the slack after abig fall as well and oil purchases down for the second successive month will stress the trade this month for sure.

English: Manmohan Singh, current prime ministe...
English: Manmohan Singh, current prime minister of India. (Photo credit: Wikipedia)

 

India Morning Report: The weekend cometh, markets head north for the final relief rally for the week..

Detailed map of Indian national highways.
Detailed map of Indian national highways. (Photo credit: Wikipedia)

Almost like a movie building the relativity of negativity into the eigenvalues, the markets will duly uncoil in the week’s last trading session to entice investors back. Idea’s 50% PAT growth performance on 8% year/tyear growth is probably the best for the industry which makes it Idea’s seventh or eigth such hurrah ina rush order for the street. Data s now pobably double digit revenues after another 100% jump in subscribers. Infra and FT saga continue with the National Spot exchange and the IRB kind of market leverage habits of promoters showing up the small companies into veritable oblivion in 2-3 sessions indian QIPs may watch out as short term debt issuances from Indonesia failed putting markets on hold for the continuing Dollar armageddon even as dollar weakens at home in light of better growth prospects

Jubilant results won’t be so do not bother but some media houses may be back this quarter and the next as advertising revenues will likely imrove after the rush of sports events in India in the last couple depressed some revenues, ( and some other reasons, private to experts in that business sector)

IOC is down 50% from its peak in May when Banks were still in our cross hairs ( we were and are taking India up with the banks, if you sill want to snipe instead into our homes) The December 2012 closing values of IOC far too depressed and ata time markets had not recovered value in that sector, were still near 260 and today’s prices are a quarter down from there even as hikes went through in time.

Powergrid and REC are back and we will continue to use them both in the same breath and thus not in the same pair trade, which would be with “xxxx” IDFC, PFC, PTC are also all headed north but may still have hardly 55 on the downside before markets delink them from bankrupt, over leveraged infra mid-caps as earlier.

This may be your PIMCO year in India even as Al Erian recovers his Bond Fund equanimity with some including me still defining a double digit interest rate scenario in India as not improbable. PIMCO, if you recall lost two years of the crisis betting on interest rates steaming out of their ears when they were taken out by good fixed income demand for bonds in 2010 as I remember. But the Pittsburgh Pirates and PIMCO are since doing well.

Bajaj Auto correction on drop in monthly sales portends of more naysayers testing the automaker for continued sales performance above 300k in motorcycles as the peers give up sales on the auto sector’s trouble with slackened demand and an eye on primary sales inventories remaining too high at this time precluding that Vendor strategy. 6 new discovers are launched from July to December and B A is avoiding invoicing the old Discover for lower numbers this month)

Motor cycles were 280k in July 1, 295k in July 2012 and total , with exports also breaking stride equally, 320k this month

YES Bank and HDFC Bank have started recovering value, and HDFC Bank may well trace the market’s upside trips switching off during correction for a great single stock accumulation strategy for those wealth makers not interested by available SIP and STPs in Funds

 

Bank Results season (India Earnings): ICICI Bank keeps showing long term tracking to objectives – Q2 FY2014

Your favourite bank did start showing  hidden wrinkles as it eagerly snapped up a 26 bp NIM increase to 3.26% this quarter an Net interest income grew in line with the bank’s voracious appetite to INR 38.88 Bln. The retail surge which slowed down to 20% and Deposit growth continues without buyouts of deposits  at the industry rate of 14%. That means the retail team is unlikely to prove other results without the earlier snafus with retail processes even as it opened 250 new branches, 150 in the unbanked regions. The chink in the armor is that the bank will smooth over its increasing gross NPAs as the continuing expansion in margins gets the bank to override and lay down the news of a jump in gross and net NPAs. Gross NPAs for a large bank as such are horribly disavowable at 3.23% and Net NPAs are also thrice the rate at equally sized HDFC Bank.

