India Morning Report: A thorough shucking, and 6200 it is

English: A 10 rupee 1902 stamp of India.
English: A 10 rupee 1902 stamp of India. (Photo credit: Wikipedia)

A week of thorough shucking and more (unfortunately extending to free enterprise attempts in the Indian markets, that really got shucked these five years) and JP Associates is in the lead for an extended period after a long threefour years where it played an also ran stock to many other daily trend leaders, and none of the rerated stocks over the last 5 years are seen as rising further from here, keeping the best dozen in abeyance.

Despite the perseverance of these players however, the stocks selected are not really getting through, and instead the residual charm of the retail economy from Jubilant Foods’ era competitors like Talwalkars to the Jyothi Labs, the new Quetiapine powered US launch from Jubilant Life (looking healthier, everyday than its similar named cousin in pizza) and the MNC phama stocks celebrating a new strategy for domestic markets with Pfizer and Wyeth getting together meaning the delisting mania is probably done with  at least for this trade

The Rupee is ready to move on after the post festival haggling and Oil demand is the risk India will watch in 2014 when tapering happens. Now Rupee should be able to break back into super 60 zones as the Infra party gets totally dissociated from realty plays. Thankfully retail and FMCG is back, and Shoppers Stop is definitely a deserving venture.

Glenmark Pharma and Cadila remain the better picks from their strength in Domestic markets, ITC is likely to be bet ton to at least 350 after its upmove. REC has tak first rund of Power NBFCs again to 222 levels but has no potential to break into the 40s let alone 250 levels from here

Chetan Ahya’s(MS) predictions(and analysis) are also resonating with the market. He showed that a 3.5% expenditure growth in H2FY14 will push India to its utmost if fiscal disciline is still at 4.8%, and probably PC won’t get an out despite the good CAD achievement given a sluggish revenue Q2 after an equally discouraging Q1

The Darjeeling Limited probably does not have much sway right now in the markets with most strains of stocks bearing Midcap or Corporate Governance issues now on a defined negative list. On the other hand the tourism industry fix seems to be deepening and India’s Hotels are getting the short shrift fter a long decade of seat increases coming to a head in the next two years ( in Deli and Bombay from n ET report). Occuancy rates of just 61% in a business destination that does not even have the extended holiday season the world enjoys is a petty misnomer for India’s effots to exit this detrimental global cycle as Europe falls off the investment (origination) map exxcept for ECB(External commercial borrowings) debt

The times of Robinhood are no more? ___________________>>>>

English: Remains of village stocks in the chur...
English: Remains of village stocks in the church-yard of St Mary’s church, Honley, Yorkshire (Photo credit: Wikipedia)

India Morning Report: It’s Conferencing time again, do India advisors need the Brain Buzz

View of Hilton Towers Mumbai
View of Hilton Towers Mumbai (Photo credit: Swami Stream)

The Kent RO India Economic Conclave(ET//ETNOW), probably reminds other Indiaphiles of the Autoclaves and Indian barbecues as the Delhi Winters approach. Indian (Mughlai) Barbies of course last all year and the take off on that name is rather steeply silly, but not as silly as those Modi’fying Indian polity or still relying on Bankrupt European franchises not just in India but even in US where European Banks try to claim the upcycle again just for having reached the bottom of the valuation pile in investor opinion.

It signals that people are listening to more than the seldom heard refrain earlier that US Bonds are headed for the 4% mark on the 10-year Treasuries, Goldman Sachs having updated their opinion and with US equities starting from record 16000 levels finally after 5 years other equity assets around the globe are also finding favour. India must be enthused because even without the Enclaves or any agro encomium (at the new WTO round in the ‘hood), India weights will remain ahead of European bank investments, HY Bonds in the US that continue to come back however will be something EMs and India cannot compete against.

I-Banks stocks are a good pick if your portfolio does not have overseas diversification yet, with Investing in fashion and rising by the EM watermark rate of 30% growth at least in the first 6 months. Again, these flows including US high yield and specific picks in Global equities do not compete with India flows, while Asia credit remains at its most constrained sufficiently tempting even without European QE to keep the arbitrage for Asian treasuries and an umbrella from Domestic Interest rates is always readily available, not threatening the CAD in any of these South Asian / ASEAN SE economies that seem to bring more relief to Chinese investors and pro reform governments. The winners however in the I Banks are HSBC and Goldman Sachs and other stronger names, and one should be careful to whom one listens and sets the morning alarm with.

FIPB approvals have come in for Singapore Airlines – Tata Air joint venture and Religare which will invest as holding company from the island state.

Another quick silly update: The linkages of urban and even rural India to radio as a media have again spiked into something tasty and a medicine to nail the hubris, without having to drink and drive, even as new year celebraions come around the bend in Lutyens’ Delhi and elsewhere. Home is where the heart is, they say, esp when the RJ is handing out your favorite Mall freebies and movie Tickets with Muscle and oomph.

A small slide in from Gold to near 31k marks just on the news of 40% investment demand of last year returning. Gold season is tough for Financial discipline. UCO Baank results? give them a pass and stay with BOI and PNB, and you must get short on SBI to save the India Fund you have been planning. Buy IDFC, trade YES Bank and ITC because you have already bought and no there are no retail investors to count in the Indian markets the residuall INR 50 Bln turnover of the class probably counting professionals in the trade, since the first 95 circulars from SEBI cut out sub brokers and MLM chains from Indian Financial Markets. QFIs have still not taken much to directly investing in India and apparently there is still something to be done about it..

Modi? Bad experiment!

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Hotel room, Hyatt Regency Delhi
Hotel room, Hyatt Regency Delhi (Photo credit: John The Geologist)

India Morning Report: 5550 and nose down, Banks give up consolidation

FO Update: Bifty(BankNifty) strangle could be a good sell so vol moves are up but one should stay away from buying bank puts individually or shorting banks per se. They are quite in line for a jump and won”t be characterised as the villains of this move

The day started well enough Banks shifting chairs with HDFC Bank and Kotak taking over the upside and ICICI Bank facing a small (less than 1%) correction and Axis Bank moving up smartly as well, but as we prognosticated, the Rupee is touchy and tus 5550 seemed like a top off, barely opening at 5573 before trending South. On the bottom again, the move is capped at 5400-50 and the Bifty could well stay above 9000 throughout esp if the Rupee manages to keep the bears happy at 67 levels itself, as the markets decide the new direction of the move in the rest of the Financial Year (Fiscal).

The Rupee has received considerable global attention it has yearned for and sellers have been keeping quiet not because of fundamentals or flows but for the attention alone. ( Any study ignoring other parameters and attending to the correlation with global fourth estate exposure would thus be able to prognosticate the new founts of pressure on the Rupee. Oil is going down and 4% GDP is post a not so tough Oil Bill prognostication at the umpteen downgrades that heralded the start of the week. IT is almost overvalued again, one windfall quarter per 25% loss in Rupee value (YTD :D)

GDP (PPP) Per Capita based on 2008 estimates h...
GDP (PPP) Per Capita based on 2008 estimates http://www.imf.org/ (Photo credit: Wikipedia)

On the market performers, accumulation of a disordered undervalud opportunity variety has started making itself felt in Caital Goods companies and infracos equally as Reliance industries which may look to E&P approvals in 6 different fields. Thus the sectoral technical picture is additionally cluttering the fact that no policy decisions would be forthcoming till after May 2014.

Savings in the Oil ill are coming  from the 13% share of Iranian oil, which because of shipping lines and insurance issues, are unlikely to be raised. True to form, Irnians do not really want t o use Rupee payments made to buy Indian exports except for its rice and tea demand.

Auto sales jum is more a victory for the two wheelers again, Bajaj Auto recovering Exports to 144K ths month and domestic sales on breath with value #2 Honda (301K). Maruti’s jump back to 87,000 units is still a poor performance below its run rate of 100k cars on average  pre 2010 itself. M&M tractor sales have dropped to near ZERO at 14,000 r month and Hyundai has been wiped along with Tata Motors for all the improvements in traction at GM, Ford, Toyota and VW.

Glenmark Pharma is a good pick to start the mid cap ride. Yes Bank and IDFC should e among the non controversial movers and shakers as the markets operate in an unwilling tight  rang waiting for the Rupee pain to go away. Sun Pharma will bottom out above 500 levels and start on its promise again as it builds on the INR 1 T capitalisation. The September trade data for India is due in a week

I do have a couple of questions on the detailed NH survey on housing price trends released yesterday. The 670 mln sft inventory for example seems to be a little bit of an over estimate and prices in Bangalore ,Bombay and Delhi are unlikely to move down despite huge inventories in residential , affordable, commercial rental and commercial spaces overall

Also ATF prices ( 71k per kl in Delhi and 77k per kl in Mumbai) are probability going to  strain the almost barebones domestic aviation pricing again and UDF are up for renewal. These are likely to remain hygeine factors to the India story ( low growth high cost aviation and high inventory of property) because of obvious inelasticities in the real estate pricing and the elastic nature of demand, roving a sea of red for aviation in the last decade. Thus inflation fears are probably dead in the water with Oil and Gold moving down globally.

Metals esp Tata Steel is back in the Buy lists in this run which will probably peak immediately after mid 2014 till September 2014

India Morning Report: A dark light envelops India Markets as the longest tunnel is in play

The New Sea Link
The New Sea Link (Photo credit: Prashant Menon)

There is a light at the end of the tunnel. After all Sun Pharma has retraced to 425 and Ashwini Gujral is recommending a short on Axis Bank, with the Axis Bank bulls freely shorting probably the naked shorts that make up a new residual market of speculators as PCRs stay in a lower range with FIIs not adding more short hedges.

VIX India is having fun at everyone’s expense getting back at markets for being called bad all over and staying increasingly bad. The Morning has already see the rupee enter the new range box between 64 to 68 and so it is unlikely that it will recover to 62.50 or that this is the last stage of the capitulation move.

But yet the new negative momentum in the indices is looking to close out this move in this week itself with a $100 Bln exit by FIIs on Friday necessitating a grave distance covered on Monday and now on Tuesday the same is likely. That means the indices could well compete with double digit yields targets on 10 year paper and the currency targets ( if any) to hit 5000 by Friday close and provide a respite week next week.

JP Associates and infracos have not started back and private exchanges and therefore promoters linked to that may not yet ever make positive lists again

I am like a kid, hoping the Banknifty cut today means the Reserve Bank has thrown the banks out to the wolves asking them to mark all holdings to market and push out a mandatory minimum to AFS portfolios. But then there are those that still think below 8 yields will be back

Buy Power NBFCs and Bajaj Auto has also finished its last moves. LIC Housing for one other NBFC can probably not move down after it hits 130 levels

Vidyasagar Setu, commonly known as the Second ...
Vidyasagar Setu, commonly known as the Second Hooghly Bridge or Second Howrah Bridge, is a bridge over the Hooghly River in West Bengal, India. It links the cities of Howrah and Kolkata. The bridge is a toll bridge. It is one of the longest bridges of multi Cable-stayed type in India and one of the longest in Asia. (Photo credit: Wikipedia)

India Morning Report: State Bank of India results scare, IIP for June -2.2%, $12.27 Bln Trade Deficit

Taj Mahal, Agra, India. Deutsch: Taj Mahal im ...
Taj Mahal, Agra, India. Deutsch: Taj Mahal im indischen Agra. Español: Vista del Taj Mahal, Agra, India. Français : Le Taj Mahal, à Âgrâ, en Inde. Русский: Мавзолей Тадж-Махал, Агра, Индия. (Photo credit: Wikipedia)

Banks growth constraints from old and new NPAs came to be the most heavily landed blow again with INR 150  Bln in fresh slippages to 2.8% Net NPAs and a 5.5% of Book in Gross NPAs for India’s largest bank as markets at 0.9 PCR look to bottoming out with 5500 Puts still popular and Futures encouragingly becoming short hedge currency again for Institutions.

SBI has managed a NIM of 3.49% this quarter and investments currently denominated in low yielding CP will significantly buffer the margins to end of this fiscal according to the Bank resident’s statement defending current results (ETNOW). Auto Sales of 131k cars and less than 11.5 mln two wheelers as MUV/SUV sales plateau and trend down in the last bulwark crumbling for the 12 months are just part of the degrowth in the economy as a whole as May IIP was revised downward to -2.8% and June IIP came in a -2.2% showing degrowth of -6% in Capital goods and taking the April June quarter to -1.1% , negating any growth from the rate cuts before the rate clamp shutter down business in July , August and probably September

