India Morning Report: Rally enters fourth day with steep move up to 5850 levels

Line up the confetti balls and the piniatas as the fourth day of the Rajan Rally engenders new Slumdog Billionaire, Kaun Banega Crorepati and a successful Indian Badminton League probably mean the start of another even if the 2014 Airtel Grand Prix at the Noida Track is under threat and the IPL is sstill al knotted up from the Hawala Masala

 

Historic Valuations, Trends disregarded as flows rush in

 

Leo Pharma
Leo Pharma (Photo credit: Christian González Verón)

 

Piggybacking the global weakness of the Dollar, investors not predicately assuming to undo damage to the Rupee, nevertheless brought the currency back into play for the 60 mark to the Dollar on Tuesday with a 64 open as flows returned to India debt and equities. With INR 1600 Crore returning in debt and 800 crore ( more than 25 bln ) in equal measure into the chosen investments in stocks, the IT and Pharma largesse from the Dollar was no longer the defining mantra of the market by Friday itself.

 

As the 260 points in the Nifty to 5850 on Tuesday at 11 am show, the market may well take the indices to 6000, bring India firmly to the centre of the 2013 and 2014 investment maps as was three months ago and thus probably caus ethe currency to further climb back to 60 levels again as there are absolutely no buyer or seller levels in the move from 55 to 69 in the last three months and 10 odd days.

 

And much like it was Matt Schaub and Andre Johnson for the Texans in a star filled roster or the veterans Dravid and Ganguly playing India in on one o the many English conquests last decade, it was veterans that stuck to the India script rushing the momentum early morning into India with ITC back to 330 levels and still worth a few moves and Bharti and the banks not far behind, moving secularly together as rates fell below the 8.25% mark on the 10 year paper and ECB short-term borrowings interest rose again from Rajan’s moves to allow FX swaps at 350 basis points (on deposits till November for now).

 

The 5750 mark was expected to hold in the morning, the 20,000 mark on th Sensex seems obvious now on the BSE Index and

 

English: Amitabh Bachchan photographed by Stud...
English: Amitabh Bachchan photographed by Studio Harcourt Paris Français : Amitabh Bachchan photographié par Studio Harcourt Paris Harcourt Paris (Photo credit: Wikipedia)

 

thus 6000 is almost a certainty and as inflows measure interest and levels, there is no reason for indices to now fall or turn from these levels even if OMCs have not really gained till now on the Oil basket prices in India’s PPAs vis a vis the refining margin impacted by the appreciating Rupee or if no exporters seemed to have been selected for the overall CAD gains except for Bajaj Auto and It and Pharma are still available for substitution. Even if Infy has  new target of 3500, a balanced indian market is unlikely to let it reach the same in any hurry with value available across sectors, including last months star sector in metals. Sesa Goa weightage s increasing in Nifty by under 2% and Tata Steel is still available under 300

 

Kaun Banega Crorepati 2013 started last week on Sony with another veteran Amitabh Bachchan returning as its iconic face in the Indian version of “Who wants to become a millionaire?” (kbc.sonyliv.com) One Taj Md. Rangrez has won the Jackpot in this edition in episodes shot till now

 

 

 

India Morning Report: The lack of political prowess of the Nitish Modis and the NaMos, Advanis and Dear Rahul!

The General Post Office and Reserve Bank of In...
The General Post Office and Reserve Bank of India building from across Lal Dighi in B.B.D.Bagh, Calcutta (Photo credit: Wikipedia)

India Morning Report: And after 5600, is 5500 ..then 5400, 5300, 5100, 4900, 4500, and on it goes pegging poor buyers..

That would be one loose definition of retail investors currently ready to be pegged as not so germaine and India being resilient and a winning post even as RGR takes the board at the Reserve Bank of India. Vallabh Bhansali tried a valiant effort while MF managers ( again to be free non academic and interested in discussing with the educated layman who has other professions to tend) can be loosely ascribed as the educated investors’ abode and banks as continuing bulwarks of pressure for enterprise even as the NPA saga will not bleed anew but will extend its lasting periods well into 2016.

