India Morning Report: A tough hand dealt in the Financial Stability Report

Loan
Loan (Photo credit: LendingMemo)

The Interconnectedness of the Indian Banking system, might have become prioritised for a global caveat emptor learnt but the Indian system has much more downside from our desi PSU style profligacy in SME lending as haircuts on even 50% of that stressed portfolio would take the government out for a long walk in the woods. Delving a little more indepth into our favorite subject, most of the stressed portfolios in India Inc’s first stress tests were found to be in Infra, Mining and Cap goods sectors or our core Infrastructure series components and those would anyway need to be treated differently than Ordinary term loans . Such loans constitue 54% of the Stressed assets identified in the FSR.

However as the Financial Stability Report remarks, there is a fundamental risk to about 60% of the credit stock in the Banking system collapsing banks even as they have primarily not created a laconic lee side for the Ghat monsoons in interbank lending primarily one supposes thru traded CDLOs and real lending on larger accounts  than derivatives without a defined underlying as in the global case. The risk as highlighted in the FSR come from defaults in lending portfolios of Banks skewed to single corporates apparently among other details one has to study from the disregard of concentration risk by lenders with the 20% to single corporate and 25% i think for group key limits to be tightened and enforced duly.

India on the other hand has to grow the Securitisation pie  from here and where the Central Bank would be trying to control INR 1.7 Tln in repayments due till 2017-18 from the next fiscal onwards (FY15->2014-15) , India would indeed face an uphill task the markets would do well to ensure they have factored in. HDFC Bank too never got that approval for added FII investments even as Axis Bank application was cleared last week(to 62%).

Back to the mundane diary of the Indian markets for the day, Markets trade leaving the upside intact as shallow trades characterise the last trading session to 2014, much like last week’s record low of INR 740 Bln in the full day of equities and derivatives trading on the NSE and BSE and Cash volumes are likely to stay below INR 30 Bln (the last week low was INR 50 Bln) probably. US and European Markets are closed on New Years Day including Fixed income markets (at least in the USA) The other thing to highlight from the watchful Fiscal Stability Report is RBI’s worries on the Growth – Inflation dynamics not working out as WPI continues above 7%  which we led with sometime in November.

Net foreign inflows continue to sweeten the deal for India inc into 2014 with a 1.5% CAD (FSR score 1.7% and a FY14 achievement score target of under 3%) and the Fisc even if the virtual spending shutdown (as in the last 4 years) from January will soon find another yawning gap even if FY 2014 indeed perks up reasonably. Hopes of a stable post election scenario have almost been crossed out in case you did not notice in the New Year’s eve  celebrations and the infra pack, high on investment hopes and leadership from IDFC, and a deleveraging trio incl GMR Infra and JP Associates with the Relinfra people facing their first AAM Party audit

Apparently new year’s eve also sees an uptick in Tata Power and Reliance , which one doubts will last esp as Tata Motors is receiving its recognition only for its minute share of the TESCO-Trent JV like in fact here was such when Starbucks burst onto the subcontinent scene. The Starbucks venture is well-defined however, and the ware tastes well, drawing in big crowds in now 3(Three) cities in India

Redesigned logo used from 2011-present.
Redesigned logo used from 2011-present. (Photo credit: Wikipedia)

What probably did not get highlighted but was tried earlier by RBI, also needs to be monitored for results as Foreign Banks continue to skirt the Living Wills issues at Global HQ and continue to rethink their strategy with regard to entering India. Apparently Gross NPAs will start trickling down as we long suggested but Fitch and a few others are still hoping the PSU disaster will play out to bigger stakes and at a faster rate to make a return virtually impossible ( especially if larger Government injections are requird to keep them floating – KV Kamath). However, I would just depend on the investment recovery and the credit growth performance by Private Banks and probably PNB as Deposits finally outpace credit in the last bi monthly reports on the Banking sector in Calendar 2013 and the ICDR hopefully comes back to respectable levels without Banks having to constrain such new lending in India’s recovery phase

Also don’t take me to be a cynic but Torrent and Lupin’s timed leaks about Pharma’s assault on a generic version opportunity for Cymbalta may be better timed but is still probably a few months away from translating into Dollars and one fervently hope ( and cannot claim to otherwise yet concretise) that the generic provides an opportunity to us more than the cookie cutter $200-500 mln with or without first mover advantage.

India Morning Report: Energy Cos, FMCG follow into the bull segment in January

English: tata steel lake black and white effect
English: tata steel lake black and white effect (Photo credit: Wikipedia)

The news of breaking thru to better levels in the next segment have started crystallising on expiry day as OMCs and  Tata Global catch up while Aurobindo is a strong candidate to become the trader sentiment fundng stock as it battles the challenges from a local branch of the US FDA in its new avatar(US FDA’s new avatar)

Divis’ is another if you think it needs a scratch to win the Pharma segment in 2014. However there still is significant (75% +) investment upside in stocks like Cipla, Lupin and even Sun and Dr Reddy even as they review their competitiveness in the blue sky territory (Ashwini/ET on Aurobindo) for their stock prices.

Mining and Metals are not going to get a broad rally and may sustain bear interest but Tata Steel and a few others are definitely heading for a better future, Jindal Steel on the flip side continuing into the nether. IOC  and BPCL could be strong picks, HPCL having compensated for the lack of interest within the sector in 2012.

The long stretch at 6200  now sees thinning out PSU bank trades and new investors looking for the non Quantum broking “hidden gems” i.e. analysed not in this block of 5 years but surviving the negative glare other trader favorites have been subjected to as Bank and Dealer trading rooms get increasingly traded out of the select short list making the back bone of the as always overall positive prognostication for the Indian Markets as a steady uptrend of more than 15% gain in 2014 has been divined for the overall markets. 

However the FMCG jump backs identified in Talwalkars, and Jubilant or even real estate newbies in listed trade like Prestige or earlier RKJ picks NCC have already shown their limited stamina in such rallies and the same applies to a McLeod Russel or any other such Midcap picks and Tata Global will probably lead a pack of 6-10 such winners . Others likely to be included in such a cross section of winners would be the winning infra trade from IRB, Lanco and even the blue chp pick IDFC,  and another from GVK, GMR and Reliance Infra on better leverage news in 2014. The ones rejected for quitting on the bank licence race or just trying include Shriram Transport and LIC Housing. ITC and Bharti are not good for the day but remain part of this segment of winners to provide fairweight to sucha trending portfolio unlikely to be able to depend on Maruti or Axis Bank (probably just because it was tired by traders thru excessive lay in 2011 slurring it as a bulwark of the bada$$ trader instead of India’s flagship trade) Punjab National Bank alone is making up for the required breadth in Banknifty underlying/components along with the usual volumes in SBI. Seemingly, Powergrid is also nearing a FII limit at its current aproved 24% part of the overall sectoral limit.

The Power NBFCs are good for the rush, HDFC Bank is not out of favor and REC and PFC continue to lead this other mrket spine overall, but the other spine/splines(if you read) would come back in Powergrid and GAIL. As mentioned earlier the L&T and BHELs (esp the latter) or the metal and mining Hindalco and Hind Zinc may not provide such an alternate portfolio enough weight to survive the daily storm in 2014

Also, on the overall, like Reliance in the earlier years from 2005-2010, one should stay away from a Kingfisher like future looming for Tata Motors as cash gets reinvested at luxe rices into JLR and it is fully matted in domestic markets

 

India Morning Report: Markets slip as PSU bank investors stay away

Is Inflation the Real Problem?
Is Inflation the Real Problem? (Photo credit: Wikipedia)

Active index and Banknifty balancing in a stable India economy above 6% growth involved the usual confidence investing in PSU banks a two thirds of the Banknifty to and or xis, HUL and a select set of defensives , that have disappeared as markets fall thru additional support levels. Apart from the loss to Ashwini Gujrl’s set of picks seen over two – three weeks post ‘shucking’, any other impact on the markets is lacking. One feels the confidence shown in non leveraged High Operating Leverage businesses in small and mid cap sector is also misplaced. Such High Operating Leverage Businesses with more than even 75% Op Margin in cases have time and again shown that less than 1 in 20 such businesses , even with deep pockets like Jyothi Labs, convert into a brand and a business like Bharti.

Bharti and ITC lead markets back and Lupin has a lot of strength left in it. Expectation have come back to a 360 Cipla to kick off the game for this rally segment and ICICI Bank and Axis are also losing ground from a probable low yesterday as the Banknifty sinks into 11,500 levels. However, the end (of the shorts) is nigh. This observed bear extension on Thursday is a direct concomitant of a stable PCR near 1 levels leaving writers hungry for more and writing calls is always easier than underwriting puts at new market levels

Tulsian’s faith in the ‘shadow stockings’ ahead of Christmas is also back, but we don’t think  UB Ltd will be compensated fr not rushing returns in the merger and bankruptcy melees of the crisis Olympics. However, it would be  good idea to sink into HDFC and Siemens.

Also Barclays Capital, as we have been following got in  5 out of 7 the same selection of 2014 picks. We already made it clear Tata Motors is a big sell on 2014, probably bigger than the Jindal Steel breakdown which will stop out of the ‘bear cartel’ push at 225 levels The Energy trade should be pushed but the Fisc is already distressing and the release of Fert subsidies at INR 50 Bln  was already a razor edge detail for the Corps watching India’s clawback on global fortunes. Assuming NTPC would not be ready to immediately step up on reform gear and leverage growing efficiency, we would disagree with buys on NTPC.  GMR is back in the big bids and the big bullish candle moving GMR, RelInfra and IDFC together with JP Associates should land on the next bevy of drones.(any independent rally segment up or down can be ascribed to a virtual set of drones picking the right calls). Bank of America, the other who nailed the Economy without attention to thoughts of a wavering Rupee (more than required) will also be worth tallying scores in 2014

The 15% Food inflation and the 12% contraction in Consumer Durables (read our earlier monthly commentary on PMI/Inflation) put paid to any thoughts of a recovery improving despite news of a Q3 debacle already factored/expected for October 2013 and probably till December 2013 s this includes our festival time data. November Auto sales disappointed for all though retail inflation has been strong (good demand indicator) in Consumer durables items on existing stocks as production has been subdued for more than 6 months now

Again, despite the policy tightening, banks are unlikely to need rate hikes as they have weaned off MSF rates. Also retail inflation will continue fueled by higher Food inflation , in double digits due to supply and other economic concerns for small and rural businesses. onion rices have corrected sharply in the meantime and Food inflation data for the month was likely overstating facts, returning to lower double digit levels in the remaining 5 months of the Fiscal.

Oh yeah, we may have forgotten, in the search for Economic employment, the Global recovery of 2014, is not happening except in US Equities as Europe proves its a dead continent and a usurius currency. China thus also fails despite a better share of its own currency in exports again and that leaves US and India and the ROW without business ends to close deals beyond a hygienic rise in Trade led growth. US is also stuck at 3% levels despite the mentored lower trajectory for Currency and rates which a good motivator but the currency is unlikely to be allowed to get eweaker at least from the current Dollar Index levels, probably never below 78 in all of 2014 even as Oil imports stop for the Superpower of the 20th century. And that, is despite the taper.

India Morning Report: Volatility(India VIX) has another 40% upside, the last series is a rush

Maruti Temple
Maruti Temple (Photo credit: Terry Hassan)

When markets opened yesterday, the PCR reported was an even stevens at 1.0 and the rush for Open interest additions in All calls from 6200-6800 or all puts from 5800 to 6200 by writers meant the VIX continued to jump in a flat market remaining at 6200.

The trend continues today and with a bull spread easily assimilated, Bullish positions will accrue in the flat market till the written calls can jump the markets near a 1.2 PCR level which means actually a lot of money to be made in this derivative series in the last month of the Calendar year as the Dow unwinds most of the gains in the previous two weeks.

Indian markets will drift but look like making all time highs sooner than later as the bottom catches up with 6200 while the VIX continues its move up. If you notice, in the calls for a saturated market the buy calls today are  a distinct extension of the same stock selection begun in August 2013.

PNB has finally been given the green light wth its better provisioning implying a bigger bull weight to the stock esp as PSU banks remain a big no and that means a lot of exits. The market saturation commentators probably used the SBI series to make the point but the same is more an indication of a fundamental disavowal from the State Bank stock as it remains a primary conduit in the highlighted Asset quality factors Fitch underlined in yesterday’s report to 15% NPL levels by March 2015.

ICICI Bank remains a buy on longer terms and if indeed it is available cheaper from 1080 levels it will be at the erstwhile 1035 for the day traders and accumulators Delhi goes to the polls tonight and next Monday counts will be in from the State Polls, lending  strategic beginning for the incumbent Congress and probably its last chance even as Modi makes a fool of his self in oratory and may cut his speaking engagements towasrds the end so his work record can be taken to the elections. A distinctly uneasy feeling to hear that sound of voice and it is likely to set in as a big fail for BJP on the national stage in some vaguely deviant way wihth a confused young electorate holding the keys to the next Government in Delhi ( Centre, not state)

Back in the cash markets, stocks selected are likely to gain fast colors soon as the Manthan is almost over and equity inflows substitute bond outflows near the next inflation rate hike as Money supply remains subdued and counters the rate hike rate cut philosophy underlining the wider disenchantment with trying and making money esp in India and the recovery looks to run sharer this quarter bringing banks back into mainstream picks without the PSU weighted Banknifty dragging individual winners

HDFC Bank has also suffered in the negative sentiment in aut markets and while the CV market and its loan portfolios like NBFCs and Indusind Bank remain sluggish and give of fthe all pervasive urge to cut weights in India, the rest of the retail Auto markets and Finance majors are probably set fro an upturn. November sales were especially cruel on Maruti and even Hyundai even as Ford rested on a steamed u 4000 units i export, resulting in almost 12k units for the month near its best yet.

Domestic shares of auto companies continue to shrink for everyone vbecause of the troubles with buying a Hyundai a Tata motor product like the Nano or anyther Three cheers to Darashaw Technicals for catching the exit point in HCL Tech. Notice again, the veracity nd the preponderence of select buy calls showing the winners of India Inc, this is the time to build the portfolio. Motherson Sumi(speaking on ETNOW) is one of the select auto ancilliary mid caps that will also build a market catch all in this specific turnaround time with strong order books and improving margins.

