India Morning Report: Building up that range between 6300 and 6500, Energy Cos let fly

Call buying in the new year has resumed in 6500 and 6600 strikes underlining market confidence in making the upside while 6300 Puts define the bottom of the range (Sold puts always in a bull ‘candle’)

Also non food credit growth signifies Banknifty has less pressure on it to buy up its PSU components before the secular recovery takes hold in India Inc., right now recovery prospects led by better performing banks and corporates, even select Mid caps. BOI and All Bank seem to be in the buy rush but buyer beware doctrine applies nd we remain happy with PNB as March shows the having accounted for the bad losses and survived with better provisioning.

The Energy Cos are way ahead in the New Year esp if you include the rally on 30/31 as the pace of increases in Diesel prices and the increase in Non subsidized LPG confirm better prospects and however also confirm that the battle against the Fisc will last a long time unlike the chutbhiyas fighting it out for an ex Infy startup tickets in Bangalore (AAP gets a dirty linen in the streets fight with Pai and Bala joining against Nilekani)

Infy did start back at 3500 but there is a further downside risk from the fracas probably enthusing electorates and markets in its incipient hour tonight. HCL Tech is a great short right now to save your Bull Dollars. Cadilla and Glenmark remain the important buys with IDFC, YES and Bharti and ITC leading the Bull charge. Bharti tops its trading range around 345 and the ITC breakout is still long way to go in January.

Maruti sales hit rockbottom in December, so  I would have waited two weeks to confirm the trend for January before including them in the Volume breakouts. Sales at Toyota were down to 12k and Maruti a paltry 90k, this trend much like our Maid in Manhattan and her UN immunity spawned employer Devi Khobragade a little too ahead to go with real recovery trends, even belying equally bad sales in January too perhaps?

IIP ticks up again for December as and when data is processed but bank credit jump is part of the lag with no new projects expected in December – March and WPI will remain stressed near 7 levels and higher even without the customary poll sops in this season Indusind is not a good buy and that with the lack of buyers as volumes return this week means the bull ticks will be slow except for Power and Oilcos

India Morning Report: It’s the banks, stupid!

The January series, with three days to go in the New Year, has started optimistically and apparently is in no hurry to trade. however within the two trading sessions including the first 15 minutes of today, Banknifty has already managed to 11600 levels without undue weightage to the losing PSUs. That being the target no one probably wanted to exit the 70% of India’s banking in PSU Banks forever not served by the State Bank of India or the PNB recognised as winners earlier separating them from the sick pack.

But given this start on the Banknifty this time, one would expand the role of the Private Sector banks in this rally to 13500 where one first probably evaluates its value score in terms of future March 2015 earnings

Meantime, Havells and Idea seem to be the scrips to nod to given their position in the trend and coming FY results as December numbers get reported only after two weeks and more hints are sought towards the Fiscal close where India would assess its gap in Economic terms as well, having assumed at the start of April that they would be much closer to a 6% GDP recovery

The infraco trade will like to preempt more hopeful whispers from North and South Block, the fate of the Congress government precariously hanging in balance and the hope outlasting the pushing back of most important decisions and any spending to post elections, a Vote on account coming in February to last the interim period

India certainly batted the 2nd Test well but with rains likely to spoil two more days of that game, its a virtual close to the year on a less than even score having barely eked out  a draw in the first to save face.

Happy-New-Year-2014-HD-Wallpaper

 

The LNG hike in Delhi seems to be a good marketing strategem launch timed to last throughout 2014 and players in IGL , GAIL and Reliance that starts producing under the new price from April 2014 sales. Diesel cos lasted most of yesterday with more than 1-3% gains fo rthe reported news of increasing the gap closing of diesel subsidies at INR 10 per Liter

Food inflation has shifted from Onions to potatoes, but will tick down the overall cPI before the fuel inflation statrts up in Q2 FY15

 

India 3.0 – A question of balance (A Calendar of Economic Events)

Trading strategies are more the norm at this time of the day but the markets have finally regressed the entire cycle of events from the mid 90s to retrieve a year or at least a month of flat no move left stock markets and the rupee after a valiant afternoon early last week, follows into submission.

By our calendar, India Inc and indian polity have more twiddling of thumbs despite the Parliament out of the way till New Year festivities start in earnest and the Opposition crosses probably into a near win zone against the losing Indian government, a sinking ship, ripe for deserters and hence the time for foreign media to make a tattle tale red a**ed monkey impact on things.

One still thinks ofcourse that India Inc will survive the remaining year as the financial markets have, propped by liquidity though consumption is likely to be a dampenedr in the coming festive season with means stripped of all respect in the Ways and Means advances of a government, 33% of plan spending and 52% of non plan spending exhausted in one quarter and personal consumption enjoying the hit from inflation every week.

Ofcourse the Indian polity has been early pioneer and we the commentators have been as usual late in adapting to India 3.0 which like 1.0 and 2.0 before simply refuses to budge from positions, movements and growth rates established last after a severe drought in the early 20th century and a westernised relief program by the then British sponsored Congress governments in the principalities of Indian maharajahs.

The Anna movement has fizzled out without a viable political color, NaMo and Nimo apparently not good for a national calling and Rahul Gandhi not coming out to take charge, the old generation moving on has also provided pause for those of us born in the 70s as more entry line recrutiting takes salaries , if any , to 20 somethings and no growth industry replaces againg telecom infrastructure stories banks amnaging to gro credit to NBFC, Real estate (Affordable Housing) and other services industries.

FDI collars for old sectors, new banks and growth calls for the pack waiting for work yet still snagging salaries at IPL linked marketing companies, erstwhile growing BPO and IT companies or NPA hit PSU banks are yet a year or more away. Not much is expected from IIP data and Manufacturing Output growth data on Wednesday while Friday’s WPI data and that of FX reserves is unlikely to move decisively either, yet not be in the rut, WPI having improved for the last three-four months. European inflation data is likely to be worse today when most nations report than tomorrow when Italy and Sweden are scheduled to report while key South Korean, Russian and Aussie data speeden the recovery by the currencies against the dollar.

Happy Thursdays! A trading thursday before the new series

Inflation & Gold
Image by Paolo Camera via Flickr

As 2012 begins on a low note , market levels are encouraging enough for investors to make a commitment to India for more than a few million and they laso have been able to play the non FII traders in the market who continue to roll over (angel brok) short positions in short of the eternal 4500. Inflation figures were encouraging witha 6 year low on food inflation

Onions were 40% cheaper last week, 60% this week while potatoes are also down 33% as warehouses start collecting stocks and rot starts while waiting for good exports prices.

Primary inflation came under 3% meraning good numbers for basic goods and primary articles supporting the falling nose of inflation with fuel stubbornly continuing but lower at 14.5%

There have been subtle changes in the Dollar – Euro – Commodities links ( see article ) in this month despite the year end low volumes and lack of interest which evidence a great year for equities from next week! Happy new year,e veryone and thanks for staying around!

Happy Thursdays! Inflation pulls ways and means advances

As Yes Bank signs on to a 600 bps savings bank deposit rate, and food inflation ticks down from 15 to 11%, the refusal of yields to predicate a proposition in the double digits forsooths that the RBI will stop around here if and when inflation trends down. It seems to me that more of the banking sectors participation is at work here in controlling the rise in interest rates. Incessant lobbying apart, the rising IIP and refusal of inflation to tick down below September’s 9.7% could very well still mean a systemic redefinition of interest rate basis in India like in So Africa.

Instead of defining new zeros in overnight and short term rates treasury liquidity like in the US and UK, the new BRICS entrant has simply defined a higher systemic basis by accepting highe3-5% inflation than the US and UK and EZ targets of 2% at the maximum

Some results from biggies Kotak and Dr reddy also make this New Year holiday in India a good segueway to great market speak on the festival of lights.

Kotak outscored by 20% for a new run rate of $800 mln for the 12 months while Dr Reddy returned to its earlier $2 bln run rate with 9.6 bln and 22.5 bln in revenues respectively. Kotak will be with the biggies in keeping SB interest rates down but market sees a lot of benefit for them in the new regime as PSUs are outpriced for the time being and tackle quality issues

Inflation in vegetables remains at 25% but we are in favor of good growth for the hinterland in MSP raises now 2800 for Chana and Masur and increase again in rice and wheat. Also Hamilton must give hope to Ferdnand also to come up in the ranks as the Buddh provides a chance to speed things up on the F1 circuit

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