The stresses however may not be l

India decadal growth rate map en
India decadal growth rate map en (Photo credit: Wikipedia)

inked to its growth as one looks askance at the 15% plus ROE. At this moment however I am unable to more than cast a  doubt on the Capital Structure for such ROEs and the same however is not to be confused with the global banks which still have a entirely different Order of magnitude of liquidity and derivative profits/risk management. It might still have an audience requesting that they be treated as peers especially on the comments on Capital Structure while structured product profits would still seem unseemly. The results will probably bring the bank under fire from its Indian peers , starting here at the ROE growth which seems awkwardly as always one step ahead o f the coming high interest rate regime when it actually expands margins.

Profits are only up 25% less than the expected INR 24-25 Bln mark at INR 22.54 Bln

The Active CaSA strategy for the bank seems to have worked wonders again with another 1.95 increase quarter on quarter to more than 43%. From here CASA would go on reducing once it reaches 47-49% levels in three-four quarters(at this pace). Average CASA as been reported duly at 39% , ad the gap is showing , which may be a disconcerting note for investors as the surge in retail and commercial deposits continues to bank the margin till rates are hiked.

However to reiterate, The Bank thus now has been completely clean on the paper trail in terms of its profit, asset growth and retail loan growth objectives , also fulfilling its rural objectives , covering the unbanked and continuing to improve its show while the fissures in its wholesale international book and the growth in retail NPAs coming hither will well be masked in the current reporting as well, leaving it another show of increased transparency  The bank has however totally dominated its peer HDFC Bank in the banking sweepstakes for the two universal banks heralded in India at the first stage of bank reforms in 1995.

India Morning Report: Markets swing to international sentiment on India

Pivot table NSE Banknifty PSUBank index scrips...
Pivot table NSE Banknifty PSUBank index scrips from OJN for 20110609 (Photo credit: OJN2)

 

The proof of the pudding is in the eating. in the weakest correlation ever to its presence n the Global markets, as shared by global investors and markets that largely ignore Indian events already, with mirrors available in east Asia/turkey and even other developed economies, India itself typically stands alone and the imperceptible nod to trend shifts remains the only hint to international investors. again though the banking system has been asked to step up to tighter overnight liquidity yesterday with a 4% CRR now enforced daily instead of twice monthly(fortnightly not bi monthly) where earlier it was required to e 70% now it is 995 That would affect the base SLR stock too but with most in excess on SLR, banks would have additional motive to hawk those securities for others CRR requirements and a domestic mini bond sell off may yet be avoided if there is a real overnight liquidity crunch. Which there is not.

 

So the entire shortfall of INr 900 Bln pointed out as likely by analysts like UBS’  Bhanu may actually be a mirage for inter bank markets though interest rates will respond likewise the first shock of two weeks ago and a catch up to the 10% mark as the LAF is now available at 7.25% only for 0.5% of each bank’s NDTL. Thus this shortfall may take a whole 6-8 weeks in unhiding itself in the business and a rate hike may yet be unlikely though the range of choices before the RBI Governor is still not large and banks wee on the verge of easing down loan rates when the dollar/oil trap worked them into a corner

 

What that means for equities is that they are largely naffected as liquidity from interbank schemes and pledges shares has already been minimised. Also foreign flows stay in and increase slowly while letting the Rupee fall. I may be well describing a limitation of this monetary outreach here but no one would play that card to corner India though unwittingly FX flows be unconcerned and pressure maintained on the currency as dollar starts its climb back I still dont think IT sector is going to capitalise on this leg of the continuing rupee depreciation stance but yes those basing their investments on continuing wage hikes factored in will bring in the kudos for the sector always singled out as the flip side of a depreciating currency while exports remain ata standstill falling 5% in June

 

Markets may not dip further from the 5990 levels Is ee in late morning trading on the screens and the Banknifty dip is probably still just a check on how things pan out and north is the way to bet from today late afternoon. Sun pharma going back into currency or more HUL will still not preclude positive investing in Bharti, ITC, Yes, IDFC and iCICI Bank

 

 

 

Bank Results season: Its not the asset quality trails but the change in NiMs

Banks across the board got a full reprieve in Q1 (Fy 2014) as they report much better NIMs, ING improving to 3.56% up almost 10% from previous year scores because of the lower interest rates by the Central Bank. Apart from the old hat CEntral bank rebuttal to banks at this stage for refusing to  pss along the rate cuts, this strategy is not really creating any abnormal returns but would have unsqueezed banks bt for the oil triage getting the Economy back into a high rate orbit.

