India Morning Report: Did investors buy into the Rupee last week, and the Suntory deal

Friday’s  closing rushes on the Rupee trade could be just another chimera as the China miasma refuses to scare foreing investors from China and other shallow EMs renamed MINTs. China also reported an improved Services PMI implying the trade situation could improve for it and its partners including Aussie, USA and India. However, things overall continue to look bleak for global growth as dependent on legs of growth in China and Europe.

Europe has been importing more, however, esp as Germany probably focusees on its own consumption for a small break after a Target imposed halcyon end to 2013. Rates are likely unchanged in Central Bank announcements and Global liquidity reprieve trades, may be ephemeral at best as Yellen returns to post snow recovery prognostications to hopefully continue along the same taper gradient $10 Bln in each policy date.

However, not to be confused by the Global Economy’s internecine interactive brusqueness, the India trade remains a leader for the Global benign trend continuing in Equities and HY debt this year and is likely to turn in better performances on the bourses than any other.

The 4.7% GDP score was not so bad except that it included at its best form, not more than 6% contribution from Services. As expected, Agriculture did not continue an extended rebound from Q2 and thus contributed to an overall disappointment for policy watchers with Governor RGR still on the edge of another couple of rate hikes and CPI close to plateauing out at a high 8% itself

Radico Khaitan is one of the bigger winners as the Equity trade in India opens to new bull scenarios, we choosing to watch after every 100 points as traders fill up the gaps and bears might give up most of their extraordinary gains in the following 6 monthsas they take each plateau of waiting for more investors as an inordinate sign of weakness or overconfidence having nbrought the hcicken count home to roost

Volatility remains at an extended low and the PCR below 1, implies one should batten down the hatches as most price levels on your choice investments would carry very little risk on sold puts . SBI and Maruti also proffer extraordinary choice to traders that need financing and are not selling puts ans positional shorts in both continue to dig for lost Mayan Gold, making it at least a year or 1200 levels before they exit with profittaking trades.

JP Associates may be out of the index but is a great plus trade ( opnly post redenomination of the Nifty) while Adani Enterpricses catches supplementary caucus support from the Adani Port bull trade. GAIL may still not make it to mainstrem positional trades or transition into a defensive but we reccommend buying the stock with IDFC and YES, while ICICI Bank and HDFC Bank individually will carry the Banknifty, PSU shorts making the Index tradea patchy non performing long

Foreign buyers saw $2.2 Bln in gross trading on the NSE itself on Friday. The return of bank investors and trading rooms including StanChart and HSBC to the bull trade on the Rupee, counld confirm secular up trades in Asia even as China gets ready for a currency depreciation battle. However, first order of business would be to observe if equities can keep up with the smaller selling that remains part of the trade in the first half of the week as markets start the series at fresh new highs of 6277.

The Sun Pharma and Hindalco trades should catch fire by the middle of the week in that scenario as mainline picks remain good for the goo but new buyers may not get them at better levels . Bharti , ITC and Bajaj Auto continue to hold strength in the consumer investments story and Services PMI returnign tot he green likely for 2014 means aviation, trade and tourism could critically support the good guys from here. The LIC and ONGC/OIL buys for BHEL and IOC are confirmed but sectoral trades aer non existent on either side. Pharma’s big week returning to substitute IT is the one certainty and not an immediate bulltrade so more consolidation is likely this wek esp if the Pharma trade does not kick in. The inevitable short trade on Hero as it yields ground to a bad February sales data will only land blows till 1850 levels as the news f the recovery should kick in the sector after new excise reduction and recovery in buying from March

India Morning Report: India’s flipsyde from global correlation markets independence

All its successful recognition as a unique misstep of policy in trunk Asia investing, still leaves India a unique place in the sun, inviting specific negative correlation from trades and investors in asset markets, marking its independence streak. However, this is just a improbable hypothesis and an unlikely share for the Morning Report (in this form ) except that Dow’s 100 point rush closing yesterday is overshadowed currently by India’s own woeful exits with the Nifty streaking a negative 80 points making the Rupee start this positive Asia morning at the bottom of its current range. Likely this is the stage NDF price discovery also tail lights trends to be in extreme discovery actions and the Rupee easily could have been at 61 levels here with trade purchases and sales in the same range as earlier years Gold would be thus in a greater rush to complete a mini rally in the reduced taper euphoria.

I am apparently getting ducked on Kejriwal and Pepper spray much like I expect Independent Women careerists to, in the office today.  But markets could have easily ignored it and celebrated the successful Spectrum auctions and the India recovery data linked with global news of India’s importance in winning 2014 portfolios. India CPI ended under 9% as the urban CPI receded well into the background while IIP was almost positive with its 189 index score a big jump on the previous month apart from the strong consistent jump in utilities.

A secular Telecom industry uptrend excluding unlisted Vodafone (in India) , is likely after the media rounds prepare a consistent analysis of all players, both Idea and Jio(Rel) having bid INR 100-110 Bln, Jio adding monopoly of 1800 waves in its repertoire against Bharti which with Voda, focussed on winning back existing markets and prepare grounds for improved pricing. Idea having won price conversion over, is unlikely to create another loss making value bid in the retail markets.

In more humane form, India again loses its advantage as it starts off the recovery with an expensive rate hike, a shallow debt market and a doubloon of proprietary traders mesmerized with no good corporates and an officious monitoring and handshake philosophy engrained in Asian culture its common denominator with other closed end markets allowing a 5X US Dollar impact and shallow development hubs. India’s WPI announcements are likely to be near 5.5% .

SBI reports midday with another INR 6 Bln in provisions for pension, INR 25 Bln increase in provisions and INR 85 Bln from an ever expanding restructured asset pipeline in this quarter again but the stock will react further post earnings tipping off a expectations rally at its nadir as it comes out improving the NIM expectations in a better rate environment for lenders from 3.19% in the previous quarter.

ONGC proved great results yesterday along expected lines, profits to 71 Bln , sales at 208 Bln just 1% off last year’s data in the 30% increase in Net profit(28%). Realisations will improve substantially in the current year. Q3 realizations having dropped 4% at below $46  before depreciation earnings. Subsidy expense was more than INR 100 Bln up 10% making the 30% jump more creditable. The company may however get squeezed this quarter as the government defers subsidies with the fisc coming into an expected range.

SEBI added lines of caution on Executive compensation, independent Directors, Women Directors, public succession plans and a mandatory whistle blower policy into the Corporate Governance Code. Along expected lines, The listing agreements at the Stock exchanges will be updated immediately.

Employee stock options have been withdrawn for independent directors and nominee directors are not permitted the dual role of independent directors (DNA India, ETNow).

IT’s attempt to woo the markets with forecasts are likely to fall on deaf years as markets already topped the range on a half rush for new Rupee levels now more likely to be equated back with outsourcing jobs as Pharma breaks out in a good couple of years.

Apparently the stock of debt in Telecom, that can be shared publicly is more than INR 2,000 Bln.

In unlisted business, Kiwis have been bundled out for 192 and India will make sure it has one overseas win in its belt this time after a thorough bashing in all forms of the gamme. RCBs fortunes will be interesting to follow in the IPL with 4 marquee players and none of the local stars like Manish Pandey and Karun Nair.(TOI Blr) Lankans were ignored for an English Summer. Faf du Plessis went back to Chennai as the Gurunath investigation proceeds. Ben Hilfenhaus, will be the likely winner in relatively new entrants this year with TV Networks and Captains working towards the same objectives, Beuran Hendricks winning the Owners’ curse taking in another quality seamer. Dravid shaking down Nathan Coulter’s bid agst Delhi. The list on cricket next atill includes only CSK rosters, duh!

KKR had some money left over too after picking Manish and Debabrata (Ist Round Mitchell Johnson) while Kings XI and The Royals probably walked off , purses safe from prying eyes. This time, even as Shikhar Dhawan is down under, Sehwag bats for Punjab who have Shaun Marsh. KKR got most of the RCB slough offs after the  Fished Fisher dug himself out 

Royals kept Watson, Binny and Rahane, while Mumbai bid in Corey Andersen, Hussey and the Zed.

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: The gradual Taper encourages a rally, India indescribable yet?

English: Skyline of Mumbai from across Back Bay.
English: Skyline of Mumbai from across Back Bay. (Photo credit: Wikipedia)

India seems to be locking itself into a no man’s land as the nations punters join the global hordes celebrating the slow Taper on Bernanke’s going away announcements yesterday. ET Now in the meantime has continued with finding obscure (GRE: obfuscation..) commentators on key event dates. CNBC 18 wins again. The issue we are raising is at a different dimension(d-axis) than the assumed obstinacy to be different or that of even the fundamentals of a recovery being spelled differently this side of the Himalayas.

Meanwhile what is looking risky even as Asia applauds the thinking behind the taper, that India’s currency markets try the haywire trade still hoping for an aftermath in the Rupee as the Rupee opens to 62.30 levels. Equities will start the day at 6250 levels and while others posit a rannge of 6200-6350 , the day might yet spring a surprise or two before noon trades. Anyway equities are back above 6200 and GMR is back among large bidders even as they exit Istanbul. Also, NSEL promoters in J Shah and Financial Technologies have been duly censured and MCX would soon be owned buy another consortium of Indian Institutions. Taper could have been abslutely a non news in the Indian currency markets too and the open quotes are a sign that shallow trading costs a lot in adverse selection prmiums to the currency’s bid ask spread.

HDFC Bank’s application for  increasing FII limits to 49% pends with Axis Bank’s application for a relaxation in a similar ceiling and both will be leading bullish plays today.  Assuming that currency markets just wanted to explore the possibility of a significant negative impact of global liquidity being withdrawn , India’s preeminence as a investing destination in the new post crisis world stands. The $34 Bln in FCNR deposits aart, because the Infrastructure situation in the country is unlikely to improve from current vies of coalition governments even for the BJP, the risk remains that India investments will remain confined to a NDF market in currency , smalleer Indiab Bull boutiques with no presence otherwise and at best at 50% of the pace China specific and China sympathetic investments in South East Asia. Singapore and Korea too are not looking for more than a flagship investment or two to artner with India in ther growth run. However, none of that impacts the fundamentals of India Inc and the rally we have outlined since August is rel and given US and European Banks and institutions will increasingly be constrained in the coming months given other investment and Capital constraints, or the recalcitrant DIIs recognising any new levels, Real investors have to sustain this rally, neither retail nor from OECD institutions.

The Yen also got a boost from the Taper trade, while India and other trade partners have increased trade with China in the last few months over its traditional partners as both Industry growth charters in China including European imports and Resource exports from Australia and Brazil have been sidelined in the build up to lower trade surpluses and higher retail growth expanding not just Landrover but also our franchises from Cotton and Agri exports and a new market for Management and Consulting Services in China and South East Asia.