Consumer durables have been double digit negative in both May and June degrowing 10.5% on year in june with non durables up robustly another 5% allowing them to improve inflation. Better news from trade with a lower import bill from less than 3 tonnes in Gold and Silver imports each makes a crawl at lower CAD possible as also more controls return to the Economy after 22 years of reform under Manmohan Singh

Dabur and other FMCG could return to strength given the consumer non durables sales upticks and continuing robust inflation in the categories even as input inflation subsides. a 9.64% CPI does not discourage category leaders HUL and ITC also from continuing to improve realisations even if the Rupee completes its move only beyond 65 levels

ONGC results were bearable though the markets are unforgiving for the iNR 200 Bln quarter as realisations are likely to remain near this quarters $40 a barrel than last year’s $45 levels and the coming investment uptick within the week could see Oilcos picking up the slack after abig fall as well and oil purchases down for the second successive month will stress the trade this month for sure.

English: Manmohan Singh, current prime ministe...
English: Manmohan Singh, current prime minister of India. (Photo credit: Wikipedia)

 

and more..

GMR Malé International Airport Private Limited...
GMR Malé International Airport Private Limited (GMIAL) Office (Photo credit: Ibrahim Asad’s PHotography)

 

more sectors seem to creep into the equation as the marketstructure gets hijacked by those trying to make it look like the same as a retail investor could do in the fun 60s rolling on the floor…but Power NBFCs led by REC and PFC remain good moves in 2013 and PTC could get a bigger stronger role in the quad with Powergrid unlikely to lose relevance and despite roads being deprioritised, there may be enough speciality infrastructure bids ( I mean ports and urban planning ventures as well as welfare structures for the new deal) to keep all other infra midcaps floating. Also I personally back GMR Infra and Reliance Infra while berating overleveraged pops like even GVK and some mid cap Mumbai Real estate juggalos

 

 

India Morning Report: Pledged 100% of your holdings and market is up

Seemingly though, there is no more free money in that. It could have been on a generic basis because of stricter internal risk guidelines, and fat tail events precipitating the HDIL event could also be innocent ones like pledged shares needing to transfer ownership and bank ownership of the same got in the way and so many other reasons. All of them a 100% unlikely. Almost. Because HDIL is paying for surrendering all its real liquidity to its pledgee bank that took all its sharees to extend it a loan and while margin calls are a norm to a down bear market, getting into the bull orbit, recovering real estate prices in Mumbai and some good real estate assets did not help HDIL

published from lodha's signature project site
published from lodha’s signature project site

The new mid cap stars in Mubai property are Phoenix, Peninsular land ( in this rally) and even Orbit corp where they really circled up the wagons. The signature Lodha property – The World Towers – aside there are others that have captured the public imagination in Mumbai including Exide owner’s (onlyy related families) “Raheja Platinum” in Worli touted as a first of its kind skyscraper commercial towers.

In the meantime Hathaway cable is still in play as digitisation plows ahead and makes a strong #2 in markets like Mumbai while Zee’s Dish Tv takes up the slack after a big run in digital stocks since November 2012 Back to banking though, the new NBFCs getting bank licenses could further reduce the universe of actionable Mid cap in India as most of them propeled into almost blue chip league by Net worth requirements alone would no longer be able to run up asset growth as a Mid Cap that they have wrangled out . Power NBFCs are a different story with REC and PFC having much more potential for even doubling assets twice over. yesterday’s almost breathable recovery at 2:30 pm after everyone did think 6000 was a bottom signed the recession blues away too and regardless of China’s strong PMI performance and springloaded reaction in equities India is likely to get more allocations in a continuous September in the Pre Budget rally and later post Budget as the government still has a quarter in which to post other fiscal discipline measures midstream however miniscule they may be and then get into a big Welfare play  as it would take if the Congress led UPA with or without the UPA components ask for a third continuous term. If they crimp on spending in this Elections it could be byebye india inc though some Corporate India would still like to believe in NaMo’s extremist India as the answer to big brother’s comeuppance on us.

Also it was good to see Airtel and others stonr overtures for th eprice increase but attrition is likely to come back in waves, because “Momma, I still pay my own bills” and Call volume has been dowwn almost steadily since 2006 giving strength to losing hopefuls like Kotak who failed in growth herms since then too and the amrket have been waiting on their Indian style dhandha fundas to take hold on the larger untapped Indian market

India Morning Report: Considering the velocity of the move, it is now improbable that the bull run is yet in progress?