Also the concerns about asset quality are probably unfounded as they just try to close up books on all doubtful assets and this quarter’s anomalous jump of 50% at HDFC Bank and more at ING vysya is likely just a result of that

Retail Banks have obviously been running higher NIMS like 4.4% at HDfc bank and cllose to 4% at Axis, but they also hide a lot of retail pain in their bigger balance sheets that can be shown by segmenting the cost of funding also appropriately for the retail book

 

India Morning Report: FDI flows bolstered in 13 sectors including Defence and Telecom

English: Manmohan Singh, current prime ministe...
English: Manmohan Singh, current prime minister of India. (Photo credit: Wikipedia)

Pending Cabinet decisions, Parliamentary Debates, Ordinance and Laws

A welcome decision was announced to increase FDI limits in state of the art Defence equipment to 49% from 24% through the approvals route and base cellular networks in Telecom to 100% from a 74% currently removing an important roadblock in the plans of Global Services companies to enter the lucrative Indian market which created unseemly compromises in corporate governance and issues of under priced auctions. These two sectors can see immediate fDi commitments  The decisions were pushed by an ebattled PM and Economist Manmohan Singh likely to be singled out if the UPA fails General elections in 2014

The reforms initiated yesterday, unlikely to be rolled back in the long term except for political opportunism by new governments were long expected and remain important for India Inc, even in sectors like power exchanges, commodities exchanges and Stock exchanges where the existing 49% limits have been brought under the automatic investment route.

Importantly, the long-standing increase in FDI limits for insurance to 49% meets private insurance companies requirements and the sector looks for IPO issuance in the next 2-3 years with heightened participation from investors adding to solvency ratios and potential new business underwritten in a market growing at a double-digit CAGR

The removal of brownfield pharma projects from 100% automatic FDi stands as Ranbaxy reports a new FDA strictures at an Indian plant

The rupee will likely continue to trade above 59 but there are unlikely to be further selling pressures on the currency at this point though the depleted FX reserves and continued demand spiral for Oil necessitates careful watching

Banknifty was under a lot of flak from RBI intervention yesterday but will likely have bottomed out at those levels and those short during the day would have to close out without recourse especially in the DEivative markets as the thinly traded contract that creates the highest tradable volatility correlated to market directions depends on large discrete moves in the options trading its direction and as and if strangles were formed late at 11200 levels they would suffer from the positive semivariance similarily as the bear cut of double digits on individual private bank sotcks was much more thant he losses to the banks from the Monday/Tuesday interest rate shock event

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

India Morning Report: Really, the failure of the food bill?

The Food Bill’s failure to carry the day for the shortest parliament year in history might bring out more ‘under the covers’ Welfare Economists like me and many ladies from colleges, schools and workplaces I have been. One odd part of the Food Bill argument post facto on NDTV was the reticence of known commentator Gurcharan Singh to link the idea of policy failures to grain lying waste in FCI and other storage nationally.  A seeming recurrence of other such arguments, the anchor was right in still feeling bothered by this denial ad these simple supply chain fractures cannot be allowed to be neglected for purely political fault lines that have long proven to be futile for the future of India, whether it is love for coalitions, BJP as alternative or change of form of government and Third and Fourth fronts of obscure policy which again succeeded for a welfare objective nosed in corruption

Importantly for the morning though, those who lost the pair trade were a little less inconvenienced by the banks trading higher as everyone agrees the private performers must, the sharp cuts in pre-open foretold of a failed section of the markets still looking to make a bear grip run for a few live hours to disturb the almost confirmed trade, a likely genesis of the recent spurt in flash crashes globally and rather unfortunate. 

Banknifty puts should pay out well at the end of the month and one should not get too greedy in raising put strikes too fast, so it is the right time to pick up a few short straddles / strangles for keep around 6100 skewed by the multiple for the short puts ( your leg long on the market)  and if you fund it further with short calls as hedges you should choose those beyond 6400, i would be vary of being stuck with a 6300 call short right now.

