India Morning Report: The Morning after and the rush to October expiry, pre Diwali

Maruti Suzuki - A Star - Reflection
Maruti Suzuki – A Star – Reflection (Photo credit: Balaji.B)

 

Banks get a further fillip after a great policy picnic yesterday as the 7day and 14day repo allowances of 1% of NDTL rev up Balance sheets and as Chanda Kochchar explained, large projects will stay away for the extended holidays that is Q3 of the Fiscal till December and retail lending will be in high fashion, ensuring a good economic fillip to non investment GDP growth and due dimensions of a recovery with a good monsoon

 

This edition of the Morning report is late because of an exceptionally busy earnings week ( though technically i was engaged in an all-nighter on one of the better games out there)  The easy availability of government collateral apart, the Indian Banking system also enjoys, despite its overt concentration on NBFC and Real Estate Loans a still largely unsaturated map of loan portfolios with both these stakeholders whose importance cannot be underestimated in the growth cycle.

 

LIC Housing results were a great start to the rest of the week with INR 22 Bln in Topline and INr 3 Bln in Net Profits, boosting the missed Net Interest Income with other income and  as usual one of the first with their wholesale bank funding tied up. Big brother for NBFCs, Deepak Parekh led IDFC reports tomorrow while Auto scrips like Bajaj Auto and Maruti ( i do not know why) are in front of the rally that survives. Given the market predilection for selecting concentrated risk after choosing winners from a diverse basket, 6250 is already looking stressed if only in the bullish premium of the series futures being lose in the run today with merely 40 points chalked up on the Nifty,..

 

However as of now there was enough with bank stocks having come back from out of favor and apart from YES and the bigger ICICI Bank, HDFC Bank and Axis Bank, the others, especially the badly run PS Banks with near 5% of NPAs on the Balance sheets must start receding and winners again return to glory for a move further in the same run. IT will probably return to extra attention to allow funding that leg of the rally if there is one. Pharma stocks have been up as good results pour in from challenged players like Ranbaxy and high expectations from DRL keeping away from interest in the real winners in the midcap sector

 

Bharti grew more than 5% sequentially and EBITDA margins grew 1.2% on year to 32% though a one time forex loss impacted the bottomline. Markets were quicker to shrug off the net profit miss as the Africa business , late to the party reported a 18% sequential jump to INR 70 Bln revenues, Dollar value of the Business also climbng to $1.11 Bln. Mobile Data, finally seemed to have taken off for Airtel and while India markets revenues dropped the exected  dimes to an ARPU of 192, Africa more than made up as the company wh $9.7Bln in debt had hoped. The Forex cost hit Financing expense which jumped 38% sequentially. Also Revenue per minute in voice finally grew to 36.74 p from 36.39 p in June. Growth was 13% on year in the topline

 

DLF is hurting from the pre festive season but with the continuing woes sequential growth is for Q3 is down here as well still expected to be near 10% on year in Revenue and EBITDA terms , EBITDA margins have grown to near 39% for this quarter too ( estimates from ET/Moneycontrol)

 

The currency and bond markets are still subdued though they have responded positively to the policy’s tone of finality for the direction for India Inc, open options not sunting corporate strategy into a crucial business season

 

Good returns with pricing advantage for Consumer companies and fuel decontrol cannot and will not risk the India growth story, nor is Indian currency going to be compared with the likes of Brazil, Turkey and Russia at any stage despite our structural ‘diversity’ and the unsaid inclusion worries as with other more developed democracies like the USA. PIMCO leads the return of the non ETF institutional Investors to the India story as the kitty for October inflows continues to grow ahead of tomorrows expiry which could still happen into the 6350 mark and definitely should close at 6300 as rollovers complete within yesterday today and tomorrow. Maruti should ideally return to more reasonable valuations and attention shift to M&M Bajaj and even Herocorp

 

 

 

India Morning Report: The lack of political prowess of the Nitish Modis and the NaMos, Advanis and Dear Rahul!

The General Post Office and Reserve Bank of In...
The General Post Office and Reserve Bank of India building from across Lal Dighi in B.B.D.Bagh, Calcutta (Photo credit: Wikipedia)

India Morning Report: And after 5600, is 5500 ..then 5400, 5300, 5100, 4900, 4500, and on it goes pegging poor buyers..

That would be one loose definition of retail investors currently ready to be pegged as not so germaine and India being resilient and a winning post even as RGR takes the board at the Reserve Bank of India. Vallabh Bhansali tried a valiant effort while MF managers ( again to be free non academic and interested in discussing with the educated layman who has other professions to tend) can be loosely ascribed as the educated investors’ abode and banks as continuing bulwarks of pressure for enterprise even as the NPA saga will not bleed anew but will extend its lasting periods well into 2016.

However if you do not ascribe to these notions as a first party or as third party notions of whats ailing india, which we would happily accept is not so, coalition politics to come and the lack of political prowess of the Nitish Modis and the NaMos, Advanis and Dear Rahul are going to cost India inc dear. One of course does not mean this as a crutch of benefits of stable seating charts at the RBI here but the ailments of the system will not be solved by monetary policy and one sees , like the continued selling of infracos and infra NBFCs even as banks rebound on the news of the new Chicago educated governor taking over (Deepak Parekh also was prominent among those welcoming the change). Fixed income Yields and more promisingly CDS spreads could respond to the timely change of regime at the Reserve Bank

Beautiful Gold Jewelry Designs from Golden India
Beautiful Gold Jewelry Designs from Golden India (Photo credit: epSos.de)

JLR results will be down this term, the defensives have been hit hard with HUL and ITC responding negativey to being tagged defensives after just having broken into growth on the trendline for the 3rd time together in a decade. Its a wonder SESA Goa , Sterlite and Tata steel are still falling sharply and that just means the market is unlikely to quit correcting till the CAD measures yet to be invented by us or experienced Economists like RGR and CRA (Rangarajan) are implemented to sustain the Rupee. Pharma and IT, the big white hope of those living and operating other Indian businesses from outside India, hardly seem geared for growth, most sticking to just small additions fom conversions of Fx and Exports though a stable share not growing fr pharma including the continuing risers in Stride Arcolabs o rthe youngest pig to the slaughter , Torrent even as Glenmark and not Sun pharma look great investments for the future

DIIs are still not biting and rates will be hiked sooner than later even as RGR tries to keep the bridge between the politicos facing elections and rolling out the first entitlements bill (in cash).Imagining Jet Airways at 300 levels while celebrating the final inking of a 24% stake from Etihad would have been unlikely even for those who started 5, 10, 15, 20 or 25 years ago.

The Sensex could not keep its morning cues intact going into the 11 AM post morning session and may sjow one more steep eigenvalue of fall on th Nifty and Sensex even befor the weekend comes but then it is becoming likelier at these levels after 12 sessions that the markets will not be freshly bet short and that this time means you should take one big short but it is improbably improbable that from here the hedge you take in buying the Banknifty will possibly probably and without virtual nanobots, make likely more money in the period to August end of series. So, come ray with me the markets last at 5500

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