India Morning Report: Everything is alive and some more are back in play

An unusually late report from our end again, but the markets continued flat after having a scar Friday afternoon closing at 6080. The markets traded closer to 6100 in the entire session and the yields again turned back up to higher than 9%

and the Rupee stabilised at 63.5 levels. Any move int he Rupee above 64 is as good as the other breaks markets are looking at and the Rupee wll in that case skid till it hurts around 69-70

The month’s IIP data reports are apparently still awaited at this long hour and markets have been trading better consoled by the slowing down taper jitters and getting used to the “NO BUY” mode at DIIs and Funds. Power NBFCs have more or less completed the rally with REC moving into 220 levels while the cuts on ICICI(1010) and ITC(310) are also probably done with equity shorting again replaced by buy index hedges in this Short trade attempt.

“Pre-emptive Open” sessions on the Nifty saw the markets trying to guess at low levels for almost every other scrip and the muscle contest was a no show as Emerging market ETFs may be out of inflows too soon in the series but it is unlikely that they will actually see outflows or even if Fixed Income asset classes get more attractive than equities it will not see any equity flows jeopardised by the same desie any attempt to rationalise a link between the two markets

Mauritius and Cyprus being targeted by  India does ht hot mone yflows and in fact probably bodes well for the REvenue Department hose hands are tied especially as they already tried an illadvised reetroactive taxaion of deals like Vodafone, from an era when FDI rules were much more amorphous than today

Tata Steel may see profit taking but that and SESA Sterlite have reported true to form fgood results and with disparate sectors reporting today from Hindalco to MindTree and Reliance Infrastructue who has turned around on their Power revenues woes with Multi year tariff agreements the rally can move around a variety of sectors without paucity of defensives and without a tight upper limit or short duration limits on BUY trades

Seriously, a little gold buying or the returning of Oil demand is not a cause for a BEAR traded on these unvdervalued markets a s long as you have the money to sit and sip a cupa instead of fliing it too fast and creating positive notes on the VIX. One expects a dip in OI also as the short positions exit during this week and the F&O series will probably see more robust trading when such exits have been completed, more probably for next Monday

 

India Morning Report: Sharp cuts ensure quick bottom in India around 5650

Bombay High, South Field. Undersea pipelines c...
Bombay High, South Field. Undersea pipelines carry oil and gas to Uran, near Mumbai, some 120 NM away. (Photo credit: Wikipedia)

A more than expected negative reaction in  the Indian markets yesterday may have subdued analysts into a negative whirl as they were waiting for the same, but post the subdued slightly positive open in global markets, it increasingly looks like today’s move in the Indian markets is more a positive search for value than just a reaction to yesterday’s sharp negative move.

Though your favorite superanalysts may be recommending shorts at 5650-5700 levels on the markets , I would invite you to use this rare opportunity to further sign in to Indian markets in scrips of value except that though banks refer the most value potential they are not ready for a move up yet. ONGC and Tata Motors are good shorts too, and apart from the index shorts one can see the visible analyst reaction actually picking out rare weaknesses for shorts as Ashwini Gujral recommended in Option spreads shorting Tata Motors and ONGC . Telcos haev nearly recovered the positive sentiment almost immediately and exporters are mobing in the positive zone including Bajaj Auto and Sun Pharma

The heavily discounted PER multiples in the Indian indices also ensure further ETF outflows do not negatively impact Indian allocations and one expects debt market outflows to stabilise soon as well as the yields in the Fixed Income Market spiked n small volumes itself yesterday and there are only higher opportunity losses for further exits The Rupee can obviously not last at these levels having failed to establish any zones in the three breaches in last two weeks but as the “correlation backward catch up play has lasted almost all week, the rest of the markets are unlikely to oblige Rupee’s bottom making move in the next few weeks and is likely to be ignored in equity and debt///government bond markets

Shorts on UCO, Karnataka Bank  and Vijaya Bank will work singly and can be tried as pair with buy in Banknifty once BOB and SBI bottom out as the big movers in this move. A Direct air with pvt sector ICICI bank and HDFC Bank would be riskier. Nifty short strangles with the Nifty bottom at 5600 is recommended y IiFL which would be their first positive trade in the quarter (joking!) but a great one Short 1 put at 5600 and use to buy puts/sell calls at 5800 . Selling 5500 put would not be bullish for this market nor very remunerative.

 

India Morning Report: And that my dear is how a normal consolidating market looks like..

Singapore Flyer
Singapore Flyer (Photo credit: chooyutshing)

 

Unfortunately, the last two months were not normal for the markets at all, with most shorts alive yet unable to close the deal and finally breaking the buck whence this detail of markets opening and staying around yesterday’s levels instead of retracing everything is the real consolidation thing which should invite cattle herders in droves to this overtly spiritually marketed FDI and portfolio destination. As mentioned other Asia destinations are not so active right now and I am not aware of the depth of the new market in Burma (Myanmar) which is increasingly going to be a Hail Mary target for unregulated PE money (Hail Marys work more often than you think)

Meanwhile another big IPO from China and a portfolio divestment in Thailand should be enough motivation for any serious Singapore business to rush in now before the Hongkong dragons take over Asia hub again. Right now they are increasingly becoming the Yuan market in more ways than one.

Back on Indian governance, it is better than most other Asian republics and yet resistant to a full hearted embrace for foreign investors but that apart, there are now lesser differences that matter than depth and liquidity of the Capital markets even with BSE and MCX adding to the mix, the first few months of multiple exchanges not marred by flash crashes or other exchange level black swans in any other developed market geographies either like London and New york. Shanghai, Sydney and Singapore continue to look for diversification of asset classes and business with others like OMX, Nikkei or the myriad European exchanges led by Deutsche Borse and for india the local FII market in Luxembourg which still provides some investors to the myriad QIPS though India does not play with 144A placements and jurisdictions as often anymore.

Ofcourse after a buoyant two years Emerging market ETFs are again fighting for share with High yield and sub prime business and also we do not get any new allocations evena s the larger chunks sunk in China weigh down anchor on foreign investors amidships and the high  5900 market isjust waiting for another news event driven buzz ( I don’t know how that what we do here is different from a flash crash really and we do not even allow HFT or any pother program trading to trigger off a steeper slope into the selloff!) when the retail FDI vote happens today or tomorrow.

 

 

 

Pay me my VIX – India Morning Report ( Monday Pre Market Open 03/06)

Though the SGX Nifty has factored in all weekend heebie jeebies into the opening price, the increase in Volatility on Friday to 26-27 would indicate a likely rush to reach the “ultimate bottom” and shorts on Nifty seem to be controlled and careful while the buyers have been out in full strength at these prices even in 4900 calls now. At the worst it will be more 4400-4500 puts and 4700 calls. However, the week is crucial to determine india’s fiscal and monetary future. If it enters a bottomless pit behind these 4700 levels it will likely find more bananas than the precious investment which has already jumped to 3.5% from a contraction in the earlier quarter in the latest 5% growth shock

Consumer and Pharma remain very critically poised sectors as well. IT is more negative than positive and Banking is more positive but yet the pressures on the Sector are really higher even in quality like ICICI, HDFC, SBI and of coure the vulnerable axis under new management

Going back to the VIX, a higher VIX should mean higher returns on the Spreads, esp if you use Vertical spreads. Also cover asymmetrical strategies if you have sold calls

A Whimper for the results season! Ewww So Awkward!

NSE building at BKC, Mumbai
Image via Wikipedia

How my daughter would have reacted to them market story being played out..

The trading stories really lack maturity here in the NSE minefields of INR 1 Trillion — two trillion on a good day — with most value plays (Mid Caps) strapped on to 4 investors and 1 broker playing an amusement park ride and nothing so intelligent or scary as a roller coaster.

The results season just showcased how easy it is for Indian companies to grow double digits quarter to quarter but it is just not getting the bang for the buck as we look on to someone to start rolling fresh cash into the markets.

DIIs buying of course to reduce the impact cost stick on to this purchase cycle and are ending up with value picks where most of the leads coined by india bulls have gone kaput led by “rate sensitives” > Where SBI’s deposit rates and cost of funding was as low as 6% in 2009, its raising deposits by 75 bps to 225 bps along with lending rates as thankfully however been noted a s a great positive, but why they are waiting on ICICI Bank despite the big results or HDFC and HDFC Bank.

The erstwhile Mid Cap, Axis Bank has of course pegged on to a new size as the Big 4 locally and plans to grow slowly, an example of a stock market darling that got her ambition and served the investors well. But many more are waiting none fof them likely unresearched . The drawbacks are there nonetheless but not the ones recognised in the marketplace.

For example, without due liberalisation, most sectors now have leading stocks with larger sales and growth numbers, not listed on the Indian markets, we have the Emerging market ETFs supplying regular funds to India keeping India at a lowly7-8% weightage and the India ETFs getting into pretty laconic and clubby investment cycles some where probably because of the small number controlling larger sums. None of the drawbacks is so contrary than our predilection for the worst grade of investors/traders., like Morgan Stanley leading press and networks into a decided trend.

MS has a long history of catching the BIG LOSER pretty quick and in lthat it is almost a 99.3% consistent leading indicator on picking the wrong trend or a trend dying out. I am so tired and confused.

Morgan Stanley's office on Times Square
Image via Wikipedia

The retail consumption level off – Hero reports lower Q4

Hero Honda Passion
Image via Wikipedia

Profits year on year are down 16% and the auto number s for March have definitely scared observers as well. The profit deceleration is hihger than expected ( misses Bloomberg poll estimates by 2% ) Sales growth numbers are respectable yoy like for others as Bajaj Auto and Maurti, Hyundai ( even yoy pretty bad)

India just does not have the profile to switch to SME players in this age and till the dollar gets to levels of below Rs 40 to a Dollar, the Trillion Ruipee EV companies are likely to be good enough for PE or individual global portfoliso. Index ETFs are anyway 75% of the FDI with $1 bln per month likely to continue. disposable incomes allowed food and fuel inflation without concerns yet, but going forward the larger imported inflation and the transmission to manufacturing and the retail demand curves ( durables, autos, services) have been the immediate market concerns that need facts to displace the pessimism

Up ↑

%d bloggers like this: