The Newest

India Morning Report: New Private Banks circa 2013 and a Fiscal Responsibility Map for the Republic

0

Banks start the week with the right foot forward as New Bank guidelines are released well in time . New banks would have to hold 25% of their branches in rural areas and existing NBFCs would be able to convert their Tier II and rural branches into bank branches without any new RBI approvals. Bank M&A could be the flavor of the year as RBI guidelines suitably condone upper limits for Corporates wishing to enter banking thru wholly owned NOFHCs (Non Operating Financial Holding Companies) including a minimum of 40% ownership of the bank by the NOFHC , less than 5% by NRIs and 49% FDI in the bank. NOFHCs will have to bring the bank co public in three years and bring their stake down to less than 20% in 10 years and 15% in 12 years. The minimum capital required at INR 5 bln and the CAR requirement of 13% ( for each of the financial entities in the NOFHC structure) 

States have unwittingly contributed on the green side of the Fiscal Report for India in FY 2013 as plan expenditure which does include state allocation ( which was likely fully drawn) had been drawn only 56% by December 2013 making likely according to the ET follow up that India will spend less than 90% of the budgeted Plan Expenditure for FY 2013 at INR 4.28 tln. That means Chidambaram is under less er pressure in the last full year budget to be presented by this government and need not hold back investments in 'populism' espoused by Food Security and Employment guarantees safeguarding the few precious investments India has made in social infrastructure though not making it better for sectoral spends on Education Health or reining in higher subsidy expenditure leading to a non plan bill of INR 13.5 tln this fiscal , a three quarters of a trillion more than budgeted.

The $2 bln RBS operation in India is also losing 1000 more employees as Foreign banks get the new ring-fenced structure in India and mull over as the guidelines will also define new approvals for existing banks where guidance is required for exissting bank operations looking to pare expenses in Capital investments in national operations as they struggle with new living wills that decide their winding down of liabilities in case of another global failure. Global banks continue to negotiate for transparency and a level playing field and in the meantime inorganic M&A could possibly not be as discouraged as it was in the past decades. In the meantime most Foreignbanks stick to restricted CIB operations despite holding a full licence

On the budget front, more infraco spending and no new taxes are foretold as India settles in for a recovery with new Capital investment that could also buoy revenues by a good INR 200 bln for each 1% pop in the GDP. Stronger Fisc targets for FY14 and FY15 will be missed again as the markets decide to hedge their bets wwith shorts on Punj Lloyd and Maruti while the Bank Nifty looks to shine the light on market followers and burn a starting point for the post budget rally. 

Posted via email from The India Investment Post

Continue..

Filed Under:

India Morning Report:Global investors may not withdraw from Equities

0

 Twitter's posterous is not quite preposterous its also post post posterous

 

While US tries to balance its Economy after a spate of QE liquidity is seen as injuring fiscal and monetary health, a rise in interest rates in the Economy with or without inflation could do wonders for the paradigm of growth as China and Japan return as investors in US treasuries and 10 year yields rule around 2%. The US economy may not be able to break the limits of a sub 3% growth even if yields spurt in the next few years in the US even as Europe falls back in an extended recession and the South catches up, esp Italy and Spain with imports to offer to the rest of the Economy making a brilliant recovery this 2013


However back in India after the deep cut yesterday, the Economy is very much invested in and FIIs are unlikely to leave this isle of relative prosperity even as the struggle for relevance continues for India Inc and Domestic consumption keeps the beer head on even keel if not frothy. 

Indian currency would have few takers in the rest of this month before the budget speech even though the Cuts in Borrowing would lead to a minor rally from here as the Rupee was anyway unlikely to move below 54.50 levels. Yields at 7.8% are likely to be a defining high instead of the 8% plus seen earlier in 2013 and may creep back from there as Asian investors withdraw from the Global rally but funds flow to India are again unaffected

Markets would choose carefully between equity choices on offer esp as the cut in Private banks by 4-5% brings back another choice of PSU bank investors into those chosen to run with (Investors normally choose to exit than reenter same scrips on a trot) but Energy and even Metals are likely to be in favor with Cement and Sugar returning to Demand pull after a long time and it is likely that Banknifty might still be rerated or reconvened ith a higher private bank weightage in 2013 .New nifty index scrips also seem to have lowered the impact cost for the index trades and higher index liquidity could be critical in roping in new funds for Indian Markets

Again I would still prefer no straddles be bought as they bet the markets will necessarily move and strangles be not capped at 5900 or 5950 esp if your investment is limited to even a few lakhs. Lupin, Stride Arcolabs, Glenmark and Cipla make excellent investments again. ICICI Bank can be accumulated at current levels. IDFC and stolid infracos will lead the new rally movces and it may be soon on budget announcements but that one is a vain hope not worth long term investors' time or money

Posted via email from The India Investment Post

Continue..