However if you do not ascribe to these notions as a first party or as third party notions of whats ailing india, which we would happily accept is not so, coalition politics to come and the lack of political prowess of the Nitish Modis and the NaMos, Advanis and Dear Rahul are going to cost India inc dear. One of course does not mean this as a crutch of benefits of stable seating charts at the RBI here but the ailments of the system will not be solved by monetary policy and one sees , like the continued selling of infracos and infra NBFCs even as banks rebound on the news of the new Chicago educated governor taking over (Deepak Parekh also was prominent among those welcoming the change). Fixed income Yields and more promisingly CDS spreads could respond to the timely change of regime at the Reserve Bank

Beautiful Gold Jewelry Designs from Golden India
Beautiful Gold Jewelry Designs from Golden India (Photo credit: epSos.de)

JLR results will be down this term, the defensives have been hit hard with HUL and ITC responding negativey to being tagged defensives after just having broken into growth on the trendline for the 3rd time together in a decade. Its a wonder SESA Goa , Sterlite and Tata steel are still falling sharply and that just means the market is unlikely to quit correcting till the CAD measures yet to be invented by us or experienced Economists like RGR and CRA (Rangarajan) are implemented to sustain the Rupee. Pharma and IT, the big white hope of those living and operating other Indian businesses from outside India, hardly seem geared for growth, most sticking to just small additions fom conversions of Fx and Exports though a stable share not growing fr pharma including the continuing risers in Stride Arcolabs o rthe youngest pig to the slaughter , Torrent even as Glenmark and not Sun pharma look great investments for the future

DIIs are still not biting and rates will be hiked sooner than later even as RGR tries to keep the bridge between the politicos facing elections and rolling out the first entitlements bill (in cash).Imagining Jet Airways at 300 levels while celebrating the final inking of a 24% stake from Etihad would have been unlikely even for those who started 5, 10, 15, 20 or 25 years ago.

The Sensex could not keep its morning cues intact going into the 11 AM post morning session and may sjow one more steep eigenvalue of fall on th Nifty and Sensex even befor the weekend comes but then it is becoming likelier at these levels after 12 sessions that the markets will not be freshly bet short and that this time means you should take one big short but it is improbably improbable that from here the hedge you take in buying the Banknifty will possibly probably and without virtual nanobots, make likely more money in the period to August end of series. So, come ray with me the markets last at 5500

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Offer for Sale vs the Auction Route vs Promoters

Currencies strengthen against the rupee intra day despite expected range with RBI actions not making reform grade impact to rupee baiters

Offer for Sale is a possible route for promoters esp targeting those with more than 75% holding but also competes now with direct auctions Thoise choosing the OFS / IPP route can now however commit such sales every 2 weeks within the colling period of 12 weeks

Promoters are frequently charged with managing  the “market-making” in their scrips making votaries like India investor Advisory Services and Ingovern come up as a new segment of Proxy Advisory companies. Our home grown PACs may serve a long felt need but with limited individual experience in the ranks their impact may be as limited as of bloggers unfortunately

Promoters of Vedanta for example have used Sterlite and SESA GOA to consolidate Cairn and other indian resources in a single company structure buut Vedanta has palmed off loss making resources at a premium for over $500 M in cash profit onthe consolidation. Also the two indian stars are additionally handling VAL debt of $12 B. Here’s the amazing detail on the same

The Auction route allows promoters a lower prep time but Auctions of ONGC and WIPRO bombed soon after the announcement in January Seemingly the new thorny point will be not allowing modifications on OFS/Auction bids whence promoter is unable to gauge the degree of non interest in the issue

Sebi has also asked that an indicative price be displayed during the last 60 minutes of the close of bidding and stated that bids cannot be changed or cancelled during the last 60 minutes from the close of bidding session instead of last 30 minutes.

Any disclosure of a minimum price or floor price for the offer for sale would have to be made on the day before the offer, after close of business hours.(DNA – now under the Zee banner 🙂

 

Rupee Impact: The ECB/FCCB repayment steer ( Part II)

India raised $2.5 bln from ECB/FCCB as late as October. Most of the $2.4 bln in September and $2.5 bln in October is infra and Petro bonds. FCCB pending from 2007 are deep out of the money. Overseas

Bharat Forge
Image via Wikipedia

investors having been caught in a firesale courtesy Europe, have been tough on their India FCCB holdings too

Adding to the list of large and mid sizedc corporates from the ETreport on Monday are the metal and minerals squeezed Tata Motors, Sesa Goa and Sterlite who better pay back their debt or their bleeding financial statements of the last two quarters would look benign in

English: Wordmark of Tata Motors
Image via Wikipedia

comparison to the ones for December and March. Others like Bharat Forge, Bhushan ( $410 mln for cap goods import) Financial Technologies and L&T probably have cash to return the outstanding / buy back their paper in the market (Bhushan borrowed in September/October) Investors are already enjpoying a steeply higher yield at which they are now trading as first investors have sold out.

Mint(livemint.com) has got a nice table for redemptions due:

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