India Morning Report: 6220, then, true bottom, market move up please.

Namma Metro
Namma Metro (Photo credit: ashwin kumar)

More impressive than Horn OK Please, but then two wheeler riders deserve beter(sic?!) or not, National Highways are safer for Trucks and Four Wheelers and so no, this headline is not about the mow down of two wheelers or by two /three wheelers in the urban meltdown. The 1000 odd rich families in the People’s Republic are treated with such disdain twice as vitriolic as attributed to the rowdies on Indian roads and they are definitely equally cognizant of the traffic rules as the four wheelers. As I write S&P seems to have marked India’s rating to stable.

More often than not, these urban snarls on the way to work have lately been marked by spots of new construction hanging because of bankrupt cities and states or other EPA/non EPA but documentation relation bottlenecks the construction crew is pretty used to. The BMRTC however, continues to break the mould in setting the benchmark for delayed and inept project handling, while the Bangalore Metro remains the only pristine mass transport crew in the world, after 15 months for nothing else but the 3.5 km distance it covers in totality to the CBD.

A “Dadi Balsara” inspiration that could work for the city and other Indian cities, is to break Bangalore into 3 different urban entities, not a loose conglomerate /federation of municipal divisions/organisations like in Delhi but cities with passports , if required, to travel in between. Singapore has managed very well with the urban transport problem and along with the Scandinavian cities that started it, London and Singapore remain great examples of how to create and grow a city infrastucture and plan urban Transport

But then, I am in the 9 to 5 mold like most Indian 18-40s and more or less wait for work to come to me because that is the smart thing to do.

English: COMPULSORY SOUND HORN sign
English: COMPULSORY SOUND HORN sign (Photo credit: Wikipedia)

Markets are dull, lifeless and the nose is pointing up as 6220 held and will declaim into the biggest rally yet as Earnings season successes have put the GDP growth residual to the crisis into a proper perspective, India becoming one of the most undervalued domains and like US equities, the depth of the market gets its own sponsors while Currency and Fixed Income woes almost strike a t will, the lull taking again a single seller to push a sharp toll on the incumbents, the currency lopping a wide ball to 63 and yields kissing 9% . The RE60 quadricycle will be good for the Indian soul and perhaps sponsors like Prince RJ will even push for it to displace the 800 (in the minds). Bajaj Auto, suffered a setback despite  adding export numbers in October as markets remain uneducated about its portfolio and expectations are at variance spurred by the single line item hope of the return of Hero in this Festive season. Three wheeler sales are strong again and M&M is making a comeback in the Global Auto sector citizenry where they have made a unique impact ( not from 60s history but here and now)

Those who watched it will be carrying it home as Rajeev Gowda handed the BJP and CNN IBN an apt rejoinder on the Poll /Survey action initiated by the CEC ahead of state and General elections. Results season is over not just in the USA but here as well. The remaining PSU banks and Dhanalakshmi Bank and Dena Bank report over the weekend. Next week sees more MNC Pharma results and Sun and Stride Arco labs  report big earnings quarters, Sun Pharma closing on the 14th. Both Cipla and Sun Pharma report on the 13th and Sun could wait for 14th morning before appearing on the networks as Stride Arcolabs reports. Tata Global (Starbucks) reports with the Reliance pack on Tuesday/Wednesday

RBI guidelines on Foreign banks entering thru the WOS structure plug in the statutory gaps  but cannot more than show their good faith and welcoming arms for Foreign banks who are already staring at cutting themselves out of more regulatory capital holes cropping up to bear the expense of global expansion hitherto unfathomable in an industry used to being welcomed on the strength of an opaque global HQ without farming Capital to such “territories” Even as the regulations are required and Indian Bank sector will expand and mature with a growing debt franchise , India has already been bracketed into an “exotic” category with the likes of Brazil for its reliance on traditional lending products in the credit basket and the split from shadow banking ties or one still believes even the lack of depth in wholesale funding. Also none see India as a pioneer for having always kept the inter bank market to a minimum as global banks fight the war with regulators for drying up the inter bank market. Credit continues to contract in Europe at near double digit levels, the single most factor affecting banks even as they stabilise the new era of growth and the best in class retain double-digit RoEs.