When markets successfully consolidate, the volatility gap to any target peak leaves them considerable room for quicker faster rewards till they even reach for a asset bubble and then extend the wrong way down) equity investors’ profit taking in the first 5 months including December’s latter two weeks of global holiday has been muted despite funds portraying it as a short sign almost for managers’ hands waiting for fresh infusions and the second half of the year will build the next local inflows that gross up into the buying frenzy to be as LIC and even other insurance funds come for their share of bargain buying made possible at these levels by some really perfect design (dessicated and elongated into another 5 years since 2008).

Some of our renowned Economic authors either due to their own perverse aforethought (being an MBA makes me also feel ‘collicky’ / syrupy or about having believed in the author in question in his earlier corporate life) or a habitual coasting to prefabricated DNA of the argument or policy made me begin this simple daily report for Thursday. The show on NDTV was anchored by Sonia Singh and though the author in question is perhaps a greater practitioner than William Bissell (Fab India )

Gurcharan Das’ tomes of the last few years  have recently stopped being MBA strategy and become Economic thought stirring India visions. However, though I would not be commenting on his writings and have not implied any in the previous sentences, the show caught him on the wrong foot and despite being of the same/similar genealogy, and having held him in great esteem for his experience, I felt stunted for listening to this argument.

The not usually required introduction herein also probably underscores that I am not ready to be a raving rant in my Morning Report. Also I found it in his voice that he had failed when he let loose an uncharacteristic rant on the Congress Government. Man’s ideals are sure misplaced engines of convenience.

Also, it is naive to assume one can keep shouting about free market ideals as response to realpolitik especially given the engagement offered by media today.

India Morning Report: A late last minute judgement call but that pair trade was ill advised

6th century
6th century (Photo credit: Wikipedia)

ET finally let the cat out of the bag but a bit late as the Bank nifty short was paired to the indices in a copycat move of a trade that worked in the 4700-5300 down India jamboree of 2010 then 2011 and then 2012 as well. Anyway it is afternoon as most of my readers realise my busy ness in th emorning with struggles for food and hearth taking over the life and times of accomplished investing advice and career counseling for the world of investment banking. Ph. D seats in India are few as well and a preeminent shortage of goods could well price that education much higher than it is today, the doctors 9 though i m yet to get in) still on the periphery of business and academia preferring stolid credentials to maintain ranks and bag enough fees to supplemennt honored careers in banking and finance (most of them)

Anyway here’s wishing them better luck for the pair trade next time and here’s wishing you use the contact form below to discuss and disect India, Finance, and anything else you think makes sense

No break from trading this week as another broking NBFC tops $400 mln in quarterly revenues following IIFL efforts yesterday and with broking revenues not dipping in one of the most inactive lulls of equity trading in recent times.

Dr Reddy’s results look nippier solely on last year’s poor Q4 but revenues rose nearly 30% at INR 33.4 Bln , annual results topping 20% on Sales and still 18% on profits across at least 2 bad quarters out of 4 reported. Generics accounted for INR 82 Bln out of 111bln in Sales. GVK power results this afternoon were wierdly out of whack with some tussle forming with APTRANSCO while GMR seems to be progressing along expected lines on cutting debt.

Nothing of note from Novartis or Pfizer yesterday Given the wierd secrecy arround mnc accounts one cannot immediately comment on 90% of their profits (Novartis) being from other income and being (un)affected by transfer pricing

Anyway the wind out of shorts jumped Wednesday indices to 6150 and markets are trading a t their highest level since 2011 while the rupee from trades on Monday continues to stay around 54.80 and expiry is going to be easy for long traders in options , shorting options now key to an ever changing vocabulary for our middle tof the tail at BPOs earning seven figure salaries or hoping to make some disposable spreads through trading, hear hear..( Three fat tail events discussed in here, find them and write to me for a mid week mania contest entry, your favorite candy ata favorite coffee place for prizes)

India Morning Report: markets tinker with 6000, shorts fail again

Shardul kulkarni, despite his hanging on to the short trade on the indices since 5800 for the 5600 mark or thereabouts is a pretty chastised man as he leads the discussions of the index topping off at any time and falling south. if you subscribe to his school and few still do including DIIs, you would expect larger profits in the aftermath of a continuing move north, giving these positions extra incentive to come in given Nifty volatility is just south of 16. However, the depth of the market and i do not track the Historical volatility measure to track the ranges otherwise , the IDV measure could again give 25% upside from that.

The Ascent of Money
The Ascent of Money (Photo credit: Earthworm)

The caveat being the monthly series are still not good for the volatility trades and this move cannot be captured with May series transaction costs and premia making it more probable that options will lose the extra profit opportunities across voltility(vega) and the prices (delta) itself and thus the long trades have to be played in Cash equities or futures rollovers till LEAPs also make an entry for the large pool of wholesale trading money that rules the Indian markets going forward.

But then trading in Autos for this limited period is strictly a choice for the liquidity or requirement for trading income you might see as it does not befall the fundmentals of the sector despite India Inc’s impending bounceback and if you are already not long 2013 for these few scrips in the sector you might have to rule out 2013 for any opportunities later.

Today’s newspaprs carry the concise summary of results season, showing the outperformance on profit growth of nearly 20% with raw material costs down almost 5% and Sales continuing to grow only in retail/consumer and banks but many select stocks have broken through the 20% topline and 30% bottomline barrier thru a mix of cost and sales efficiencies even as in the FY14 periods the downfall of PSU bank sales continues unabated and a limited impact of the resulting credit slowdown might still show on private bank top lines esp in retail as banks fail to reduce credit costs having no option but to continue to raise cost of retail deposits, continuing with a unified ;term structure’ for retail and corporate / wholesale customers

Indian markets have to respond positively as rare cash chases India after a long hiatus and is sticky for lack of the promised revival opportunity in China and Europe. High yield debt meanwhile also presents a global investment opportunity at this time with yields just 6% may actually be supported by the US fixed income markets chasing higher yields and creating a move up all across the term structure  to revive the interest rates starting with the 10 year and smaller yields

 

India Morning Report: Nifty recovers despite Cobragate 2

Capital Group Companies shuttle bus, Irvine, Ca.
Capital Group Companies shuttle bus, Irvine, Ca. (Photo credit: LA Wad)

The follow up “revelations” of almost all due process (sic!) used to manage fund accretions thru mutual funds, insurance and deposit products in the Sub continent’s private Banking/Wealth Management units failed to enthuse the markets despite the expected ‘seriousness’ again to be accorded by regulators, finmin and banks’ compliance functions as known tricks of the trade admittedly still deplyed by at least 17 of the accused banks are so commonplace that cooperation among banks also part of the revelations is a defacto quantity and yet not news at least to those who try to engage the markets and develop the discipline of asset allocation between short term liquidity and longer term investment/retirement and event needs. Though some youth might be encouraged to consider this as a sign to push for transparency and progress and banks will show them the clean house they need, these practices are not even necessarily questionable and are known to all salaried taxpayers who remain most enumerated in the Indian taxpayers contributing revenues to the government.

 

One wonders the efforts for black money recovery could further gain pace but only from continuing increase in banking deposits and registered investment products though you would agree that a full fledged DTC implementation and that of an integrated GST would have had the benefits to revenue one expected. The morning has recovered since the Cobrapost expose with the Sensex up a 100 points and the bank rally is still alive if you do hold long positions on the bank nifty

 

Fixed income yields have not ticked down with an eye on CRR pushing pressure from rate cut to extra crisp liquidity in the coming policy or two and RBI also will be busy with arranging OMOs and as always look at its longer term SLR/CRR obectives in this light a s needed

The Rupee in this leg is bound to follow a complementary target to the equity moves but with lesser dissonance between the two markets the atmosphere this week is overall more conducive to building up long sides of the trade and even expecting Thus do not play for volatility trades in this series or look for too many day trades unless it is your favorite mid caps or blue chips still not out with their results and outlook for the rest of 2013  and which you are fully informed about.