India Morning Report: Powergrid 78 Crore shares on offer, LIC and IDFC better picks

A bond from the Dutch East India Company, dati...
A bond from the Dutch East India Company, dating from 7 November 1623, for the amount of 2,400 florins. (Photo credit: Wikipedia)

The Rupee in the meantime and the bond markets again showed up weaker to announce that India investors remain Hedge funds and non standard  investors ( read hot money) already exited commitments when day began (  on any day) even as the US taper possibilities receded ahead of Jobs data but bond investors sold out just to drive the point home to the US Fed as well, keeping their pressure on after being denied a just reward for having supported the Fed when they expected the taper to start in August – September. The Divestment program is likely to continue in Coal India/BHEL (5% on offer). The Oil swaps window has been closed by the RBI in light of required action being completed ( Second Quarter Q2 economic data near the end)

The quality of India investors in the offshore markets/or of the so called Foreign Institutional investors aside, Indian markets enjoyed remaining flat in the session up to 11 am (We try to make the India Morning Report before 9:45 on most days) and ahead of the European markets enjoying a year end surge of interest as US gets Holiday fever.

Powergrid seems to be well received though no data is available yet for the first of its three investor days. Retail investors can continue to apply on Friday. Post issue purchases in Powergrid are also likely to stack u despite institutions having saved up on trading in the stock for this week of buying, and one can accumulate the stock with excellent India business prospects. The additional 7.8bln shares men 1.9 mln new F&O lots in the NSE. In the US markets in derivatives in Chicago that would have been 78 mln new lots of F&O contracts possible on the available floating stock itself. F&O shorts in Powergrid and colgate currently are likely to peter out and are bullish with individual series’ like Glenmark that is powering ahead already

LIC Housing and IDFC have finally become part of hot pick baskets and infact one or both will be de rigour in all market portfolios including those with stock derivatives strategies as both are actively traded, value investors may still find game in the two that can really build up volumes in play to the period till at least June 2014 when they might lose the value tag eventually.

6250 seems to be a good mark for a breather and may even break the monotonic correlation with Currency and Bond markets allowing RBI to consider more options than a rate hike threat for markets governance. Auto sales reports were as disappointing as post Festival month readings could be with people also postponing purchase decisions to the new year in India and the CV/Truck segments crashing through compared to last year. Traders 20 scouring reveals good shoting skeet in NMDC, GMDC and TN Newsprint (ETNOW, Lancelot D Cunha, Rakesh Gandhi)

Stocks like Lupin and M&M fin also show restless investors in the trading tick showing south while Rel Cap and Rel Infra are back in the good books. As of now Tata Steel continues to just about outperform Tata Motors but soon it may be immaterial to play Tata Motors anyway as Global steel markets relax a vice like bear grip and stabilise with some Chinese Demand pushing up. Commodities including metals are also bottomed out as end of month Chinese data confirms a better November

Exports are stronger even as Domestic Auto markets slow but the winer would be Bajaj Auto and not Tata Motors from our vantage point. The wai for a mid-cap boom seems to coincide with other rtail traders entering markets

The Trade deficit for the quarter was an almost non existent with remittances helping the CAD to a low $5 Bln or 1.2% but the Rupee seems more under slag for equities which will continue to move up regardless. Rupee thus cannot be pushed down now either with full Oil demand in play. Q2 also saw Debt outflows at $5.7 Bln in the quarter though Equity inflows according to Bloomberg ( carrying the GOI press release) are upwards of $17 Bln

This may cler the way for the Rupee rally eventually as Exports showed up above $81 Bln this quarter and imports stayed under last year’s usurius figures of competin growth beating Exports additions as Gold imports remained virtually stopped at under $4 Bln in its biggest market, global rices continuing to hold $1245 marks. Indian trade deficit at an average of less than $12 Bln may see this as the botom in the years to curb when Gold import curbs would be lifted. That reduces the prospects of any Rupee rally

Also, though no affecting any listed stocks Unitech has completed asset transfer to Telenor for the uninor licenses according to reports

A news report (ET ) yesterday highlighted the change in investor tastes in Auto as Bajaj Auto has grown 6X times from 2008/9 while Hero enterprises has exited Honda and grown 1.5X times to now equalise at 800 levels. The pair trades if anyone dared in the initial period probably because of the changeover for Hero are still a fair trade for years to come as Bajaj comes out with a 20% + motorcycle share with much better margin stories. Hero has announced a new JV with Magneti Marelli

 

India Morning Report: When the woods are lonely, dark and deep..

English: this is bajaj pusar
English: this is bajaj pulsar (Photo credit: Wikipedia)

Don’t Flip the lid though. Markets are finally moving on last call on Expiry day, to close at 6100 in November but the standoff till yesterday taking deep positions at a sell from 6100-6000 may not transpire, the play being caught and a reaffirmation of positive  moves from 6000 usually good to  start the rally from 6000 levels.

Also, as we usually are easy to predict, Kotak Institutional picks and that of some network analysts are again the wrong crop and definitely not good for harvest. L&T a late harbinger , its results likely to lag India Inc general investment recovery ratheer than be a sign of the same.

Axis and Bajaj are good again though the banking sector must face a few questionable glances purely in market valuation terms as Tatas withdraw on the question of operating ompanies esp outside India not being allowed to make a banking company in the NOHFC guidelines. M&M also did not want to move around its Finance companies as posited in the new structure directive but the structure is sound and not getting the desired response again. Also the Foreign banks had to be given concessions despite which they are not responding to the RBI invitations

Bajaj is favored by the continuing robustness in Rural GDP even as a farmer suicide on the same Sugar support price highlights unevenness in the national picture between rural and urban areas. CV sales are down 20% affecting both NBFCs and Indusind, or the auto industry majors relying on the sector. Tata Motors ahas effectively exited the sector along with a dismal Nano launch in the retail segment

Yields keep dropping back from last week’s 9% levels , starting the day at 8.67% . Buy picks on the Power NBFCs are instead good to go, with REC and Powergrid both alternating strikes on the bulls sides IDFC will also see big buyers taking positions in the new series and the only thing stopping ICICI Bank at this point is the lack of Banks to short further with Banknifty keeping to 11200 levels albeit on expiry day

US Markets will stay out of action till Monday as Thanksgiving day is here and shopping season is seeing a lot of uptick with cheap iPhone offers

The world's toughest fighting man. Yet, deep i...
The world’s toughest fighting man. Yet, deep inside he is just a lonely, homesick kid, praying for letters from home. – NARA – 535228 (Photo credit: Wikipedia)

 

India Morning Report: Record low PCRs mean a bottom at 6000, Iranian Oil to be feted in markets

Goin' to Iran
Goin’ to Iran (Photo credit: Örlygur Hnefill)

The Nifty already ranged by puts and calls at 6000 and 6300 is likely to consolidate signs of moving up as the 6100 puts start looking good for a ramp. Despite the global cues, including an agreement with Iran, the market seems to show the Call writers have finally suffered from overconfidence for the second time on the trot this month and second time this rally after having been caught in October. The Rupee tantalisingly at 63 seems to be a factor too but Traders and  other market experts seem to have decided not to wait frther to buy into India. Citi’s MD, Mr Pankaj Vaish as much said so about institutional investors too on the weekend.

Even as Jindal Steel makes an exit from the Sensex, markets are finally separating the grain from the chaff, KArl Slym and JLR not helping the failing Tata Motors cause while Bulls continue in Tata Steel, probably widening th ga before the Ratan Tata vehicle Tata air and Air Asia get into the fight in 2014

As mentioned above, Nifty decided against trying further value levels aand opened around 6050.

Worth mentioning n fellow Network Analysts’ would e that despite the preponderence of buys that favor Bata and also repeat Tat Global, some have decidely loved the short on Bajaj Auto. Again Bajaj Auto was the genesis of the bbull trap last time around and Bears and shorts will pay heavily esp in derivatives for remaining short on what is likely the most of all bull trades in specific scrips in India after Pfizer and Wyeth as Banks remain on the back seat. In PSU bank picks to short too, TRaders 20 on both leading channels showed the kind of mistakes that can be made as BOI may not yield further in the short and a UCO Bannk may already be at the bottom after a year long short on the scrips, the last month rally in PSU banks (unfortunate) never reaching UCO Bank

If played along the ground in the sessions till Wednesday the markets may well try 6350 sooner than later before Friday close, but shorts digging in at this high concentration seems to me an isolated uncorrelated event worth researching as the US VIX on the other side rules at all time lows in low double digits and ready to try new levels ona new high from last week.

Good news for Axis Bank as it enters the Sensex 30 by December 23. If Banks do respond to that as  a secular class, despite Axis Bank hit on the FII ceiling of 49%, it will not be a big trend to ride but a one off, as the Fitch/Moody’s restatement of NPA woes is a twist anyone following pSU banks was having a hard time swallowing and markets were eagerly waiting for a turnaround in Q2 results let alone letting the slide be ignored in the DEcember and March quarters as provisions likely shoot up

IDFC and LIC Housing Finance seem to be walking away with the cake and short term traders continue to ignore a wonderful opportunity as investos stock up on both playersI would back picks on All Bank and Andhra Bank apart from the return to weight for PNB and BOI as ICICI Bank comes back to 1050 levels i n morning trades

Gold’s probably going back to 27k levels if not 25.5 (‘000 per 10 g) and if Fixed Income yields spin back to below 8.5% aided by the exit of trades on the older benchmark, things would get smoother for cash equities and the December series. Polling is underway today and counting would unlikely bring any shocks next week. Bank nifty would be stuck at 11,000. Oil prices will continue south after the Iran deal for 6 months makes arrangement for Iranian repatriation of oil profits, oil sales and humanitarian trade i.e. export of food and medicine among others to the India favorite (trade terms)

 

India Morning Report: A little late and not better for it

Definition of Sub-Saharan Africa, according to...
Definition of Sub-Saharan Africa, according to the United Nations institutions (Photo credit: Wikipedia)

The Rupee reaction petered the rally at its 6200 floor well before the November series was out and so things do not look well for the downward pressure building in, on the news of the “cosmetic taper”(Marc Faber) deciding to take the markets for a ride across Asia. It is mostly as ET reported, because of the perceived lack of quality stocks and globally because Dollar bond yields need to rise regardless.

Yields at 9.12% do not really threaten the India story but signify a sell down which given India’s small base in FX, Currency and even commodity markets where a single import continues to equate the Indian equation to the underdeveloped Economies of Sub Saharan Africa if only in market perceptions. Moody’s and S&P mandate for India apart, this as we mentioned last week is just one or two players and hot money choosing a quicksilver trade and the Rupee as a target for such trade does not necessarily mean another big cut in India markets. Trade should pick up around 6100 levels only and the Rupee should not move to any risky levels above 64.

Gold investors will remain in surfeit in this stage in the Global markets and that need not be correlated as strongly with Growth as other crises jumps in buying.  Lack of Indian Investment demand for commodities an lack of demand at the pump in Oil in the US has still meant good overseas investment demand for Oil and Gold given the new lows

October data for Imports in this Fiscal at $280 Bln is down 4% and Trade deficit is still high at $90 Bln. The NRO/NRE Deposit swaps have apparently collected enough for a number around $20 Bln to balance this trade deficit as estimates for the CAD have been already brought down to $60 Bln. The October deficit is however just $8.8 Bln and Exports a healthy $27.7 Bln, the MOM increase in deficit probably immaterial.

The Sensex started the day 135 points down at open and is currently trading nearly flat from Friday’s big cut on Nifty and Sensex. Also, the Tata Motors trade on the positive, post results trned out to be a dud bag as we said . Shorts on the market can however pitch in, shorting the Index though IDFC, YES and ICICI Bank are quite done in independent scrips and Pharma being defensives are also on the secular buying list apart from being good India portfolio picks. IT sells will roll back in this leg as they benefit from the “India, Sell” tags

However, one still feels the /Indian yield curve and growth story were back without threat of inflation and the rate hike affected in October and to be repeated now in December to 8% on the Repo rate is the mindless exercise which is triggering this spiraling of yields and only strengthen the rating agency view keeping India stable near junk than giving its due and correcting the rating’ own regional imbalances and prejudicial biases, still favoring an untenable proposition like Brazil or Russia and a market failure like Turkey over a stable story like India.

Is India really fairly marked for a NBFC only kind of play with the coming high interest rate scenario?

 

India Morning Report: A post festival dawn, markets churning sector and memes

corus / Tata steel IJmuiden velsen beverwijk
corus / Tata steel IJmuiden velsen beverwijk (Photo credit: Wikipedia)

The Goldman spiel actually are quite a Venus flytrap “MODI-fying” India targets to 6900 on the Nifty as it wanted. However, markets haven’t really closed around any specifics except the “Investment dozen” which could include ICICI Bank and YES with IDFC and ITC among others. however the morning rush of re open advertorials on the networks today, especially saw me frowning a lot at ASK’s shallow commentary on ETNow, and even Sukhani got caught in the vortex of sellling Tata Steel and /Buying Tata Motors ( ineffectual, near total failure in India) as SS tried to look for a deeper correction.

** The investment dozen is our(mine) selection and does not match the broker , Goldman Sachs as reported in TOI/ET/other Bennet coleman properties

On the other side, Cognizant results , till now shackled in their being listed in the US only, were being feted by the market’s unholy trinity in bull spats on the HCL Tech and even “Wipro” counters, showing the day had not only been bought in by the Bulls, the correction strategy was completed midway thru closing trades yesterday before 3 pm and the day is trending in the positive again. Apart from that trading hint, I also have to let you in on the secret that market volumes are still going to be building up till after the Superbowl in the US when all yearly earnings will be over and EM flows will be in focus again. However Q4 inflows will be dominated by Emerging Markets and China is in play again so India will get its due but nary else, romantic fund managers like PIMCO, the Fink or even George Soros being in short supply and having already decided on India a while ago in 2009. One ears Madison Square Garden is a little silent today but its a long way from being a new advertising strategy for Indiaphiles or Global market conversations involving authors. AMBIT is hardly a help , ET Now perhaps looks at shining at this plateau and ceding a little back to moneycontrol/CNBC18 again.

Metals are indeed in the bull ring and contrary to those still waiting for outperformance in results before the stock selection, the metal rush is on. India PMI and Services PMI crawled back to 47 levels this October and china again reported an expansion in the Economy. Singapore is doing well despite curb on overseas investments by Chinese dominating that flow.

New Banks will be a new story in this new year though most will be reusing attempted model plans from 1995, including rural distribution and Home finance or FX and structured Finance with increasing/exclusive attention on derivatives to spin risk into profit and out the door again for more business.