India Morning Report : (Friday, Pre Closing Update) All round recovery from global mini crash on Thursday

Map: Asia (location), subregions as delineated...
Map: Asia (location), subregions as delineated by United Nations geographic classification scheme, except *: Northern Asia* Russia in Eastern Europe en:Central Asia territories geographically, wholly or partially, in Eastern Europe Western Asia territories geographically, wholly or partially, in Eastern Europe, Southern Europe, and Northern Africa Southern Asia Eastern Asia Southeastern Asia territories geographically, wholly or partially, in Melanesia (Oceania) (Photo credit: Wikipedia)

Asia in general recovered smartly after Amari’s comments were seen as blown out of proportion and BOJ followed up with huge injections of bond selling. Of course, India markets reacted similarily but are sure to go their own way from next week as the common thread from continuing global liquidity is bolstered by the local growth stories, continuing FII interest in India and a heady  IPO market led by resurgent demand including cross regional deal interest out of Hongkong, Qatar and Singapore.

Still on the yen machinations, China’s plans to go global to keep manufacturing competitive and flagging imports also add to Japanese and Korean discomfort, making local QEs a last build option that will grow in size for the late starters despite protestations yesterday of a synchronisation with G3 interests and/or the disaffection shown by the BOJ governor Haruhiko Karuda , leaving BoJ in early 2014.

The Yen at 101.7 again , the rupee may slide to further lows on a trot next week as the adjustment trade to make exports competitive is out of sequence of the improving fundamentals and the weakness of the US Dollar, an event unlikely stopped by this week’s global inverse trade days of Tuesday and Thursday . Amid the differences, one could see trends in currency markets continue to elude India inc but definitely RBI plans to grow an international role for rupee and continuing interest in rupee positions from emerging market bank trading desks incl hsbc and stanchart are not just paper scapes as india grows it trade pie in global trade.

However apart from equities and now a little bit of debt, India needs to open to more global currency products for a sustainable self reliant trade to emerge in chosen currency pairs to exclude the recurrent window ofdeep depreciation adjustments of the rupee especially as it is engendered by payment pressures alone and not borne by the strength of domestic consumption and growth as can be seen inthe people’s frepublic off that side of the Himalayas. Jet Airways and spicejet also report tonight though Jet traders are convinced of headwinds facing the airline’s deal with etihad

Results season is busy yet as a flurry of sells/hold ratings on SBI because of the continuing slide in Net NPAs ( now 2.1% from 1.8%) are still misplaced after yesterday’s 7% slide failed to take into account the bank’s growth in credit at more than 20% on a INR 10 trillion book even as the pressure to exit the restructuring habit of marginal corporates and the over dependence on SME accounts is still under process. NIMs have pegged lower on year because of pension liabilities but quarter/quarter decrease is still evident because of deposit costs

Full year consolidated profits at INR 180 Bln are not a trifle and help the bank establish itself in an important quasi policy role much like the dysfunctional governments we withstand as a non functioning opposition continues to get closer to leadership in parliament because of its non attendance of parliament, a sure sign that the upward climb of fundamentals in India is feverishly capped despite growing roots of literacy and a much more aware bueaucracy than is available to our neighbours

 

India Morning Report: The short stuff stranglehold and more consolidation..

Those hoping for a correction as DIIs called the market wrong 2-3 times before the markets left them selling into a rising market and handling redemptions but based on the predilection for that correction shorts have already bled in trying to sell 5800 Calls and had to roll to 6000 calls in December series. That ould seemingly have been a nice time for an exit and now, new top range of the market is well settled nearer 6200 where the new Sold calls set up the top of the range while those holding the 6000 Call premium of about 100+ are likely to be trapped by bulls and doused fully in the run past 6100.

English: India's Minister of Finance Palaniapp...
English: India’s Minister of Finance Palaniappan Chidambaram is the special guest at a plenary session titled Risks to India’s Economy in a Post-Crisis World held at the World Economic Forum’s India Economic Summit 2008 in New Delhi, 16-18 November 2008. (Photo credit: Wikipedia)

Nifty hits 6000 on way to 6200

That of course is just more details of how shorts including DII managers like Madhu Kela who were long on the Indian economy but haave been battling continuing redemptions and the lack of opportunity to buy will be hurt in the January series before the markets start a downward trend most likely post budget as euphoria over policy finally dies out only after new budget announcements and tolerance for fiscal slippage and the new range for targets for FY14, 15 and FY16 that governments across the world and P Chidambaram must use wisely. Avoid IT esp Midcaps as shorts would concentrate there while the market achieves 6200 to help them fund their trades to the North pole

That also means that markets will likely remain above 6000 in the run up to the budget and supports at 5900-5950 are likely to hold allowing Indian currency to catch up on the bad year past in 2012 and strengthen in the periods the Won and the Singapore Dollar create as they continue to run up past the US Dollar on continued good performance by Singapore and hopefully bad December trade data turning out to be a chimera for Korea whree the WON nearly ran up 10% on the Dollar in 2012 on trade resurgence but China may be looking to other trade partners at the beginning of the recovery while Korea has to wait for the consumer boom in China and its other Export markets.

Asia leads strongly in today’s open as Europe is also likely to rejoice on the postponing of all arguments in the US Senate and House for another two months as both Republicans and Democrats try to get a hold on their contribution to a longterm restructuring of the budget deficit.

Meanwhile LIC’s investment charter is likely on target to receive the policy endorsement needed to own up to 25% of a company in equity and the Indian state gets a strong ally in Institutional investors resulting to that.

Manufacturing PMI data to be released later in the day may not be able to hold on to its gains at last months near 54 performance and December’s lukewarm auto sales ( to be confirmed by Bajaj Auto and HMSI) with TaMo scoring just 15000 sales for the month and Maruti sticking around 80,000 vhicles for the year near its recent bottom for the year. Hyundai also reported sales of less than 30,000 for the month while M&M nearly topped off the 50,000 mark in a strong performance and its new SUV range indeed catchs on the fancy of the budget buyer, a big category in India’s consumernomics.

Late Morning trading strategies India July 18, 2012

Tata Global, Torrent Pharma and Dabur also report on Monday and are hot for a pre results upmove. (Torrent Power is the bad boy and may drag torr Pharma only later)

If you know Merck and Container corp they could actually be post results movers.. again results are slated monday and Tuesday Merck has alrdy been moving up but unlike others may not have abig level.

Dabur
Dabur (Photo credit: Wikipedia)

Page Industries reports Tuesday and should be continuing strength or that stock becomes an old story long gone

Zee News and Zee Entertainment report separately, DNA reports under Zee News

BAJAJFINSERV ist the big mover and offers intraday score. LIC HOUSING should jump further to even 277 for a sell on Reults next week. ING, YES and KOTAK wait for a move from kotak’s results tomorrow.

COALINDIA is hunkering up and 360 is today;’s level regardless of Nifty ‘s direction. I am worried about the market because of Reliance results looming tomorrow but despite expected beaten margins in Oil refining , Singapore itself at $5 [pper barrel, the scrip seems to be set for an intraday move up .

In sum, get long in ICICI BANKA nd IDFC, run with AXISBANK ont the rebound, and if youare invested in Merck thenthat should be enough but  otherwise Bajaj Finserv and Tata Global are set for the bigger pop.

GMR and JP ASSOCIATES could outperform as once he infra run starts in the afternoon. BAJAJ AUTO will  move up on results as 1433 is its lowest price levels, if dumped it could go down now to 1200 levels.

Woeful india presentation and Analysis – Bloot!

And I do not refer to the ministers, Trivedi or Mamata, I refer to Rishad Sembhalan and otherwise insightful Asia commentary that fails at knowing India or its concerns,. Rarely has something so pathetic been allowed by the Channel as its commentary on India as the lady with the rose for India’s Railway budget ( It was an

Mamata Banerjee's signature.
Mamata Banerjee's signature. (Photo credit: Wikipedia)

obituary rose, and this is an emotionally charged comment, but yet I seem to have hit the nail on the head more than anyone else for the last 4 years and this is another from that cartel of 100% tricks, that Bloomberg Asia or anyone in Singapore not be allowed to speak on the subject of India.

On the flip side, the entire SE Asia seems to come out trumps always with that cliched view of an incompetent India and its incompetent ministers everyday and we know it is that Economic growth continues to happen despite policy not with new  policy by now. . ( and this time Pictures of Mumbai laborers…1!! ) while we filled with hope remain with pen/ keypad at hand, building that movement.

Godrej gets a Temasek vote of confidence

Baytree’s investment into Godrej consumer underlines the long pending second line of investments to be made by the Asian SWF in India and other growing economies of the region.

Godrej is issuing 10% equity or 16.7 mln shares in a preferential allotment to the Baytree arm of Temasek at a good $8.2 price or less than $6.30 if you consider Indian rupeee’s expected levels of INR 65 to the Dollar $$) The equity makes Temasek a 4.9% investor in GCPL, Godrej Consumer. The new Rupee 1.00 par value shares will help the company fund and stablise their acquisitions in hair dye maker Cosmetica in Chile and last year’s acquisition of African hair care firm Darling.

Cosmetica for example cost GCPL a hefty INR 10.8 bln for its $36 mln turnover but will add INR 2 bln in profits

Temasek Holdings
Image via Wikipedia

every year after the acquisition is completed. African Darling is thru one phase of marger integration as per Adi Godrej and likely to complete integration by 2013. GCPL grew revenues at 36% from December 2010 profit growing faster to INR 1.67 bln for the entire company growin g12% volumes in the Indian business

Adi Godrej’s interview in today’s DNA is available here

The company has acquired domestic brands like Genteel and Swastik, haiir color Rapidol and accesories Kiny in South Africa as well as Tura in Nigeria and an insecticide company, Megasari in Indonesia

English: Adi Godrej at WIEF
Image via Wikipedia

The company has made a comeback with its pure soaps in India, growing volumes in soaps at 18% in the latest quarter and Magasari’s innovation will likely be introduced to compete with Good Knight in India. Godrej also likes to talk about its 1-2% R&SD spend and may want to grow the advertising on its brands in line its new mores , probably for its proefessional hair brands in which it has increased spends and M&A purchases.

While Malaysian Khazanah has just changed its charter from a Energy rich SWF to a diversified fund and may be more interested in smaller/monopoly plays in smaller Indo China economies, Temasek continues to farm the big money in China, Singapore and India.

Korea will probably make its own surplus SWF investments but still needs some inward interest from other SWF funds while india’s Top 20 in the Private Sector have been a matter of considerable Interest for Temasek since 1999.

The use of so many subsidiary vehicles for Temasek however incl Cedar , Baytree and directly as well as the bigger sibling in GIC is likely to make governance complex however for the coming generations of investment from Temasek as well.

India Infrastructure: Changi gets in

Changi is also a Temasek/GIC investment of the Singapore government that wanted to prioritise its entry into

English: An aerial view of Parliament House in...
Image via Wikipedia

india’s aviation infrastructure projects. Having lost 2 bids ( at least) with tatas in a JV it has finally agreed to buy 26% of GVK’s aviation business. given that GVKPIL itself is only worth $320 mln odd on the exchanges, the stake’s valuation of $800 mln for the aviation business should lead GVK out of a potential debt trap even if condition on syndication of infra debt is not corrected esp with respect to NPA considerations for debt to the sector.

NPA marking after 6 months, apart from its long tenure and thus unsuitability for bank books, none of which have stopped banks and infra projects from announcing financial completion and consequent delays in land acquisition, escalation of project costs and delays in project execution, even after operationalisation, ground results and financial projections are yet divergent as adoption of pay as you go by retail consumers is slow at best.

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