Filed Under:

and more..

0

more sectors seem to creep into the equation as the marketstructure gets hijacked by those trying to make it look like the same as a retail investor could do in the fun 60s rolling on the floor...but Power NBFCs led by REC and PFC remain good moves in 2013 and PTC could get a bigger stronger role in the quad with Powergrid unlikely to lose relevance and despite roads being deprioritised, there may be enough speciality infrastructure bids ( I mean ports and urban planning ventures as well as welfare structures for the new deal) to keep all other infra midcaps floating. Also I personally back GMR Infra and Reliance Infra while berating overleveraged pops like even GVK and some mid cap Mumbai Real estate juggalos

Posted via email from The India Investment Post

Continue..

Filed Under:

Morning Trading Strategies (addendum to India Morning Report) : Shortson IDFC and LIC Housing seem...

0

Yesterday's move up was a defining one and is likely to be bet dowwn in today's reaction. Also, infra is likely to be rated down as Election year approaches and India inc battles with inflation. However shorts on larger movers like LIC Housing and IDFC are unlikely to give more than the required minimum in the reaction and remain larger movers on the upside. Also Jp associates as expected followed last eek's DLF into the quagmire of being shortlisted wwithout a salary for the bulls on offer and are unlikely to be further good for more than a 5-10% move down or up. 

Similarily Bharti , another favorite on the downtrade, has already reached barely 300+ levels and may not move. 

However, the loss of control in the Aviation investments being sidled in are a serious issue the market swill discount as Air Asia gets sleepy Tata and Bhatia (mittal in laws) investments and Etihad goes out demanding CEO and COO positions for its investment

Maybe a leg in Pharma before an upmove and that highlights Lupin and Cipla, while OMCs also offer an uptrade and private banks below ING and Indus ind in the pecking order get picked up further on deal buzz (warranted or otherwise) including Karur Vysya Bank, Federal and South Indian Bank all with almost no available float for takeovers or buying of a NBFC to expand footprint
Maruti is still not a blue chip for the Indian Market and Hero and Maruti infact make for a big short i would try as they can be kep t open well into next week a day before budget moves take over

Posted via email from The India Investment Post

Continue..

Filed Under:

India Morning Report: Global investors look to India after India Inc outperforms expectations

0

A quick re-rating of the F&O market in the early trades yesterday meant  that writers of the 6000 call had a hurried exit from trades and very few have tried to cap the maarket already at 6100 or any other digits as the markets actually show signs of a breakout. The low volumes of MCX SX are perhaps an open invitation for the short club to try something faster and tighter in F&O trading on that exchange but with index trading not open yet, it is unlikely to have any impact and in this predominantly Asian leg of the bull tour, it is unlikely they will get past petty strategies to break up the trading interest up while 1 in 3 rating agencies have already fallen into the usual rut of calling for India's derating showing up our lack of faith in India as another 90 days look set to pass without any execution bombs and those analysts and short side traders aree undoubtedly still just waiting for actual policy and roll out execution announcements which can then accordingly be belittled for giving them a leg to stan din the crowded room . Givcen that it is used by most large media as well, the tac has become almost respectable but is painfully obvious and can usually be shot down with larger negative consequences for purveyors like these rating agencies 

However the disconnect between investors, foreign brokerages and domestic traders only joints shows up mercilessly as a red flashing risk factor with domestic traders sticking to corporate governance unfriendly scrips and sectors like fertiliser and sugar before policy announcement or choosing unknown branding successes like Sintex ('pani ki tankiyan jinme jang nahi lagta') for shorts on a stable market suitably gaining strength for a small pre budget week rally

Bajaj FinCos (Bajaj Finance and Bajaj FinServ-insco) came into favor largely yesterday as the banks' tandem with infracos which will lead the new rise of the indian indices has largely been lost with Indian banks ramping up on the strength of the domestic market and their robust balance sheets which will be of use to foreign investors. Infracos led by IDFC have seemingly won a few more partisan traders to their side in this current rally on its trading strengths and while ICICI Bank and IDFC will both rise, PMEAC and RBI favored NBFCs like M&M and Bajaj are more likely to be important investments for the fund hungry infracos and their new leg up post budget. 

