InDIA MORNING REPORT SEPTEMBER 07, 2012: Global Liquidity Moves and a crunch in China

English: Bharat Swati (BHEL Swati) is an India...
English: Bharat Swati (BHEL Swati) is an Indian two-seat training monoplane designed by the Technical Centre of Directorate General of Civil Aviation and built by Bharat Heavy Electricals Limited. (Photo credit: Wikipedia)

As GSAM and a few others will willingly admit over the air, there is no return on your investment in China for a few more months. Of course the most important news of this market and it is affecting pre open rates as we speak is the Central bank liquidity thrust which has started in earnest even before the last obstacles toa Spanish bailout have been removed from ESM approvals to Spain’s own assessment and formal request. Bond buying in the 1-3 yr range by the ECB was announced at the monthly ECB meeting yesterday and was good news fo those already picking up 7% and 5.5% bargains in Spanish and Italian bonds. The resulting liquiddity esp as China is crushed under its own policy weight of the last twenty years is more investments in India.

However sooner or later more backing will be required for this rally as the BHEL and SAIL disinvestments look ticklishly unlikely despite Chidu’s best face on it. Bank nifty should be an important gainer if not today, tomorrow as 9850 was an important point of support.

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Amazon gets nearer to India post?

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After Amazon opened in Spain last year and a rumor of Lipkart getting into the supply business for Amazon hit the circuits last, the talk of their first local fulfilment center show that while the talk of interested shoppers with Amazon was a fact unsubstantiated by country sales break down, the wishes for a local Amazon store may no longer be lost in getting their IT software to recruit here in as It happened one night in 2006

This warehouse is a critical piec eof the Amazon logistics chain promising delivery from US to far flung international destinations in as less as a week and probably includes ready shipping plans that can be tied

Screw Amazon.cominto Amazon Prime sooner than later. If it really turns into an independent India based website with Indian product ranges and a couple of expat managers, it could be that much bigger for Amazon and a bite back for Apple which has horrendously latched on to super premium pricing for its hot iPad and iPhone lines in the country

More to this ‘short bout of volatility’

English: Company logo for CLSA Asia-Pacific Ma...
Image via Wikipedia

There are miles to go for India to even try a fair chance for GST, DTC and Infrastructure investments to name just three seering gaps. CLSA downgrade of India – biting for Sensex levels of 25% lower near 11000-12000 could be the ‘tru dat’ of a sinking European bank season as it hits Asia at a very vulnerable time. No one should deny the loss of purchasing power of the rupee at a rate of 60 to the dollar . PPP terms should thus become wider from the current rates again

However, Banks are being targeted somewhat unfairly raising old concerns of it being because they are our only liquid stocks that run on financial assets that can be willingly spiralled into submission. And that is perhaps precisely the reason they could be targeted. One could see India testing hyperinflation and other denigrated “IMF tenets” of deficit economics being raise by this hot money tail. As funds lose close to 20% and a s flight of capital also ensures lower than 80% availability of locked capital, it is unlikely that anyone can defend against the shorts that are required by traders to recover income in this cycle for their investors and clients.

Global fundamentals demand perhaps that India understand the downward spiral like the other sovereigns. Of course that still does not deny that we were at least 5-6 notches better than Italy and Spain, whereas we have been alooof to the crisis because the “developed world” of the med had a lot of downward catching up of ratings to do with the emerging stars like India and China. Unfortunately though, we have lost the chance to be an equal with China, irrespective of how proud we are of our distinctive identity

China's FIRST McDonald'sWith the dip in stocks on non conformation by the RBI ignored for a late afternoon sell off, Nifty could well do another 250 points till Thursday. I would suggest waiting and watchin gon bargains with a holding capacity of 10-15% of paper losses at 4200-400 levels

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