India Morning Report: The Rupee now counting 63..62..61 , the Nifty counting 5900..6000 ..then?

The PCRs are already hanging by athread. But the long seen unloading in IDFC seems to be at an end with FT announcing investibility changes in IDFC and HDFC for the rebalancing from Sept 22. IDFC investibility is down to 54% from 74% and HDFC likely to see $208 mln inflows (JPM) from investibility rating increase from 74% to 100%. IDFC is also up 7% on the far end to the big story and is likely to move up with its close association with infra debt like at JP Assoc also relieved by Manoj Gaur’s latest sale of a 4.8MTPA Gujarat plant to a now 59 MTPA Ultratech under the Birlas (KM)

Meanwhile the index comfortably opened the sultry day proceedings at above 5900 and the Rupee almost tore into 62 levels before retreating towards yesterday’s day end levels. Friday’s 6000 level run  is thus still a given though the markets are not seeng serious buying right now and is not yet under the bullish impact of such salubrius India winning strategies as Import substitution. The $10.9 Bln deficit, a very respectable low given recent scores since 2009 is however still near the Post reform highs than the average rate as could be assumed by India Investors and the $75 -80 Bln trade deficit targeted may well be just par for the course if India Inc does achieve it, with Gold imports already under 1 MT in August (650kg)

English: Panorama of Sachivalay (Gujarat Legis...
English: Panorama of Sachivalay (Gujarat Legistative Assembly) at Gandhinagar (Photo credit: Wikipedia)

New layers of investors returning to the markts however muddy the prospective recovery levels of the recovery, some like Kotak expectng the Rupee to top off the move at 63 itslf. However with the 5th day of rally past ysterday with just minor scratches, today’s close may also be positive and selling 5900 calls are likely to be beaten before day end even though the markets are in an extended short covering phase through this week. IT stocks are nearing fatigue levels, cntriuting to India’s bullishness in ameasured move avoiding days of Rupee depreciation as they target longer term portfolios again, and markets now actually prefer Auto and other performing Economy stocks that are in cycle and not tagged defensives. Before the news of war in Syria died down $151 Bln was already the bill for Indian Oil imports in four months and that turnaround with lower Oil levels could see substantially much more sustainable interest in energy stocks

High CPI and negative IIP reports due today should worry no one as markets resume to wieh in on the fact that Foreign investors will likely keep India in th center of their Global portfolios. No there is virtually no risk of India aplying for sovereign debt default in the coming days.

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

 

Midcap Select: Opto Circuit, Adani Ent

OPTO:

Opto got a first device FDA approval in the USA thrui its Cardiac Science Corp subsidiary. It can now invest in marketing of its retail Wearable Holter Cardiac Monitors

ADANI:

Apart from being close to outbid on the LNG unit in Gujarat Gas (65% stake + 26% open offer = 91.5% of $1

A Meghwal woman in the Hodka village, north of...
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bln+ Valn premium on sale) Adani also commissioned a largest of its kind 40 MW solar plant in Kutch in less than 6 months. Kutch is on the northwest coast of India in Gujarat, also where Adani’s port and Tata’s Mundra power plant are located.

Ford rolls out Asia plans from India

Ford has scored a great win with its hybrid Compact SUV in its home markets as the Ford Escape in October and November ( head over to advantages.us to check out today’s Auto sales announcements in the US ) Its market share in December, likely to cross 15% with more than 171,000 in sales. It has planned to expand Indian capacity with a similar compact SUV here titled the Ford EcoSport ( WSJ India ) 

[[posterous-content:qlasovICwvCmAxIFBHnd]]Ford has planned a second factory in Sanand in Gujarat ( next to the Nano plant) for a cost of $660 mln ( INR 40 bln) and is upgrading its Diesel Engines capacity in Chennai by 33% to 330,000 for another $72 mln, while it has a current capacity of 200,000 petrol units in Figo, Fiesta and its Endeavour SUV specification

The Indian hybrid targets its earlier JV partner in India M&M which has bought a SUV company in Korea and could well face immediate competition from GM which has started doing better than Ford in India as also VW which is almost caught up without support from Suzuki the hybrid SUV is planned for $142 mln at current exchange prices. Ford will likely spend much lesser dollars on this project if it is indeed enacted thru 2012

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Ford rolls out Asia plans from Chennai

Ford has scored a great win with its hybrid Compact SUV in its home markets as the Ford Escape in October and November ( head over to advantages.us to check out today’s Auto sales announcements in the US ) Its market share in December, likely to cross 15% with more than 171,000 in sales. It has planned to expand Indian capacity with a similar compact SUV here titled the Ford EcoSport ( WSJ India )

2012_ford_escape

Ford has planned a second factory in Sanand in Gujarat ( next to the Nano plant) for a cost of $660 mln ( INR 40 bln) and is upgrading its Diesel Engines capacity in Chennai by 33% to 330,000 for another $72 mln, while it has a current capacity of 200,000 petrol units in Figo, Fiesta and its Endeavour SUV specification

The Indian hybrid targets its earlier JV partner in India M&M which has bought a SUV company in Korea and could well face immediate competition from GM which has started doing better than Ford in India as also VW which is almost caught up without support from Suzuki the hybrid SUV is planned for $142 mln at current exchange prices. Ford will likely spend much lesser dollars on this project if it is indeed enacted thru 2012

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National Manufacturing Policy / Zones

The NIMZ cities identified in the latest manufacturing policy area compendium of all identified microsites and

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large successes of India in manufacturing policy over the last decade. Japan funded Delhi Mumbai infra corridor, the industrial zone at Manesar or the village Dholera in Gujarat identified for investment can start in quick time. The Dedicated Freiht Corridor needs $7-8 bln, the DMIC even $40 bln or INR 2 Tln for itself, Japanese providing $10 bln and Private sector to be willing ot invest the rest

With a new Land acquisition bill, which nevertheless does not make it easy for someone to single handedly establish or grow a city in the wilderness( attract good talent for one, attract suppliers and ensure all resources in supply for another)  is still as difficult but where land acquisition and construction for manufacturing can begin like in Manesar, Haryana or Dholera , Gujarat can show the way to others if done right. Unfortunately winners do not include last decades export successes like Textiles and Auto ancilliaries and Services will be denied its place in the sun if it remains a National “manufacturing” Policy. The Buddh International Arena in UP near New Delhi with a NCR, Delhi address tag is a great success showcase for others.

Also, like Indian banks being told off in foreign lands, foreign banks in India like ICBC and CCB that have just opened should not be allowed to club their business with that of the parent country as it will stifle local opportunity esp where such large investments are expected by local satraps and a regular scam-o-rama is keeping the media busy from 2G to Mamta Banerjee Europe , in contrast has global companies and diaspora ( not remittances) that make such partnerships with banks global in thei rvery nature instead. Sadly some of them will leave or forfeit plans of growing in retail if they ever nodded to RBI

A couple of other ‘contradictions’ have to be managed in India, including letting farmers a share of real estate profit with the new bill in hand allowing prices without governemnt interference, delevraging required in the real estate satraps specialised for such acquisition incl DLF, JSW and maybe JP ( not delevraging but has hands fuull) or the new crop wlike India bulls and Adani which have to bear the blame for endless delays in the Power sector or the consumption successes like PVR and mall owners who are making profits only in the super luxury investments. Also India’s labor participation rates could soon be dropping below 65% ( nearly a low 60% in the mediterranean Euro crisis owners) and US that provided a great land of opportunity for educated talent from this country, also suffering a low participation rate of 64%

Interesingly India’s export growth, still keeps machinery in the largest categories, and should soon include

The Rashtrapati Bhawan which is the residence ...
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pharmaceuticals as well. Perhaps Farming can be mechanised, along with Textile cities and Auto ancilliary dreams. Loan mela, anyone?

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Ideas for Winning Investments: Adani Power & Mundra Ports

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Adani Power

This Gujarat based Electricity producer and co owner of Mundra Ports is agreat value for money with two good cities under its belt in gujarat and one in Maharashtra. The smallish power company has just upped its Electricity units produced 5.5 times and utilities in India regulatorily enjoy a minimum profit of 12-16% on all its sales. The company sells 88% thru Power purchase agreements and the Merchant Power component is already pricing at Rs 4.5 and upward i.e. 11cents is toward the lower end and relalisations could cross $0.33 cents for each unit during the summer shortages. The Adani Power units sell to State owned boards, in this case, GUVNL who owns distribution and even that lower rate is an average INR 2.88 per unit a realisation of INR3.09 per unit may grow by 20% even in the coming quarter thought the management does not give any such guidance and even if they produce the 7.5 billion units they crossed this quarter, the team is looking at maintaining the 50% yoy growth it produced in December 2010 and now in March 2011. The third turbine added 330 MW for the company and units at 85% availability have moved from 1.2 million units per quarter to close to 2 million units per quarter of which offtake from GUVVNL is assured/mandated for 85%

Mundra Ports

the private port operator finally overcame capacity restrictions on its new port facilities taking its annual income 36% higher to $500 million and Q4 profits 74% higher year on year to $84 mln, annual net profits with a great 50% margin to $244 mln (INR 917 crore on sales of INR 1938 Crores) the company also acquired 50 mtpa capacity this month from Aussie Abbott Port for $2.2 billion

India Results Season

Indian companies have been growing profits at 12% qoq as also sales despite the lower IIP and higher inflation and the report card ( for 732 companies as of today, check indiaearnings.com) is looking great

Gujarat Urja Vikas Nigam Limited
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