with the Friday tray of goodies gone..and diesel nad LPG 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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Ticker recommendation but something close to my heart for a long time. The cardio device market is a great opportunity globally and someone with quality manufacturing facilities can really builfd on the same. Opto circuits is also a verified good corporate governance company and unlikely to be too risky at these levels. They just recd a new manufacuring/quality approvals in Japan

eGom must have released another 500k tonnes quota for sugar exports and that is unlikely to keep that sector for more than a 2-3 day buzz

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Considered a farce by many when it was introduced in October last year, the Pre Open Session Call Auction means different things to different classes of investors and traders. Members on bul and bear camps seem to take extreme positions even 20% wide in most large volume scrips like Reliance, Hero Honda (Bajaj Auto), SBI, ICICI and HDFC Bank as bonafide trades are not made on these price quotes till 9:15 when market opens. IT theoretically allows h whipsaws in trading to be minimised but just facilitates a minimum mass for each side and speaks ranges in the market for traders. 

It has however become important for people / Finvestors esp those probably exposed to overnight price discovery thru ETFs while existing SGX and CME nifty contracts remain locked with a few market makers who are not able to track the market expectations on thin trading volumes for effective price discovery. 

It also gives market makers on different exchanges BSE and NSE the opportunity to play out opposite trend expectations without much trasding damage and then move in tandem during market open

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Though promoters would also be using it when they pledge shares and misusing the practice ( see Promoters' scourge..) the concept of negative lien is one of the few best practices we mainain that make prime borkerage and lending against shares as alo various agreemens with capital market intermediaries..self regulating. Any lien on yor shares should not mean they can be sold as collateral the day there is a drop in your margin without allowing extra days on penal interest andor chances to repay on a reaonable basis.

Also, this avoids mass sell off of securities in disused accounts if used as larger operations organisations like the NSDL , offshore and distributed globa l ops and direct brokers try to walk a thin line between chicanery and 'best for the customer' Given the complexity of such contracts and necessary flexible conditions on higher value accounts where the fine print gets distributed between different departments, there would be no greater disservice than if your shares are sold off without your knowledge and or without due notice

Negative lien implies distinctly that the lien marked to the lender/contract excuor/holder does not allow such entityindividuals to dispose off the sahres making it mandatory for the owner to sign them off his securities account

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..and then by 10:30 may skip the fuel issue

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India's asynchronous naure withthe global Economy has more or less been locked in by a past generation's ascendancy to the senior positions. Even in my colleagues (peers) I would find the unemployable having stuck to their positions and holding positions of influence in the few MNC corporations and global consultants that are India-centric in one or other key strategies. The situation ant the senior levels has always been used as an excuse to rejuggle portfolios and in some cases fatten middle layers without any career visibility and without focus on keeping strengths as the companies have few hiring department staff who can work with qualitative factors anymore  and no India offices/branches/franchises ever having allowed any performance based arguments on who or what should lead their Office. The top employers surveys by AON Hewitt and by ET-GPWI both do show up these glaring deficiencies, but more importantly for a lot of India's senior management layer, it means an abrupt end of the road a middle / regional levels and we keep getting Mis s World / Miss Fashion kind of global nominations once a year to offset that imbalance. Somehow, our hiring departments focus on the TT ratio for cost effectiveness has cost us the plot and we are busy using he same as bargaining chips for the hundreds of internal movements, the real talent having been neglected watching from the sidelines..another humdrum year of ennui where none of the unemployables remaining in those positions need do anything to keep their job or even the next promotions by virtue of sitting in their current seats of unachieved and untempered workability negotiating new office deals and water bridges to go to Africa gleefully 

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The Samsonite Campaign by JWT Shanghai won the GrandPrix in the Press Lions, with P&G USA winning Gold Lions alongwith Perfetti India for their Fusion Ecoglide razors

