India Morning Report: Why exactly is IOC available so cheaply?

Of course, Infy will lead the bullish breakout on the Index, and the profit prognosis again at a Cons INR 28.75 Bln is much more to look forward to than the Cons Revenues of INR 130 Bln but the dip in Revenue growth , braked to 0.5% on Q2 Dollar data is still probably excusable. The jump from Infy to the Earnings season that starts in earnest next week.

However, IOC is as expected delayed on the divestment news but mainly because the Oil ministry got the fangs to file a dissent note as the Energy co’s price has slumped to lower than 200 (on the average of prev 6 month closing prices) There are many benefits to divestment and in fact a bargain such as IOC at these prices would be an investor bonanza par extraordinaire. BPCL (up 7%) and HPCL(up 3% probably) gain on the news of the delay but the question to who are the agencies involved in muting the price performance of India’s best navratna after ONGC remains important to answer unfortunately for the BJP fueled markets and the outgoing Congress government

The Delhi Power audit will also ensnare Relinfra as it owns 2 out of 3 Delhi Power distcos with more than 30 mln subscribers and three-quarters of the Peak Demand. Delhi takes in a huge 7.5GW of Power Capacity of the installed 130 GW nationally but the share is much larger in utilised Power capacity

The Pharma companies, the other beneficiary of India’s global largess in currency trading, will also be busy making aggressive deals in the US Pharma market while rejuvenating their domestic Pharma businesses, with Torrent and Auro completing deals this quarter in Elder (domestic) and Celon. ¬†Lupin delivered another USFDA win along expected lines with Twynsta generic being allowed to both Lupin and Torrent. Fresh buying is impossible even in Lupin, Cadila ( 850-1350 nah?)

The market is not really ranged and while Infy may not be able to envelop all India expectations ever again at the start of the results season, it still clears most markers impeding a new rally post earnings. Bank earnings deliver the second infusion of realistic optimism on India Inc in a few days when the upward edges of the range are exected to stand up to better levels. Meanwhile Infy should crawl to the top of its 3400-3650 range benefitting the rare speculator who punted positively for them , most having to square out written calls, even as the markets face resistance offered by such shorts and Infy sets the grounds for more positive surprises down the line with NRN back at the helm. The changes in the Executive would be the easiest to explain.

A problem of plenty as I use images from Google with the syndicated image burner feed disappearing from WP?? ūüėČ

The RBI governor would be probably hoping that the month end policy becomes a non-event considering the positive mpact just from holding rates and the challenges from inflation growing by his side. BofA’s Axis Bank ugrade may still be too little and too late as Axis battles NPA spam with PNB , counted for its days with the PSU crowd

Indices should not see a meltdown thus at 6150 and you should get one bang out of the score if you sell 6100 Puts getting cheaper by the minute at the open and even 6200 ones. If you cover them do cover them with buys in the OTM range(buy) at 6700 ( assuming 6500 in  a close future top of the market ) The bottom of the index range should thus become more volatile funding the shorts glued in to the market bearing down for over 6 weeks now but they will probably tire out this time, Vol allowing a long-range upside on its own nevertheless as India VIX continues to ride low on a stuck to the tea leaves recovery, which will still trend higher and not lower like in China

India Morning Report: Infosys still chooses to report into the weekend

One of the Software Development Blocks of Info...
One of the Software Development Blocks of Infosys Technologies Ltd., Pune, India (Photo credit: Wikipedia)

 

After a big jump in pre-morning and post pre-open trading in Infosys, the scrip is registering ‘voters’ for the big positive result tomorrow. That it happens is the hope the rally prospects are living on as investors settle for the stable India an Asian investors nod into the markets after the heady May-September trades finally settled the issue of India being unique with a 25% depreciation of currency that has thence lost almost half its value in depreciation.

 

The Rupee will thus finally head to pre-60 levels and the Janet Yellen trade may push the markets further into rosy cheer, before a forced taper does tick in as Janet Yellen may still prove in a surprise for the markets. Yet, the news of the taper is fading away and US could remain overlevered to shelter its overlevered households and keep the consumption ticker running as inflation remains intuitively positive to growth. That could serve as example to India down the road though the comparison is still too wide off the mark except for specificities India shares with everyone (as usual)

 

Even as the Rupee moves back into stride, expected tomorrow an EBIT improvement at Infy and an expansion in guidance/rater as guidance has already been updated multiple times, a discouragement to those positing further muted guidance may still be required

 

The Bennett Coleman machine TOI mentions IIMs (and IITs, probably)  are facing employment pressures again , sneakily close to reports of net employment increases back at the IT offspring of India including Wipro, HCL and the MNC offices seeded here after a long success rate of the earlier growth phase. Accenture did break trend to show jump in consulting more than outsourcing revenue this time but outsourcing trends have been showing up everyone else again, seemingly the only strategy outside server management that has a direct proven impact on global profits

 

Yields jumped down still refusing to, but picking up real demand (hopefully) as the Rupee criss-crosses between 61.5 and 62.5 at an unnoticed fury of changing positional trades. The trades, still in ITC, Bharti, HDFC Bank, ICICI Bank, IDFC and probably YES as YES slides into 340-350 levels again for the results season starting tomorrow.

 

As noted, EMs like India, without the IT story per se are ready to take the year to a positive close esp. as the worst India could do is 4% growth

 

 

 

India Morning Report: Infy comeback not happy for markets, “Mind the Gap” and Rupee is still down

Don’t get me wrong Mr Murthy, you have been welcomed back except by your family at Catamaran, but that India is welcoming the IT story comeback of the decade to only 2 paise jump on the rupee itself goes volumes to say in a market shunning the banking sector after changes in provisioning introduced last week. Provisions aside, Credit growth to industry ( non food credit) hitherto most subdued in April, still grew more than 15% and coupled with global jump in Business investments except in Japan and Europe, it is still more likely that apart from extraneous bull fittings like “in the face of elections” ( middle pages of ET) growth jumps in the second half of the fiscal will lead India Inc to higher pegs of growth and make this snafu around 6000 a suckers bet for bears globally. markets opened in the positive but as today’s news was concentrated around Infy, failed to keep¬†the momentum of the pre open after a month end weekend

Image representing Infosys Technologies as dep...
Image via CrunchBase

Before I go back to Infosys and rupee machined external debt obligations of midcaps, Sun Pharma has indeed tipped off its highs and along with banks completes the reasons why there is no jump desite widely accepted as having bottomed at 6000 on the Nifty and in fact below 20,000 on the Sensex. Old hands hold steady but the defensives are well scattered in underperforming categories led by Metals and the ever decreasing demand hit Autos led by Maruti or for that matter the ever neglected growth bid filling in for the halcyon days of IT as defensive at Biocon

GMR Infra’s INR 25 Bln revenues for the quarter were led again by a 2 in 3 contribution from aviation (DIAL) at more than INR 17.5 Bln but with both airports and highways making profits apart from the CERC guaranteed power subsidiaries, and debt in the main standalone company ( one assumes the results pertain only to that even in consolidated data) is much lower than could have stoked a bankruptcy hazard at a very healthy 3.04 against the allowed 5:1 for infracos. Thus, though Relinfra might have a bit of an expensive portfolio, GMR has stabilised in profit terms and locked out bad players like GVK and Lanco, with a segueway for quality and volume plays like JP Associates no longer required to mirror the flailing fortunes of DLF. Rel infra of course would try to sell each project in the portfolio on individual merits and may have better news to share as well down the line.

English: by Neville_S Uploaded to wiki by user...
English: by Neville_S Uploaded to wiki by user:nikkul http://flickr.com/photos/nsukhia/303927860/sizes/o/ (Photo credit: Wikipedia)

On Infy again, Rohan may not shine as EA to NRNM, Infy may no longr define Indian market’s fortunes but the nudge up to 2500+ on Monday morning has definitely rerated the stock back into some portfolios.

Infosys slide not Kamath “idli-chai” vs. Murthy’s “flash drive IT”

I agree too despite his own protestations that it would be wrong to put the finger on KV Kamath which might make the coffee tables at the Infy campus not in “My-eye-sore” or other satellite cities but the one at Hosur (part of my-eye-sore ;0) One thing of note highlighted much later in hindsight could be that KVK had a globalisation experience of a very Indian company in management values and markets while NRNM has the outward-in outlook of an outsourced engineer/ almost NRI like that ie entirely different. India must realise from its last two decades of exposure to both sides that global mores of management and indian ones despite a shared management education spine and an equal distaste for ‘ajurveda’ or failed homegrown remedies, differ in values and attitudes except some of that ‘jugaad’ in ‘not so big’ money situations.

It was this gap that probably KVKamath found too abstract to jump if indeed he tried to take an active role in the situation at Infosys. Also, though much of the morning’s contributions from TV and media have been rather objective segueways into the first quarter of reporting by a reconstructed Infosys savoury dish in Q1 of the fiscal, not much is expected immediately and this upside is limited. ¬†Annuity business of $21 Bln is however intact from global businesses like Big ¬†four banks or leading global brands that continue to find Indian management equity compelling for “outsourcing” repetitive tasks that do not require expensive compensation strategy key. Cognizant thus will be difficult to displace in the high volumes game infy has struggled to avoid.

On the more important topic of Cricket and the general elections in that order, Srinivasan must be joined by Dhoni in resigning from a few of the intertwined job responsibiities sooner than later and yesterday’s farce is likely not the end of the story of IPL gone wrong if indeed the Special GBM of the non profit is called. Similarily the sub 5% fiscal deficit performance may not bringing the flagging fortunes of INC(Indian National Congressas is registered with the EC) any required relief but we can probably look to a left included coalition at Delhi in the 3rd edition of the UPA if we indeed are able to fend off the extreme politics of Gujarat from the national scene. The more cosmopolitan under 40 population normally wronged for not participating in elections may infact shun the ideology ‘ridden’ politics of the far right in time if goaded properly and yet save the next 5 years of the India Inc canvas

Mid Caps like Opto and Orchid seem to be targeted by those that could not recover the infra vector gains from their speculative tips in HDIL, Orbit and even DLF consruction flats and despite the big jump in equity and convertibles from European investors last year or two Indian banks, infracos and pharma companies will have a much easier time this time around in managing ECB receivables during this continuing hammer down trade correction on the rupee likely stage managed to change into 2014 order of magnitude of purchases and export realisations and likely to last all of june as CPI still has not trended down and no seen imovement in supply chain efficiencies despite AAdhaar and the Food security Bill

Happy Thursdays! Infosys alone cannot change the trend

Tata Consultancy Services - Ferrari ad at Hyde...
Tata Consultancy Services – Ferrari ad at Hyderabad airport (Photo credit: teemus)

Bears had fun in the markets today poised to take the markets below 17000/5200 tomorrow or day after, but the results from TCS could change all that. The IIP was a nice positive surprise too and it seems not just consumption but some production and some growth in basic and intermediate goods was underwritten too. the Fiscal and Current deficit should also have crawled out of the hole of worry and banks set to take the lead in an Economy which they have nurtured. The growth in Credit for the week is lower only because the ebnd march ramp has to die out anf is still a globally leading indicator of the goods Asia can bring home with 14% growth and a M2 also close to 14%

However, that Infy results were cathartic for the markets cannot be denied, and I am aching to buy some good infra and banking stocks onthe pick up again, esp if I can be a keeper for 6 or more months, this not proving to be but still looking like the bottom we had in the second half of 2009

TCS reports a volume growth of 3% in USD terms and ofcourse double digits in Rupee terms even as the wage increasesaffect the EBITDA. Also MindTree may be back to a buy level at 632, so print the upgrades and lets get going . Of course consolidations, almost discouragingly last at least 4 more sessions and a quicker run up may only trade so llok for a weekend close towards 5200 or at least an intraday dip after we have celebrated TCS and Infy starts back above 2300 tomorrow open if TCS results do fine,

Up ↑

%d bloggers like this: