India Morning Report: RBI Announcement brings in the relief jump

Markets, finally assured of their assessment of the long road ahead, jumped at the heartening news , though expected, of no change in monetary policy parameters from 4% CRR to 23% SLR and the bank rate temporarily at 10.25%. the Central Bank will “rollback liquidity steps in a calibrated manner” when stability returns and the yields are already south at 8.05% , Rupee climbed south at 59.75 levels but unlikely spoiling for a flight/light immediately as markets parry at yesterday’s levels but back in the green after the jump in selected stocks

The jump has of course died as he policy announcements are over, an unseemly trend, now seen twice in the last 4 years Our detailed RBI policy analysis will be available. Futures and options markets could be demotivated in volumes after the Rupee spike , still not sure of a trade after the loss of growth policy eigenvalues and a lack of a down trade in the Equities or Fixed income markets in this month. Oil payments schedules can probably be aggregated at the end of August

Credit Growth / Deposit growth projections in the quarterly review come in at 15% and 11% respectively. Banks will be unable to raise rates in either direction in a hurry. housing NBFCs seem to have lost the most, lIc housing levels at 180 unheard of and IDFC (Infra, PE, AMC) at 110 levels after a long break of nearly two years. M3 growth will be 13% as forecast today the High CAD for three years has been highlighted by outgoing Governor as a structural risk. The next RBI review will fall immediately after the expected Fed announcements of QE withdrawal in the September policy

RBI did right and is on watch but it seems that money is still pulling at the current Rupee levels as the Oil calculations get ready to upset the new equilibrium and the BoP risk comes fore much before exporters catch the new opportunities

 

 

 

India Morning Report: IT’s the big short.(Inching towards that 6100 mark, to inch back to 6000~)

English: WCAM- 3 locomotive at Kurla . It is D...
English: WCAM- 3 locomotive at Kurla . It is Designed by Bharat Heavy Electricals Limited. (Photo credit: Wikipedia)

Inching towards that 6100 mark, to inch back to 6000~

Markets never had such a foggy idea of where they were going having just cut up all paths withs chances of an India recovery but yet fogged by the fact that there is hardly any other choice if you exit India as a Foreign investor. US markets in fact have much the same prognosis ahead of the QE withdrawal as most of the money staying in any markets would unlikely move between markets. In fact Indian debt is back in “currency” as a new auction for buying rights saw the permits from the Central Bank covered to $4.33 Bln (@60INR=1USD) However, exits for indian debt since the fateful announcement in May were a humongous $10 Bln and RBI auctions have been unattended last when they thought banks would respond to excess liquidity mop up initiated in response to the FX crisis

Yesterday’s measures go further, es the ingenious channeling of Gold imports, committing a fifth to exports and assigned to custom bonded warehouses. mports are allowed for Gold businesses only but should fairly benefit the Economy from here after the thud from the extreme shock in June that dd bring the trade deficit back 40% to $12 B for the month

Markets and commentators seem to be losing faith in Cap Goods “monopolies” in India like BHEL who are fairly regular in printing bad numbers every three- four quarters and as banks have bottomed out, the short trade would start from any such market reaction to bad results, good results already baked in. L&T’s results for example seem spectacularly bad for market sentiment despite the Capital Goods major stuck with the same pipeline for well on 9 quarters now as it has been highlighting frequently and deterioration was probably unfortunately still not baked in

The GST reform may not be done but as ET reports on the front page the Capital NCR state of Delhi is finally getting bar codes to track elusive alcohol revenues , an important arsenal of funding for States in the Indian Federal system. in the southern idyll of Karnatak, in fact alcohol lees and extra state duties on fuels ( esp Petrol) make more than 90% of the budget’s income streams

Mid Day update; IT sector seems to be set up for the big fall as markets drop the dollar factor and go back to business left in value from the big move to IT last month. The IT short could well start before the expiry as IT stocks are not big in derivative trades esp with TechM, KPIT and infoedge not getting th bg speculators who play in derivatives

Also Walmart, Carrefour and tesco ventures in India may finally be closer to expanding statewise as the policymakers write in a waiver to 30% local supplier clauses allowing them to go for their preferred favorite supplier strategies sheltering them for producing exclusively for them, much a good thing for the supply chain deficiencies in the country

In stocks, you should have been long banks and you could hold from here. You can also keep longs in ITC, Bharti, Bajaj Auto and IDFC irrespective of current levels. At 6100 , the markets will head south for having run out of reasons to stay up and make room for a few margin trades on the short but expiry may well happen above 6000 levels as the ‘comeback’ trade (sic!) would just try and get a fai trade for shorts before closing up again with select stocks and sectors really sparse in this deep and big market, making impact opportunities a likely opportunity for those with 1005 data access. if you are game, you should look for changes in liquidity impact of the NSE 500 stocks and probably a dozen will show up interesting changes in trend to pounce upon. Those stocks toking up and ready to go downhill may also be camouflaged especially if you see large volumes in trades as prices go down on sustained basis(more than 2-3 days of this week )

Sorry Ashwini(ETNOW), going short ain’t so easy if you are betting on India, much like its hindu rate of growth, the nations stocks are probably stuck at these levels unable to channelise a trend

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)

 

 

 

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