The contingent from Brazil and others from Latam like Chile and Argentina had a very happy break ahead of the weekend with 52 citations in Silver and Bronze Press Lions for Brazil, including Fiat, Kia , Volkswagen and other auto campaigns all winning metals. Gold Lions also had 5 citations for Lady Gaga, Madonna and other Billboard Press ads for Brazil

Cyber and Design Lions were also announced before the finale on Sunday when more metals are due. The Cosmopolitan of Las Vegas and Digital Kitchen of Chicago walked away with the Design Grand Prix while P&G shared Grnand Prix honors for its Old Spice (body Wash)  Response Campaign in the USA

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True to Bernanke tradition(just that it was set yesterday) when the FOMC replaced key phrases in its policy to show the policymaker's economy mirror, we also chose to repeat the WoW headline to reflect the factotum. Detailed data is bein gshred on weekly inflation and the jury is out yet.

There has been considerable public officials' speaking against statistics and the way they work in China and we do not have the same issues in India esp since the PMI has been revised as also the inflation baskets

Greek vote for a Euro 28 billion austerity package notwithstanding no one expect Greece to last and in that similar spirit of the great indian ennui, nothing changes with the details of WoW inflation inrease. Primary articles inflation is 12.68%, Food inflation is 9.13% and there is no visibility for the fuel group yet in the releases, where anyway the calls on Diesel etc are pending and that might even move the urban inflation a wee bit when it does. 

In the meantime this is a beer guzzlers' report and not too technical so we will go back to showing you the money. Which is markets will stay down for some time to come as this week's rumored overall inflation has already jumped to 9.5% and the 10% mark is near. Also no one wants to allow another amusement park on the banks of the Yamuna as importers of the London Eye ride have found in India..indians are a very peculiar creature of comfort, none of their comfort spending translating into luxuries, autos or anything else except food. And the overspending ofn food is well on despite the rising food inflation component which at least the rising interest rates can impact a bit

Wow increases in rate are as high as a 80% rate on the food side and 40% on Primary articles! What gives?

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Perfetti's campaigns keep running a metallic campaign at the French Riviera, its Sour candy campaign from Ogilvy, winning one of the two Silvers in the Press Lions. The other Silver went to McCann for Onida's Campaign

Two bronze lions snagged in the Press Lions include P&G's Downy from Grey and UBI with the help of Mudra's "Blueprint" campaign design

In the Radio Lions, 3 Merc Campaigns in South Africa won the Grand Prix and a surpring Paint shop campaign from Singapore won 1 Gold and 4 silver Lions

Onida picked up two Bronze Lions in the only winnings for India, while The Economist snagged 6 Bronzes for Singapore and McDonalds , 3 for South Africa

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With all the talk of market rumors, one should actually be thankful for the rudimentary back bone of informal information networks existing and make amends for all the missing informationon the floor. Wirh most mid caps volumes teetering on the edge, lack of information, sometimes criticall ike that Orchid Chem's 80% promoter shareholding is pledged down can really score a lot of negative points for NSE and BSE for market opaquenness and enough cannot be done about it without market participation.

No one would have found out unless ET had reported it on Page 1, traders in the know probably on the market making side since a year or more. 

More to the issue at hand, pledged shares have really reduced and promoter houses have deleveraged for their proprietary trading "budgets" At least pledged shares should not be in the Capital market for raising margin trading volumes and for occasioning portfolio capital / and /or derivatives plays as they can serious impede corporate governance and financial dependence can engender a lot of moral turpitude

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No eGoM for Diesel, Urea

Diesel and Kerosene producers as wel s Urea makers hoping for a reduction in the retail subsidy on the products will likely be disappointed for 4-6 weeks as the government puts its house in order.

Banks consolidate, but for a coming downturn

Meanwhile banks seemingly will survive AMJ without much loss of business from the rate hiles but Credit projections have been corrected downward by SBI's new Chairman Prateek Chaudhuri tp 16-19% for the year. 

Tata says the gorup is together in financial difficulties?

CLSA has in the meantime downgraded all the Tata scrips together, Titan and TCS losing favour 

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Now that it is in the Bombay Stock Exchange Sensitive Index, Sun is likely to gain back its valuations and get credit for due diversifications, with Emerging Market JVs with Pfizer from SPARC and Taro's full year results as well. 

It also got FDA approval for Imitrex this week. Imitrex is an injectible (statdose??) from GSK. Annual sales of the single dose syringe come to $190 million so Sun can probably look at around $28 mln from the produc without extensive marketing investments

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Despite recent trade pacts with the US esp with fresh removal of cobwebs on transfer of trechnology, it was a no brainer for MMRCS and Indian Defence establishment to turn down US fighters just because, the supplied and promised technolgies were ancient and showed their distruct keeping our ambitions at an arms length. assuming that we never want to reenact a NATO with the US, it was a good decision to thus sign Eurofighter's Typhoon and Dassuault's Raphale fighters for the order. 

Looking forward , one thinks it unlikely that US will sweeten the deal so quickly and without Congress and policy action on both governments' part. However , the F35 aircraft from Lockheed being offered now does look like a better del and must be explored for a chance for effective technology transfer. 

Not aviation, which is the larger commercial opportunity in China, Brazil and India, but the Defence ordnance remains the largest sponsored somponent of International trade globally and as such one must have a modernised fleet available to justify such a budget whence the economic good of the greater can be achieved even in terms of supply chain efficiencies. 

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DEspite good news from mamta as the Singur Land Act gets court approvals even as tthe Tatta Motors apppeal against it was denied, Pranab Mukherjee, Sonia and the pending coronation of Rahul are all on a pretty sticky wicket. UP does not seem to be going beyond Behenji and as such Rahul entering as the PM candidate after working that constituency is a hardy niut and the economy isn't moving beyond 8% 

Most can claim that Indian government has visibly stopped with GoMs meeting Ramdevs and Anna Hazare than meeting on Diesel, and the urban and rural constituency alike confused about announcements and implementation of the Food Security Acts, Wome empowerment and employment schemes. Social welfare schemes may seem like regular appendages in an Indian budget but are crucial to determine whether the incumbents will find their way to North Block. From the markets, commentators are unlikely to comment further except hope for such inaction to be a normal day or two of extreme politicking, albeit statistic watching has also become more criticlal now and is not helping the FM. For manmohan Singh, of course, it is time to step down if Rahul wants the leadership but I think he can still rally the ogovernment around if he starts right now and Rahul gandhi can probably solve the Chidu , and Pranab uncle problems for starters

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The Indian funds management industyr has gone through a lot, volumesz static at INR 7.5 trillion for the six months of 2011. While a week ago there was movement (and argument ) on changing the direct applications modeel for the industry back to agency with a new commission structure of 1Rs 100 per application, it seems to be a split decision and unlikely to solve any crisis of funds in the industry. Equity funds have accretions in Jan - May but of $100 mln to $200 mln . Fixed income receives a lot of institutional funds but is a trifle limited by new RBI targeting of excessive money market funds making inter bank liquidity. 

Inspite of these factors, consultants/ funds industry outliers like Vanguard and Morningstar are unable to make traction or see a business opportunity of note in India as the expenses model and volumes expected even from bancassurance and direct applications are still different by almost two orders of magnitude than ETF players and specialist funds operating in US and Europe. Using the same differences and looking for an inexact harmonization is not going to take you closer to maturity but towards the same global instaboility that comes from larger prospectuses with inane disclaimers which hide the exacting leveraged strategies and other such short cuts like ponzi schemes of the west witnessed in the 2008 implosion. The seeming rant here however is only in response to such consultants and non Indian funds trying to find their way in to a lucrative market such as India by terming it young and immature.  

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Lodestar and Maxus seemingly rode Tuesday night Broncos at Cannes revelry a rough rodeo, walking away with no. 1 and no. 2 in the Media Lions. The Grand Pix was for the Garnier Media plans ( are they sill doing the shadowy cha cha) and the Silver for Maxus India came for the exceptionally gifted Tata sky plan. (DRAFT..)

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Here's another industry sregment CMO that has never seen advertising and marketing seminars by the "nature of the industry" Usually we put the quotes around "industry" itself for that place called loosely IT sevices * Product Engineeri (from the CMO tweets) or Outsourcing, Onesourcing and Offshoring

But surely innovation and pioneering spirit has to be appreciated, wherever it lights up your heart..

Almost two years ago, MindTree “kicked the tires” on a brand re-launch initiative. For a variety of reasons, it did not make past a discovery (exploratory) stage. However, we decided to hit the reset button and try again.

What will be different this time?

For starters, everyone is behind it, right from our CEO Krishnakumar Natarajan to our board members. Just as important, we are not going to put limitations on our partner. Everything will be on the table such as what’s in scope this time around. This is both exhilarating and frightening at the same time.

I plan to use this blog as a vehicle for you to journey with us and hope to get some advice along the way. From partner selection (which will happen in the weeks to follow) to the start of the project, I will share whatever I can without jeopardizing the success of this very strategic initiative.

Recently, research network and advisor Horses for Sources (“HfS”) wrote in a blog posting “We’d love to see someone, anyone, in this industry be bold with their brand.” I think there’s a real opportunity for a services company to claim a brand positioning that is both desirable and unique.

Why not us?

Dear Jo,

That is really good news from a place which is still tentative about being an industry. 

Pioneers can be different in each generation and for a youngster like MindTree that new generation can be spawned every year. The brand afficionados can really learn if MindTree can rediscover its journey

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The answers to a higher fiscal deficit may well lie in ONGC's FPO next month as paperwork gets done. With a higher subsidy burden a conservative valuation is a must.. Esp so as the eGoM has never met to even raise Diesel prices. A sale of more govt shares will bring back the Oil major above Coal India, which crossed it in May 2011. With a Market Cap of INR 2.2 Tln, ONGC still lacks the capacity to pull out rabbits from its hat unlike its early hey deys and the coming fall in price of crude may further squeeze its profits. The offering will garner close to INR 10,000 Crores at a 5% discount to today's market price of arnd INR 253. Retail discounts do make it available to retail investors but with a larger institutional cover , the issue will go through esasily unlike SAIL which withdrew last week ( rescheduled) SAIL would have got the government another $2 bln. PSEs in India have added weight in the Sensex since yesterday's annoucement for adding Coal India replacing Rel Infra in the index

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A public/private bank name comes to mind, as also many personal investors but India loves is shock therapy and now is the right time as any for the :::Common Man:: to open the TV and just shout down the goddamn stock prices. It won't yield him anything either and his neighbours would be so happy..given that momentum basis, it is unlikely that anyone will miss buying the "good guys" Infact not just good stocks, the Options and Futures series should get more interest whenever recovery starts wth a basis in the markets for having understood Futures and Options till here. Fixed Income markets could never provide that opportunity so are not well traded and I or any one else have not been able to provide a public trading platform for trading the other public opportunities like movie stars, public figures and sports men, IPL teams..the list goes on Also there is he subsidiary cultural meme that instead of right guessing the good ones and he bad ones, seems to thrive on being reckless fools who just wildly keep guessing in the middle of someone's work..IO am finally getting crazy from all the writing.

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Though that is not from Fibonacci or for the Fib series, some tormentors on virtual soot could very well push the case forit. However while immature shorting has scored a few gray areas out from the market maps n the last few weeks when it began, now traders who get scared by shorting could very well be losing a packet as intra-day movements are long range and compete a week's trend in half a session for all practical purposes pushed by paper thin volumes. There is a lot of downstream wind for the markets to rest lower and yesterday's move though decisive and covering a lot of the range down, do leave a lot of room for fresh Put purchases which also has o spread out from an overt concentration on Nifty. .Anywaya lot of us would still be praying for the secular up move to start away, while worried about purchasing that long long position we want. Buying should still be concentrated in smaller lot son the bigger scrips and I really do not see any value mid caps out there with banks and tv networks driving growth and not being really there on the exchanges. (Disclaimer: This author suffered from air shock when NDTV was listed and its over leveraged financials disclosed much later and still continues to consider himself a savvy investor, market maker and trader fit for any Global bank position in Trading, Marketing or Sales)