Pivot table NSE Banknifty PSUBank index scrips...
Pivot table NSE Banknifty PSUBank index scrips from OJN for 20110609 (Photo credit: OJN2)

 

The 90 point move on the Nifty yesterday, trying to make spectators out of those opting for not such a roller coaster move means that the classic correction/ consolidation prospects have also improved apart from the secondary improbability of conditions improving as no policy execution is likely.

However markets would woot for Goldman Sachs’ revised targets and Moodys’ clean chit for the subcontinent’s Economic goliath “Mumbai dreams” upping growth forecasts to stratospheric ( and they were so “stratospheric” just 8 years ago) levels of above 6% by FY 2015

The Pre Open went along expected lines, traced the line in the sand for bear traps with fastest rising prices from Bharti and HDFC Bank to Axis Bank among others correcting to Monday levels before the Pre open ended with a sigh above 5730 , cutting out shorts from the lifelines to the next few millenia. Decks are cleared for all cash subsidies and other such tools that would ensure no Old India thus gets in the way of New India but I would think the more things change the more they remain the same as young India hardly owns any mints especially if high priced MBAs ( like us) are as few and young couples that are actually growing Bangalore’s per household income and disposable spend levels are actually as relatively poor as they are with MNCs leading local IT companies in correcting compensation to an affordable baseline suitable for fatter expansion of numbers on call from more working class ratios like teeth to tail ratio ( ratio of solders to commanders) and enabling keeping existing customers happy as possibly only viable strategy inputs including at banks and marketing consumer companies hitherto fueled by top management / boardroom expansions.

Of course for the markets that aside is as peripheral to the rally as the Moodys’ report they triggered to a big high yesterday and as peripheral as the bickering in Parliament led by that able woman on how to lose the no confidence vote to be tabled by the opposition in Parliament

Banks esp Axis Bank and HDFC Bank that led yesterday could exchange roles with ICICI Bank and because the fourth member of the trading independence consortium of the banks i..e. SBI or Banknifty (PSU – not a defined sub index) is incapable of leading from the front without crashing through it is unlikely that the Nifty will easily cross over the 6000 line yet again. I wonder what gives when the Nifty finally does it in a few weeks from now.

 

 

The Goldman Sachs Tower - Jersey city, NJ.
The Goldman Sachs Tower – Jersey city, NJ. (Photo credit: Wikipedia)

 

 

India Morning Report: Ahh, I hope you got the rally..

Here it is, the Fiscal Cliff. Markets are soon going to realise the celebration of Obama and the general panic in the US markets are both in equal measures a global celebration and a classic over reaction that ticks off momentum in the other direction.

If India denizens do realise the limited impact of the issues including the fiscal cliff’s promised red splotched shores of recession then they can follow the DII traders into buying into the India markets even before the day is over but the correction is mandatory. ITC is up smartly, so is ICICI Bank and there are the Mid Cap acts to follow the trend down which will present unique buying opportunities including Hexaware.

Biocon Logo
Biocon Logo (Photo credit: Wikipedia)

Biocon should be back in the mix except for the ill informed market sentiments in the areas of “focus on outsourcing” and “outsourcing is over” that seem to bring the edge back to the markets every other rally as unfortunately they remain unimportant issues esp to the business models of Indian companies succeeding in the US market and capable of building a domestic market franchise in their labs/sales departments

The markets should have probably continued up yesterday in New York and therefore here in Mumbai and we should still hope for a 6000 mark before the year is over if the muted correction is followed by a good rally next week. Mannapuram and Muthoot have failed to pick up from October levels while NBFCs like M&M Fin and Bajaj Fin did follow up on the good results and continued Tier 2 market development due to LIC Housing and Shriram Transport while Jet is back at invested and yet interested in investing category, Accumulation having begun earlier at below 340 and traders hoping to make a surprise kill into a 5900 rally

Silver and Gold will probably weaken as Dollar surges back and the Rupee almost crossed over below 54yesterday but is hurt in early morning trade today towards its current LOWS of 54.6

 

Market Street
Market Street (Photo credit: glennharper)

 

 

 

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