The Taper past ( it will last till September 2014) and India starting on a recovery path, markets have to recognise the Depth in India as speculators continue to keep coming back to old favorites that were not more than tangentially aligned to the new Global equations like the frog that sips back everytime he succeeds in taking a new step or two to get out of the well

11 AM Update: (I agree with SS on CNBC 18 again), One should just wait out the falling knives and start buying towards the close of day today after 1400 hrs instead of the rush to sell 6200 calls or especially Axis and ICICI Bank Calls which are well worth buying (ATM) 

Fixed Income markets contrary to expectations of the 8.75% yield on the Ten year bond losing again because of Fiscal impacts in the last quarter of the year, may in fact move back behind 8.5% lines as Spending cuts materialise to balance out the missing $$$ in Rvenues and Disinvestment charges ( which may still come out on top) However equity indices will depend on only inflows into the select basket of scrips including Bharti and ITC in FMCG and IDFC , ICICI Bank, HDFC Bank and YES Bank, or other midcap selections outside earlier.  The Power NBFC trading range for example is a very wonderful opportunity for those willing to wait and watch on India.

Indian Pharma seems to be retaining market interest as $200 mm molecules have more than a dozen opportunities every year in a 2012-2016 period even after the first few Big patents have come and gone as more than 30 $ 5 bln patents expire. Teva’s first few generic applications being rejected upholding current patents in the USA may also not stop them from coming out on the winning side in revenues on the vast US market opportunity, while  Indian domestic business is still less than $10 Bln and probably can grow 5-6 times from here.

Banknifty has a bottom at 11200 so today’s snap southward may not hold after 1400 hours in closing trades before the last session of the week tomorrow. Gold swipes big losses in today’s trade as the Global liquidity shrinkage impacts runaway trades in Precious metals led by Gold and one assumes even Crude and Real Estate markets at least outside the USA. However, even limited trading volumes for importers, ne does not expect India investors allowing anyone here a win with significant short trades in the metal. International prices of Gold may well breach the $1000 per pound mark. They are currently trading at $1200 post taper announcements.

 

Bank Policy Wednesday: India stands PAT on rates in December

Even as RBI shows concern about the retail inflation, it has probably factored in the welfare sustenance supply chain requirement that has necessitated a higher tick of Food inflation likely to last till 2015. Even though the jump in core inflation to 2.66% has reached worrying levels, the RGR regime has played it on the level, standing by the current Bank rate at 7.75% . As banks have already moved off the higher MSF lending or the last quarter, banks would anyway be unaffected by the lack of change but the markets can seriously take the impending rally’s mechanics from here .

The FOMC reports later in the India day, closer to midnight when they can , we agree, start with an early taper. However, The Fed meeting is likely to also be a sendoff for Ben Bernanke and so any such major policy announcements may be skipped for Janet Yellen to attend to in February, April or even June 2014 and as the Fed has managed so adroitly, the Taper would not mean tightening. Though the Dollar remains weak, the Taper is unlikely to still avoid the Dollar strengthening into a vise like grip on the US own Economy.

On India’s Policy announcement, the 7.5% mark would have been even better but as noticed concerns on Food and Primary inflation are real and may spill over to Core inflation unless kept in check. The RBI Governor notes that Vegetable prices that jumed 99% in the Friday WPI report may fall sharply.

Yesterday’s Review noted, in the overall scenario

In India, the pick-up in real GDP growth in Q2 of 2013-14, albeit modest, was driven largely by robust growth of agricultural activity, supported by an improvement in net exports. However, the weakness in industrial activity persisting into Q3, still lacklustre lead indicators of services and subdued domestic consumption demand suggest continuing headwinds to growth. Tightening government spending in Q4 to meet budget projections will add to these headwinds. In this context, the revival of stalled investment, especially in the projects cleared by the Cabinet Committee on Investment, will be critical.

Banks have garnered $34 Billion from FCNR Deposits and India’s FX reserves have jumped at a $5 Bln every week from $277 Bln odd at the end of November and now at $291 Bln. RBI continues to flag the negative output gap and even a slowdown in Services

Also factored into the December decision is the virtual shutdown in Spending by the Government from January as revenues remain not so robust, which would strain interbank liquidity (LV?CNBC18)

It is good that RBI has returned to not being overtly reactive to the inflationary economy and GDP in March could have a larger chunk of the good news premium Indian data has been lacking since the year began.

India Morning Report: TESCO gets in the door, Another rally on the brink and a few kinks in the Bank Armor

Whatever be the State of the Bank Champions, Banknifty has bottomed out at 11,200 effectively esp with HDFC Bank hollowing out the tube on a 2% cut in MSCI weight to just above 5%. Coming back to the fundamentals then, it’s a beautiful morning when Banks and lendees have to get into line for a little justice being served. Though ET very adroitly , slipped out of mentioning any of the technical line items by the NPA sub-Comm at RBI Headquarters, the NPA guidelines will go a long way towards getting the banks to wake up to a new, faster era where they cannot use just proximity to the promoter as cause for underwriting. Specific colour coding of the timeline to NPA forces a beautiful transparency onto the banking system.

Currently Banks are prone to getting CDR notices around the 90-day deadline when the loan assets sour into NPA and the current accounts with more than an INR 100 Lac overdraft exist in such plenty that they are not duly raised as line items fraught with default risk for the bank. RBI draft guidelines also propose red flagging the Promoters and Directors of such businesses that are prone to turn purple in 90 days from the first Default so they are not wont to hop from enterprise to enterprise or engage lending officers into such a scheme that encourages adverse selection.

Au Bon Pain logo.
Au Bon Pain logo. (Photo credit: Wikipedia)

ET actually would be one such enterprise forever on the brink that has to prove its Financials and its intentions and has limited its own borrowing capacity but that may not be interfering with editorial ethics and it is not unlikely however that the same will be one of the discussions in this CDR friendly patch of Indian Banking’s jump across Futures and Fortunes from the casual officiousness of the nineties to the brisk professionalism with Corporate , SME and Retail borrowers in the 21 st Century post a global crisis

A last rate hike is coming and the rest can be entered in the post policy announcement today, in a few minutes as markets last without any cash trading in the first hour and some.

The IOC divestment is good news even as Markets drive the stock down to possibly the lowest realisaations from the stake sale. The Trizivir approval is coming through for Lupin while  the same USFDA has akso approved Lupin and four others including Sun and DRL for Cymbalta($5-6 Bln per year) generics in the US domestic market (anti depressants ) Sun’s SPARC lost a generic application (LV/CNBC18)

Auchan
Auchan (Photo credit: Wikipedia)

IDFC and ICICI Bank as mentioned yesterday have righted the price trend amidships. If you are looking  at other rate sensiives suriving the coing high interest regime and leading thus this India recovery, apart from ITC whose core business showcases highly inelastic high demand for its products any consumer staple business especially in Foods is an equally good proxy as Food inflation will continue strongly thriu 2014 whether rate hike or not and GDP growth restrictions continue to bracket very few non performers except the NPA ridden PSU Banks. NPAs in the system rightly would correctly jump to 16% of the assets in the high rate scenario

And yeah, I belong to the minority that likes the sharp reaction from India to US trapping of Devyani Khobragade. Even PPP does not cover half the gap between Service costs in the US and in India

TESCO right timed its entry apparently in JV with Trent. The London based retailer is a welcome substitute for Walmart in a touchy state -Center source of friction in an iportant policy hot pocket. TESCO lands in Maharashtra and Karnataka with its first two Large Format stores ( though thyey are really bigger than the Auchan Hypermarket format) Other non stock market related news for retail came from the otherwise listed Spencers’ owners RP-Sanjiv Goenka who are taking Bangalore’s own Au Bon Pain national. They are the first Master Franchise looking to own all the coming India ‘stores’ of the Coffee/Sandwich chain (QSR). Apparently national footprint for Au bon Pain entails more 1800 sft investments whereas they have rationalised on size in home district of Bangalore except for the flagship restaurant on MG Road

The Bank Policy Date goes by without a change in rates as the RBI advises against an over reaction to the good news while they wait for data

India Morning Report: Markets catch the flu , ‘one sneeze games’ continue

Rstps2
Rstps2 (Photo credit: Wikipedia)

A single stroke move at  the start of the week followed by one barely hanging Tuesday and the markets are a volatile potpourri. Despite the pre ponderence of institutions, markets have come out of 2010’s downturn having decided to be a one shot vaccine for India’s Economy woes every morning, tanking a 100 nifty points today to 6250 levels on the every thought of having to continue at the new range without a hope of an immediate rise to the promised lands at 6500

As Dominic Barton reminds us this morning, India is not on the priority lists of investors at the moment, anda scary thought to encounter in one’s portfolio despite inflows of $5 Billion since September.

Vegetables in a market in Singapore's Little I...
Vegetables in a market in Singapore’s Little India district. (Photo credit: Wikipedia)

NTPC could well have started the way down an its bounceback probably is just an aberrant move. However give the broader markets would be at an index of 6250 before 11 AM, it is easier to plan for an index going up again tomorrow and traders would be wont to get their choice picks in banks with the Nifty at 11,750 on the Banknifty.

One hears of some news on Bharti but the stock is continuing a slow rally from its 300 lows to 340 levels probably unaffected (LV/18). Coal India also continues down after the new CERC guidelines.

Rumors of an apolitical volte face by the party in power with Nandan Nilekani following on Manmohan Singh’s tenure as PM and a Shashi Tharoor and few other young ministers, seem to be “TOI’ like incendiary flames on the post election fires.  IT recedes as a defensive in rare down trades and shorts on HCL are probably the best way to cash in.  Breakout innovtions apart, undoable extensions on the startup model like being attempted by Just Dial in enabling services are proven time and again to bleed out such fragile new businesses. Energy rice raionalisation continues with easy increases for LG distributors to match the new cost structures.

English: Railway network connectivity map of t...
English: Railway network connectivity map of the populated regions of India. The Indian Railways is the world’s fourth largest railway network spread over 64,000 kms and transport 30 million passengers a day. (Photo credit: Wikipedia)

Most investors would accumulate ICICI Bank and Axis on shorts made today and shorts would probably exit at current levels. YES Bank remains an investment bet but policy is around the corner on Thursday next.

The Fitch warning on fiscal indiscipline is unfounded while the US sartups ranking updates IITs as a Top 10 force in the coming Economic rankings of the world. The Dollar Rupee however looks to be on the run to 61.50 and not 62 levels since Monday’s single Candle move up.

11 AM update: Exports have receded back to under $25 Bln and the deficit is a heartening $9.23 Bln with imports under $34 Bln, Rupee catching the worm before the 2-m/5pm RBI update for the reference rate, OIL bill fully paid and UCO (The Iran Bank) coffers full, Sajid and Ruchir fighting hard , taking turns to stick to their recessionary discipline induced by Bombay duck speculators in their circles waiting for the taper to break the straw on the Camel’s back.

Invisibles were a humongous $116 Bln as Samiran points out, only $20 Bln – $40 Bln from foreign inflows on a full year basis and Defence Imports aded to the trade deficit just $15 Bln, leading to a CAD score likely under $45 Bln. Oil is confirmed as having a lower tick in the second half of the year too. Non Oil data has dropped below $21 Bln from above $22-23 Bln in the prior months, an unhealthy increase)

Hopefully Stanchart traders have changed their call in time in the Q3 parts and there is liquidity following the bullish rupee trade outside notoriously trend lagging wealth bank forecasts(Julius Baer/Chris Wood week ago) trying for a share of the NDF trading volumes

Equities are in the meantime marking probably the time in FY15 when Gold and Silver imports at $1 bln in November , come back to pre curb levels

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: 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.

Bank Policy Tuesday: RBI Governor completes policy action

inflation
inflation (Photo credit: SalFalko)

With the forced liquidity constraints as the currency devolved on the nation in June ( after May 21 announcement) RBI was stuck in the middle of a rate cut leg of its policy to encourage growth. Already hampered by banks using Central Bank liquidity to the extent of INR 2 Tln instead of market, the Central bank’s rate hike onsequently in September even as the MSF hikes were redacted and brought back to the normal line may finally break the back of the markets on the verge of a bullish move from 6200.

The only inflation out of control however is the Food inflation which may not respond to any rate hikes and this rate hike may just be a mechanistic response continuing since Duvvoori Rao demitted office to stabilise the higher rate environment, in which case India may old these levels for a good six months, and in developed markets this new intermediate leg could have lasted years, till the rate cuts can begin again.

Meanwhile consumer staples will continue to see large double digit price increases to correct 2-3 years of suppressed marketing budgets and pricin pressures unrequited to keep basic sales growth alive in consumer markets

The announced policy steps however will increase bank rates and as retail lending has reounded such increases are largely going to be absorbed by consumers and however will have had debatable impacts on fueling furthr inflation now controlled by bank rates. NBFC business is already looking better in consumer durables with a clampdown on 0 interest loans and while that may not segment the market in favor of first time durable buyers that have been an absent quantity fooling marketers and policymakers, it will continue to better control the negative output gap with more advantages for NBFC lending even for banks that have already relied a fair portion of their portfolio on the sector at the expense of obviating the real winning consumer sectors or industry sectors winning n the changed scenario

RBI hiked rates 25 bp and MSF channel has returned to 100 bp over the repo rate clearing the path for a return to the Repo rate as the Bank rate.. WPI forecast has been banded to the central bank’s comfort zone as 6-7%. GDP growth is updatd to 5% for FY 2014

The banks lead the Nifty comeback post policy action as they assume the deed is done and currency will consolidate around 61-62 levels before going back to the trade deficit control led highs nearer 60-61 levels The sponsored rally ost policy is however blushingly even across non actors and non performers in the banks bunched with YES Bank, ICICI Bank and even HDFC Bank and Axis Bank. IDFC has recovered its morning deficit too. BOB is up 15 pointsand BOI is in the positive with Pharma/result candidate DRL also staging a mini rally. The short on LIC Housing ahead of results has also disappeared and tomorrow’s results are likely to see fat positives as sentiment needs a good build up and inflows ontinue to allow market makers to perform as such and the Financials are likely to reward investors who stuck through the unreasonable 2 months pre the last MSF related policy action. Further policy action unless embargoed by inflation is likely to stay with seeing the bank rate climb down from the current MSF 8.75% to the Repo rate of 7.75% ( The Revese Repo is 6.75% where  RBI issues new collateral securities)

 

India Morning Report: A double trade in IT and the falling Gold prices but China is not good for the Dollars

Before we proceed however on the mechanics of an extremely juicy rally portender yesterday, I/we must recommend you dig in to Bharti, ITC and Bajaj Auto irrespective of your faith in the Network Analysts out there recommending fresh shorts. The thing to worry about is the weak prices in Gold right on the edge of festival season, as buyers tend t o stay away unless there is a heady cheer and while import limits CAD, Gold is still below 30,000 per 10 grams in trades around the country and on MCX.

The MCX resolution is also a matter for some grave restructuring and not an easy one as the promoter being the Technlogy provider and if they have been given permission to create the public exchange in such, the regulators must also bear it and not fall for a half baked compromise.

That said, the correction in IT stocks yesterday was a simple reminder that ESOP mechanics and Wealth Funds still hold sway on that sector as it is overweight in most global portfolios plus ESOP managers have a real safe exit if they can recommend take profits on post results euphoria. However, other insiders may also be involved in that they guess the “Q4 Winter” about to strike IT prospects may really simmer down market interest in the IT pack. However, as the rally proceeds this correction ahs also made possible for short term traders to dig into the sector as a fail safe trade probably before the first two weeks of November series are over.

Rupiah
Rupiah (Photo credit: Anis Eka)

Also, the banks are back as policy tones clearly show Repo rate pressures are off because Taper is moving out at least another year and that also means a stronger Rupee, Baht and Ringgit or even the Rupiah and Won that have shown up as pressure spots again in the Emerging Asia economies because of a uniquely intractable dependence on the US Dollar(“single currency” ).

Rupee however may skip the party even as inflows return because of the Crude prices ratcheting up the difference again and supply chain pressures will keep food inflation also high, rural consumption at a better tick thru festival season and it seems a dead Bollywood except Anil Kapoor’s above average attempt at bringing professional production to Colors ( as usual) KBC is working up the consumption dime too. Rupee will however seemingly head to 60 before the investor celebration begins with fresh inflows exceeding expectations into Election time

6100 is already back an the straddle at 6200 (sold call)  5700 (sold put) will have to move up again to 6500 levels but you should not switch till it is time

China GDP is still at a resilient 7.8% bottom and the credit squeeze, real estate asset bubble or a sad 2014 outlook mean the sun is not shining on private and llisted share portfolios in the biggest and only superpower enticing OECD funds and locking them in by the month, now at a 72 month positive inflow trend, and likely unbroken. Also China orders for Iran crude are up 60% that may still influence crude prices stabilizing.

Hindi on whimsy: Akasmat(Sudden, equally apt in both up and down moves); utavala na hona(to not look too eager)

India Morning Report: Dead cat bounce, Earnings rebound on the horizon

NEW DELHI/INDIA, 16NOV08 - Klaus Schwab, Execu...
NEW DELHI/INDIA, 16NOV08 – Klaus Schwab, Executive Chairman, World Economic Forum, Narendra Modi, Chief Minister of Gujarat, K.V. Kamath, Managing Director and Chief Executive Officer, ICICI Bank; and President, Confederation of Indian Industry at the welcome lunch for the World Economic Forum’s India Economic Summit 2008 in New Delhi, 16-18 November 2008. Copyright World Economic Forum ( http://www.weforum.org )/Photo by Norbert Schiller (Photo credit: Wikipedia)

And the international  impact of an immaterial shutdown cascading to its third instance in the current crisis after a US downgrade and the shutdown first awaited showed governments globally as it did markets that it was really immaterial. The economics of a shutdown are indeed brilliant and technically still half an hour away(at writing) . It means some  Federal Workers will not get paid and probably more in this instance than earlier when it affected only pensions and some non critical defense spends and not even one third planned government spending which anyway trends down having been minimised earlier

Anyway, apart from the sequestering which will in the long term impact US healthcare and Defense stock, the issue of the Rupee recovery as Oil continues south ( on weaker global /US consumption) and the US Ten year yields looking to bounceback from 2..64% on ‘No Taper’ news, India Inc has had nothing to report. Earnings in Q2 despite the all round scare will remain positive for the few listed corporates that carry India Inc on their shoulders The rebound in software exports in the invisibles however has strengthened the trend towards overweight IT and Pharma portfolios

Mitesh (ETNOW) as usual played a clear long with a pick on ABNuvo in cash that works much better thu the day than the Sandeep Waghle/Gujral technique of trying to short the edges of the bottom as the Dead Cat bounce holds and rejuvenates some banks (Afternoon update: Banks managed well, YES Bank shorts dened and F&O interest likely having picked up in those 6 bank series excl the banknifty index weighed by more than 2/3rds publc enterprises)

The CAD bounce is already in with $21 Bln in a quarter indeed by itself worthy of applause and additionally was abnormally high and the other three quarters of the year will trend barely in double digits if Government estimates for the full year CAD are spread over these coming three quarters at less than $9 Bln each That is due to the reduction of th $8 Bln Gold deficit in Q1 before curbs coming down to near zero ( restricted to 20% of imports  that is not exports thru the regulations introduced concurrent with RBI’s currency control measures in monetary policy

The Trade Deficit keeps growing and again for India as for US the Net Services (Invisibles) Contribution was a surplus of $16 Bln for the quarter gone by, but the blocked imports leading to the same are not available to us to comment on our ‘cutbacks’ impact on growth. Core Industries (38% of the IIP) grew the expected 3.8% after a 3.1% in July, making the hopes of a recovery more substantive as well. Banks like ICICI, HDFC Bank and Axis will reap benefits f any rebound from their larger distribution and shorting SBI is still a neat trick int he market in terms of the looming uncertainty in the short term. In fact I would say it could break below 1500 but for the rising bear trap being locked into by Bulls in India counters selling 1500-1550 puts and looking for a trade positive on buying the 1700 Calls than writing them so its actually a seesaw.

Don’t worry about EM being global victim of the QE and now its withdrawal, the newest setup is on the Euro, with 17 weak countries holding it, as it rises into the bubble-o-sphere on  US Stupidity and is potentially looking to becoming quite a safety wall for all the world’s troubles much like the yen did for three decades since the 80s.

The Banks are trading in the green and this weeks events could possibly split the bank trades between PSU And SBI negative and ICICI Bank and private bank positive in this trading rich sector even as metals struggle to find buyers as the markets still believe in a lower bottom around 5600 (and then lower still)

Tata Steel and probably two more scrips at most merit positive attention and would have accumulation from institution at all levels. The calls in ICICI Bank and IDFC are likely to remain positive though the rest of the week with the low levels of yesterday late afternoon, when the morning’s dead cat bounce ‘resumes’.

 

India Morning Report: Markets wait for fuzzy logic to come back as banks get ticked off

The Rupee has continued its climb but equities have taken a break even as Rupee survives end of the month selling for import payment obligations in a benign environment Oil heading below $103 (US Crude)

Bharti Airtel Lanka
Bharti Airtel Lanka (Photo credit: Wikipedia)

FDI Dollars will likely boost debt markets soon, the positive sentiment from that and the promise of removing extraordinary liquidity measures letting the markets 5 basis points off the 10-year bond yield to 8.73% . BofA ML in the mean time agreed that there was no doing anything in India till 2014 came and went so the rally is at a loss still from  a disgruntled bull frustration at this rush for beyond 6000.

Goldman Sachs put India in the same basket as Turkey and Brazil, rather on the heels of the City beating Manchester United and showing Goldman Sachs burnt in putting too many eggs in this basket too. However, we go agree on the Fragile three from Goldman Sachs which will really get stricken not just because of dollar dependence but because of domestic alchemic leadership that continues to drive a fiscal big bang attempt in those two domains as well as someone like South Africa. The Fragile Five however esp India do not exist as those with deep domestic markets cannot be clubbed with Emerging Markets

India’s Dollar dependence is much a factor of the Oil price, so that can’t happen without Syria, Iran and israel. No, India cannot choose to come out of the growth plateau overnight by dissing inaction and is not  sign of weak politics, just more federal than the smaller EMs can afford. Our deep markets still offer much more than even China in most asset classes and Financial market reform is not a steeplechase to be run, or a small sprint but a consistent marathon. Neither is the consumer credit habit overdone in India or hitting the falling Domestic savings except that real income has ben stagnant even negative as non agri GDP data shows us in 2013 ( a 0ve 0.5% growh in since April this year, i.e. Q1)

Reforms did break India’s markets stride yesterday again, as the SEBI panel freeeing Govt Bond investments frm quantitative restrictions has to merely posit the same to RBI at this juncture. RBI in the meantime is busy bringing down growth era economics by C Rangarajan and others who took his place after he remitted office for higher advisory office. The edgy action on 0 percent loans and the continuing waterboarding by banks on using MSF and overnight liquidity instead of interbank markets have got RBI in a fi x of its own and that has definitely been scuttlebutt fodder for the equities.

Those following the soliloquy of Ashwini Gujral however may do well to note that I think neither Maruti is making it higher in this week nor traders or investors are going to wean off Bharti Airtel in this series. Volatility is on a thin leash as October still rushes to 50 point premiums over the current Nifty levels even as barely three days before expiry premium in the current series has been completely blunted off by the trading blades used to bigger prizes in an Indian rally constructed/deconsructed at will

Markets could well bottom out especially if action is indeed seen in the infra sector and more is not thrown banking’s way allowing the sector to recover last week’s trading levels. Inflows from the NRI binge for example have been waned to Deposits apart from the continuing rush on Dollar payments home to the tune of $1 Bln from just three publi banks. SBI in fact is looking at its first woman Chairman in a few months

ITC and YES Bank, along with AXIS on hedgie trader desks, remain in limelight with incoming investors and most wait for a resurgence in Financials to confirm India’s superiority as an Asian investment destination though China remains bigger an d better after another shocking half year of underperformance 5600 does look like a tradeabl market bottom for India, surviving these levels in such economic doldrums

 

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

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

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

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

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

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

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

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

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

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

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

India Morning Report: Markets watching the airlocks at 1.30 PCR

Русский: Дорожный знак 1.30 "Низколетящие...
Русский: Дорожный знак 1.30 “Низколетящие самолёты”. (Photo credit: Wikipedia)

The Put Call Ratio, never an independent trend saturation indicator per se is nevertheless impeding most new buying in the Indian Markets as a higher PCR indicates the highest levels of puts sold and comparatively a negligible strength of written calls to initiate a downtrend. Given that the banks have recovered the sentiment to 11200 levels though, the unique topped up situation will continue to walk a steady tightrope for the markets at this point because unfortunately  traders are sunk for short ideas except for targeting the private banks again even as the perfectly engineered ride up to the market has left value in most rivate banks and in most blue chips.

Bajaj Auto at 1870 is hardly compensated for its Margins of 18.65 and Hero Honda is no longer overvalued. Reliance is again hardly left with any steam on the upside but with investment eigenvalues in India rarified Himalayan peaks, such stories are hard to come by for India and will unlikely get short interest even on their Q2 results day when they report barely coming back to /staying at normal profitability levels ina challenged environment. The INR 44 Bln sales at Bajaj are only bolstered by the new rupee and so also for petroleum cycle bled Reliance as oil starts going up after a barely 6 month breather to importers like India

Manmohan Singh did a great job holding 8 channels to task while inaugurating the ASSOCHAM session today morning, taking of true reform ably effected in  energy and the rupee levels helping export volumes 9 again, without discovering that direct relation to be not more than a fond hope anymore) as commodities continue to sink globally except for Oil, led by Indian exports of Cotton and copper also losing value and market like its exports of Tea Coffee and anything else non Gold as the quality is exactly what the buyer did not order, good or bad

English: A rectangle 270x180 pixels which has ...
English: A rectangle 270×180 pixels which has an aspect ratio of 3:2. (Photo credit: Wikipedia)

Me, I was even thinking it s saturday all morning and the markets are virtually closed..ET’s report on July currency trades this Monday..

The data shows that average daily volumes for currency options have fallen by as much as 79 per cent for one of the exchanges so far in July, but another bourse have witnessed a hefty drop of only 35 per cent.

Meanwhile Raymond and Indian Hotels are not going to be traded derivatives from the Octoebr series

India Morning Report: India regains investment preference in Asia, builds on 5900

English: This picture has been taken at the Sa...
English: This picture has been taken at the Satya Bharti School. It shows the education system and children’s life at the school. (Photo credit: Wikipedia)

Markets had a choppy week early on in India but with selling having refused to resume and Asian markets keeping a comeback worked into the numbers meant the Dollar indices poised to jump at 83 going into the next week. In thus phase however Dollar may again lose the tight negative correlation to Asian equities especially again in India which has managed to climb down the volatility beanstalk while steadily gaining 50 points yesterday and another 50 points at open today.

Many out of favour scrips from Metals to the yet to be prioritised realty are now at their technical support levels meaning they will mostly support positive moves ad may even lead one out of 5 days in the positive next week. .The jobs report in the US morning will of course propel the Dollar but the likelihood of that momentum taking down Asian markets has receded with the yen keeping counsel near 100 and Asian automakers not seeing tariff barriers in the US traded away

Oil prices are unlikely to continue north despite demand led reductions in inventory in the US as refineries remain underfed and the Egypt tensions are resolved
Banks are poised comfortably at 11250 levels and the Banknifty straddle has worked wonders in localising discounting for bad debt PSUs to SBI and BOB among the still expected to perform members of the Index . Thus further PSU bank attrition of business and bad debt spirals will unlikely stop the rally from taking root in banks next week and ths leading the Indian Nifty 50 back to 6000 levels albeit for a trading largesse. Pharma sector picks like cipla and Lupin continue to have much to offer and trading down in Sun Pharma may ot have large index effects ( expected as exports are succeeding at competition) iT scrips are much in a bind of low profitability even as immigration reform fades away and 12% in Rupee depreciation fails to make earnings forecasts positive ahead of next week.
Bajaj Auto, IDFC and Powergrid could be good picks at current levels though RBI signals have already discounted PSU applicants for bank licenses including PFC. PTC is also dong well without a banking license to its name and REC may trade to lower 190 levels but is likely a good pick at these levels all on their standalone performance and undiluted by the market added momentum in June for Banking preference. YES Bank is a great pick at these levels and supernary promoter interests are unlikely to be material to the bank’s professional management as is the prospect of 100% FDI in leading lights in the sector. Telcos will probably get 100% FDI approval sooner than later and Aviation’s experience with Jet Etihad is likely to remain positive and accretive to value ton the whole. Lupin’s pipeline of 100= drugs continues to underline the block profits in generics witha low barrier definition of blockbusters and no big stories in the us market nonetheless and similarily with Cadilla, Orchid and Stride Arcolabs.
More importantly consumption winners heading for no man’s land ( Trading at lifetime highs seen mathematically breaking new ground with positive momentum trading) with ITC, United Spirits and eve HUL and Bharti likely to head off the “no investment” led dull prospects at India in story, expected still to be worth much more 6 months down the line. While HUL has shown already that shorts were wrong, once results expectations are correctly warded off by Telco promoters sunil mittal and co, Bharti may also be seen in the light of its quasi global brand and investment expectations and thus gain from reducing debt on new investment rules in fDI and in required infrastructure debt accounting

The Rupee thus is free to depreciate but in a small range around the 60 mark.

 

India Morning report: Oil signals treated as critical sell levels for the Rupee (This week in Asia on advantages.us)

English: Graph showing Indian rupee and U.S. d...
English: Graph showing Indian rupee and U.S. dollar exchange rate from January, 1990. 日本語: 1990年1月からのインド・ルピーとアメリカドルの為替レートのグラフ。 (Photo credit: Wikipedia)

An old adage for the market, it is now a repeated phenomena in the global markets for India to retain the dubious double distinction of heralding global commodity lows and be cornered by the slightest sentiment building in Oil. The day thus is a weak barometer but may soon gain ‘tumbling’ significance for global currency markets as the Rupee will be decimated to even beyond 65 levels if Oil rally does gain strength.

However as it is unlikely to happen for now, long investors may not be able to leave Indian shores before it eventually does, giving the upper hand to hot money flows as opportunities run out with the Yen at 99 and Euro also not facing new substitute demand, yields going up from global lows in various central bank auctions in Europe throughout June bringing short term rates to near above 0.5% and even closer to the 1% mark from momentum extrapolation(as will likely show)

The Indian Rupee has been closely pinned down earlier in 2009 and lack of buyers remain its “new” worry in global trade share increases as Yuan manages a smaller volatile range despite an equally suspect recovery path due to a paradigm change from South east, Coast Only development to a more homogeneous spread as legitimised by a 5 year plan.

Back to matters at hand PSUs like BOB will probably lead the bank indices down even as most new banks will make likely a good sector lending structure possible in the higher spending towns and villages of India that have kept Rural CPI apace at double digits till now. Muthoot’s Bank may indeed be a new kind of entrepreneurial venture in banking as long as they meet RBI conditions and manage not just the minimum net worth cap but raise the bar for fellow new anks to the desired but not contingent levels of INR 2500 crores of $400mln and even INR 10000 crores or $1.6 bln whnce an opportunity the size of India may be deemed fit. This size of course may not be ready on day 1 but should nonetheless be planned to those levels with capitaal lines tied as was behind the uccess of private insurance in its infancy in 2000s

100% telecom FDI for India thus might mean in an indirect way, better days for Oil consumers even as demand returns to the US market after a good 6-8 weeks in yesterday’s reported data and are critical for the market to retain 5750 levels on equity indices. ITC and Bharti remain on the up and up in block deals for FIIs or even program trading where such volume is amenable. Yes Bank might see another block of additions by FIIs as it exits a RBI ban on foreign investments and has quite some potential before reaching the allowed 75% levels currently in the sector HDFC/Bank prognostications for a 100% FDI in the sector linking its scrip fortunes to the same may see thus a longer gestation period till the new government is in place in 2014 and indeed starts picking up the courage to forget its pre electoral hang ups with FDI if any

 

India Morning Report: Bring it on, said the citizens to the grizzled

The palaver of a broken market ready to tip off uncertain highs is catching strength this time but the bulls still have it having technically exchanged stock weights skilfully as new funds were available everyday. of course none of it makes sense if no one believes in the recovery. All liquidity infusions are a case in point, belief driving the US engine out of the morass again and again

However the Banknifty breakout confirms the bull run beyond 6100. We need to understand that PNB results yesterday with Net NPAs quite creditable at 2.37% for such a behemoth. The most glaring misunderstanding of the Indian market still comes from Bharath Iyer’s team at JP Morgan and others at Bank of America and Credit Suisse desks as they maintain SELL/underweight on this behemoth which though PSU has still managed to weather the big NPA electric storms and is now helping Industry ski with abandon. Unwittingly, CLSA loosely modeled on the same state friendly structure in France, had a desk here rooting for PNB after results yesterday as the only one upgrading PNB but PNB underlines what it promised last quarter that it will definitely show up with green shoots on its assets this quarter aiding the expected India Inc led recoevry. also notably missing the point is those missing the come back equating PNB rising as the same as PSUs rising previously, more than a decade ago an epithet accorded to SBI. The correction in bogey PSU banks unable to come back is due and should exclude the UBI, the Canaras and the Syndicate banks even OBC and perhaps Federal and SIB on the private sector have not done enough inorganically to merit positive attention when wwannabe banks are available

Production data today could be led by another jump in Consumer durables and a not so wild cut in mining as we get into the trenches for a q2 GDP rush on the global markets . Korea still struggles with the weak yen induced failures as Korea and Australia sign on rate cuts and Korea adds liquidity to get jobs back in another novel rendition of mint printed liquidity

Australia ofcourse is in a double bind with imported inflation and no regional relations except for its customers in mainland China who don’t care much for the goods right now. Good shorts on the India markets come from understanding markets at 6400 and that underwrites that these last 300 points top off the nifty’s run for right now. Again, if the market remains slow and mostly steady from here, we have not heard the last from the bulls and it is definitely not a weakness as now markets are stable at higher volatility levels showing inherent confidence in the recovery.

 

India Morning Report: markets tinker with 6000, shorts fail again

Shardul kulkarni, despite his hanging on to the short trade on the indices since 5800 for the 5600 mark or thereabouts is a pretty chastised man as he leads the discussions of the index topping off at any time and falling south. if you subscribe to his school and few still do including DIIs, you would expect larger profits in the aftermath of a continuing move north, giving these positions extra incentive to come in given Nifty volatility is just south of 16. However, the depth of the market and i do not track the Historical volatility measure to track the ranges otherwise , the IDV measure could again give 25% upside from that.

The Ascent of Money
The Ascent of Money (Photo credit: Earthworm)

The caveat being the monthly series are still not good for the volatility trades and this move cannot be captured with May series transaction costs and premia making it more probable that options will lose the extra profit opportunities across voltility(vega) and the prices (delta) itself and thus the long trades have to be played in Cash equities or futures rollovers till LEAPs also make an entry for the large pool of wholesale trading money that rules the Indian markets going forward.

But then trading in Autos for this limited period is strictly a choice for the liquidity or requirement for trading income you might see as it does not befall the fundmentals of the sector despite India Inc’s impending bounceback and if you are already not long 2013 for these few scrips in the sector you might have to rule out 2013 for any opportunities later.

Today’s newspaprs carry the concise summary of results season, showing the outperformance on profit growth of nearly 20% with raw material costs down almost 5% and Sales continuing to grow only in retail/consumer and banks but many select stocks have broken through the 20% topline and 30% bottomline barrier thru a mix of cost and sales efficiencies even as in the FY14 periods the downfall of PSU bank sales continues unabated and a limited impact of the resulting credit slowdown might still show on private bank top lines esp in retail as banks fail to reduce credit costs having no option but to continue to raise cost of retail deposits, continuing with a unified ;term structure’ for retail and corporate / wholesale customers

Indian markets have to respond positively as rare cash chases India after a long hiatus and is sticky for lack of the promised revival opportunity in China and Europe. High yield debt meanwhile also presents a global investment opportunity at this time with yields just 6% may actually be supported by the US fixed income markets chasing higher yields and creating a move up all across the term structure  to revive the interest rates starting with the 10 year and smaller yields

 

India Morning Report: The meandering world’s progress condensed in a fete of ‘immediate payoffs’

The Seal of Salt Lake City depicts the building
The Seal of Salt Lake City depicts the building (Photo credit: Wikipedia)

With Goldman Sachs moving its next meeting of shareholders to its other back office in Salt Lake City, Utah, India’s sloth in an optimistic IIP growth of 2% and FY 14 downgrades to 6% by a couple of foreign brokerages it was all but sure that Monday’s bad openings would be followed by a tirade to the finish line with Network analysts from Ashwini to SS and Udayan Bose (TV18)  pining for the 5500 mark to make the uncertainty go away. Of course that also unleashed the India outsourcing Bull with IT companies a safe bet and TCS the largest Market Cap company ahead of Reliance Industries.

However, sanity has returned to the market since with interest and eyes returning to Indian equities and the Dollar index having recovered its paces since the Yen correction at the start of the series without the Yen losing any of its pressure to cross parity to the Dollar and the Euro denizen of Germany proving that it is unlikely to feed its south neighbours including France (conceptually) anything other than Target liabilities for the growth spend everyone was sure Germany has keeled over for. Germany preponed its budget exercise to reaffirm its primacy of fiscal discipline as the Euro recovered last week’s blues since and the EU summit failed to move on any of the agenda items. The European economy still needs to work out a longer timeline for its recovery.

Trade deficit data however points to a tight cap on US GDP growth for 2013 and similar warning bells toll for Exporting countries like India and China though EU and Japan look at the small recovery in both Capital Goods exports and imports numbers for US in February Capital Goods trade up by a net $1.1 Bln in the ever increasing Trade deficit and a bleak month for the US in terms of the shored up Fiscal surplus breaking down along expected lines in February’s big Fiscal deficit.

India too therefore looks at a larger trade deficit even as Oil prices come down by over $10 in the last 30 days with Exports barely maintaining the newer levels it managed in the last throes of 2008-2010 and February’s deficit of $14 B is likely just an aberration after January’s $20 B hit.

Markets look better in equities from banks climbing despite the fourth estate coup against the top 3 private banks looking to make a mark in wealth as brokerages rang the bell for State Bank and the stock climbed up 3% in Banknifty’s climb back above 12000. The attention on ITC which was almost a giveaway for the lack of short interest in the broader market also encouragingly continues and the picks on Bajaj Auto should also bear long again than continuing south or short as last week. NALCO and RCF Offers for Sale also look lined up to complete successfully with LIC’s participation in the OFS taking its stake to 6% in RCF. The residual stake sale in Vedanta’s BALCO and HZL investments could really brighten up India Inc’s balance sheet in the current fiscal itself but one cannot gauge the impact of continued market confidence to the T given the fourth estate’s penchant for equating accountability for the government with all lack of information and analysis on any story /subject

India IIP Report: (September 2012) An incipient recovery may not take monthly comparisons

Though providing monthly updates may have its advantages, quarterly tracking of the monthly IIP itself solves most of the cyclical trading and investment decision needs of the data as the organisations involved mull another ‘restructuring’ of the data series that relies on 31% Capital Goods and 38% Infrastructure production in the series. Ming and Utilities are reverbing as the more critical pieces having benen down from their averages longer and deeper. WPI data follows on Wednesday. CPI was reported a lower 9.42% instead of 9.76% for Octoeber almost concurrently to IIP announcements as overall CPI is 9.75% static over the September data while rural data has tipped to almost 10% at 9.98%

Electricity series has recovered well to 3.9% . Of course year on year figures are really not indicative after the big jump still keeping sentiment at its depths re performance but is up from 3% on August and negative in June 2012

Counterfeit jewelry
Counterfeit jewelry (Photo credit: Wikipedia)

Consumer goods data has gone negative again at -1.3%  from 5% in August and Intermediate goods are almost flat at 1.8% on month and 1.6% in June 2012. In June, Consumer Goods data was stronger on durables growth of 9% at 3.5% and Festive season has been good enough despite the discouraging data for September (Durables -1.7%, non Durables -1.1%)

The overall PMI Composite for India stood at a high of 55 in September and is only 53.5 in October but still among the highest globally. The September IIP data is a degrowth 0.4% after a degrowth of 1.8% in June 2012

June data was sharply negative on Capital Goods at -27.9% The September series continues at a double digit negative clip of -12.2% but policy hurdles seem to be out of the way from the brakes still on in June

August IIP has been revised downward to 2.3% as well, showing up the incipient recovery in the face but Mining sector’s chugging back to normal is reflected in the statistics well at a positive 5.5%

Basic Goods growth was a positive 3.5% in September over 5.3% in August and the overall Manufacturing Sector is a negative 1.5% against a negative 3% in June and positive 3.5% a year ago

Services and Utilities data have been very strong in India’s version of the crisis in IIP since 2009 but have finally hit a big disruption canyon in 2011 which has continued ravaging India’s growth prospects into 2013 as it returns to the fabled Hindu rate of growth of near its least 5% even as China transitions into the Developed World ready to strike at per Capita benchmarks set by Europe and the USA

 

 

 

Bank Results Season: Shriram Transport Finance Jumps On Leasing Growth

Income of INR 1594 B produced a record INR 3.37B profits for the banker wannabe as Shriram Transport relied on Leasing Income to replace the more lending business friendly Gross and Net interest income. In its core Truck leasng business the industry leader is still moving all the gravy with a dominant 50% market share. Consolidated Net profit is INR 3.67 B

Meanwhile Indian and European brokerages (Credit Suisse) have been upping the ante on the operator since results were announced . Its anual EPS is now riding near 60 at INR 29.14 and the growth clip of 20% of topline and 30% of PAT is likely to be an easy win for the future Bank. Off book AUMs are increasing especially in Q3 with bilaterals to banks making 80% of its securitisation in FY12

The retail market is inspiring improving NIMs for Shriram. Management commentary highlights changes in priority sector definitions to also improve Shriram’s relationships with banks. It had only INR 400 crores in Q2 securitised against an improving market volume of InR 34 B till mid October. Net NPAs are a high 2.89% but have been declining steadily int he last 3-4 quarters from above 3%

Shriram is apparently waiting to season its new leased assets to benefit from an increase to Off book AUMs and tweak new securitisation agreements to the more adaptable PTC mode where credit enhancements are still allowed ( disallowed on direct assignment) while the latest cap of 8% lending rate on priority sector characterisation of a loan might be also apossible change without due pressure on profits as its market leader status allows to maintain and improve NIMs

 

India Morning Report: How Does Romney Vs Obama Influence Me?

English: Barack Obama signing the Patient Prot...
English: Barack Obama signing the Patient Protection and Affordable Care Act at the White House Español: Barack Obama firmando la Ley de Protección al Paciente y Cuidado de Salud Asequible en la Casa Blanca (Photo credit: Wikipedia)

It does and it doesn’t. After all the ones on the right side ( yes there is one, there is a right side and that is the Obamacrats) are anti outsourcing and probably not that friendly to India. But then India historically understands that what it thinks from afar and how it will be treated at the Dining table are almost always impossible to reconcile and it is mostly a case of the understanding sibling waiting afar to make a ritual sacrifice to the global family than any other equal concessions or other.

Or so China and Pakistan would like to believe. Of course Anti India rhetoric aside, China will still give much more weightage to India than to Pakistan because of Pakistan’s vanishing act in the Economy, in contextual relevance in Defence matters and the sheer size of the Indian market. But China has been obdurate and India’s policy is either expected to help US or China or stay away, making India the loser in all three choices and to put it rather insensitivelyequally decimated in any of the options. Defence spending , and there has been some, does help India’s Foreign policy cause but as far as Obama’s win is concerned, the dividend from that is only likely a couple of decades hence when US continues to grow as trading partner.

Back to other subjects of the morning, M&M and L&T have not got permissions to expand their Defence and Ordnance business and two wheeler markets are not growing in the festive season despite the Mujals’ best efforts on Hero. New launches from Hero are already sold 100k in M-Cycles and 50k in Scoters so the start’s more than good but Bajaj is the one winning the share wars and the profit margins this season.

New impetus to Banks wanting to set up business in the changed policy circumstance has again taken a back seat as nothing is likely before India’s own elections come due and the ministers   (eGoM) realise hopefully that half cooked might well be twice the penury for them in electoral battles so they should get something with the flavour of ‘execution’ out of the stables first.

The Israel Lobby and U.S. Foreign Policy
The Israel Lobby and U.S. Foreign Policy (Photo credit: Wikipedia)

Markets are where they were yesterday and the wait has not changed trends or direction of the markets. Romney is also where he was yesterday and pinning him on the changing stances in the debate goes against the grain of understanding Romney the politician, a by product of Romney the business investor which makes its very unlikely the Tea Party will be around or longer unless Americans want more gridlocked barbecues on the white house lawns

India Morning Report: A bright festive pre close rally to 5450

 

Of course that is about all the market could take as it prepares to correct today after another long run on the positive side. It is unlikely however that the correctiobn be anything more than a shallow dip and those waiting for a flash restart of a steep rally will likely have to plan it a bit further don the line at this point. It is more about safeguarding capital flows already in the market than about more news flow driven markets responding to policy inaction or any inaction with a fall.

The IIP disappointment will also likely survie a big dip as the market took pains to ride out the news without any adverse moves. The strength in transaction volumes contineus but 5450 may invite some profit booking in due course when the move snowballs to the south.

OF course a downgrade would set the ball rolling and that is one effect of policy inaction we cannot avoid. Politically they should also get to defend why India is anyway treated near the BBB levels by the rating agencies despite its more traditional and even public spending dominant structure for its banks .

 

So, why don’t you think Dynamic provisioning norms will hurt banks?

 

 

 

It is just a proposal at this juncture but we would be pushing as many good bankers for the provisions on standard assets to be adopted so the NPAs can be taken out of this subset of provisions and expensed off at least. As of now the proposal is still raw in its details requiring banks to keep additionl provisions including for foreign branches which are still leveraged on structured plays for each loan\

 

Current proposals start off with introducing provisioning on restructured loans specifying that such restructurings should have more skin from the promoters, lessening pressure on banks from the bankrupt promoters and adding a possibility of debt recovery before preference share conversion is forced and then giving it to years before adding specific provisions to that. This is overall a discipline that may be disavoed only by a fe Public sector banks depending on their portfolios

 

 

 

 

Morning Bites of Substance: Dollar makes pre open woozy

 

logo
logo (Photo credit: Wikipedia)

 

The Dollar apparently ‘unfairly ‘ beat equities to the open, climbing to 57 despite weakness in the Dollar index, again designed to keep the falling euro in balance and rising against the Rupee

1. Apollo Hospitals are setting up 2000 pharmacy units in the next 3 years, though 5000-10000 will be critical mass EBITDA of the private label business is expected to grow by 12-15% and that of the overall branded business by 7-8% Pharmacies sruvived 2012 March with a 5.7% EBITDA and apparently older non performing stores will be shut down

English: Anil Ambani, Tina Ambani, Anil Dhirub...

2. Reliance Anil Ambani is buying into Shopper’s Stop spending INR 515 M on 1.76 M shares likely taking its stake to 5% from the March data shared in print

3. Jyothy is likely to relaunch Henkel Brands, Margo, Pril, Henkel and Fa this year and Mr White and Neem next year

4. media fave Sun Tv is investing another INR 5 B , 2.5 in movie acquisition and a similar amount in Capex

 

 

 

India Trade and Revenue Deficit Data – May 2012

Exports continue to consolidate at May figures above $25.5 B. imports are consistent with this year’s degrowth at $ 41.9B and the trade deficit at $16B may mean more weakness for the rupee though policy measures are in place

Jewelery exports are hardly down 9%, ready made garments hit by lack of demand in Europe, and petroleum products 26% apart from the known lack of traction in engineering goods. However imports are down too and the $16.9 B deficit is a relief.

Indirect Tax collections were up 16% till April with Service tax collections for the month up 45% on the year to the new target of 1T

Overseas FDI by India reaches $45 bln

Indian outbound FDI reached a $43.9 bln mark in 2011 till March 2011. This includes the Q2 purchase of

English: This photo was taken by Nikhil Kulkarni
Image via Wikipedia

Airtel Africa (Zain ) in 2010 in 15 African countries. It also includes the $3 bln and more purchases of Shale by Reliance  across Pioneer, Atlas and other shale owners in the Marcelus and other shale areas in the USA.

FT reports the Sahara acquisition of Grosvenor House as the landmark UK investment while M&M snapped up the SSangyong SUV business in Korea for pennies in 2010-11 less than half a bln, rumored to be headed for Saab from Spykar this year M&M scraped its ventures with Ford (earliest) and Nissan – Renault ( 2008) as it still produces the M&M Verito on production lines set up to produce Logan and Nissan’s India car to be designed by them.

Liquor baron, MP and Force India owner meanwhile is embattled in a fight for the survival of Kingfisher Airlines and Tata consolidating its JLR and Corus steel purchases from more than 3 years ago. Indian Financial services business never reached the required scale overseas either but carries a book of more than INR 8 Tln or  $ 160  bln in SBI and $3 Tln or $60 bln in ICICI Bank following on the heels of Chinese and US Top 4 with over $225 bln in assets each

Midcap Select: Opto Circuit ( At home with your heart )

Heart during ventricular diastole.
Image via Wikipedia

The electronic patch device produces the report mailed to the hospital from home after 72 hours. market surveys used by Opto circuit use a $500 mln market size as basis.  This mysense heart device was approved last week.

Wayward/Baseless revenue estimates based on optimistic foretelling by the industry as is the wont in the last 10 years of India’s new product introduction in the west apart the company could definitely do with $ 20 mln in extra Dollar revenue with the currency run expected to continue.

Opto does not have any liabilities in Dollars and may convert this dollar revenue to good profits. Its other product business revenue streams were locked last year in Japan

The company is not getting good yields in some invasive device businesses where it needs more investor partners,and wants to list in the next six months with existing PE partners where it can As told to ETNow (inthe brief) the company wants to roll out further devicess for FDA approval in the next  2 years

Midcap Select: Opto Circuit, Adani Ent

OPTO:

Opto got a first device FDA approval in the USA thrui its Cardiac Science Corp subsidiary. It can now invest in marketing of its retail Wearable Holter Cardiac Monitors

ADANI:

Apart from being close to outbid on the LNG unit in Gujarat Gas (65% stake + 26% open offer = 91.5% of $1

A Meghwal woman in the Hodka village, north of...
Image via Wikipedia

bln+ Valn premium on sale) Adani also commissioned a largest of its kind 40 MW solar plant in Kutch in less than 6 months. Kutch is on the northwest coast of India in Gujarat, also where Adani’s port and Tata’s Mundra power plant are located.

The new on again, off again

Ambani House July 2010
Image by Jay Hariani via Flickr

Happy New Year everyone. As head of the largest falling business empire in market capitalisation has come back from the East and Tata Airlines to my father’s group of companies, I have organised one little reunion with ( no, not my little brother) the one that matters the most tome and I knew of.

Mukesh Ambani has taken up the $250 mln debt ( We are transferring a lot of idiopathic drivel to sanity courses with 1$ =  Rs 60 USDINR=X at 60 will likely overshoot the final average rate for the rupee this year we hope and it also gives us time to think and strategise, to plan the year and get readers more reason to ccontribute to us.

The $250 mln investment will alow Reliance media efforts to come out of the gray zone to some extent with new brands pretty usurius to build even  in Big bad Mumbai. India can do with a strong industrial group coming together and if Mukesh Ambani is able to put his act together after whatever component of the $8.8 bln development costs are paid back to him by DGH/ MOFPET

Mukesh Ambani at the India Economic Summit 2007
Image via Wikipedia

Earlier Ambani in his true bludgeoning self had kicked himself repeatedly with shadow investments in his telcos apart from the misadventures of younger bro’s RCOM expansions and RMEDIA expansions in at best shady ventrues without admissions or taints of corp governance and administration, easily run from the BErmudas if so willed. Mr Mumbai Indian in the meantime has been singularly helpin gthe banking sector avoid too much correction in India during the bear run, absorbing more Bear points than a Canadian grizzly bear on each rough day at the markets.

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.

India Infrastructure: Tax Free Bonds from NHAI

Detailed map of Indian national highways.
Image via Wikipedia

NHAI has 70,000 kms of highways to be awarded under the National Highways Authority of India umbrella, targetting progress of 15 kms per day by end March 2013 (FY 2013)

NHAI avers that to reach the target of 20 kms per day, it needs to have 20000 kms or 30% of its inventory awarded. For FY 12 they have awarded 4,300kms projects. The company is raising $1 bln with bonds of which 40% is reserved for Institutions and 30% for HNIs. 15 year, and 10 years bonds yield 12.45 and 12.3%  (8.3% and 8.2% coupons) NHAI puts up the public portion of the funding of the highway and retains a 100% oversubscription ( likely institutional) for its 25% share of any project(tentative)

NHAI already has operational projects of nearly $800mln revenues and has recd $400 mln this year as premium from 19 projects

No Welcome for “Global investing” from India

A good reason why everyone is more bearish on India as is evident is state interactions but more so in

International Finance Centre : Hong Kong
Image by AraiGodai via Flickr

deeper discussions and transations in global markets, is that India did not support any of the global sentiments in the last 4 years. While Global FII stance was a little “dumb” in their understanding of a different culture, they did not get any returns on their efforts for which they could come back with a bigger wallet. Indian institutions were hardly material in their global concerns and while this made India a haven, it did not improve any currency flows from and to the nation’s markets

Currency and stock and bond asset trades on the long side, could not even engender a higher allocation for India in global Asia funds as the secular growth promise was not backed up with vcolumes of business. On the global trade, India investors were hardly visible globally and even domestically their volumes spoke of their own limitations in domestic and international markets with the rupee losing its sheen as the last backers turned away three months back after the lack of interest glowed in the dark.

China on the other hand has put trillions in the global market in the last few months, Brazil has exposed itself by trying to invest its savings in the European crisis. We need not be Brazil definitely, but we will not be able to put up a solitary “this is not going to work stance” on the global bankers next time. Global Bankers , having been caught with incomplete logic and unable to fidnd a schmoo in Asia have been withdrawing to their shells as they figure out their next move, but that also means that india has to jump a negative dissociation into playing a significant part as the next upmove centerd around Asia, still needs those global funds of choice, who in turn need to know that their undestanding is better than “the rest”

We have to design a market set,, not just conditions favorable to them, but distinctly designed trades that give them leverage on their trade and that they design for their institutional and private/corporate clients

Axis Bank to aim for 1 million cardmembers

Axis continues its late thrust with tied cross selling from deposit desks / relationshi p managers at its retail branches ans India gets into the act for increasing the unsecured (credit card ) loans portfolio. In the US also with regulations well in place, banks have started wooing consumers fed up of retail charges on debit cards etc to new credit cards. Axis Bank plans to explode on card member enrolment even as ICICI Bank and HDFC Bank work with a smaller 600k members each and State Bank of India even smaller at 400k . 

Since October Debit Card spending has shown a higher rise in India as credit card spending though bigger by 10 times than 5-debit spending each month stays dull in the new economic ways of the country. US has been growing Auto loans at a good pace month on month however India had ponly one small bump up in November (in both the fortnightly reports of Nov 4 and Nov 18) and may well fall back as banks look at new ways to get back customers that have not returned since the sun went out in September 2008

Happy Thursdays! November buzzes everyone

English: A 2008 Maruti Suzuki Swift Dzire VXi.
Image via Wikipedia

November buzzes everyone, December is too cold

Sun comes out in the East, but the East is all sold!

All the talk of potential markets in retail and consumption, engendering domestic demand ( in China) and even the imminent collapse of Europe ( not just not happening, in danger of engendering imprudent fiscal expenditure by imprudent politicians, just back from the brink) everything’s come to a nought

US is also going to a nought score but after a $52 bln weekend in Non auto sales and another $36 bln in Auto sales for the month of November, it is rather to get on to a nought in all 2011 inventories by January 2012

India is headed to another ground zero right now, even as China starts betting on expansion without getting a jump in domestic demand. One wonders if stock market investors are correct in deriding Divestment thru buybacks and cross holdings mooted by the government arms, One further wonders if india’s aviation industry will ever get to use bankruptcy protection as a strategy as KFA finds another hole to plug, and one wonders if the yields falling to 8.75% being the end of the move in Fixed Income, if the rupee will ever come back to below 50 on the bat

India’s fiscal problems have batted on a high inflation wicket, with 9.39% in CPI in October and a 8% food inflation for the third week running for November 19, Pranab advertising a fall in the price of Onions by 40% and October Export growth and deficit stunted and expanded by OIL and rupee gyrations Non Food inflation is dead in the water ( includes fibers and oil seeds) at 2.5% but Fuel is still 15.5% and Primary Articles a 7.74% lower but by no means a low number

There are a lot of other statistics including M&M’s jump in November sale sto nearly 41k vehicles incl almost 18k passenger vehicles and Maruti’s falling behind the 100k in Sales despite there being no strike at its Haryana plants and they will all come in due course.

At Happy Thursdays suffice it to say that November was good to pass on for the results showing for any government or corporate but there have been good signs for growth, with Europe solved along expected lines, banks at an all time low globally and the Nifty 4950 a good time to go short on everything, always a better feeling once you decline to wait 10 years for the pay cheque.

China’s landing will not be hard at all, watch for the detailed analysis on advantages.us, Airlines will not fade away   with US American Air taking a 18 month vacation to recuperate with new pricing and new supplier and cost agreements a good example of the new strategies discovered in this new millennium, the other – central bank pay cheques for every citizen.

INDIA Q2 GDP 6.9%, First Half GDP growth 7.3%

FINANCIAL SERVICES CENTRE
Image by infomatique via Flickr

A Q2 GDP growth in Services of 9.3% led by Transportation and Hotels  (Travel) growth of 9.9% (Q1: 13.5%) and Financial Services of 10.5% as well anchored expectations of growth in the future on Services itself. While industrial production was 3.2% in line with IIP estimates, construction was stable at 4.3% and Capital goods though lower still grew, manufacturing was a low 2.7% growth (Q1: 2.9%) and agriculture was not that far from the 3% mark either.

Interest rate environment is hardly going to get a reprieve in the stretched liquidity conditions as only money investments seem to be trending to output. The social services growth of 6.6% is also good and as spending in a challenged fisc environment barely going o budgeted lines, this is good for the welfare economy

Unfortunate noises on GST, DTC and now retail and aviation FDI show more challenges even as FDI for the first half has climbed to a comfortable $20 bln with state deficits unlikely to be met by service tax collections alone and government spending programs will now have a coordinated effort on increasing yields in the fixed income markets

Q4 growth will be more of the “shock and awe” variety with dull business in Q3 and Q4 a matter of fact. Top line sales in the US in Q4 (December) is a tough 3%and a similar crunch will travel American to India as well, unhindered by hitherto 20% topline growth beyond what could happen till here

Till now Corporate growth both in India and the USA was leading growth on the ground and while in the US it could have continued without growth in GDP in India loss in topline after mining contraction and basic inputs settle down would correspondingly now impact the Services growth where new orders have been drawing a blank since September, though India is still sitting on an expanding Services sector esp in Travel , Utilities and Financial Services and that could pull us past the magical 7% mark for the full year. Utilities ( not counted in Services in the GDP) grew by 9.8% in line with other travel and Finance, Insurance and real estate services

Q4 growth will be more of the “shock and awe” variety with dull business in Q3 and Q4 a matter of fact. Top line sales in the US in Q4 (December) is a tough 3%and a similar crunch will travel American to India as well, unhindered by hitherto 20% topline growth beyond what could happen till here

Revisions in the GDP basket have been made from this quarter, GDP deflator at 8.8% Cap Goods weighted to 17% from 31% and other changes driving Q@ 2010 to 8.4% from 8.9% else the Q2 2011 numbers would have been closer to 6% (6.4%, TV18)

Indian Private Banks : A global mid-market bonanza

The Bombay Stock Exchange, in Mumbai, is Asia'...
Image via Wikipedia

A sea change

The global credit markets are no longer a quest for safe haven nor are they any longer carrying any lesser risk premium than the equity markets. While global correlation stepped up in the last few months in equities, it has increeeasingly become tied at the bone to moves in the fixed income markets with terms like sovereign risk or spreads between sovereign and corporate risk making a good hot fudge and no business.

Opportunity for Indian Bankers

Indian Private sector banks have long struggled in the international arena but despite foreign competition in structured finance and leverage products and a norma regulator-local bank close relationship in USA and Europe have ventured out and established foreign branches in 5 continents. While the earlier propensity for choosing non resident indian customers for credit and deposit products , the current opportunities in Transaction banking globally and their comfortable liquidity position are the right fits for a global custom. While they will have to start out by buying foreign credit portfolios as customers are equally choosy in these uncertain conditions and the banks must choose quality credit.

The quantitative leverage in terms of Tier I Capital of 11.5% and Capital raitios of 18-20% for ICICI Bank and HDFC Bank would be wasted on Indian credit as quality borrowers are not available in the local market and public sector bnanks already carry nearly 66% of the share of business, ICICI Banka nd HDFC Bank contributing to a 30% share of Indian credit with Axis Bank

Though a much more detailed analysis is planned, this much is beyond doubt and not much in terms of options is available to Indian players, India’s tiered international access in banking and insurance having long created untenable costs in their being branded as risk averse and or market unfriendly in inter bank markets unnecessarily

THIS IS A PRELIMINARY DRAFT

The bitter pill for Indian Private Banks

India’s Forexonomics ensure that india’s capital and outward ambitions automatically make its best large cap efforts look like mid market plays for the global audience. A bitter pill to swallow but one India and I myself among others of mine and the next two generations have long resisted. The behemoth of an ICICI Bank or that of HDFC Bank, being from Asia have long been identified as new players in the global arena and because of risk parameters self defined, they are yet to use their international businesses to extend credit to international companies, not that many quality businesses would approach them for syndication either.

Having all the research time I need at my disposal though

Rupee Impact: Rupee Turnaround

While we have already discussed and the story of Forex losses for Indian corporates is ongoing given the 15% correction in Rupee to its lowest levels in November alone, the rupee has already started its climb back, not as a intra day reaction but as a secular move as governments realise the fragility of the Euro albeitly slowly, and the Europeans battle with an extended low period for manufacturing

The resulting Euro weakness eases the pressure on

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the rupee which should anyway never have been an issue to dollar’s supremacy in the last 3 months whence despite low trade flows it corrected under sharp shorting by traders as the unlikeliness of fiscal deficit coming near targets or trade and revenue deficits being under control was made clear here.

The Dollar may continue strongly however but election years may limit the trend for America as well despite the easing of US oil supply as WTI instead of slimming prices is on a b inge to catch up with Brent more than halfway as prices converge

Indian IT is an immediate loser in the resulting investment interests in India as gfrowth in retail and infrastructure takes center stage Consumer Discretionary businesses may be excluded bu tthe Indian consumption story is doing great esp as more urban influencers dedicate a higher 20%-50% of their disposable spend to entertainment and “going out”, eating out at an all time high despite the high food inflation figures Of course supermarket outings continue to masquerade as non TV entertainment for most couples

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Rupee Impact: ECB & FCCB, repayment due 2012/3

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From a FC  article of two weeks vintage, it becomes clear that not all the $10 bln FCCB debt holders in India ( FC says $8.5 bln outstanding) including Power sector projects, Kingfisher and the others like GMR Infra will be lost when interest payments and outstanding debt eat into their profits as FCCB / ECB debt holders contemplate the sharp fall in the Rupee. From 52.4 right now  which is beyond the March 2009 lows, the rupee can probably not find a range till 55 with many caught  off guard by the pace at which rupee positions had to be liquidated in the market,. Lets hope SCB is also trading the new trend in profits since October 2011.

The 22% fall in the markets this year may see a further breach though the morning’s signs of trying the 4700 levels are encouraging for a falling only market trend. The ECB debt holders have already reported large 300-500 crore losses on their mark to market of Debt in the September quarter, but the silver lining is that players like Reliance Power have actually repaid $300 mln in October itself. The FCCB holders will be asking these companies to pay out on their ECB/FCCB in 2012 alongwith a host of other companies to the tune of $2 bln saving them the atrocities of the currency movement likely to continue in the future right now for the next 6 months given the surprise and the pace of the downward correction this month. Those at extreme risk are the corporates raising fresh “cheap” external debt in October to $2.36 bln incl. GSPC, Mundra Ports and IDFC.