Budget announcements have come into play but after the unlikeliness of DTC and GST rollouts has already been debated and the futility of unassigning another INR 100 bln odd to infrastructure and prioritising sub sectors is argued out , mostly there is just a wish that PC succeeds in billing down the fisc and the government borrowing in the coming fiscal as india remains the only big market ready for a rally and global equities get ready for a sharp cut after the first two months of the quarter substantially shored up business volumes and profits at Hedge funds, PE companies (?? we are as much mystified by it ) and Big 4 investment banks . The global Bank rally being another three month away is probably the reason why this cut could become sharper as UK recession and US temepring dowwn of growth at near 2% GDP levels demonise stable markets and the early global moves in the euro give it one high Six flags slide to come down in and Flash PMIs today underline their inability to survive with 20% lower budgets, tough love for banking and devaluation by the yen esp as competition in Capital Goods exports is considered.  

It's sorry, Indian coffee trades down

Currency wars having been a no show given every FM's need to follow in the steps of Japan's Abe sooner than later, Indian currency continues to resist strength on silly excuses woven into the fabric of markets structure as Exports like Coffee suffer a double whammy from India in volumes as production is more than 20% lower and value as indian coffee quality has apparently not registered favor with quality  international buyers. Meanwhile Asian coffee offers hope to Indian exporters as Mustard, palmolein (Crude Palm Oil imports) and nions fall 20%, 33% and 20% respectively to allow CPI and food inflation barometers to cool down or at least not ratchet up the fiscal bill for India Inc. Government borrowing is in control and yields have held at 7.8% desspite the small cut and the unlikely prospects of a cut in the next 6 months

Posted via email from The India Investment Post

Continue..

Filed Under:

India Morning Report: US still refuses visa to Modi, Jet promotes discounting sales

0

If you were among those selling a strangle on network recommendations expecting Nifty to not slip from 5900, you would have realised the folly of undermining your native knowledge of the country's markets with your observations of futility on the range and almost immediately the trappers were in action making the signature comeback in the second half of the session which was fortunately not sharp like the dying minutes. Wealth investors also have much more to punt with structured and naked futures shorted in Oil and event he other base metals as China plateau is defined as was in early 2012 when we were rooting for a China comebacks. However, back in local equities, our credit flows despite retaining a skew to construction and finance companies because of the higher multiple in the factor of productivity are not as lopsided as 50% of all credit as in China and so the slowdown in Credit could still turn higher and is anyway likely to never lose the double digit growth tag.

The 5950 top of a ranged strangle is likely to be the bad bet and further selling of puts as part of the strangle still hike up the naked buying o f naked Nifty longs and apart from the hedges also seem to improve immediate buying sentiment probably better than release of extra margin on the bull prop. Also investors seem to be avoiding Midcap real estate and not all mid cap when making long term commitment to India and while PC may not be able to hold the fisc that strongly, real estate holding dominance in this mature market is more likely to be a reason for a deeper cut and market bulls are active as long as DLF and HDIL/HCC action has faded away ( and like a jaded Beatles tune, the tag is it sure has faded up) 

The market is however ranged on the upside and there is likely to be continued buying at the expense of call writers into the last day as inventory was not very strong into the F&O series in the early part of the month after holding promise. 

Banknifty as we hoped is back in play after removing all the stops anyone might have been holding. The strategy, unquestionably bullish hoever engenders future censure and keeps bears away so does not trap any shorts because of the inordinate time taken by these hedge traders and program traders trying to go deep into 5850 intraa day before coming back. or it might be that there are very few known pockets that are long on the India market given the continuing plateau unable to fall in Asian EMs, China and now inflows targeting Japan. 

Posted via email from The India Investment Post

Continue..

Filed Under:

Advertise