In exits, the Patni exit came after a 10 year wait for a paltry $1.5 bln valuation ( $1.2 bln at Year end exchange rates) The BPO giant Intelenet also found it difficult to close the deal, finally settling for $600 mln for Blackstone's exit by selling tio Serco. Serco has thence not ramped operations in India too much either.

Warburg Pincus made some good profits in its sale of 4% of Kotak mahindra for a good price on the exchanges with $245 mln in its kitty. it still holds another 6% but has exited most of its other investments like Vaibhav Gems and even Max India

As the Indian Telecom story merged int ot he global mainstream saga of despair and degrowth, ChrysCap was able to get out of Idea Cellular, its 2.7 percent stake fetching $170 mln

Last in the list, Siemens had to bide its time for its venture to exit BIAL selling 14% of the airport to ROFR holder GVK after a wait of 3 years for Rs 6.14 bln or $120mln.

Siemens Project Ventures, which typically puts in $130 million-$1.3 billion in a project, has invested in 14 international power plant projects, with an overall capacity of more than 8,000 MW, as well as in three telecommunications projects, two medical centres and an airport, with a cumulative project volume of $10 billion.

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In exits, the Patni exit came after a 10 year wait for a paltry $1.5 bln valuation ( $1.2 bln at Year end exchange rates) The BPO giant Intelenet also found it difficult to close the deal, finally settling for $600 mln for Blackstone's exit by selling tio Serco. Serco has thence not ramped operations in India too much either.

Warburg Pincus made some good profits in its sale of 4% of Kotak mahindra for a good price on the exchanges with $245 mln in its kitty. it still holds another 6% but has exited most of its other investments like Vaibhav Gems and even Max India

As the Indian Telecom story merged int ot he global mainstream saga of despair and degrowth, ChrysCap was able to get out of Idea Cellular, its 2.7 percent stake fetching $170 mln

Last in the list, Siemens had to bide its time for its venture to exit BIAL selling 14% of the airport to ROFR holder GVK after a wait of 3 years for Rs 6.14 bln or $120mln.

Siemens Project Ventures, which typically puts in $130 million-$1.3 billion in a project, has invested in 14 international power plant projects, with an overall capacity of more than 8,000 MW, as well as in three telecommunications projects, two medical centres and an airport, with a cumulative project volume of $10 billion.

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2011 was as much about making business happen as any other year despite deal business going down by 30% to $460 mln in the year in India and as usual we had a consultant reporting on growth from the India corneer of the world in Investment Banking as global focus shifts to fee adviisory business. India's share is a less than 8% of the Asia pie which itself yields a 4 1 mln lower than each corresponding deal in the US on average. US leads in investment banking deals this season as well

The largest component of the deal business in India continued to be Private Equity with VCC listing the Top 5 deals and the Top 5 exits in the big ticket deals that went down. 

Earning nearly $500 mln from fees may be still much lower for investment bankers to satisfy staffing for growth 5 years out esp as the region's deal yields depend on Pe which is currently fighting funding and legal wars in their global franchises as regulations circles around to make it tougher for them to ensure profitability on deals following numerous failures in high fashion and early / blocked exits in existing deals. 

It was especially happy for the bankers and the PE teams for gettin gthrough these deals in 2011

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The FTalphaville team, writes on the general success of bankers to play with derivatives a  s a derivate of our literacy bound skills learnt by the coming generations. With 2 in 3 people in India qualifying as educated, this is just where our brain matter has been applied too. and what Sid Mallya possesses to run Kingfisher after his Father's true legacy In summary what the Flynn score trends over the last few editions show, is that people have been getting better at abstract problem solving, more likely to prefer arcane problems with fuzzy results than disruptive rights or wrongs with every choice

The Flynn effect has always been tinged with mystery. First popularized by the political scientist James Flynn, the effect refers to thewidespread increase in IQ scores over time. … What’s most peculiar is how scores have increased:

1) Scores have increased the most on the problem-solving portion of intelligence tests.

2) Verbal intelligence has remained relatively flat, while non-verbal scores continue to rise.

3) Performance gains have occurred across all age groups.

4) The rise in scores exists primarily on those tests with content that does not appear to be easily learned.

What’s puzzling about this increase in general intelligence is that it appears where we’d least expect it. While one might assume that IQ scores could increase over time in terms of crystallized intelligence — the part of the test that measures particular kinds of knowledge, such as being able to count or vocabulary words — it’s actually increased on measures of fluid intelligence, which is the ability to solve abstract problems.

 

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Air India sat pretty while everyone cried foul on the aviation industry, airlines' stopped pying the gas billa t the airport and while vendors have been paid and /. or prioritised, banks continue to suffer, printing credit lines, much like the Eruopeans without any collateral, reusing old paper and where loans are dead certain to be lost to fantasies, issue preference shares to themselves. They should have been adminstering the airlines in bankruptcy court buit as of now, no leasing arrangement for athe aircraft, no stoppage to airlines expansion and no money to pay salaries, contagion spreading to banks instead of cutting losses. 

A random quote to a ftalphacville post on Flynn scores that also segues to my next post on the general increase in abstraction and problem skills as a way of life. So you know I am not really complaining banks made the deal. Banks should.

We’ve become better at abstract thinking. We don’t have any trouble analysing a financial market that has no physical location, or considering credit exposures to sovereign nations through derivatives contracts. It’s just what we do.

Furthermore, as the ability to think abstractly correlates with intelligence, it becomes a self-reinforcing cycle where the people who are best at such reasoning stay longer in education, and get even better at abstract thinking, becoming even more intelligent… until one day, after many years of study, a good portion of them land in investment banks. So what do you think happens next? To what task is the abstract thinking capability employed?

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As 2012 begins on a low note , market levels are encouraging enough for investors to make a commitment to India for more than a few million and they laso have been able to play the non FII traders in the market who continue to roll over (angel brok) short positions in short of the eternal 4500. Inflation figures were encouraging witha 6 year low on food inflation

Onions were 40% cheaper last week, 60% this week while potatoes are also down 33% as warehouses start collecting stocks and rot starts while waiting for good exports prices. 