Sells on Bajaj Auto(Ashwini G)  or Tata Steel(SS Investments/Trading) are contraindicated and those on failed PSU banks still accepting deposits and making credit a funny way to establish anyfaith in India stories. There are very few Bank of India stories out there

To reiterate this market was quite done with the correction at 6250, and seeing that it is flow led, it is likely to push forward faster and probably YES and IDFC are better single cash trading picks or Bajaj Auto and ICICI Bank or HDFC Bank pair trades. Bharti and ITC should be investment portfolio stories throughout the remaining December quarter and till June 2014

Petronet LNG(SS) and Tata Global(Trader20) seem to be good mid market picks though overall I maintain idcas will be ignored in this stock selection spree which will still see some victims . 300% Onion inflation is of course an election gimmick and stays one as monsoons create a win win for India Inc

India Morning Report: Nifty treads lightly as shorts disappear (Priced to 6300+ levels )

English: The West stand of the Tata Steel Stadium.
English: The West stand of the Tata Steel Stadium. (Photo credit: Wikipedia)

Monday saw 6100 losing the pins as markets drew interest from investors on good Reliance results. TCS follows. IT and Pharma  outperforming expectations similarily throughout will probably see that elusive 6400 mark to set a new Nifty record it at least seems improbably probable.  Short hedges should move up to 6600 and 68-6900 levels this week or next.  The 6300 call continues to see increasing prospects of a devolving positions as the short trade exits the market. Tata Motors, Tata Steel and Idea may remain strong except for funding trades to enter short profit positions in results calendar Private Banks remain dull as the higher interest regime and larger account restructuring news and its containment are both seen as  insufficient and unresolved.

As i write, Indusind is reporting a 37% jump in NII., largely from retail yields as NPAs were contained with market borrowings helped the profits. The cost of deposits if an issue is also likely to nettle the smaller candidates as th month’s bank policy confirms continue the higher interest rate regime.

The 6200 market will likely be reached except for a sharp negative news trend with less than 4-5% probability and will continue with IT and Pharma keeping “beat expectations” premium and Metals incl Hindalco and Tata Steel or the M&M picks counting for more buying and thus volumes of trade as the scrips also need  boost in liquidity. IDFC and YES, or Bharti, ITC and Bajaj Auto will spring any consolidated market moves. ICICI Bank is finally consolidating to positive marks and Bank Nifty may se a change of the flatlined visage before the end of the week but still unlikely.

10 year yields have hit the 8.65% level but this might just be an aberration as new securities get hocked on Friday with the 10 year adding INR 70 Bln

 

India Morning Report: Markets out of short opportunities at 5350, Rupee actively down to 68.63 at open

ITC starts the day at 305 levels, a good buying levels as the FMCG opportunity tanks.. Markets will be unaffected by shorts like Voltas and Tata Chem (Mitesh Thacker) or even shorting in Titan with buying Idea (SS) even as indices jumped to near 5400 levels at open after a scare from banks not jumping in at 8600 Bifty levels RBI norms on Developer loans from banks on the other hand obviously come as Banks’ lack of opportunities again lead to a ramp up in rel estate loans through 80-20 loans allowing developers to drawdown on bank project facilities before starting construction.

The precipitation for yesterday’s 650 point fall on the Sensex and near 200 points on the Nifty was the missile test by Israel and Obama admitting he is deciding between Congress cooperation (prefered) and otherwise attacking Syria after the Chemical Weapon deployment by Assad Bashar

IDFC and ICICI Bank are slow on the uptick and more worrisome is the Power NBFCs failing to shore up the trends as Powergrid falls thru in double digits in 2 sessions, to 87 this Morning. Bharti is still a buy and Bajaj Auto has started off the day smartly.

REC is floating around 166 levels and PFC and PTC are up barely in a bullish market, probably moving only on a sustained move up from tomorrow. Oil risks to the CAD seem to be contained with India already having reduced its exosure to Iran to less than 15% and unable to increase it.

Jet and ITC may sustain higher levels as domestic aviation price realisations are set to jump in airlines’ and encouragingly Jet would just be following Spicejet. ITC jumped its own retail price ponts in the tobacco business by around 14% per brand variant

Tata Motors rerieve as it counts its chickens from JLR based on last quarter’s EBITDA seems short lived and may be an avoidable investment. Tata Steel however is a good lace to start your post crisis 2013-14 portfolio

India Morning Report: Sharp cuts ensure quick bottom in India around 5650

Bombay High, South Field. Undersea pipelines c...
Bombay High, South Field. Undersea pipelines carry oil and gas to Uran, near Mumbai, some 120 NM away. (Photo credit: Wikipedia)

A more than expected negative reaction in  the Indian markets yesterday may have subdued analysts into a negative whirl as they were waiting for the same, but post the subdued slightly positive open in global markets, it increasingly looks like today’s move in the Indian markets is more a positive search for value than just a reaction to yesterday’s sharp negative move.

Though your favorite superanalysts may be recommending shorts at 5650-5700 levels on the markets , I would invite you to use this rare opportunity to further sign in to Indian markets in scrips of value except that though banks refer the most value potential they are not ready for a move up yet. ONGC and Tata Motors are good shorts too, and apart from the index shorts one can see the visible analyst reaction actually picking out rare weaknesses for shorts as Ashwini Gujral recommended in Option spreads shorting Tata Motors and ONGC . Telcos haev nearly recovered the positive sentiment almost immediately and exporters are mobing in the positive zone including Bajaj Auto and Sun Pharma

The heavily discounted PER multiples in the Indian indices also ensure further ETF outflows do not negatively impact Indian allocations and one expects debt market outflows to stabilise soon as well as the yields in the Fixed Income Market spiked n small volumes itself yesterday and there are only higher opportunity losses for further exits The Rupee can obviously not last at these levels having failed to establish any zones in the three breaches in last two weeks but as the “correlation backward catch up play has lasted almost all week, the rest of the markets are unlikely to oblige Rupee’s bottom making move in the next few weeks and is likely to be ignored in equity and debt///government bond markets

Shorts on UCO, Karnataka Bank  and Vijaya Bank will work singly and can be tried as pair with buy in Banknifty once BOB and SBI bottom out as the big movers in this move. A Direct air with pvt sector ICICI bank and HDFC Bank would be riskier. Nifty short strangles with the Nifty bottom at 5600 is recommended y IiFL which would be their first positive trade in the quarter (joking!) but a great one Short 1 put at 5600 and use to buy puts/sell calls at 5800 . Selling 5500 put would not be bullish for this market nor very remunerative.

 

India Morning Report: A new bank, not Citi, 8 not 4 and numerous other slips to the mile..

Vikram Pandit’s new efforts in India with Kampani’s JM Financial may get JM a 10% bump in stock quotes but it is unlikely that his 50% buy of the subsidiary and 490 million warrants worth 3% of the listed company with Hari Aiyar and wife in the new bank application at this stage will build on anything like branch infrastructure in at least the next decade, so watch out for questions on the application being followed closely in the media?

Otherwise of course the Chinese continue to prefer the number of wealth ‘8’ in their phones and registration plates for the cars that are sold and you should avoid gifting them anything with the number ‘4’ thats sound like the word for ‘death’ and Morgan Stanley leads the list of suitors looking for a bear to hold as Indian markets sit pretty on last year’s prudent calculations still not outrunning the underperformance in sensex companies in the quarter gone by. Markets are headed to all time highs probably but the next target is 6350, steady as she goes..