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Oracle may finally be able to get rid of its bank soluions business in India. Despite purchasing the product company in 2004-5, Oracle has no been sitting comfortably on its Seibeland Iflex acquisitions es with iflex being a listed entity in India. I would rank Cap Gemini as an outsider and CTS a favorite for the bidding wars to ensue. India's Africa Trade has a lot of I-flex to thank but complications arise from the fact that CTS also did not want an India listing and Cap Gemini's anking ractice is too raw in the field to make a good show of it even if they win the metal at an auction

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India has already started wih the leather hunt at Cannes, its 89 nominations yielding 2 bronzes in Promos and 3 silvers in Public Relations in the first 55 announced on Monday. Closer home the "Bankers Trust" series on Bloomberg UTV should mint (sic!) bigger and stronger from here as Tamal Bandhopadhya makes a splash with illustrious public sector gentry. His session with Prateek Ch. was refreshing nad informative. The tryst with Chanda Kochchar on Indianomics and the public sector Bank of India interviews along with Subir Gokarna on Banker's Trust / Final Word, is a refreshing change from the inane business programming earlier. On CNBC 18, Udayan continues too. 

Seemingly al ot of ICICI Bank goings on in the Latha Venkatesh interview of Ms Chanda Kochar was inspiredf from our 2008 and 2009 essays on the bank? But no acknowledgemetnts so that just must have been the brush in the Aussie Desert..

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Even as ABN AMRO gets ready to re-enter India and ANZ is ready to come back to reclaim their territory, the new look branch and retail superstructure created by ING Vysya Bank and Deutsche Bank in India continues to look for higher volume business. ING is listed as a domestic bank while Deutsche Bank is growing under the global structure with South Asia and Asia independently managing regional operations. Both these banks are focussed on retail banking superstructure. Global Risk pools at ING and Deutsche Bank may be challenged by the bank subsidiarisation regulations, though both banks should be inherently ready for it. New look Indian Private Banks like Kotak had been unable to compete effecively with global bank preceptons and all make do with a stagnant marke without personal credit and asset management/bancassurance businesses. 

New look Yes bank may yet break the mold however and expand the market while IDBI moves with ICICI Bank and HDFC Bank to rural marketspaces and Tier 2-3 towns to build on their distribution and public heritage. 

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Phase II of global MNC strategy in India sems to have started with a clean slate. Bigger players in personal wealth and Private banking space come from the top 3 in India, among Stanchart, HSBC and Cii. Smaller offshore franchises like Socgen do not seem to have growm. Deutsche Bank also planned an aggressive expansion in India, though in retail to $1 million deposits. Stanchart toook a new public PR route for its Private Banking appointment and it was refreshing to see banks sharing staff movement information.

StanChart's Jaspal Bindra was appointed Group Executive Director in 2009 after a good stint as CEO of Asia during the crisis. TS Shankar was appointed as South Asia Treasury Chief earlier in the year. In the latest appointment Sandeep Das comes from Premier Wealth prodct to head Private Banking. Global Bank s are looking at asweet spot in retail banking for 'higher' networth individuals with deposits of nearer $1 millon. HSBC has also recently averred the same to be a profitable segment

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With its book crossing INR 1 Trillion in 2011, (having stayed asround there since 2006) Citi has restarted the expected growth from Indian Markets scoring an increase of well over 78%. The Bank scored an uptick of 65% to INR 1454 Crs ($363.5 mln) with 35% and 33% increases in Corporate assets and SME assets/ NPLs seem to be getting back in ccontrol for the remaining Citi operaions at 1.2%.