Primary inflation came under 3% meraning good numbers for basic goods and primary articles supporting the falling nose of inflation with fuel stubbornly continuing but lower at 14.5%

There have been subtle changes in the Dollar - Euro - Commodities links ( see article ) in this month despite the year end low volumes and lack of interest which evidence a great year for equities from next week! Happy new year,e veryone and thanks for staying around! 

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Japan hardly imports $30 bln annually from India an dis almost entirely dependen to n Chinese imports for its local economy. However it has been developing India with annual Capital investments of INR 90 bln or $2 bln and an almost equal amount of INR 88 bln or another $ 2 bln in development aid this year. 

Japan is providing $4.5 bln in the Delhi Mumbai Industrial Corridor looking a  developing more than 12 new citiies on the route amongside the larger Dedicated Freight Corridor which encompasses the nation across its two legs Delhi - Kolata and Delhi Mumbai,. The Eastern corridor of the DFC itself costs $10 bln while the DMIC is envisaged to cost $90 bln. The freight corridpor speeds up our Logistics gap while the DMIC undertakes urbanisation in new zones to catch up with the China equation

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State Bank of India has nearly 22,000 ATMS and another 5,000 from its associates, ICICI Bank has 7000 ATMS of its own. foreign banks are in fact recognised in many parts of the country by their ATM locations, as the logo and slogan heavy ATM kiosk, though treated by a utility as many creates and builds the bank brand and shows it for reach than the bank.

However, as ATM operations can be more easily run by a third party with the omnipresent Brink's Aryas money truck delivering cash to each machine, bankers have been rooting for a white label ATM operation like the Tower companies in Telecom, with their own revenues and necessitating elimination of free ATM transactions as once the model has been approved, charging fees and paying for the location become mandatory for the consumer and cheaper for the bank

Apart from communalisation of costs to all banks for location , it will also mean that operators charge lesse r fee on a larger base and thus a committee of the MOF has been recommending the deed as public Sector ATMs including those of larger Indian private banks ICICI, Axis and HDFC total nearly 100,000 and probably these few do not want to be caught spending on the brand anymore.

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Indian Media and Entertainment posted a string of positives though listed bullionaires like Eros and PVR continued to struggle to prove their worth on a perceived high cost base, being measured against some unreasonable expectations.

While Ra.One was a blockbuster but fell on being second to Sallu's antics, The Don 2 and Mission Impossible concurrent successes of this month are being compared on equally tenuous marks despite $3 mln of daily business as Indian enterepreneurs in their bid to fund the global majors have set a high watermark for profiting from the success of this entertainment.

To a funny bone it might aseem its corporatisation is a s much a dud as that of Foreign banks like Stanchart to harness the Indian Capital markets, with IDRs that do not have the rights for ibnvestors to enjoy the company's performance.

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Indian Media and Entertainment posted a string of positives though listed bullionaires like Eros and PVR continued to struggle to prove their worth on a perceived high cost base, being measured against some unreasonable expecgtations. While Ra.One was a blockbuster but fell on being second to Sallu's antics, The Don 2 and Mission Impossible concurrent successes of this month are being compared on equally tenuous marks despite $3 mln of daily business as Indian enterepreneurs in their bid to fund the global majors have set a high watermark for profitiong from the success of this entertainment. To a funny bone it might aseem its corporatisation is a s much a dud as that of Foreign banks like Stanchart to harness the Indian Capital markets, with IDRs that do not have the rights for ibnvestors to enjoy the company's performance.

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P&G India added A&M expenses to 37% of Sales in the period to March 2011 as it plans a new look entry into its strong product categories in the Indian market, trying to take out the resurgent consumer staples major Unilever. P&G India despite commitments to India and China has revenues below $1 bln in the Calendar 2011 as well after scoring $710 mln in March 2011 

Unilever has managed wafer thin margins on its exteneded distribution network as it keeps marketing spends below 20% while ITC has been able to build 3-4 $1 bln brands in the Indian retail lifetyle markets and Ashirvad in Consumer staples

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SEBI seems to have used investigations by Bloomberg UTV in cracking down on Almondz, Atherstone and PNB Invest alongwith 7 recent IPO companies like Bharatiya Global, Tijaria Polypipes, Onelife, Brooks Labs and PG Electroplast. These bankers and IPO companies are banned for 3 years from approaching the Capital Markets

These companies are charged with souping up DRHP disclosures sacrificing accuracy, misleading investors as well as using ICD routes to divert fiunds to operators for driving post IPO prices on the bourses from the issue proceeds itself. (earlier version vanilla bridge loans based on IPO value used by brokers and bankers) 

According to B-UTV's Exposed, 30 of 37 issues this year were trading below par

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State Bank of India finally seems to have succeeded in its request for Capital from the government but it is not clear whether the approval for $1.2 bln worth will be part of new announcement sin the FY2013 budget or otherwise as the banks is reeling from a shortage , CAR in single digits and NPAs rising

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The fortnight ended December 16 data shows expansion in credit continues at much the same pace reaching INR 4.26 Tln or $82bln approx. having started a w-o-w uptrend since the last week of October. Deposits though shrunk by INR 365 bln, a large sum, even as Advance Tax payments for Ecember were due. Rates of Savings and NRE deposits have been increased over this last week of the year with ICICI, IDBI joining ranks at a 9.25% NRE rate

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RBI is bringing another $2.4 bln or INR 12,000 crore auction this week on Dec 30 because of a missed date on Nov 9. Liquidity operations thus have totalled INR 480 bln or $ 9 bln+ and a CRR cut of 0.5% would have released INR 20,000 crores or INR 200 bln even if neglecting 1 in 5 funds quantum as sticky to SLR cushions and CRR cushions bank prefer instead of credit. If further liquidity is indeed required, ban economist desks already expect that to come via the CRR route.

Government has accounted for liquidity thru buying back the 5, 15 and 20 yr term securitiesand rates have remained higher after the dip to 8.4% over the lower growth. According to Shubhda from Yes, the 13% leakage in cash and the Inr 90 bln in Sept and Oct FX intervention would have caused some of the current liquidity squeeze. 