 

FCCB vs ECB vs Rupee

The overall External Corporate Debt for Indian companies has grown to $30 bln in 2011 till date from just $10 bln last year in 2010 as per an ET report. Most of this addition is however on the short term side and many of the FCCBs which are 1/3 of the Dollar/Euro loan folio are due for conversion by 2012/201 when they will be called by lenders and if repaid as is likely in moist cases, they will not present a problem. The last crop of borrowers had a very different set  of objectives and the problem is unlikely to crop up again as not many envisage default or rollover and when given a chance will repay the loans to cut their losses as borrowing costs of 8-11% a full 200-300 basis points ahead of domestic costs get negated by he 15% adverrse movement in the exchange rate for the rupee (USDINR=X)

Some examples of smaller midcaps who issued high conversion price debt 5 years back like KSL, Sintex, Clearwater Capital for Kamat Hotels have been having much more limited success with resolving with either due repayment in May 2012 (KSL) or conversion approved by lender to 24.5% stake with promoter majority intact in Clearwater case and zenith and then Sintex expected to default after taking a 40 cr hit on earnings (INR 400 mln per GS analysis)

IMPORTS ARE UNHEDGED, EXPORTS HEDGED

The problem is that 2 in 3 importers are not hedged on their position and likewise the small advantage is that IT companies unhedged on the Dollars earnings and Gems exporters who paid for their imports in Cash are going to add to cash profits to the extent of at least 10% of the 14% movement in the Rupee since July and veven more if the rupee tries to get to 55 quickly

The inflation impact of the rupee depreciation will be hard and fast with Oil holding steady , All in all an impact

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of more than 20% of earnings for those unable to liquidate the external debt on their balance sheets. But new borrowings have been short term heavy in 2011 and those will be purged by 2012 with a 20% of debt position at risk of loss on the interim results / FY2012. Infy has also degraded earnings despite the uptick claimed mostly by unhedged Mid caps and HCL Tech is a big loser as well, with hedging strategies turning upside down and Treasuries sitting on the old ones.

Bank Results Season: HDFC Bank showcases awesome retail growth

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With deposits increasing 9% over the June quarter and Savings accounts increasing 6% year n year of the total 18% growth in Deposits, HDFC Bank did well to run in to September end with a NIM of 4.1%. Advances have grown by 25% from September 2010, for Balance sheet size increase of 20% based on retail loans growth of 30%

The Bank has proved again that efficient management can still help it scale its mature management model as Net NPAs remained a low 0.2% of its Net Advances. and Capital Adequacy also remained at 16% and 11.5% for overall and Tier I based on the current Basel norms in India. India’ s breed of banks continue to grow on equity infusions than a hankering for Tier II capital and thus the bank sizes are inherently not comparable in size to those in China and the USA.

The bank increased PAT to a humongous INR 12 bln ( INR 1199 crores ) or $240 mln for a $1 bln runrate in FY2012 total Balance Sheet assets now exceed INR 3 Tln against INR 8 Tln for SBI and INR 2.5 Tln for ICICI Bank

Advances rose to Rs 189,917 crores or $38 bln and deposits outgrew past the $40 bln watermark More details would be apparent in our series after ICICI Bank results come out at the end of the month and HDFC bank results presentation is formally created/shared for the bank

Advances rose to Rs 189,917 crores or $38 bln and deposits outgrew past the $40 bln watermark Fee income was higher by 15% over 2010, at INR 983 crs comparing well with Q1’s 1100 crores. The year on year growth in Topline is the same as for Q1 and profits are up nearly 4% from June Other Income also grew more than 8% as Deposits grew 9% from June 2011 keeping the CASA healthy at 47.1% ( CASA had reached 49% last year)

Net Interest Income rose above expectations to cross INR 3000 crores rising less than 10% QOQ from June 2011 Loan provisions were 393 crores or $78 mln a mere 12% of the NII and the Cost Income Ratio was less than 49%

India’s Grand Design? or just a Maha – myth

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There’s a brilliant analysis by  Gayatri Nayak, in the Economic Times today. Brilliant because that is something in plain data and in plain sight what every Corporate indian and even every Indian citizen otherwise or any other species observing India on the World stage wonders. We are the I in BRIC like the I in Team, we are the I in interest rates when the world is reducing them with alacrity to avoid a depression. Our oil still costs a $110 a barrel, 2 of the BRIC nations almost get it virtually free from their own energy resources, the third and the first citizen in every economic miracle now is China.  even if everything in the Local Infrastructure run for China collapses, the 25% LGFV default will just reduce its growth to 0 when it is going through its slowest phase in manufacturing. nary a hope of a recession. And there the similarity with India ends, but with others it has much more in terms of dependence on commodities, energy, and hot money flow magnitudes that just do not compare with the rupee trading at its lowest.

Read the ET article here: http://economictimes.indiatimes.com/money-banking/with-high-inflation-and-weak-currency-india-not-like-other-bric-countries/articleshow/10060355.cms


The foremost problem is the speed at which the prices are rising — from assets to commodities to manufacturing to services. This could deal a long-term blow to businesses, making them unviable. Prices have been gaining more than 8% for more than a year now. The main reason for the fall in profitability at companies is rising input prices and not finance charges as it is made out to be.

“India is less integrated with the global economy” was the argument then. While it may still be true when compared with many Asian emerging economies, this advantage has narrowed down over the years. While the overseas debt has gone up to $306 billion at the end of March 2011 from $221 billion at the end of March 2008, the cushion of foreign exchange reserves went down to $305 billion from $310 billion over the same period.

As far as decoupling is concerned, the bottom is the same for everyone but thence everyone of the global economies from the G7 to the G20 to even Mongolia would have decoupled on the way up . The great contrast in each competitive resource advantage and each strategy in Brazil, China, USA and Europe will determine very different trajectories of growth seen and supported in the Financial markets.

At stake is the order of magnitude of investment and infrastructure which others have harnessed earlier than India. But while the others may be volatile in responding to global stresses, India just becomes a sub standard risk to carry without the heat of a growth running up that order of magnitude. Others have much more command and control mechanisms as witnessed in Turkey and China, to ensure transmission of policy do’s and don’ts. If we do, it stays confined to one single Corporate group or region The regional imbalances are much greater in China and Russia, even Brazil and the smaller economies are exclusively better risks for the global investor because they are entirely dependent on that investment and deliver  a bang for the buck like Coal in indonesia and iron ore in Mongolia, but smehow that focus continues to deliver a faster sustainable growth while our discussion of imbalances makes evryone a victim in the end?

We could very easily be at the same stage as China if we had better transmission of policy cash and of policy mechanism to channel the growth. We may still be doing much more for our poor than China which has apparently been focussed on just the coastal “districts” ( urban conglomerates) that were already trading with Hongkong and the rest orf the world. But what we miss is the global demand or investor interest which cannot be just delivered to those shouting from the rooftops or those taking to the streets by fast and by suicides.

An administered rate of exchange with 10 rupees to the Dollar can bring it though. It will bring into focus our strategic decisions and investment in growth to a direct returns comparision with global investments. It is also the rate at which PPP trades for India to the Dollar. And it is probably the singular reason  why no one bothers to hear us on the table or give us preference or deference in trade.

Probably why we are so happy at rupee depreciation so we can get more value for our immediate quarter from IT exports when export growth in cotton, tea and even coffee and oil could mean so much more to us. In non It exports we will still remain satisfied with 2 – 3 million tonnes of Rice, wheat, Onion and some other crops but we remain the top 4 producers of those and falling behind every year.

Probably our priorities for infrastructure investment also need that push to file up behind the Exports doing the best and easily sustainable as in agri-commodities and gems and Jewelry

but that is the cliched argument no one has acitoned for the last 60 years. never.

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Happy Thursdays! The India June Reports on inflation and expectations

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with the Friday tray of goodies gone..diesel and LPG are upgraded to almost profitable for OMCs. India inc is on a roll waiting for the fuel inflation to build up in the July treports. Stock market volumes across India, US, China and elsewhere have been down by 10-30% ( in the US NYSE now trades 17 bln shares a day) . However, the commodity prices going down have helped the cause of investors vis a vis inflation hawks and the market is showing a lot of skin and a fresh round of global FII recommendations for the next half of the year in India

Last year around the same time, we had taken up increases in the price of petrol and the cascading effect on inflation was pretty tough scare for India Inc. This time Diesel is even more directly linked to input prices thru freight but everyone would be happy if the RBI kept raising rates allowing a sneak vision of even a 20000 target for Sensex. But I would not be fooled with food inflation still 7.7%, fuels still 13% (before the impact of 5-10% hikes on Friday) and inflation still 9% for India Inc (week ended June 18, 2011)

Also, it was great listening to Wilbur Ross on the differences between European and American Banks , the critical being that Our credit deposit ratios never exceed 75-80% unlike Europeans which thrive on 120-160% Credit Deposit ratios but Cost Income ratios are intact at less than 60% ( Of course that does not include global survivors like HSBC and StanC)

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Trade Deficit. Another scary 2011 ride!

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India’s trade deficit was $9 bln in April last year. This year almost $9 bln of gold imported in the month of May is itself almost half of our annual requirement of gold. Thus with Indians actively hedging with gold and stocks down for time to come, the larger trade deficit could continue for another couple of months. With the import bill at $40.9 billion for the month, our deficit is running at an average almost equal to our exports just two years ago at $15 bln for May 11.

Exports are good but still not up for a monthly comparison as Mar 2011 was exceptionally high coming in a good year for exports. However Exports at $26 bln grew 56% year on year. Imports also rose more than 50% at $41 bln with Oil only growing 12%

The disinterest in India is hard to miss | Advantage Research

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Though one may dare say that it was clear as early as late 2009 when the Bull run had already started but Quality FIIs had not planned anything for India, India has long-lived with the notion that though it might grow, not many investors are ready to let it stand up to them as its monetary mechanics don’t match big bully China but still are not as pliable as rent driven Mexico or squeaky clean Chile and in Asia, the Nams and the Bangladeshs. We ran through two great Sensex upticks fueled by a smattering of FDI cream and mostly Domestic investment good for at least 20% of GDP into the stock markets. We are also not great candidates for hot money but still the last quick bull strapping of the markets happened in March on $1 billion and three days of reactions got it down to worse with the same amount lost.

Now in one day of trading we have chalked up another $500 million and talks of support at the more comfortable 5500-5600 levels. Though short interest might want a stable target of even 5300 and noises have been heard baying for more, it is not in the nature of the Indian markets to respond to that extent as Central Bank policies, protection and liberalisation mean only micro-trend formation and are unable to either destroy any value motive in the current valuations or grow into a bigger superpower, though even now to that there is a studied upward bias in India’s fortunes and even stripped of hope one is staring at multiple upward re-ratings and higher weights for much neglected India.

Till that comes, none of us are losing sleep over it, resulting in keeping us busy on the treadmill running the status quo without much traction, repeating micro-cycles and even bigger trends since that day in September 2008 when the world turned on its head and cemented the plan to let growth lead in a very few years. that also does not mean there has been any reduction in the ranks of EM haters and that Democrat or Republican US policy continues to favor more tribal neighbours like Pakistan and continue to disfavor higher value relationships with India in Defence with a non NATO, non militant national government with an independent state policy.  with all its nice sounding tinges that is the same list of limitations in the reforms statute and the growth conscripts since the nineties almost 25 years back when we started a journey fueled by investment and reform pain.

India Infrastructure Series: IDFC prospers in the new Economy :: 2011 results update

(Press Con/Analysts) Profits in the core business grew 40% with loan book now INR 480 bln ($12 bln) at 50% higher, the support from fee based businesses have marginally declined as AUMs in the AMC decreased in FI outages and falling NAVs.

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