 

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

 

Bank Results Season: HDFC Bank Q4 grows 30% PAT and Net Interest income

HDFC Akkrama!
HDFC Akkrama! (Photo credit: prajayogi)

 

Net interest income for the Indian Market leader in Private Banks rose to INR 43 B from INR 33 B 26% on year/year growth. As dividends from insurance have also started showing up regularly every two quarters consolidated PAT has been growing unbridled past our 30% watermark. PAT for Q4 ended up at INR 18.90 B, a substantial shoring up of business performance in the last six quarters when it began a series at a strong but smaller share of the indian market with INR 12.5 B quarterly profits and  INR 26B NII

 

A CASA of nearly 48% however with Advances at INR 2.4 Tln nearly not growing fast enough, deposits have closed in on the INR 3 Tln mark. Though its cost income efficiencies rival the most superior in the industry, the funding structure of the bank still shows up in a heavy 16.8% Capital Ratio in Basel I terms which would not get negatively impacted in the Basel 3 regime for Indian banks and an Advance / Deposit ratio near 85% and gross NPAs of less than 1%.

 

Though flash reports have not mentioned it yet, Fee income likely tracked more than INR 28.8B and the bank needs to attend to credit growth as a main objective and define trade credit /transaction banking and commercial lending separately going forward as also wealth vs traditional retail and loan product income in retail where new blood is likely to strike alongwith limited competition from indusind and kotak bank

 

The detailed exposition of year end results will appear in our traditional HDFC Bank vs ICICI Bank face off after the Chanda kochchar led bank’s results are announced.

 

India Morning Report: Cheerful markets for FDI inflows, Pensive memories of a growth phase of IT industry

Jet Airways IFE
Jet Airways IFE (Photo credit: Wikipedia)

 

If IT were a mere product than employment for millions, it would be seen to be in its mature post growth phase ready to be phased out by a new product or business. That is not a valid hypothesis, and perhaps not a valid criticism but yet a good attempt at slang , street smart catch up with the good times. Even as HCL Tech follows Wipro as Wipro opens the week headed to more than 10% lower at open, HCLTech will likely lead them back once they reach a sub 300 level here. As long as we are on the out tray, ( out of fashion vs being the ‘in’ of the last two decades) one might also reserve judgment on the golden M&Ms, Mannapuram Finance and Muthoot, both actually having been thru worse in the last two weeks but that we’ll underwrite as being on the up and up from here, calling not just a bottom but an active clawback, though one might rule out active recovery in these till results season stars are over and infact the same can be ruled out in most of the midcap.

 

On individual scrip recommendations apart from commending the HCL Tech short by Mitesh Thakkar and exhorting my readers to go forth and make profit on HCLT.NS corrections, to join the stream and strengthen it for bigger payouts I would just add one bit of caution against non recommendations by Ashwini Gujral on the Jet Airways story. Anyone who thinks Jet will remain in this channel and not reach 550 again is flawed or limited by their prior analysis of a different fundamental and as Technical chart Guru Ashwini G. will just exit this limited (non) trade idea of his once the scrip beats prior targets and resistances and Jet Airways per se remains one of the strongest MidCap non Blue chip picks in the Indian markets on par with pharma midcap plays which realty speculators and chart gazers run easier with because of studied volatility and proclivity to oscillate in SHM around the mean traded price almost at beck and call.

 

Similarily Mr Sukhani’s view on banks and the nifty are always a little tentative at ‘U’ turn moments and one should not discount them in a hurry nor excessively mind them while looking at even positional trade except when one expects to run in for an intra day bet or two. Bank of Baroda may not grow faster, higher and stronger in a hurry but Banks per se have been out of favor unnecessarily for long part of the 2013 trade and as they remain half the market cap and two thirds of the liquid market one would venture its the easiest pick to grow with if one chooses YES Bank at this time, headed to unknown heights on its stock price.