A wonderful FNO pick on Tata motors reversed my earlier opinion of the TV18 guest who chose Tata motors again but as stock vols (option vol in current month series) closed above 40 the bid to range the 280-310 stock trade with a bought put at 305 on a strike of 290 as recommended should gladden many a margin accounts. The strategy is brilliant only if when it opened this Friday, the bids in the normally not so liquid stock family  would not have quoted the ratio spread at a profit. Buy three puts at 290 at today’s open and sell four 280 puts in a minor tweak to the strategy played on the network but you could leave it a t 1:2 as well

Do write to us above and link in with your blog / facebook page in the comments. 2013’s dull exports and consumption story for India in the meantime cannot stop cosmopolitan urban India from turning Jiading(F1 track) and Pudong (Shanghai) and Lavie and “Caprese” luxury bags with Gucci stores springing up here now much after China’s $15 b market accepted them despite our protestations to the contrary .If not the Chinese predilection for lucky numbers, one could still catch a fancy to under-reporting ages , the ilk spied upon by Jug Suraiya on Page 3 in his TOI op-ed of today

ITC results should be eagerly anticipated and with infracos back in demand together ITC and IDFC will garner a lot of new outstanding demand volumes ( open interest) esp as JP Associates has completed a first rush yesterday to 80 on the futures. Sun TV is much better than Satyam though but both are equally risky on corporate fundamentals after the corporate governance in churn in either of the scrips. Sales of $1.6B at ITC in the quarter reflect the last of the big consumer companies making a sustained comeback after the jump in Q3. Europe based consumer goods giants including Nestle, Diageo and Unilever have already been singled out for investor attention in growth deficit hungry Europe for their stronger Asia businesses (ref FT.com, subscription required)

The New Drug policy is out though impacting margins at Pharma MNCs and Cipla & Lupin will also trend down on the repricing of margins across the board.

The main topic on this busy day could still have been the new RBI trend policy established by the WPI falling below 5% and the CPI having come in earlier. Though loath to check the sub indices this morning i see a Core inflation at 2.77% near all time lows and I do not believe we have seen the last of food inflation though April did not get to be a major run on the home makers’ wallets.

10 Y yields on the new bond have already responded vertically to near the 7.25% mark and thus RBI will take the whole term down immediately in the next three-four months before growth actually responds, likely leaving the rates below 7% forcing banks down on deposits despite the flagging demand and without more than a signalling cut in CRR. The news of more cuts was however the most important one behind Thursday’s heart of a rally.

 

India Morning Report: Here the bounceback, there the banks and airlines

Anjum Bharti - 01
Anjum Bharti – 01 (Photo credit: Adarsh Upadhyay)

A short and quick stab on Monday will show that efforts continue to keep India Inc juiced as Q2 will likely return a broader cohort of companies that increase their bottomline based on continuing decrease in non food core inflation, and a small measurable uptick in production.

Most of the market business still returns to banks at their low point of the cycle and struggle is on for a better run rate for deposits on the growth. The only negative skew to this cycle being that banks cannot cut any rates of lending as they maintain interest bearing deposits to an edge to market investments or hope for better borrowing rates for themselves despite the professed rate cut forced on the Central Bank

Taxation changes to mutual funds that till now paid Capital Gains have leveled the playing field somewhat  the in the new budget but the banks cannot make up for the loss of money market deposits placed by large corporates earlier so quickly. Retail unbinding of savings rates have already scarred the proposition for mainstays like ICICI Bank and HDFC Bank as new business is the most important of all business segments in any industry and esp so in retail banking. Short term Mutual Fund investments now bear 24% tax.

Bulls remain in Auto (Bajaj Auto not Hero moto, Maruti and M&M but Tata Motors too) , ITC, Bharti and IDFC and may not exit healthcare or enter infotech for longer than intraday business

Allowing competition in International flying with a fleet of 10 is good news and low fares have been promising in the off season too. Rupee remains strong and will likely climb outside the 52 range too if foreign investment portfolio flows indeed do not ebb as March seems to promise. Again a caveat to Domestic institutions to keep cash for such rallies and not miss the bus or their overall performance base will erode faster than they have the opportunity to ride another big multiple growth wave that last ended in 2006-7

India Morning Report: State Banks, Bread and Coca Cola

First the note on infracos that have unsettled the markets
What markets had initially identified as a resilient strain of Corporate misgovernance in infracos from GMR and Reliance Infra had apparently never been a cured mutation despite consistent action and PR by the companies. Even today when the infra gap is being addressed, because of group leverage showing on the holding companies, GMR, Reliance Infra remain active short candidates especially for those bullish on Kushal Singh’s DLF despite its bad results. Hoever, the short interest looking actively to rerate the markets has probably been snuffed in the bud and will likely lose out in this cycle as the day progresses today.

 

English: Tata Prima Truck by Tata Motors
English: Tata Prima Truck by Tata Motors (Photo credit: Wikipedia)

 

Brokerages re-rate SBI and Tata Motors

 

Expected disappointments from Tata Motors and on expected resilience from the State Bank panning out a lot of uptick has come in for both stocks, At 249, Tata Motors is indeed a good defensive buy and its JLR performance can only improve as it seems to have managed to keep sales volume increasing esp in China where they grew by 50%. JP Morgan and UBS have also upgraded SBI as the bank’s chairman explained on the networks that domestic NIMs are a healthy 3.75% and the international book stable with NIMs of 1.7% , in itself a very good performance given that the State Bank’s International portfolio jurisdictions are not in politically challenged geographies like BOB has.

 

The Sun Pharma and DRL conundrum

 

At this bottom of the Nifty cycle , the other cvonundrum also gets highlighted as growth successes like Sun joust with almost regular failures like DRL and Ranbaxy that have lost the confidence of investors but keep the sector rated as a defensive. Emerging Midcap Stocks including Glenmark, Cadila and even Biocon are thus seen as having capped prospectsmuch like the consumer goods stories like Dabur, Marico and Unilever but most analysts have distinctly berated the laggards and moved the active investments to an aggressive growth cycle so passive investors and DIIs have to follow in due course.

 

And the ascent begins..

 

However, these are but regulation battles at the end of results season in India Inc’s diverse investor and corporate objectives’ joust for relevance and India’s uniqueness as a 5% + growth destination has not been lost to the cycle , the entire move down and the restlessness in the markets likely to be attributed to pre budget jitters in statstically consist4ent studies over the next decade as this inflection point is real and investors relevant to India stories carefully watching even if from the sidelines, checking if the stories fed to them by domestic media and other interfaces about India’s struggles are as unlikely as growth sponsors of the country make it out to be and perhaps convinced by as tately transition in 2014 under a new government that hopefully will be more of the old.

 

Private Banks like ICICI are likely to enjoy today’s mini rally from 5870 levels in rare moment s of perfect correlation with the State Bank and exploratory shorts run out if the OMCs are indeed able to puh thru a round of Oil price hikes on the weekend. Europe has of course scared global prospects for 2013 and that impact has probably run its course by the end of next week fully.  q. GS

 

 

 

India Morning Report: A Hindi speech for another wannabe and more such stable tenets of Indian realism.

icici bank
icici bank (Photo credit: Wikipedia)

NaMo made it to Gujrat’s top executive post again and likelyy will last there for a couple more terms after this new term is also over but those that can see around the media carnage opportunity for the new PM wannabe, I am still very clear that India will not accept this strong PM much like it doozied Sharad Pawar and Jyoti Basu’s candidature earlier(Jyoti Basu refused to move to the center despite being the kingmaker and a strong government in Bengal for 32 years).

A pan-Indian institution like HDFC Bank or new investors (domestic) like Tata Motors may enable however an Economic armageddon and even a Non Congress/UPA government at the Center as a viabel non coalition alternative. Rating agencies howevr inclined they may be to use that as a peg to hang India’s political instability on in the 23 country band between BBB- to BBB+ that includes Turkmenistan and Kazhakstan and other such resource only single product economies would still be continuing on a longer deeper folly they stuck to when India was actually near default once in the late eighties.

That leaves you with the question if the Nifty will indeed move in a new direction sooner and the seet answer is that despite such lengths of staple yarn wrapping this Tropic, 5850 is more than a stable support and ready to rush the bastions near 6200 and nothing else. Today’s 47 point correction as of 10:29 am however, gives you a chance to case the two banks HDFC Bank and ICICI Bank for a new run and Yes and Kotak to fight for that mid cap pie as they treble their deposit bases to become viable before the new generation banks grow into viable competition.

Consumer spend plays again rely on Airtel and the India’ economy again will not become a tireless skyscraper for DLF itself so the weak moves in the Alternate bucket reserve as the blue chips of this rally idle when the market tried to move with Axis Bank since seen as overbought at below 1200 itself or the continuing return of TaMo after the battle of Sanand and the battle of inventories not to mention the moving on of CE Ratan Tata.

The lack of clarity in healthcare plays as the Dollar driven scrips become a crowd show the rare space when speculators are having a field day and probably the entire half dozen of scrips where sell side domestic research ccan still count. Consumer spend and Domestic Pharma markets are likely set to break out of the hardly $7-8 B market they make in the branded sector finally for both FDI (Retail) and good old

Jyoti Basu (8 July 1914 – 17 January 2010) or ...
Jyoti Basu (8 July 1914 – 17 January 2010) or Jyotirindra Basu was an Indian politician belonging to the Communist Party of India (Marxist) from West Bengal, India. He served as the Chief Minister of West Bengal from 1977 to 2000, making him the longest-serving Chief Minister of any Indian state. This photograph was taken at Science City, Kolkata on traditional 35 mm film; the negative was scanned by Nikon scanner after 10 years. It is a little cropped image. (Photo credit: Wikipedia)

proliferation(domestic/ price control/insurance/diabetes cure/cancer drug availability spread) reasons

India Morning Report: I Would Not Worry About India’s Growth – India Finds A Value Blue Chip

PMI: Silvy #1
PMI: Silvy #1 (Photo credit: iksamenajang)

 

Now that China has confrimed in October data that there is a real recovery with HSBC PMI closest to the growth paradigm’s 50 mark, at 49.5 Indian core sector’s growth at more than 5% across a 13% jump in Coal production and 21% in Cement in October alongwith jump in Electricity and myriad other ‘core’ businesses including oil gas and steel means it would be a healthy PMI tracing the only other positive PMI among the world’s large Economies in the US and Net Exports as trade makes 18% of our GDP and the deficit stays in check with Oil imports cheaper even if demand for the same rise might also rise along with the definite growth clip on Services PMI

 

English: Wordmark of Tata Motors
English: Wordmark of Tata Motors (Photo credit: Wikipedia)

 

Meanwhile Fraport exits GMR Banagalore Airport at a fair profit and again GMR might forego on the offer to buy more of that Airport’s stake as India Inc gets ready for a ruch of Infraco orders which hold the ticket to its banking and GDP prosperity or India just might lose the edge it has with a 5% GDP growth and an early lead on recovery. Funds inflow have already exceeded $8bln this rally from July and with China at multi year ows in the stock markets any extra weightage for china may be absorbed without due transfers from other markets leaving more inflows marked to New Delhi/Mumbai from FII and FDI proposals

 

At this stage the Goldman Sachs and JP Morgans of the world might reconsider their predilection with Frontier markets and China before LATAM indeed does make a comeback capping the benefits to South Asia and India. Korea however should see more investments too, including Indian businesses oto whom cost of credit remains manageable.

 

Tata Motors in the meantime got flagged by Pandya and Sumeet Jain at Goldman Sachs India for doubling to a ~ INR 500 target or double the market cap at INR 1.7 Tln based on a new Jaguar aluminium chassis/engine as the stock mirrors its latest market China’s Economic performance and Landrover sales get even stevens at only 27,000 units per month

 

Both TaMo and Starbucks fed Tata Global remain on analyst radars as seeming corporate governance issues look to snip the investment led potential dscoveries from outgoing Chair Ratan Tata’s teams.

 

GMR Malé International Airport Private Limited...
GMR Malé International Airport Private Limited (GMIAL) Office (Photo credit: Ibrahim Asad’s PHotography)

 

Reliance’s big ticket investments for D6 with BP and more importantly its seeming victories in the bid to raise the price of Gas from its units remain new mysteries speculators get to capitalise on but the uptick is brilliantly pre done as the noise of future rate cyuts bring the market out of the sulky pout.

 

 

 

The Indian Auto Sales Report (March 2012)

Tata Motors seems to be a big winner of the March sweepstakes ( Is that Primary sales and build up of inventories to support a lost cause or true sales, will become apparent by May or June) Pass. Car Sales are up to 36,854 up a third from last year and at least 7000 units from February alone. Nano alone crossed 10,000 units in sales.

Many carmakers expected the prebudget spike in Sales for coming increase in duties. Also the increase in duties may not necessarily hurt retail sentiment in April 2012. Honda was back in March with more than 11,000 cars sold on back of the Brio. Etios and Liva took Toyota to more than 18,000 a 12% increase month on month and doubling from 2011 numbers. Innova still sold 6750 units in the month.

Audi reported a 1000 units sold for the month, probably tax planning for some. Maruti sales were up 6% on month again to 113,000  plus another 13,500 in Exports as Nissan overtakes Vento to #3 in Sedans and City maintaining a 26% share of the market in big cars Maruti exports equalled Hyundai exports at over 13,000 taking Sales to 126k from a 77k low during Q3 2011. Diesel trains continue increasing int he sales mix

Hyundai not to be outdone reported a little under 10% growth from February to more than 39000 units. Ford, GM, volkswagen and Nissan which no not have a single export stat in them lost their various leads and hiccups to bunch around at a little below 10,000 _ GM grew to 9,300, Ford lost momentum over last year to 9,000, Nissan caught iup to almost 6000 in a little less than 3 months and VW almost aught up to 8,300 and normally you would add Skoda to that number.

The weekend has probably extended reporting times for the month’s auto sales at end of the fiscal.  GM has not been happy either in India or China and Ford ready wit h a new plant inaugurated last week for adding 275000 powertrains ( petrol and diesel) to its India Capacity. Nissan has already started exports last month

CV Sales at M&M and Tata Motors also continued to show near 17-20% growth on the 2011 numbers. Volvo/Eicher selling 6000 units, M&M 47,000 incl its 23,000 odd MUV sales and Tata Motors 58,000 passenger units in a 103,000 odd for the month.

Two wheeler sales also likely to hold at 565000 for Hero, 365000 for Bajaj and 200000 for the new #3 Honda. Hero reportedly losing confidence over Honda’s aggressive promotions in the economically affordaable segments while the Bajaj estimate is a good 3% over its highest score yet.

UB SALE to Heineken, and other voyages of the Indian spirit

Wow O la la la leeeey o! My Kingfisher beer is safe thanks to Heineken getting to buy a13% stake in UB from Vijay Mallya’s 23% stake. The other 14% or more stake in the spirits major lies with UB holdings. Vijay Mallya’s personal fortune adds nearly half a billion or INR 25 bln ( $500 mln) at the market price of 545/-

And of course lot of leis from the Hawaii layover ( just la la !)being added to my map but then Heineken had been trying for 5 years now or am I a little tipsy! There is no aloha here in India, desh even in New York or anywhere else except Hawaii! Maybe Vijay Mallya and Lalit Modi can set up a new League there and let it be! Mallya’s KFA is unlikely to survive with anluy 20 planes and now half the operations shut down.

