India Closing Report (Week Of 12-16 November, 2012) (With Trading Strategies For The Week To Come)

Oil and Natural Gas Corporation

 

The Diwali holiday shortened week proved the dictum that if you flog the same levels for the market long enough the markets need not kneel out of fidgety bear’s interest or tired bulls leaving. However, the markets nearly rerated themselves and shorts ar eopen in the market esp as revised Telecom company targets including winner Bharti may be too much too soon for operation al challenges and negative margins in most markets on wafer thin Operating profits. One does not except writeback profits either except for those like idea who won back the same 9 circles from the previous auction without another penny in cash due to the government from them

 

Banking as expected will start Monday with strict guidelines on what is private and profit making and what is not, BOB and SBI showing they are in no position to compete in the sector even with size and rural reach or international access on their side.(BOB in Africa)

 

The market punters are still markedly divided along the same lines in consumption stocks with those that favor Axis and Jubilant and those who switch ITC, JET, YES and a few others, keeping them all in the not so Mid Cap but not blue chip ranks. The continuing fall in Cairn and GAIL makes that sector as close to Value pick range as it is allowed to get but neither ONGC nor GAIL or CAIRN look like they will be first picks in the coming week the foreign brokerages and morgan stanley having marked a flat range on the market which has obviously found 5620 to be more than fairly undervalued but is still a bit stuck in the mud even before 5800 is ht on the tripwires ( a tripwire is the simplest form of a shock trigger setting a limit beyond which the alerts start ringing)

 

Biocon has made another deal with Bristol Myers for anti diabetic medication while the diabetic market globally is expected to grow to nearly $60 B a year with even Novo Nordisk insulin yet just 25% of the market. Automobiles however do seem to be near the bottom of their range and could start ff the week’s investing bits till infra traders make a mind to take a plunge again IDFC in the lead and private banks like ICICI Bank and HDFC Bank following in.

 

The unexpected rise of Coffee stocks mid week really has set a cat among the pigeons as a 20% rise in those three cannot be easily replaced by any other competing equity or currency investment one thinks. and Tata Global remains a wonderful investment at 175 as Starbucks get s a little faster on the blocks with store openings in 4-6 weeks.

 

 

 

A reality check that augurs well for those willing to stop and take a breather | Earnings Insight

Earnings Mid Terms crash on All nighters..in India and US

Mid Cap IT and Infy looking for avenging the transfromation space with Indian business providers were again usurped by larger BPO deals and a good showing from unhedged HCL Technologies and one hopes also TCS leaving one critical movement in currency which is good for the larger economy as the ones hanging for dear life.

Similarly consumer plays like Coke paid 11% in Currency headwinds against a Ā strengthening dollar in the first two months of the quarter as global corporations report the halting recovery in the US. Intel is down and the world as we know it unchanged thrashing ahead for those not playing in such currency movements , not necessarily wanting to be shackled with Nationalist interest. However even as IBM looks at an inevitable yet steeper falling hardware sales and the ones that missed the housing recovery at Citi look at a continuing salvage operation, the world has moved on whether it desired to or not. The gap between the peers that have performed in this quarter and the rest is likely to keep growing and one must recognise those that have failed in this perfectly competitive quarter as having strategically misaligned themselves and needing a relook at their global and domestic business strategy. Globally this will soon include BofA by today evening when they report before US markets open but the winners may not necessarily include McDonalds’ , Starbucks and the resurgent Wells Fargo. What has probably happened is that those running with a perfectly operational strategy and anticipated free fall in this quarter have been singled out by us and we stand by our observation as we see the various forces of human endeavour trying to come out of the ever elongating crisis and note that no one has caught the envisioning of this new normal whether those still prognosticating a recession or those just hoping to ride on more growth allowances to make a comeback.

The changes at macroeconomic level mean that older ties between economies in critical businesses including banking and auto have probably been running on the saame tenets as the nineties yet and that they have changed only no as have been expected since 2008/9. Investors thus would have more hiccups ahead and would likely need to pull back from equities and reassess the situation and a second round of deleveraging will now likely hit global economies only later as European banks re-enter the arena.

However, this article does not have the answers we need to ‘move on” productively, except that even without regulators’ forcing it banks and global companies would do well to be more careful and are likely to be weaker to future economic crises or as observers noted, black swans could be a more often occurring event in the coming days. The growth of consumption as variously noted by Intel, Fedex, Starbucks, McDonalds’, Coke ( incl New York’s ban on supersized drinks) GM, Facebook, Dominos and Pizza Hut is not the same as it was a decade ago into which you added a health fad and a mobile. The Euro will survive but European corporates are still not ready to come out with performances worthy of a standing ovation including growing Healthcare plays like Roche, Novo Nordisk and US based Sanofi and JNJ

The going is going to be tough and the tough better get going!

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