 

The April series has seen a 14% decline in IT till Friday and the index is safe for 5600 puts sold positions to build further as booking profits on sold puts of last two weeks is likely happening in the first session (before noon) as we speak. The Land Acquisition reform Bills are to be keenly watched before the market tires of this brief comeuppance yet to be characterised as a rally while Fixed yields weather down to 7.75% in grudging admiration of the Rupee’s performance, inflows and the fiscal accounts. If the yields had indeed been leading the trend basis the conomic forebearance of India inc and the improving data, they would have fallen to closer to 7.25% even by now and thus one sees a lot of strength available to equities if the results and statistics can keep the faith making a mid week tentativeness a good point to start a big positive institutional trade even as HMT restructuring is approved and coal supply agreements signed. Coal India’s divestment plan is still threatened and complicated by the LRB (Land Rehabilitation Bill) being on the table in parliament and the Food Security Bill precariously close to being threatened by a cornered but fragmented opposition

 

 

 

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: Here the bounceback, there the banks and airlines

Anjum Bharti - 01
Anjum Bharti – 01 (Photo credit: Adarsh Upadhyay)

A short and quick stab on Monday will show that efforts continue to keep India Inc juiced as Q2 will likely return a broader cohort of companies that increase their bottomline based on continuing decrease in non food core inflation, and a small measurable uptick in production.

Most of the market business still returns to banks at their low point of the cycle and struggle is on for a better run rate for deposits on the growth. The only negative skew to this cycle being that banks cannot cut any rates of lending as they maintain interest bearing deposits to an edge to market investments or hope for better borrowing rates for themselves despite the professed rate cut forced on the Central Bank

Taxation changes to mutual funds that till now paid Capital Gains have leveled the playing field somewhat  the in the new budget but the banks cannot make up for the loss of money market deposits placed by large corporates earlier so quickly. Retail unbinding of savings rates have already scarred the proposition for mainstays like ICICI Bank and HDFC Bank as new business is the most important of all business segments in any industry and esp so in retail banking. Short term Mutual Fund investments now bear 24% tax.

Bulls remain in Auto (Bajaj Auto not Hero moto, Maruti and M&M but Tata Motors too) , ITC, Bharti and IDFC and may not exit healthcare or enter infotech for longer than intraday business

Allowing competition in International flying with a fleet of 10 is good news and low fares have been promising in the off season too. Rupee remains strong and will likely climb outside the 52 range too if foreign investment portfolio flows indeed do not ebb as March seems to promise. Again a caveat to Domestic institutions to keep cash for such rallies and not miss the bus or their overall performance base will erode faster than they have the opportunity to ride another big multiple growth wave that last ended in 2006-7

India Morning Report: How wealth now hates equities for keeps..

stock market
stock market (Photo credit: 401(K) 2013)

 

Globally emerging Markets have become a unique asset class and the first month of 2013 was as sunny as the latter part of 2012 in terms of asset flows. US enters a period of so-so uncertainity in equities a stronger currency on the anvil to stew the growth equation for the largest democracy, and not mirrorred in the Yen’s ever increasing appetite hitting a weak 94 /95 against the Dollar last week enroute to par economics.

 

However predominantly from investor behaviour on MCX’ new segment highlighted in launch yesterday with volumes of just 1.1 bln it is obvious that wealth that favors Oil speculation, Fixed income, Currency and Commodities is wary of this simple growth paradigm advocated by equities and even when it invests in growth it by passes the “stock market” dream with much more muscle than any lip services its banks pay to the segment. Though at Goldman Sachs and European houses, equities trading for clients till forms a substantive segment of business, back int he country and in real markets Equities are failing to entice banks, institutions and retail wealth equally miserably.  (Nifty bottom is capped at 5800 at its worst intraday moment and can be bought)

 

It is possible that ironing out execution flaws and goading institutions to trade the segment in due course will bring volumes to India’s newest stock exchange, but it is unlikely that equities get any more weightage in this large wealth market already lening on just that precious drop of gold more than anything else and addedly missing its calling in the global markets with shallow and reefy fixed income, currency and even commodities markets though courtesy of MCS we have volume leadership in key contracts.