Similarily, another indian experiment lying low, on a series of bad puns, is Tata Motors with Landrover sales obviating sales figures of any Jaguar models or cars back home even though the new Nano is selling nearly 6000 units a month and has a 800cc version in the works

The “sell out” (OUCH!) gives majority control to Heineken and access to 66% of india’s beers and probably more share of its Whiskies and other white & colored liquors capacity W&M stays on the chiopping block in its overseas holdings for a minority stake.

India Auto Sales Report (January 2012)

the Toyota Etios Liva Diesel

Hat Tip: team-bhp.com has a long lasting resource hopefully, which really works up the Indian Auto sales numbers, best I have seen yet

In January 2012 the recovery chords from December continued into a more coherent score as Maruti reported domestic sales of more than a 100k and exports growth of 53% or more than 7000 units to 14.5k units for the month. Mahindra continued its better performance with almost 45k vehicles for the month of which 19,325 were passenger cars/MUVs/SUVs.

According to the India WSJ, Maruti’s Diesel models scored a 34% uptick while petrol models declined 6% in the mix, making it a 75:25 from a 80:20 till now

The old 2,3 at 14% share each ramped up behind Maruti with Tata Motors and Hyundai scoring 34,600 and 33,900 respectively Hyundai’s exports of 12,000 units put it firmly in no. 2 with 49,901 in January 2012

Ford and GM posted single digit declines to 9,200 and 8,200 respectively  while Toyota came back stongly with 7,700 units of the Eon to 17,500

VW and Nissan also managed to sell more than 5000 units and the luxury segments would have probably added only 250 other vehicles incl VW and Audi

Skoda sold more than 3000 units under new management while Honda grew back from 1000 units in December but still sold only 1,725 units for the month

Thus Cars sales for the month have grown more than 20% from December 2011 to 270k or a 3.2 mln annual run rate incl exports

SIAM reports 2011 total sales to 19,46,000 units and the 10% yoy growth likely takes it to 2.2 mln four wheelers and another million in Commercial Vehicles from 800k in 2011 at a faster clip

In the Two wheelers, Hero Moto scored a consistent 520k and Honda came in third with less than 190k while Bajaj Auto reports tomroow at the 330k figure

India Auto Sales Report (December 2011)

Ford Ikon, visão dianteira
Image via Wikipedia

In the month of December, most car makers enjoyed the reprieve in Exports with domestic sales recovery also showing in the numbers. However while Hyundai increased both domestic and total numbers to 29,500 and 48,950, its exports remained below the 20,000 mark. Maruti struggled with only 78,000 units in domestic sales and 92,000 overall as its limited production of diesel units and the break in wholesale demand was attributed for the continued weakness by the sales team at the company. Its exports of 14,000 units were a dull beat 33% behind Hyundai but up 50% on its own count from 2010.

Hyundai
Image by conhunter via Flickr

The A2 segment bills 42,500 units for Hyundai with moer than 6,500 units in A3 sales. The year’s numbers

Mahindra Group V-C Anand Mahindra
Image via Wikipedia

were a respectable 615,000 for the Koreans in India incl. 242,000 Exports.

The General Motors business increased to more than 9,000 while Ford was happier with 7,500 sales for the month and Nissan counting 50% growth at 1,500 units in December 2011. Mercedes underlined the year’s 7500 sales with a 750 units sold in December.

Honda cars remained stuck at 1000 units instead of the 5000 plus sold last year each month. Tata Motors recovered from last year’s fracas with 29000 units sold. Incl Exports, Car sales are up to more than 220,000 units again incl Mahindra and Mahindra’s 19,000 units and Toyota’s massive 16,000 sales.   Volkswagen reported full year sales of 78,000 from the country with 75,000 small cars in Polo and Vento and 1,688 Jettas ( in 5 months) Ford completed 100,000 units in sales in November http://bit.ly/s8crJ8

In two wheelers, Bajaj Auto’s 305,000 includes its CV sales of nearly 15%, while Hero grew its large base to 524,000 units for the month and Honda came in at number 3 with a good 191,000 two wheelers sold.

 

English: Bangalore Taxi
Image via Wikipedia

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:

India Auto report (Sales – November 2011)

English: DTC Buses in Delhi, India
Image via Wikipedia

Maruti’s numbers have trickled in at 36,000 vehicles more than October. The 92k in sales were yet 18-5% down from the festive season report of last year.  The mood is sombre as markets find solace in car makers coming back with good numbers but it is obvious that  that’s not enough for India to power forward.

Hyundai’s India sales grew nearly 30% with over 22,000 exports and 35,000 units sold domestically. Domestic sales are up 10% At Maruti the sixth yearly sales decrease in November also showed change in preferences as diesel grew 22% and petrol(gasoline) models demand dropped 14%(WSJ)

Ford and GM seem to be stuck near the 10000 and 8500  cars a month number but this is Ford’s first year with 100k sales in the nation. BMW, Mercedes and Audi have been selling nearly 200 units a month getting deeper into India’s moneyed hinterland and export towns. VW Jetta and Passat also sold 499 units in the festive month

Hyundai’s Eon and older steed i10 both sell nearly the same as Ford and GM in a month with 7,500 units each. Its A3 sedans also sold 8,223 units (Verna and Accent)

Tata Motors did grow Nano sales 10 times over dismal 2010 figures to 6500 for November. It sold only 1000 Fiat units in total sales of nearly 29k domestically

M&M sales of 44,000 units included 17,500 units in passenger vehicles (and SUVs) Its new XUV500 is expected to brighten its chances further with its ventures in Korea stabilising and helping it leverage technology and lever its home grown stability in the global market and in india rebranding it from a home again Tata , desi variety spaghetti

Toyota has grown into a tough spot staying comfortably ahead of Ford and GM with sales of 14k cars for the month, trebling from last year November on launch of Etios and Liva during the period

Newcomers VW and Nissan grew astronomically too on a low base to 6,750 and 2,680 units respectively with new models and support for diesel giving them a distinct advantage in the Indian brands of Ford GM, Suzuki and Korean Hyundai. honda has reduced production for the month drastically as Thai floods disrupt parts production for its global auto plants

October sales in 4 wheelers were a paltry 138k units and 185 k including Utility vehicles. November seemingly has gone to 220k units with good growth at Toyota, VW and M&M

Two wheelers had a brilliant month and India reverted to reporting car and 2 wheeler sales together since October. Bajaj grew nearly 30% at 394,000 units for the month and Hero Moto corp had a more than 5% sequential growth at a high 537k units Its erstwhile partner, that still sells its trusted line of motor scooters, jumped to 200k units in sales in November into the 3rd spot

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Predilections: PSUs represent the mass of the resource economy

Sensex

The redesign of the sensex is still due but two important changes are taking place in the 30 share Bombay Stock Exchange Sensitive index. The PSU Coal India and not infra major IDFC entering the indices for its larger market capitalisation and consistent trade volumes. IDFC thus has more PSU ‘proxies’ for those believeing the infrastructure major and its impact and the infra financing plays get totally written off the index as Reliance Infra has to lose its position in the indices with 15 year projects not making a viable case for public equity investment. LNT as a public bellwether remains in the prominent Indian index

The banks re well represented in the sensex and the healthcare sector now has two stars in Cipla and Sun Pharma. The Autos remain represented by old favorites Bajaj Auto and maruti, Tata Motors leaning more on its International profits. Dr Reddy is already outside the index with its profits under pressure of late and no results from its innovation mantra

I wonder why you think ONGC and Coal India respresent India’s markets. Perhaps the Public Indices or FDI specific indices be indeed differently abled, differently designed with MSCI and other cooperation

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