India Morning Report; Rupee hits final free fall, Equities avoid snag

English: First Rupee, a Rupiya Silver coin, is...
English: First Rupee, a Rupiya Silver coin, issued by Sher Shah Suri r. 1540-1545 CE. image from personal collection (Photo credit: Wikipedia)

 

Rupee responded to the 57 mark hit on Friday and this most of the week will continue to manage all the reations to new level of the rpee before it probably heads towards a new “equilibrium” range for 2014 with RBI intervention missing till Friday evening being a minor risk to the prognostication of the leves around 57.50 ranging back to till 56, if the Equities funds flow impact is actually turned into seas of green this week or early next week itself.

 

The news of US having recovered based on the z1 report (Financial accounts) of Thursday, is a Fed push again from better days of 2013 and the recovery in retail and requirement of a more robust sustainable inflation has pushed the QE withdrawal to 2014, but a token notice is likely to weigh in on global funds tracking in 2013 esp towards Q4

 

The Banknifty is very pliable from 12150 es the bad boys of PSU led by the surprising bite on BOB books, which have probably bottomed at 660. Justdial is unlikely to be jettisoned by IPO investors in a hurry,  Dominos (Jubilant Foods) and even Jet Airways holding a good “precedent’ for them and thus social networks are likely to keep JustDial levels higher above 600 for another 90 days before a call can be taken for Secondary investors in terms of post IPO investible levels

Yen is crossing 100 again on the upswing from 95 level and will be backed by GSAM among others to new 110 levels esp as US hedge funds may not exit April May shorts on JGB and as long as the interest rate risk on the same is managed well by BOJ, Koruda taking over in his last six months from PM Abe whil currency falls could probably now sustain with a lower level of sales of JGB

Day Trader picks have moved on from trying to short the Top 40 visible, high capitalisation scrips to probable better success rate in small and mid cap picks. Yes Baank corporate governance hiccups with the succession battle not being insignificant keeps it out of trading orbits likely ranged  while flying passenger miles this month or retail and real estate credit jumps at ICICI Bank and the rest are unlikely to be very strong in May or june despite the pressure on the Rupee not tranlating into consumption economy pressures for India Inc or its consumers, imported components driven only by the movement of Oil rices, getting better if oil prices in fact continue correction

 

 

 

Where the Rupee is used
Where the Rupee is used (Photo credit: Wikipedia)

 

 

 

India Morning Report : (Friday, Pre Closing Update) All round recovery from global mini crash on Thursday

Map: Asia (location), subregions as delineated...
Map: Asia (location), subregions as delineated by United Nations geographic classification scheme, except *: Northern Asia* Russia in Eastern Europe en:Central Asia territories geographically, wholly or partially, in Eastern Europe Western Asia territories geographically, wholly or partially, in Eastern Europe, Southern Europe, and Northern Africa Southern Asia Eastern Asia Southeastern Asia territories geographically, wholly or partially, in Melanesia (Oceania) (Photo credit: Wikipedia)

Asia in general recovered smartly after Amari’s comments were seen as blown out of proportion and BOJ followed up with huge injections of bond selling. Of course, India markets reacted similarily but are sure to go their own way from next week as the common thread from continuing global liquidity is bolstered by the local growth stories, continuing FII interest in India and a heady  IPO market led by resurgent demand including cross regional deal interest out of Hongkong, Qatar and Singapore.

Still on the yen machinations, China’s plans to go global to keep manufacturing competitive and flagging imports also add to Japanese and Korean discomfort, making local QEs a last build option that will grow in size for the late starters despite protestations yesterday of a synchronisation with G3 interests and/or the disaffection shown by the BOJ governor Haruhiko Karuda , leaving BoJ in early 2014.

The Yen at 101.7 again , the rupee may slide to further lows on a trot next week as the adjustment trade to make exports competitive is out of sequence of the improving fundamentals and the weakness of the US Dollar, an event unlikely stopped by this week’s global inverse trade days of Tuesday and Thursday . Amid the differences, one could see trends in currency markets continue to elude India inc but definitely RBI plans to grow an international role for rupee and continuing interest in rupee positions from emerging market bank trading desks incl hsbc and stanchart are not just paper scapes as india grows it trade pie in global trade.

However apart from equities and now a little bit of debt, India needs to open to more global currency products for a sustainable self reliant trade to emerge in chosen currency pairs to exclude the recurrent window ofdeep depreciation adjustments of the rupee especially as it is engendered by payment pressures alone and not borne by the strength of domestic consumption and growth as can be seen inthe people’s frepublic off that side of the Himalayas. Jet Airways and spicejet also report tonight though Jet traders are convinced of headwinds facing the airline’s deal with etihad

Results season is busy yet as a flurry of sells/hold ratings on SBI because of the continuing slide in Net NPAs ( now 2.1% from 1.8%) are still misplaced after yesterday’s 7% slide failed to take into account the bank’s growth in credit at more than 20% on a INR 10 trillion book even as the pressure to exit the restructuring habit of marginal corporates and the over dependence on SME accounts is still under process. NIMs have pegged lower on year because of pension liabilities but quarter/quarter decrease is still evident because of deposit costs

Full year consolidated profits at INR 180 Bln are not a trifle and help the bank establish itself in an important quasi policy role much like the dysfunctional governments we withstand as a non functioning opposition continues to get closer to leadership in parliament because of its non attendance of parliament, a sure sign that the upward climb of fundamentals in India is feverishly capped despite growing roots of literacy and a much more aware bueaucracy than is available to our neighbours

 

India Morning Report: Just Dial IPO great hai ji, Rupee feeling quiggly

Image used to convey the idea of currency conv...
Image used to convey the idea of currency conversion (originally from en.wikipedia). The signs are (clockwise from top-left): dollar, euro, pound, shekel, đồng, yen. (Photo credit: Wikipedia)

Markets opened to the new week’s excited chatter for a change this morning after a few weeks but the better IPO prospects and improved FII flows already more than $2. B this week could not excite the Rupee and it again opened at its lowest for the week above 55 as Forex broke on last months Gold data and apparently has become the exit for bears that know they are unwanted, trying to break the cosy relationship between currency and equities in Asia and dragging down equities towards the afternoon. Rupee, with my apologies to the surfeit of economists at the top Mr Prime Minister, is just reacting to India’s weak international diplomacy.

We should have probably given you a heads up in the morning, but revenue and subscriber prospects fail to excite indian angels into backing such ventures as ours, bent on writing and interest in firings at ecommerce carts or exits from PE investments of the last cycle not enouraging towards commercially viable prospects for analysts, writers and discretionary advisers. IPO sizes are getting comfortable around the INR 1000 crore and above mark and went thru with out a hitch despite a surfeit of promoter buy backs and appetite for indian debt has also increased manifold in the last two years

Bullish straddles/strangles are cheaper and you should not fund with calls unless beyond the 6400 mark. China premier Le Keqiang’s visit to the Capital could have been much more fruitful if the premier had tried to get more pulic awareness around it, India of course happy to have exited US defence exercises to get status quo in play at Ladakh ahead of the visit. No that China is looking to allow India banks or exporters further as it continues to keep a chinese only list for government tenders and machinery ( esp green power) bids

Those who thought Indus ind would catch again would have retreated after these two weeks and especially because apart from the positive wall offered by YES, it is also a better choice portfolio for pickers across infracos esp those looking at idfc, itc, jpassoc and gmr where buying would be perfect value plays esp if any DIIs had been carry cash for the redemptions and the volatiity turn awaiting

No, the Rupee is not going back to 52-53 levels immediately though S&P’s reservations have not been of interest to any FIIs and we would like to err on the side of caution ourselves with the CAD at ever higher levels though as the CEA mentioned the reduction in CAD faster than the reduction in Fiscal should help drive growth come 2014 And yes, Lets not forget our natural advantages as a consumption and trading economy at the bottom of the commodities cycle unlike the competition

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.

 

 

 

India Morning Report: And here we are 5850 and nary a huff puff break!

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

Morning Trading Strategies – India September 17-21, 2012

Trust us. it’s not time to sell into the rally yet.

Banks are again the biggest victors of the Reform story. While Telcos will be apparently in with 2G licences without missing a beat including Uninor and Sistema buying Aircel, Bharti would be benefitting more from investments in retail and its IPO getting investors out of the 5 year old Bharti Infratel restructuring

Stay long in Banks and the uptick will be tempered as we go along. Indeed some may again try a Bank of Baroda trade. ICICIBANK and SBI are the best picks going up while HDFCBANK is the one likely to lose the least value

The Rupee is below 54 even in the September series and that is saying a lot apparently as Udayan puts it from INR 28 B in one session. The gain in the Rupee is not capped yet either till December

The infra stocks ill be part of the second coming and will be from among frontline stocks only from IDFC to JPASSOCIAT and maybe GMR and RELINRA

What ails India’s Private Sector Insurance?

I know what sets me off against the winner of the bank wars 

Though HDFC Bank remains a perennial favorite of India bulls because of its efficiencies and hold over a high interest rate captive market for credit products, tit never ceased to amaze me that the LIC of the group, Standard life could not really stand up after being the most capitalised company in the sector. Of course with impending IPO norms and Reliance having beaten them to 5th rank when the crisis began, we do hope to look at some detailed Financial statements from these “new industry barons” soon, as a lot has been hidden inside the carpets by everyone with IRDA needing to be active in policing the instituions budding into a smaller pie every year. Now the public LIc and the private LICs divide the market 67:33 and this number would be even more in favor of LIC of India ( which had a INR 4 Trillion book this year or thereabouts and by assets already is 9 times the private players ) if the single insurance product not been sold heavily esp in Q1. Amazingly after Premiums of $1.3 bln the HDFC Standard Life team delivers a sixth rank and a $19 mln loss for the year following a negative $450million loss in FY09, and $69mln in FY10. what a shame!

Recovery has been slow and steady but we would continue to be hypercritical of any business that cannot want to publish a complete set of Financial statements Very frankly their size is not enough as an industry to believe that their hyper growth in the 1st 10 years will actually amount ot anything from here..Also without Unit products they have all stopped making any effective sales growth in this “industry” Indian Telcos are far more profitable whence Telcos historically wthe world over survive on high prices of hardware paid and lost volume churns ( which also they share with the LIC industry)

Life Insurance Corporation of India
Image via Wikipedia

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