Funnily enough the expected fiscaldeficit creep and rupee falling to 55/58 could see government borrowing going up apart from the INR 500 bln yet with auctions in Jan Feb as well as March. A raw estimate of the creep on Fisc, gives INR 500 bln in Food and Fertiliser subsidies or 0.8% and INR 750 bln in other including INR 450 bln from fuel subsidies already found and agreed. leading to a creep of upto 2%. The hole will be plugged by a PSE cross holdings and using of PSE cash of 0.75% of GDP ( based on GDP = INR 55 tln = $ 1.1 tln )

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It is clear that new found love for CS has empowere India's move into the mainstream Asian trading markets though RBI has made it clear it would not allow NBFCs to write CDS contracts or short any "default" underwritten by a CDS contract. This should be direct Net worth criteria instead of class as banks or companies allowing treasuries to play with both sides of the CDS contract. CDS spreads and profits on trade rise when default rating risk increases.

A writer gains when the country's / corporates's default rating risk is seen to increase, just like a  buyer or insurer gains when default risk is lowered

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The bigger foreign banks in the country, SCB and HSBC have not activated new branches since 2009 and hold 94 and 50 branches respectively. Even as equity marets get bullish and a return to expansionaory policy is considered byt he Central bank, rate cuts following ina few months, not many foreign operations are considering a retail presence and growth in India since 2007 when DBS and Barclays showed interst and since have not expanded after 2 branches apiece in 2010. 

This year, with no new branches the 5 licenses given will take SCB's strength to 97 and Deutsche Bank to 17 with additions in Ahmedabad and Surat

Global players hold 7% of the assets in the Indian market, HSBC leading with $6bln in assets

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India has long relied on welfare funding and low cost development funding from non World Bank and IMF sources like Sweden and UK for its welfare, health and construction / infrastructure spending, relying almost totally on the same during the phase China over sped on infrastructure to create highly leveraged municipals and new ghost towns where no migrants moved from rural areas

The entire DMIC project is highly leveraged on funding by Japan to the extent of more than $ 4 bln, and European counterparts have been fallin gbehind because of auditing concerns and local political maelstroms even before the crisis. 

More than 60% of China's sovereign investments from one of its 3 funds is invested internationally. That means China already has $360 bln in investments including equities like McDonalds and Coke which are doing well in China itself

UK, while cutting back on its development aid commitments to India, has committed for the next 4 years channeling the $2 bln program budgeted at $420 mln a year thru its SWF the Commonwealth Development Corporation fund of dunds for upto $200 mln a year or half its 5 year commitment. CDC being a SWF will be answerable to U staeholders on safeguarding of UK taxpayers' investment and return parameters and thus will go further to grow UK's debilitated international franchise as it has all but walked out on the Euro after 20 years. Germany gets 60% of its market for exports of machinery and consumer goods from within the Eurozone , a little ahead of UK and France

The reorientation of the aid as been summarily done in London as Tory MPs do not think a nation disqualified from IMF development aid parameters should qualify for developmental aid

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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, are some challenges dogging india's $2.5 tln infra financing story.

Of the $1 Tln expected from the 12th yr plan in spending on infrastructure, 50% is expected from private players. Already markets have been punishing operationally efficient players like Reliance ?infrastructure, GMR and GVK for the large scale perception fof a bad debt industry pampered conveniently by bans. Of the incremental $4 bln lending by banks this year to real estate companies, two thirds is made to unlisted real estate companies for new projects as listed companies battle with public debates on their untenable debt and costs of servicing ECB and financial sell offs by DLF and others to get the balance sheet good for inspection. Whether listed or unlisted, project delays and NPA qualification is the same and more than 10$% of this new $4 bln or $1.6 tln dill date are likely to become NPAs soon on real estate projects waiting for better climes in consumer spending on the housing and durables segments

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

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

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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

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Muthoot bonds for 2, 3 and 5 yr tenures reflect the half a dozen issuers who appreciate the value of clean retail funds offering paper at less thnan 14%.  It is unsecured but the company has good PE backing and says it has 5.5. mln gold account holders to whic it lends at less than 16% may be going to 20%+ now

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The latest being the HDFC Bank announcement asking for NRE Deposits ata "all new 9% rate". May be we can also ask them to park money in good old savings accounts now back in Desh? Anyway banks do benefit if deposits at 9% are available. My guess is depositors are holding out, first for counter offers from other banks and for others, the next upward revision..9% seems like a bargain right now though it is way ahead of the earlier marks for NRE deposits

The remittance business to India was $58 bln in 2011 

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In the US markets this picture was relatively common  a slending banks swept up securities to collateral on margin for derivatives exposure. Whatever other reasons be in pace, Indian banks are finding the 9.5% Marginal standing Facility ( Marginal Stability Facility) window of the rBI attractive for borrowing upto $400 mln overnight and that could actually be a healthy precursor to rate cuts that we need

RBI is said to be concerned about the $30 bln deficit in the inter bank market but that is likely an adjustment figure for tomorrows buy back auction and the deficit is likely much larger which if it breaks out after the auction within the later 10-14  days will be really "risky business"

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Bank of America on the other side and lately some banks here have started looking happier only on days when the market has crashed beyond expectations, making these a regular weekly feature of the market. Though Bank of america has been outwitted by the Euro and will bleed for more time, the india markets and its new found drerivatives losses will bottom out in the next 200 Nifty points as new suspicions emerge on prop trading desks at the end of the local's route in Mumbai. 

Food inflation plopped to below 2% this week and I suspect more higher numbers are stillleft in urban consumption items like fruits and vegetables in that even as the food subsidy bill gets closer to becoming a law. RBI's FSR was also lined by ratatouille chameli and tom cruise bacchchan as having brought lasting relief in real estate seen by a three hour long rally in DLF, Unitech and HDIL among other strange asteroid fragments in the troposphere currently. 

The Air train between Delhi and Mumbai saw Cyrus Mistry in industrial grade discuss throwing with our own MOFCOM with Ratan Tata fadng away in another 12 months, discussions on VSNL land patying up taxes becoming more insistent ( oops, its Tata comm now) 

The end ( of the bear rally) is near in India's case and my portfolio of trading plus investing is usually a good leading indicator ( from lounging on the sofa awaiting employment) 

Our post on the bond Report will show banks using the MSF and yields staying down as the last experts get entrapped into thinking the Bear has finally come to India, Asia being the land of the eternal Bull panda.

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RBI suspects derivatives action at India's private banks may have ramped up in unknown exposure , likely as it proceeds to find out the exact proportions of derivatives profits and exposures in prop trading at ICICI banka nd other aggressive partcipants. the other parts of the FSR released today are the usual continuing challenge fron the currency failure in terms of imported inflation and the rising / doubling of PSE NPAs by 2013. 

Yes Bank has upped savings  rate to 7% and with equities out of action and sub continent deal movement slow to catch the Santa fever Q3 and Q4 are going to be a damp squib. Yes Bank also rerports a 30% increrase in Savings account cash with the bank at the ealier 6% rate fromt he rate deregulation in August.

The 4th edition of the FSR sees the Financial stability as three pillars of Macro stability and market stability apart from Banking stability,. while we grew as a nation when we proved the third last pillaer from the 25% share of private and foreign banks, the macro and maret stability are suspect for 2012 as a whole and the Financial stability quotient remains stable because of the banks at a little above 0.4%.

Asia has shown itself suspect to the European crisis and India has not been able to become a benefactor for our such neighbours or those in Norrth Asia, rather constricting ourselves into a bind with below 7% growth and declines in CRAR despite lower and uneasier credit growth with upward sloping NPAs ridden by the late systemisation initiative at our public sector monolith

India itself has seen the risky trade in real estate and unsecured loans cross up against declining credit to industry without gains to welfare and infrastructure we had strived to.

There has been considerable deterioration between March 2011 and September 2011 in Macro stability which is the challenge as the banking sector has grown amid the challenges building more volume in RTGS and other payment systems and growth in NBFC with stable capital ratios albeit with bank systemn credit

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the headlines might throw you off as being in tune with Global markets where bans are bleeding but as the dealstop gets hot, many i bankers are moving around without CS or UBS in the play. HSBC has operationalised job cuts for 20% of its workforce primarily from the unsecured loans and retail business, unliely to be account staff or other branch front office personnel. 12000 jobs are being cvut even as there is no public news from rBI or the banks on the HSBC RBS private bank merger

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RBI announced its next OMO buybacks on Dec 16 for friday. It will be pushing out liquidity on 6, 10, 12 and 17 year tenure securities(MC) The securities all matue in different months but this means the RBI operational data finds these securities to be suitable for pushing out liquidity which th eyield is above 9.3% in the overnight market..The nearly $2 bln compares with ECB's current Euro 489 bln operation this week,

ECB is lending on the 3 year tenure at 1%. Euro is already up at 1.30 since late on Monday and holding and this is a good window for the RBI to sneak in cash The modus operandi of these auctions is liable to change to more T bills if you consider theoretical stability - interbank crunch to 90 day RBI bills..? 

The 6,10, 12, 17 term ssecurities buyback would keep these tenures in demand so Duration of Corp treasury portfolios and funds is unlikely to come down

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There you go , a paranoid market...looking for a marker to peg a free trade for its small pool of benefactors. Why owould you jump 5% back in the same day with conditions as abominal and the surprise that youa re about to improve into a better performer amongst others not following? news flow had probably dictated its last trend in 2011 the way market has split ranks after its pet FIIs derated it. Or probably its just a wild ride till you find a good place for a new short on the banks and the Bank Nifty which is on its way to become the most trade contract with the banks such a repository of value for a 75+ growth nation that is "obviously going to bottom out with this under 7% performanc e in the December quarter" The only problem is this time the Dollar is probably on its way to 65 before Oil thinks of dropping below 90 and that is a nation held hostage...

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While india's central bank has been rolling out reforms at a slow pace even without significant market acceptance as desired, from Fixed ?income Derivatives to the current CDS approvals, it has also been concurrently cajoling foreign banks to stop overextending non funded lines and off balance sheet exposure among other actions that are a sure sign of a shallow market on ransom for each Golden Dollar that continues to hold us enthralled because of the assymetrical flows.

The last in this series of a dissatisfied regulator was a series of penalties imposed on SBI, ICICI Bank and others  for not having any norms for their derivatives desks in place. Shortcomings include a non existent risk management system, and inability / no desire to conduct due diligence on suitability of these products. 19 banks were penalised and are currently being served show cause notice.

Thus on top of already scarce demand and skin thin trading in derivatives, we have also had our top line banks being accused of not understanding their products and we do not even see any speculative profits or even losses from the alleged transactions as no disclosures were required for the products, probably engaged on an OTC basis and contract documentation never completed in tradition of the big desks at London and New York 10 years ago.

Really, we need to invest in the human resources and the infrastructure to make these thriving businesses for banks before we go looking for retail participation and this depth will not come from one off trades like India's Olympics medal haul by the kamaths and the Kochchars. 

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The classic inverted yield curve is caused by a liquidity / solvency crisis and one could very easily be caused in India if attention is not paid right now. As we worried last two weeks, short term liquidity drying up despite auctions has taken the short yields to 9.3% a new premium for these two reform decades for India since (1997) while the first Fixed /income yield deflation has hit the shores like a Tsunami fromt he west to 8.3% from 8.75% last month

Ideally the mid term yields (3, 5, 7 yr terms) responding to inflation however can harness the inverted yield curve we have done on multiple occasions though never when Oil was rising along with the Dollar and it remains to be see if India can cross the rubicon and beat inflation with this stick than get grungy deflated like Europe. 

India should probably avoid the 20 year or 30 year terms for bonds as they seem to have supported deflation in the Wild West, bu tcan get matching terms for Infra projects with 15 year concessions matching 15 year financing to at least make sense to investors and raise some cheap money to outgrow the deflationary impact on the long end.

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There is definitely a case for an independent agency to warehouse the leases for big Aircraft carriers and / or facilitate a sale for Boeing and Airbus by taking on a Sale and earning on our books from the Lease to Air India and even private Aircraft. I am probably just shooting from the hip and details can work out to prove or disprove the project.

However, such an agency will make an income stream permanent, serve the national cause with the right budget in the right hole and find an income stream for eithe r Banks / or State companies as a aircraft leasing corporation

Currently 27 aircraft ( Dreamliners albeit not the 8 series) are on oder with Airlines/international agencies using the Sale and Leaseback option for Air India with the carrier paying the rentals. It is definitely convenient for Air india and serves the cause of modernising the fleet. According to DNA, even as the government stands ground , still waiting to approve the deal, 11 aircraft are scheduled into Air India's roster next year for 4500 hours each from Delhi / Mumbai..For at least one return sector per day ( flying 12-13  hours per day)  

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The Land Acquisition Bill seems to be getting a lot of flak from the industry for reasons ranging from government pulling the rug from land acquisiton for private projects ( and SEZs) to prices rising ( AM Naik , L&T) and many  others losing in court to governments ( Tatas to return 300 acres to Mamata Govt)

It seems fit that there be an internecine war like this just before the Mining Bill bringing sharing of profits as law for mining projects and one wonders if the Mining bill would end up like FDI in retail or the current Lokpal media-anna-govt-media circus. 

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The stats are available for a change. 75% rural families and 50% urban coverage subject to a priority coverage of 46% rural poor ( 2001 census) and 24% urban poor that will be updated as the government hopes to a lower number.

Apparently cost of subsidies already a INR650 bln will be only INR 770 bln ( an additional $3 bln compared to a trade deficit of near $110 bln) after 2011 census data is updated.

The Food Security Act promises just 7 kg of grain but at a give away price of 3, 2, 1 per kg for Rice, wheat and coarse cereal, per person instead of a current PDS cost of 35kgs of grain, and sugar at higher prices, at 25-30% discount to the market(probably 2006 prices, i believe) . 

There are no food grain shortages in the country per se but the BPL card system already in currency would need enhancements to ensure priority families are reached first and spillovers are managed in a targeted fashion for maximum impact without creating new loopholes for siphoning of this giveaway grain for local market distribution.  

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Markets have beaten Orchid Chem to a pulp down 12% as investors and traders think that the new $100 mln raised though prudent, paying off FCCB and lesser than the original loan plus interest is going to be a big loss for Orchid. The Rupee is in a downtrend from 54 now to likely a number above 60 which will reflect in MTM losses and increasing rupee payments on the balance sheet. However, with consistent dollar revenues, Orchid could well balance any MTM losses and Gains on a quarter to quarter basis as both sides of the Balance sheet are fully covered in exposure with $100mln of exports each quarter at avery conservative basis (in a stressed scenario)

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

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

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

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

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

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

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

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

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

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A predilection or two still stuck on in the market, with markets tanking all the way, to a 4650 in a newsless one and a half hours having traversed the credit policy with a dip  ( and some salsa) this is happening because everyone is short? Or is this happening because an investor is not short, so he will not get out? Nothing so personal, but its like the market likes to tailgate people ton their drives like a negative character out of a Friday the 13th movie... Still downside left in the market, whenever there is an u[move, the down move is vehement like it has been had and there is no ice cream left.

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RBI has finally announced some additional curbs on speculation yesterday which were always considered likely. While it has curbed trading in Rupee forwards, which might not be a regular practice, market players seem to have forced its hand with FX speculation in the USDINR=X chart working on real export contracts , cancellation and rebooking of the same giving banks net open positions worth their position on the currency

Cancellation and Rebooking of currency contracts has now been denied and also RBI would be lowering and watching Net Open positions per bank onthe currency. 

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Inflation has tracked down on all counts below 8% in December and thus may last till 7% and RBI might keep the estimate a little higher at 7.1-7.2% to be safe. Imported inflation may not track down as rates have just started easing. On the growth font  therefore as all growth in the third quarter is nullified, we are unlikely to meet even a conservative 7% target which RBi is unlikely to deny in its january estimates. Production data remains suspect but the GDP deflator looks as if it has been fixed, if only I had hands on research support to prove it

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RBI kept Repo rate and CRR unchanged and as Rupee fell bac to 53 it was clear RBI' sintervention was valued and some saw it as a sign that the rate cut could be advanced, however misplaced that expectation might be. The launch of the 12th plan period is key however especially with Fixed Investment formation falling into negative territory. RBI needs all the support it can get rather than using india's miniscule reserves to support more government support as  astrategy. While Europe will remain in the throes of the crisis which is most of 2012, and some of 2013 it is unlikely thaat global growth will spring back in India and China exclusive of anyone else.

However the only remaining reason for growth being shot in India is the free unwinding of the rupee at every dollar purchase in the Indian market and statistically that will only support higher growth as inflation remains tidy on the higher base effect. Rate cuts will start sooner than later but not probably within this fiscal as the free falling of the rupee mightjust not let the rate cuts be any effective in stimulating growth

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Markets bounced back soon after left to their own wishes after active investors walked out in the pre afternoon 10-12 session. Now trading at new post 55 highs at 70 points up and ready to go down ...Just means 4700 is a strong support and relatiuvely little buying interest can keep up market valuations when shorts don't make it after one round of trades..Also given the duration of the crisis to come it could take a lot of trading days to go down to its bottom at 4400 or lower from where it starts an up streak..as the rpeferred signal famong investors is momentum in the upmove at th eend of the day

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The weekly numbers for the December 3 week continued on a much higher plane even as governments and markets battled with the 9+ figure for November with Fuel group capped at a 0.3 MOM increase to a 15.23% rate, Food  rate down to 4.35% from a 6.6% in Nov 26 figures, and Primary articles looking distinctly sunny at 5.48% instead of more than 7% last week. Thus mfg inflation / basic inputs contributing to that would have also stayed below 4% and the series distinctly showing signs of beating 8% for December except the Fuels number as prices catch up with our dear dollar basket

Commodities globally have finally entered a decent correction phase as Gold was beaten to the haven by the Dollar, running behind investment allocations as its lower value starts bringing down global portfolio sizes and increasing allocations to equities in just maintaing share of allocation..In case you did not get that, please write..

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JSW warrants were purchased in an preferential allotment worth INR 22 bln or $ 367 mln of which $92 mln odd has already been paid. JSW warrants are now at a purchase price double that of current market price so if Sajjan Jindal opts out that is a $92 mln hit to his personal net worth

in the mean time, Mr Ambani's Reliance has agreed apparently to surrender the expired oil and gas blocks in D6 while the jpoint venture is hoping for quicker action fromt he government on new fields within D6 for exploration. in the latest deployment of strategy, would be partnering  with ONGC giving it a 20% stake

ONGC in the mean time has got itself out of the Cairn wrangle paying only its 30% share(possibly the share has yet to be finalised)  of royalty  with a fresh agreement with new promoters for the earlier assets to ONGC and cess being borne by Cairn/Vedanta at $42 per tonne. Vedanta of London got a nod for 40% stake in the $2 bln purchase ( INR 87 bln) and Sesa Goa owns another 20% 

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The important numbers :

Credit in Indian Banking ( for ref: Rs 42.5 Tln, at USDINR=X at 60- it would be still $700bln )

Fixed Income (LT Savings) Bonds/ FD Rs 27 Tln or $ 450 bln

Equities  ( @ nifty 5.2K?) Rs 26 Tln or $ 432 bln

Karvy predicates the Equity component to grow to 37% of a INR 265 Tln by 2016. India is also expected to jump Germany and Japan as the Global #3 Car market by 2016 from 1mln a year to 1 mln a month? 

Anyway Equities by themselves could well be $4 Tln and while Mutual funds have got stiuck at INR 7 tln or $110 bln and even if now doubles it would be a paltry $220 bln even by current wealth management hordes. Karvy would also have unlikely counted any offshore wealth unit holdings from Indian wealth or the black money otherwise discussed threadbare yesterday in Parliament

The Insurance premium market though degrowing in the last two years in favor of LIC than the private players, is still quite twice the zize of the Mutual fund market for LIC itself, which is adding another $8bln in investments in Indian market after adding $12 bln in 2009 ( then USDINR=X at 40)

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According to the news flow, borrowing costs across Asia have risen upto 50%, that' is a sizable loss on balance sheets too where Asian swaps would have been incomplete rings and with this situation of freeze in financing however expected, those betting on Asia's grwth despite the picture of the slowdown ( not when you considered Asia in subdued growth but when you - and many did - bet on contrarian growth or that the globe did not matter ) 

There is no denying however that Asia will still grow at 4% and Central Asia & Africa as a region would grow albeit at its speculative trade/underdeveloped paradigm rate which was Europe's version of an Emerging market European banks have to exit faster though if they want to be not caught in the flurry of exits. TThey will not get a penny's worth in 3 months if deleveraging continues. Expecting banking assets to be illiquid is a readjustment that will cause such reactions in the market esp with Asian banks already suffering at the hands of repo financed Europe for a decade in Swaps and derivative contracts. 

In India, the costs have risen on par despite the strong ECB performance till October by the sheer drop in the rupee not the whole 20% but the one from 50 - 55 ( 54.50 today) a further 10% even as only 3-4 FCCB borrowers are out of the race. Opacity in news flows continues to trouble those with exits firmly completed though, and that is the raison d- etre of having a TV channel to shout from as the index takes the wrong ones to 45 despite R Power, Welspun , Orchid and a couple of others having exited the Dollar debt that was to be a pain and / or matched with their Export inflows  

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The number is higher than the expected 9% figure and with manufacturing inflation not falling from October at 7.7%, the rupee headed for the new bottom while September figures were revised to a rounded 10% and the Manufacturing index is up 0.5% MOM. Food inflation has fallen from 11 % but the 8.54% figure is still very high compared to the expected drop to 3% in the weekly numbers for the last week of November on Thursday

More than economic data I need hands to help with specific cmompany ideas to research

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firstpost.com leads with a weird 'post' today showing amchi mumbaikara's frame (unhinged) of mind. the headline screams, why ICICI Bank blah, photo pic is one of the anti corruption celebration as the government signs 3 anti corruption measures to meet the mountain and I did not read the rest.

Though India has rejected the three (four ) critical sector FDI updates incl Retail, Banking and Insurance (Aviation in a new soup too!) and ICICI Bank is struggling to find its bottom , it is by no means representative of the Indian economy per se esp with such "Blitzy" slash as an opinion befuddling young minds and inviting perennial dissing from market commentators.

What is likely however , and that is why the $4 bln FII flow till now is safely locked up ( after 20 years, another first ) as anyone exiting now for a lower bottom would miss instead an instantaneous splurge which could bring the market back to 5300. Though many would have advised to start accumulating, not many would be brave enough to purchase block trades or fundamentally take a larger position at today's touchy levels. The 54 we talk about now is that of the rupee on its way down to more stable depths ( we think!) where our IT exports ( merchandise exports having died already in textiles, tea et al) would be saved by the profits from the sold rupee. Unfortunately that also gives fodder to the bears as a Rs 100 exchange rate of the rupee would make your litre of Petrol / Diesel worth Rs 200 per liter / Rs 150 per liter even with a Rs 5 Tln locked in subsidies.

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ICICI Bank CDS suffered the most in the first few hours of India having approved CDS trading . Though only one insurer wrte CDS on ICICI Bank at a high but manageable 180 basis points a couple of weeks ago, the first few trades have pushed bank CDS' to a high 471 points for ICICI Bank across the default watermark of 450 basis points. Even SBI trades at finite default probabilities of 361 basis points above that of  France in November trading when it rose from a spread of 200 bp to more than 350 bp.

That means cost of insuring $10 mln of ICICI debt is a $471,000. However in India's case a CDS rate of below 200 bps would never be possible given its low ratings at BBB- for the sovereign and most of its banks can trade higher than the sovereign benchmark easily. even the soevreign should trade at nearer A rating levels in times of normal liquidity inthe Financial markets

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Equities trading near lows, derivatives including the PCR has moved on to a low 1.05 showing that the down move in equities will be limited. However after Friday's trading at 8.55% yields are already further down to 8.47% very encouraging to the RBI Governor to begin rate cuts in earnest  and there in lies another potential breakpoint for the market after policy announcement on Friday as rate cuts are unlikely to play into the Indian story for another 4-5 months., inflation drops well in progress otherwise. 

Moodys' and goldman Sachs ( Jim O Neill) have already sounded dire Forex payments warnings  with retail FDI having counted as negative. India's fixed income exposure outside continues to look healthy with recent outward and inward transactions of sizable value completed per expectations so we stil have time to repair our outlook.

Apart from revisiting retail FDI , whence the six months figure of $20 bln in FDI could move faster in the remaining fiscal, we also need to get our power sector investments going again. 2012 will be better for Fixed Capital formation as the new 5 year plan makes fresh proposed investments in its first year and briniging the growth imperative back could bring back the same additionally.

Fortunately, India's banks are sitting on good capital reserves to accelerate credit where it is in the right stage whether for outward FDI or domestic projects thru domestic and International/PE equity. Infra structure projects' longer gestation from the various Bombay Metro projects to the Harbor Sea link (Sewri) to be bid by Mukesh ambani and investors' rejection of the same show the challenge ahead of us in investments in infrastructure as both fixed income markets and equities need to vcover short term returns to recover their higher costs for the scarce capital. 30 year capital can come to projects from private players only if longer debt is assured of better financial infrastructure apparently,else funding India's $2.5 tln infrastructure gap and thus maintaining the growth imperative was well within our reach in 2011  

Negative Gross Fixed capital formation after a dull 8% growth in the June quarter has skewed India's relationship witht he credit agencies. It's uneven relationship and the last minute slowdown when China is steadying ships is a confusing signal for the market watchers.

Unfortunately RBI cannot do much more right now except sing paeans to the success of inflation being in control

We are not alone in the slowdown nor we ever had any reason for our equity markets to be so optimistic in the last six months, but somehow we missed our growth imperative in 2010 and 2011 before being caught inthe slowdown, looking at the fall now negating our previous accomplishments rather than allowing us a wait and watch period.

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ILFS Transportation Networks Ltd

ITNL gets into Chongquing in South East China this year as it signed up for a 49% stake in a district tollway for $160 mln or more than 5 bln Yuan. The concession period is 20 years and the debt used to finance the deal on flat repayment ( thus lower interest outgo every year) for 10 years. Immediate impact (TV18) is a 5% bump in the first year in PAT 

ECB/FCCB deals

Welspun's existing bonds converting in 2014 and Gati's balance $15 mln in FCCB bonds with an additional $7 bln interest component were bought back and or redeemed via a fresh offer for $22 mln in the case of Gati. Welspun's outstanding amount was higher being covered by a buyback for the last one week to $150 mln at a still attractive 4.5% coupon. 

Both are well run midcap companies in underserved markets in India. Gati, in the surface logistics space could well position itself for a larger infrastructure play as a 4PL player but probably did not get enough interest because of the size ( India's vast untapped market stopped by Dollar'as running away? ) 

China Remittances 

China's banks have started building on the foreign remittances having been party to a $3 tln domestic payments system that excludes Master/Visa in China. ICBC signed an arrangement with Moneygram while Africa's Standard Bank got a line of $275  mln for facilitating Trade finance in Taiwan from a syndicate of International Banks. the Standard Bank arrangement will allow for nmore outgoing trade flows from Africa to China/Taiwan/Hongkong

China is behind India in remittance for the year ended October 2011 at $57 bln versus India's $58 bln as the Rupee falls through the last decades 47 levels to a 15% lower 53-54 range currently seemingly in the middle of a down move that could cover all of 2012

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With inflation falling, the inverted yield curve ( 10 year yield a point below the short term 8.7% yield) could well be a good thing for india. the rupee depreciation could however keep importred inflation hot for India's traders and manufacturers, esp as the Fuel basket is still up on the high ledge at 15.5% . The livemint Friday report has good data to back its inferences too, but even if we do not follow the RBI copybook ( playbook elsewhere :) )  and set our own inflation target it could well go under 6% as and when Fuel also tackles the base effect. Prices have stabilised and bond market liquidity healthier as seen in the 8.7% yields at the short and long end a good 25 basis points below the yonder peak of two weeks ago. 

Forinvesors yields coming donw on the inflation ride mean large inflows into bond and then gilt funds to shore up the neglected funds industry where AUM has dropped from 7.5 Tln in 2009 /2010 to 6.75 Tln this year a slow deterioration as all the bank rolled money for money market mutual funds was exited. For banks and large treasuries however, with the money market fund closed and RBI auctions likely to be discontinued, there would be a limbo while they decide where to deploy their idle cash for quick gains, perhaps in longer term Floating funds eventually 

Rate cuts could come sooner, therefore the talk of recession as Capital4 author Deepak Shenoy highlights back in June could well be baloney. In our case inverted curves mean that banks can use that extra tey keep with RBI even if CRR cuts are not effected and bring back the short rate as and when IIP improves based on lower inflation. Believe me, no one else has the luxury of 40% of the banking system's funds lying with the Central Bank anywhere int he world even if you could go back a hundred years thru the hyperinflation cycles in Germany and LatAm or the recession cycles in Brazil and Venezuela and Russia

China has a more well defined shadow banking system, our own professionals torn between the brand of organised businesses and stock markets and the penny pinching savings they need to build a home nest. We still have a cash based economy like Italy's south which will apparently keep adding to our tax basket at its own pace regardless of how many investigative journaliusts or how many amnesty schemes are created and expired 56 new tax treaties later there is no inflow from that system into the economy and our taxed remain the lower percent population of the country. Typically, these factors influence the fixed income market which moves on the supply and demand of money, but that shadow cushion in China and elsewhere ( incl in Europe where it has yielded  a15% tax on Swiss deposits) is much more in control

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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 sB/i 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

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Barclays sold out its retail interest in India to Stanchart last week. Seemingly however., all's not well as HSBC RBS still awaits the regulators directions on how to manage with license transfers unlikely etc. Int he SCB Barclays deal the thorn is the status of Barclays card accounts as only 150,000 o f the 300k members it had on rolls were sold ot Standard Chartered. Assuming that the Emrging markets specialist SCB did purchas erthe active accounts it means that most likely all the other 150k accounts are delinquent and not expected to be remunerative to the bank as the 150k sold were by themselves sold out at a not very expensive price for the buyer

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The Index of Industrial Production has really been the straw on the camel's back. A Capital goods sector degrowth of 25.5% can not even be explained by the volatility of the sector specific expense volatility month to month. ( Our traded eficit goes up and down by a few billion every month becasue of booking of Cap goods and the fuel bills every other month) The overall IIP degrowth is 5.1%, mininig sector degrowth 7.2% Electricity still growing 5.6% Consumber durable goods would have suffered the likely miniscule contraction after heavy festival buying

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While the planning commission has apparently detailed all sector expenditure till now, the forex crisis is likely to continue for the state as the Indian rupee looks for levels like 65 and 72 while hanging on to 50 rupee levels.

India's 117 bln deficit ( for the first eight months) structural disconnects from the global scenario and the inability of monetisation as a tstrategy to fill shortfalls in even a single head of expenditure means that the government is trying everything in the book to avoid the fisc crossing 5.4-5.5% against a target of 4.6% Excess expenditure on food and fertiliser subsidies amount to $10 bln by itself, and the bill goes on to include many other subsidies incl the one on energy (fuels)

The impact on our forex reserves of $310 bln ( Currency reserves are more than 90% of the reserves) can easily be imagined and thuis automatically there is more pressure on the rupee to go down rather as warranterd by the transactions required much like any of the midcaps trading in our own market with hardly 1% volume in traded shares

All the above reasons cannot preclude one from using some of those reserves for the state sponsored infrastructure debt fund and thus the SWF india still does not own. Those investments will fill critical gaps in Indi's social and physical infrastructure and are a required head for planners to cement and excute in the period till 2017. The fiscal deficit in the mean time will be funded by such interesting propositions as cross ownership of equity of PSE already employed extensively in traditionally developed economies of Europe and unlikely to cause much more discomfort than having state enterprise managements on their toes. even if ONGC, SAIL and BHEL are taken first and buybacks in COal India also considered we will more than cross the over spend on food and fertiliser subsidies and reduce the burden on OMCs However PSEs might want to wait to find like minded PSEs for cross holdings like the OMCs int he same sector with ONGC and if such patchwork can be arranged in the next 4-6 weeks, I daresay people would be willing to wait. NMDC already employs cross holdings ina  lot of erstwhile mining companies and the plan for buybacks and cross ownership is as old as the concept of BRIC economies

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India's Pharma market is a paltry INR 565 bln currently, Just cardiovasculars and diabetics constituting less than $ 2 bln each across a universe of global MNCs and Indian diaspora supplying generics globally. In a nation of 120 bln people or 25 bln households, 10 bln households of which are below the poverty line, it is a quandary not many can resolve. The pharma companies already see only one strategy to increase the per capita usage. increase prices so much that even if they bought half the medicine they bought last year they would end up with a higher per capita consumption. The CCI is apparently reviewing this uunnecessary price increase in the system, A food security act in place may further improve longevity ( at least for the common man / analyst leaning on logic to make an infererence) 

However any larger study will show that by back of envelope calculations if we looked at the 98% uncovered population of the country without medicare as spending a per household 15,000 on medicines for the year for children, OTC, prescription and the stereess related disorders for the husband and wife the 24.5 bln would end up spending INR 367.5 tln or $7 tln on medicines and I dare say hospital care would be an extra amount more than this consumption expense. Of course the 10 bln poor families would depend on state sponsored insurane and low cost care for these requirements. 

100% FDI has been persevered with in this sector. Both for greenfield projects thru the automatic route and brownstone projects thru the approval route

However, Lupin and Cipla do not seem to have a buyer after being on the market. The global situation could well be to blame for that and the fact tat sales of $1 bln barely are hardly the scale someone is looking for to enter the market. Like in automobiles, the lack of scale just whets the appetite for global players to explore independednt plays from scratch and market realities stop them from taking the plunge as such a large market does not forgive mistakes easily 

On the Hospitals side of the Heathcare sector, players such as Fortis are still trying to take advantage of the amorphous nature of an emergent industry , valuation and transfer pricing issues likely to continue to plague the industry as a whole as for other sectors with Vodafone again taking the fall in one of the first decisions by the Tax man

MNC players have hung back till now in poharma, but they do not have any more reason to do so, India by itself could be a bigger market than Africa as a whole and while GSK and others have moved on to growing NGO initiatives in Africa (GAVI) for the immediate scale possible, the India market is likelier the more profitable market with and without NGO participation and sponsorship.

State funds however are unlikely to cme this way till Food, infra and defence are paid, both healthcare and education eternally waiting for the state and the planning commission to realise their importance with higher more tangible contributions. India's state owned low cost health infrastructure is one of the most well spread across the 3 lac odd villages with many still outside the ambit of affordable healthcare comparible only to banks without India's 'large unbanked population' still ominpresent in towns throughout the country, not even accessible for weeks at a time in certain cases

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The November Data for Indirect Taxes remains encouraging...Customs collections a INR 1 Tln, Excise competing at 944 bln and Service taxes growing 16% on October to INR 580 bln for the period till November 2011  However with Exports at $22.3 bln for them onth the deficit of nearly $140 bln in trade would hardly be compensatred or in this case the growing fisc would jhardly be bridged completely to a 5%  Fisc leaving at least a 1% over run on the Fisc

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While the monthly trade deficit in India blipped to a low $11 bln aftera horrendous October deficit of $19 bln, the overlal export numbers remained robust at $107 bln. for the 8 months from April 2011. Earlier reported numbers have been readjusted after the government admitted a series of errors in reporting data but is still a robust $192.7bln for the eight months. That is a growth of 33% oin Exoports year on year. Growth after September has been capped at 20-25% and lower capping the annual growth in Exports. Imports continue to rise unabated however unlike China and Europe where fiscal discipline carries more coin. India's 8 months imports are a hefty $300 bln adding more than 1% to the Crrent deficit, already a high 2.5%

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India raised $2.5 bln from ECB/FCCB as late as October. Most of the $2.4 bln in September and $2.5 bln in October is infra and Petro bonds. FCCB pending from 2007 are deep out of the money. Overseas investors having been caught in a firesale courtesy Europe, have been tough on their India FCCB holdings too

Adding to the list of large and mid sizedc corporates from the ETreport on Monday are the metal and minerals squeezed Tata Motors, Sesa Goa and Sterlite who better pay back their debt or their bleeding financial statements of the last two quarters would look benign in comparison to the ones for December and March. Others like Bharat Forge, Bhushan ( $410 mln for cap goods import) Financial Technologies and L&T probably have cash to return the outstanding / buy back their paper in the market (Bhushan borrowed in September/October) Investors are already enjpoying a steeply higher yield at which they are now trading as first investors have sold out.  

Mint(livemint.com) has got a nice table for redemptions due:

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