 

Structured Term investing probably brought the equity paradigm to oratory finery professed by the rich and the nouveau rich, giving them cleaner mirrors into what they wanted and perhaps their disregarding risk is what made them pliable which would be a pity as that market is unlikely to be permitted to grow that size again as Derivatives would go into regulatory scrutiny in more regime than those like Singapore and China willing to publish new regulatory regimes with large chinks int he armor, but that in turn just crimps the prospects of banks rOE and those seeking employment predominantly in Finance in Banks and other fund investors (

 

The original Private Equity Council logo in us...
The original Private Equity Council logo in use from the formation of the organization through September 2010 (Photo credit: Wikipedia)

 

shadow banking). All classes of non bank investors including Private Equity though Hedge funds still trade in equity at almost negative returns, have shunned Equity markets underlining the need to perhapds reinvent the paradigm, which iss till more understandable and germaine to capital flows than even the post Bretton woods world and its currency wars

 

The Stride Arcolabs deal with Pfizzer at 8X Sales at under $2 bln highlights the efficiency of Dealmaking and Secondary equities esegments are but a highlight of the equity charaacter that allows such Capital flows to underwrite the growth in both G10, G20 and the emerging economies

 

 

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: Is that the big breakthrough to All time highs?

Questions of consolidation have changed to ways of finnagling the new target for Nifty though Domestic institutions keep selling as on Tuesday and not many found reason to miss the India Morning Report yesterdayas we probably cowered by the repeating of underperforming by ICICI Bank to expectations today decided to skip the report 9 strictly for personal reasons but no one would believe me)

ICICI Bank has also not outperformed though it belongs to a sector where PNB has managed to underscore recovery with jumpo profit growth and profits of INR 13 bln on NII of INR 37 bln ICICI Bank would likely out score  them by Q4 itself in NII terms and did by no means perform badly though PNB’s beating estimates is finally carrying the banknifty into tomorrow’s new series. Expectations of high volumes in F&O expiry are likely to come to pass as TV18 yesterday itself reported a 44% rollover in Nifty futures into the February series.

The first 6300 targets from domestic broking houses have sneaked in and we are thinking more in terms of markets managing expectations as necessary without losing 6000 or 6100 in the Feb or next series and then steaming past 6600 is likely the plan but each is more defensive than the rest and it will be our recommendation too.

For one, policy execution has not improved, another, people could actually believe and wait for an up rating of the sovereign in the background of the current roadshows by the FinMin and thirdly the main perpetrators of missing NPAs coming back to bad debt like Allahabad Bank will be reporting pretty bad numbers as All bank reports today a 40% decline in Net yoy to INR 3 bln

Important reasons otherwise for keeping expectations hedged would include the importance of having a welfare budget for Chids’ Rahul and congress (UPA) and NaMo’s ‘threat’ to quietly come over to the center and rule which would likely spark off an important after reaction in India despite India Inc protestations of support with industry in Gujarat likely to be seen as a big positive for his candidature

ICICI Bank has reported a better NIM of 3.07% improving by 7 bp over last year and also sequentially keeping its new NIM targets alive and might even guide much better ranges Chanda Kochchar has hinted at in the last 3-4 quarters

 

Bank Earnings India: YES Bank expected to grow to required size (Q3 FY2013)

Organic growth component of the bank’s strategy has shaped up well and even the despondent NIMs shaping up into a firm 3% mark this quarter as the bank ramps up on savings and Tier I Capital thru QIPs. The bank’s loan book probably increased Corporate exposure vis-a-vis its Agri book and the Provisions have thence grown by more than twice as required at INR 0.56 Bln but the bank has brought down Gross NPAs to 0.30% of the book and net NPAs even lower.

The bank states in the earnings conference that any rate cuts will accrue to NIMs CASA is nearly 20% growing from 17.3% to 18.3% and NII is well above average even for a mid sized companies at INR 5.63 Bln and Net income at INR 3.42 bln. for a book of a target possibly closer to INR 60 bln for the bank the growth in NIM is probably stating that the bank is about to hit the big league as is obvious from is well-rounded scores in management and corporate responsibility though its early single line focus still makes it an outsider in Corp loan syndicates.

Bajaj Auto results are on the wire.

Up ↑

%d bloggers like this: