India Morning Report: Portfolio investment highs let India story dominate

Investment percent gdp
Investment percent gdp (Photo credit: Wikipedia)

As investment flows confirm net positive investments in India on a regular daily basis, making the total for March closer to $3 Bln or close to $150 mln per day (INR 900 Crores) , India and Indonesia keep hopes alive for Global equities and EEM flows remain negative with exits from China, Japan and Korea closing out on any hope for recovery in North Asia with China remaining dull and Japans deficit imports coming at the cost of lower Exports being kept on deficit mirroring the phase of growth investments without concurrent investing flows.

 

6590 levels obviously proved daunting for India Inc and markets returned the gains out of the morning trades after a buoyant day for equities all around, looking for new levels not belying the sad events of 2012 for Corporate India Markets stay away from Banks as markets had a big open on Monday and new levels in private sector banks seem to wait for PSU banks that continue to be neglected for their larger than life NPA sores and aches.

 

Reasons for cheering the performance of Auto and metals however still seem t o be further ahea d on the road to recovery and have hardly earned their stripes. Bank License hopefuls that still include the Aditya Birla Group and a couple of other corporate houses are probably caught unaware by the extra scrutiny imposed by the Poll panel ahead of a new government in steed at the Center. RBI has enough reason to deny corporate houses a chance to play with the banking system but it may be difficult to deny claims of available NBFC models like Aditya Birla Money ( Diversified Financial Services ) AND M&M Financial Services ( Retail unsecured/Auto Lending ) after satisfying the NOHFC structure requirements, giving the CEntral Bank a tytough decision as it probably wants to hand over no more than 4-5 new opportunities

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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

 

India Morning Report: Value breakdown continues to reassign Nifty weights, banks in trouble

Of course Banknifty still has another 1000 points to go but the ramp down in PSU banks comes at a price for ICICI Bank and HDFC Bank specifically and PNB’s rise similarly would cost the markets more understanding for the non performing PSU Bank portfolio that will also rise, PNB having no real score on NPL performance either, clubbed with the worst of n=”government owned banks” whose non reporting of NPLs in time earlier costs the Bank capitalisation a good 10% on more than 5% of the Loan portfolio having to be put to waste immediately.

Delivery flight to Gander 737-700 Boeing Field...
Delivery flight to Gander 737-700 Boeing Field – Seattle, WA August 9, 2007 (Photo credit: Wikipedia)

Jubilant Foods has a short call on it finally even as Jet Airways continues its uptick and IDFC also corrects till policy execution calls die out or are converted by the government positing as always more on fare hikes which can be rolled back and diesel hikes that cannot be implemented from the looks of it. Add to that , traders and investors (foreign) would also like to see actual divestment in Hindustan Zinc and BALCO as Vedanta has already made a good offer for the residual stake and legal issues bogging down this government would not be easily tolerated. But then the spectrum discussions have already panned out for the government after the setbacks from the Judiciary almost a year ago.

A Jubilant Food, Titan and JP Associates move down could also signal today being the last day or the endgame of the correction as the weekend would likely be positive for the markets when they open on Monday. All in all a lazy Thursday and a reconnaissance up for markets on Friday tomorrow as they figure out any new costs of arbitrage on fundamentals as we remain part of a high interest rate economy in terms of market structure with growth concomitant with inflation and depth of market  ( as opposed to nascent high-speed growth in Indonesia, Thailand and even Pakistan) coming at the cost of lower available floating stock with only 3% of the population at high tide estimates investing in equities and Domestic institutional portfolios and Asset allocation strategies well-worn with two decade old picks.

Pharmaceuticals are doing well as they are not undone by circumspection or saturation at lower levels of penetration still dogging both Discretionary and Non Discretionary consumer plays

English: ICICI Bank - Leeds Branch - Roundhay Road
English: ICICI Bank – Leeds Branch – Roundhay Road (Photo credit: Wikipedia)

India Morning Report August 01, 2012: There you go, Dollar is down, Rupee will correct that?

 

Korean surplus of $2.7B for the month was lower yet followed the Dollar index down becoming stronger and Chinese Economic data fooled quite a few with the state sponsored PMI going to another new low but staying above 50.

Economic conditions have improved however as China’s property is returning to a comeback and both Indonesia and China reported stronger PMIs , Indonesia scoring a 51.4 and China manufacturing scoring a high49.2 on the HSBC MarkIT surveys ahead of last month’s 48. While lead times and prices are weaker in the Chinese case, in the case of indonesia they are already stroner reflecting continuing groth as the previous series was also in expansion.

Indian data as usual is likely going to be in the comfortable 50s and then next week Services data would again be leading US.

Nifty is flat, banks are yet strong, HDFC Bank should get caught up with the leaders in pricign and the Northern power grid’s woes unlikely to affect production and services further. The Rupee should strengthen further as the Euro tracks to 1.23 and the Rupee has opened at nearly the same day before yesterday levels as it is apparently rudderless, india having being read land clean like a whistle, Rupee decides to create a intra day breathing and diving range with new Olympic disciplines in and out of matter

Economically India is stronger but as the rupee says, prove it! so do equities, cautiously optimistic and apparently time for a technical dragdown to the earlier Fibonacci levels would now make extremely sensible trading.

 

India FDI Report (March 2012)

India’a FDI process received a tremendous boost in March after $2 bln flows in January and February, itself a fair score were boosted to $8 bln for March even as international media slips into a morass susing the Indian voice and using their ignorance of India to blindfold and then play with Economic Darts ( or half cooked $$art points).

Hamersley Iron 20 class locomotive at 7 Mile Y...
Hamersley Iron 20 class locomotive at 7 Mile Yard entrance, Dampier, Western Australia. (Photo credit: Wikipedia)

India is well provided with such munition for its unfriends starting with the 4% Current Account Deficit and the double digit depreciation of the rupee to the curbs on FX trade imposed by RBI since October and added to today with punitively enforced conversion of Export dollars to a local currency. That boost was also needed for the Rupee as it faces severe action by European speculators stunted by the lack of LTRO ritual and a drying up of business back home.

FDI grew in the last month of the fiscal and even allowiing for the fiscal end corrections if any in the tabulation, is still a great score considering that FDI in multi retail was never satisfactory after coalition politics robbed the Indian markets of a great expected boost in the Hindu new year. The $36 bln FDI in 2011-2012 is still below the FDI receipts expected when the Fiscal began last year before it ended on a low note, expectations of growth scaled down to below 7%. Asian competition from China and Indonesia apart, India still expects to see a boom in retail consumption and needs a lot of private participation in infrastructure. Telecoms and GAAR apart as they target specifically sensitive corruption and governance issues, Foreigners remain welcome and banks may not be the only ones growing business in Asia esp India in 2012 and later.

Routing of FDI thru Mauritius has been a special charm for the India story signalling to most Indians on the ground that jugaad is still the order of the day and hence the efforts by the government to re emphasise that india is not one of the banana republics or one scrip economies that Western investors seem to favor. Indonesian and ASEAN FDI story is however more freely linked to Chines e FDI into and from these Countries.

The March rush may be explained by earlier announcements, large ticket investments expected in Mining and Energy from BP and other global players. Rio Tinto is part of a diamond exploration project in Central india.

Happy Thursdays! East is East?

NINE NEW RUPEES IN A ROW
Image by Michael Francis McCarthy via Flickr

RBI is unlikely to post extra liquidity except thru 9% auctions to buy bonds at their window weekly. There will be no CRR cut, non food inflation expected to trudge down to negate everything else and the rupee expected to walk out of the hole it dug itself. Funny thing is, all of this is going to happen in the rest o f December and then the next Rupee level ( ML drives a 58 minimum) sets into view at the far end of the scope.

ECB/FCCB failures if any unsung ones yet, could in the meantime drive rupee deeper into its first hole, On this golf course hole Index ( indicating depth/difficulty of hole) increases steeply with each putt. Thus, no putt, no hole! That means no FDI, no retail, no aviation, no more ethan two strategic investors for Kingfisher, AND NO BUYING TILL THE INDICES BOTTOM OUT! stay away and eat healthy in the holidays! FCCB items have been added in a new post timestamped concurrently

The reforms have hit a wall. And no Wall street journal cameo can undo that. Livemint.com, ET and advantages.us do not matter in the larger scheme of the writing having been writ on the wall, the pen moves on to spoil more walls for others. FT’s caught on to its weaknesses in understanding India, it pushes Indonesia for Indian government to realise blah blah blah! ¬†Indonesia’s got another crash coming of its own making as the Coal situation worldwide is causing serious powerburn. Indian rice is replacing Thai contracts in Philippines and Indonesia as the floods in Thai shut down the economy. Japan has not recovered yet. Korea and Taiwan doing well right now are watching out for the big wall once Chinese slowdown ripples up to the coast.

Inflation figues would be updated here as they appear. Fuel is still 15.5% Food inflation a sharp ciliff from 8% last week to 6.6% and Primary articles ( non food + basic + food) at 6.92% Good show! SIAM has updated November sales to 171,000 units from 159k last month

 

A hike up the yield curve is back on the agenda

I'm not entirely sure what the umpire is signa...
Image via Wikipedia

..with so many idle hands on deck, exemplified not just by mid senior unemployment but also by a cash reserve of INR 4.7 Tln as studied by ET and a 200% rise over 2010 there is a lot of going back on the threatening tones adopted with RBI last month. With inflation at 10% levels consistently, the longer yields have already responded, and with monetary easing in fashion inculcated by the US Fed, the market is likely to take a steep hike in yields on the long end till the effects of the easing are finally dispersed and interest rates clampdown can have an effect.

If you see other nations reducing rates, Brazil is the example which should be valid only as it has too high a watermark even at the current 11.5% and at least 2 rate hikes are required before it reaches the levels envisaged by india at the peak. I would stoutly defend RBI till our rates reach 9.5% to 10% as inflation refuses to climb down and expect many more to defend RBI hikes in the coming weeks.

Also, maruti and Reliance performance could be used as an example of how things have gone wrong with India inc and at that time, easing rates may not be good policy for us just to be in line with Brazil , Turkey and indonesia. Israel’s behaviour is always more in line with developed market estimates and growth is a challenge where Indonesia is just trying to blind side investors and policymakers alike with its eagerness to follow first into rate cuts. Neither china nor India should respond to these measures or even treat these as pressure as interest rates in Indonesia (6.75%) or Turkey. Turkey did get a positive response from reduction of rates around the 6% level itself but one must understand its response wis likely 5 times that in India given its nearness to Frontier markets or its newness in FDI regimes and the geo political overhaul committed there in the last one year and India cannot really follow into that policy regardless of the heartburn it has caused to Walmart or Starbucks and other remaining FDI candidates unable to enter indian markets in the middle of the festive season

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