Gold trades have to be conducted on cash only basis, the condition forcing Titan industries which has made a successful transition from watches to Gold Jewelry retail among others on the back foot as without Gold on lease Payables and Receivables inventory cycle / turns Payoffs would be adversely affected. As we
at advantages.us in yesterday’s update from the 8 core industries, Indian IIP remained 2.0% and Industrial production below 4% was a little cheered by March data being revised buy almost a third to 3.4%. Caital Goods slumped again n april after a 6.9% in March to 1%
Contrary to popular fourth estate perception (considering traders were not locked into HFT opportunity trades, the 4th estate must be the purveyors of only significance) the exit of $2.7 Bln from Indian debt does not affect our CAD very adversely or constitute more than 6-7% of our stock of debt infact probably short-term debt itself would have been unaffected by the withdrawals with a minor increase in Indian yields to 7.28% before the good news stabilised equities and the Rupee trade. The equities traders should thus look at the markets bottoming around today’s intraday lows before 9.30 am at 5750 by the end of this week
Bajaj Auto which weathered the storm till yesterday was the last strike of the “scourge’ and we still feel the markets are not just wanting to be back in business but conducted the bear opening ‘s finest hour in Wednesday open to mark the stability and depth of interest in Indian equities. Back to the IIP, Non-durables are back to 12.5% uptick as we had expected for March ( which should be equally sunny after revisions) manufacturing is nearly 80% of the IIP in its current format and the top 38% core industries including Mining are reported separately. Overall CPI remained at 9.3% and the Rupee is smartly trading up as investors expected no dramatic turnaround in this data esp those following the India business here.
Seemingly ONGC and GAIL are back after the run on OIL prices turned the ship towards pirate shores late last week and markets chewd u the most easy catches on the Rupee crashing thru in its sudden derring do move ( Our take; in defence of the dollar) Titan is still down 13% in afternoon trades, and one expects gold finance NBFCs to be torn apart before they are allowed to defend their continued business model as the CAD crackdown gets back into gold imports definitely prolonging Gold’s recovery in International markets collateral values on NBFC record being under severe pressure, the firms would get by fine as long as adequate margin is proved to be available within this week The Afternoon session recovery has in fact brought the Bank Nifty back to positive scores and dolla r is trading ready to go below the 58 watermark it just breached yesterday. Domestic Institutions are unlikely to respond immediately to this new buying opportunity as market consolidation slows back inflows into Mutual funds whose buoyancy is currently a high for may frm debt fund inflows on the sharp moves in yield, as usual corporate treasuries walking away with late honors.
The Mahindra Satyam – TM merger was a no show on impact as values have historically traded around daily valuations on Satyam for close to 5 years now before and after the company’s crash into oblivion and remaking of the same
Private banks and infracos still remain asked for opportunities for capital in the international Markets, yeS Bank’s completed QIP though earning it special attention in trader sentiment breach in the AM Axis and Idea continue exploding as of ‘yore (no rhymes) for the third session on the trot as they isolate all those with unique knowledge eigens of their ‘apna India markets’ rising 20% in Open Interest today.
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.
The early morning run for the Nifty has panned out really well, with the 5850 mark looking as enticing aas the hitherto 3800 mark(5600 from August) and no employment for traders yet again on the upswing or as now most would like to say in the week of consolidation after it ends the day after expiry without new brilliant moves of mathematical elasticity of direction brought about by Expected returns of each stock. algorithmic/Program trading however is different yet and with new regulation pon HFT preceding other countries’ attempt at controlling the HFT beast, Goldman Sachs trading rooms and that o f JP Morgan will continue to resemble SOHO offices trading the solitary Gilt in action.
The OMO scheduled as promised after a big break that definitely helps the cause at many ratings analysts’ desks is still required though for what would have been $3 B but is considerably depleted in Dollar terms . Similar problems with credit growth data also top up your and my morning cuppa as the absolute growth of INR 300-500 B every fortnight is now going to be a below par performance especially for one of Asia’s Top 5 equity markets of 2012 and probably the Top 3 in 2013 as Phils and Thailand are probably over the hill from all the buying un abated since china’;s slow poke began in an atmosphere of European banks’ left with Asia as the only profitable franchise in 2010 and continuing through their liquidity squeeze on Asia and post the ne liquidity moves of 2012.
The Euro is king right now among currencies and that means the Gold and Silver tunder will be missing for some more time though buying has begun. China’s industrial demand for silver had thoughtfully started increasing this quarter but accordding to somenon conventional indicators china is still a long way away from a beneficial breeze starting to blowin new custom even as impports continue to rise optimistically keeping retail sales steady on month.
Back home in Mumbai, Bharti infratel IPO is finally up and running and seeming there is more clarity in the CDS market for insurance cmpanies as well which could be the leather for the leather hunt required in fixed /income markets to keep the comeback int he currency markets esp for those longer term rupee investors which have stuck around after banks withdrew fromtheir Bullish rupee positions just last quarter albeit a bit too soon. Despite market movers, I am not very fine with the move in Canara Bank or other PSU banks that are keeping the Banknifty abreast. Its pure sacrilege of the same variety that brought the house down last time. NMDC should be a good issue and good pricing will bring good treasury gains to banks supporting Divestment OFS issues like the one priced at 155 last fortnight