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For the news flow watchers, it was indeed a throwback to first blood strategies of generics that first improved Indian drugmakers' toplines ten years ago.Glenmark scored on its 40 plus pending ANDA applications with two approvals for oral contraceptives worth a market size of $226 mln every year. The product in question is from Janssen Pharma, making Glenmarks Generics score in the US - 71 such molecules. The last such success was for an anti allergy drug also worth a market size of $231 mln. It also had a patent infringement action under par IV for a '314 patent instituted by Astra zeneca for its Crestor alongwith Sun, Sri Aurobindo and nine others Last year's sales in generics grew 20% ( 16% in the USA) to $270 mln out of a annual sales of $640 mln.   

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the Direct Tax code has finally revealed that FIIs would now be taxed for due Capital Gains. The measure apparently was blocked for the last 18-20 months because India was and is treaty shopping to prevent losing revenue through hot money destinations like Mauritius covered by DTAA and legislating tax free profits to all and sundry. Brazil and Korea were the first to impose taxes to even out incoming flows and were specifically targeting hot money. Indian regulation is more broadbased and would require more Corporate Law changes and the inevitable wrangling for another year or so. In the meantime IFRS has also been delayed worldwide for reintroducing profit booking on hedges and /or in India's case trying to market price in cases where Indian regulators want the leases/ distress sales and Fixed income portfolios to be repriced but not transmitted to the income statement..

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In India core inflation is defined as all non food categories of manufactured goods and resources. As one of the JP Morgan or FII commentators mentioned on the Friday shows on Bloomberg UTV, Subir Gokarna and Duvvoori Rao as a team could very well be wrong to target that category when it is entirely made of imported inflation and as such is an almost 100% bearing on downstream manufacturing inflation. However The RBI team already seems to have gotten itself a big reprieve with Crude immediately heading lower and likely more commodities following it in which case by a cosmic karma axis (that has also probably kept good guys like me unemployed) we would be at the target of 4-5% core inflation in a jiffy. Coming back to the classification, after admitting most of India's inflation is supply side ( and from the looks of ti , mostly imported) it seems to be unfortunate on RBI's part to target that with meaningless interest rate hikes which would just bulldoze any remaining disposable spend in the economy, without bringing down any prices. As itlooks now, we are just simply sliding into nothingness till some prices materially get lower, with The retauil lifestyle and the infrastructure champions both smothered by higher prices and usury to be sponsored by RBI hikes..RBI hikes will continue at least for another 200-300 basis points and we will still end up with a growth of 7% plus. That is an undeniable truth and your low volatility worst case scenario

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HDFC's Keki Mistry posited an hour back on Bloomberg UTV that like in 2008 when the liquidity crunch made them depend on deposits for funding, they would be doing more deposits in the coming high interest rate scenario. At least more than 55% of the funding can be recovered from deposits. HDFC has traditionally also converted its brand premium into a more that 100 basis point difference on its offered deposit rates. Well, Kudos to HDFC and I hope we can build at least 4 more institutions like theirs as what this fiscal deficit watch season needs is a lot of Financing while we cover the ground to differentiating between non core and imported inflation

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The Cannes extravaganza is truly underway and for the second year it will have live blogging from the 170 strong Indian delegation and as per the ET reports, we have around 20 nominations from Radio and Brand Activations/ Promos in the growing categories to the 'usual' Lions contenders from BBDO Mudra, Gray and Contract. Also US and Brazil competes with 2000+ delegation sand the crowd at the Riviera would be spread around 57 seminars and 20 workshops starting today. Terry Savage has definitely beaten the ennui that hit the show since 2008 and the budy revelry will hopefully continue to provide motivation to advertising afficionados in 13 categories. Making a fresh launch this year is the category of Creative effectiveness, mixing and matching your creative output with a dose of accountability presumably in financial and marketing ROI parameters..With non durable brand spending down in the US and the developed world as also Consumer India, china has got more than its share of advertising this year and has sent a 250+ delegation to the shpow for some first awards at a 57 year old tradition

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Or as old hand Harsh Bijoor is quoted in today's warhorse ET edition - Loudspeaker Nation. ( Pardon the rushing gushing metaphors, I have just decided to give in to the crowd for a week or so ) 

As media readership surveys go, however, ET is a goner, so is Times of India..the Mints and Bloomberg UTV guys are doing a real good ramp up and after the marathi debacle, th eTOI language debacle is also a certainity. Hindi Dainik Bhaskar is also pulling up past NBT..

After the postscript: This post per se just agrees that India is a very loud place, not just in busy street markets but everywhere incl outside hospitals and schools. And we remain the most spiritual with old style loudspeakers replaced by other products now that rock the latest hindi blockbusters dhinchak! Ready's songs itself are a case in point, leave alone ET's scoop on Godrej Fridges with FM radio and LCD sets from Onida and Samsung with 1000W PMPO Audio output. 

If our conversations alone rise to 60 dB in equilibrium, the music on the radio has to be louder..But in all that lies another secret of our lifestyle deliverance in motion throughout urban india. newer suburbs are as costly or costlier than big city corners for the seclusion and the implied exclusivity. A local grocer, a cafe and a pizza delivery team is all  required to bring a neighborhood into big business and exclusive condos dot the urban india landscape for the same, getting congested all too often too early but hen today's road planning in urban conglomerations is much better. Also in loudspeaker Nation itself we must laud the work of HDIL and other affordable housing proponents working near MIAL and probably soon in other cities as their work will also go a long way to using the vistas outside a city to dispel this need to be loud and shake it..

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the latest inflation reports suggest urban inflation (CPI)  has cooled out at 105, while rural inflation is hot and roaring like a hungry lion at 109 from 108 in April. Show you that our desire to reach the rural consumer that took off well with small change satchets of shampoo, biscuits and toothpaste has reached another phase. At hand is the reality that small change in Indian currency has already lost value. I for one would not even bother anymore with one and two rupee coins, Just 5s, 10s and 20s. So I find it very reasonable that most consumer plays / consumption companies from HUL and ITC to P&G and Godrej are finding it difficult to roll out more small satchets of 2 and 3 rupees, even 5. 

I would infact suggest to the brand consultants to use the chance to cost their services to these satchets as well as they are not preliminary offers of any sort for trials as they were when launched a decade or more back. As the mainstay of rural consumers, they can now easily be priced at Rs 10 and 20 with some supplies for Rs 5 priced satchets of items that need to be consumed in smaller quantities

It would be radical, yes, but the expected loss in sales is not likely to happen much. Now that banking and insurance is also sold down  inrural areas in these denominations and 'entertainment' like tobacco and cigarettes can also not be priced lower, the offtake would infact continue to increase, easily first in value terms but also in volume terms. The extra margins if any need to be reinvested in the rural logistics chains that is driving all of us crazy. even Retail FDI is now a realty sooner than later because of the same blindsiding of supply chain efficiencies by some of the largest global distribution networks at HUL and ITC for one and it's time they got out of their 80s mode and walked into the 'new' millenium with heads held high

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Here you go, the beer will go down in happier times on Friday, as markets take an opportunity to reflect on slowness of growth in the worst performing Asian / Emerging market and the expected 25 bps hike a marker for keeping low interest and maybe even testing a new bottom as India failed in its 2009 bid to go over 10% and now avers 8% is enough/ FDI flows for April will be out next week as low interest and slow growth replace low interest rates and high growth. From a cursory browse through of ET(economictimes.com) it seems Cash volumes are now INR 90 bln a day in Cash turnover, last seen in mid 2003 and a third of that seen in 2009 in the same month

Some shorts are now paying full cent for the dollar in th Indian markets as keeping the markets up for monthly pronouncements stays in fashion and gives bulls the time to use filler time on the networks for the same 30-90 stocks championing consumer spending. At least Titan and Juilant are more than extended and make easy pickings

The infrastructure / construction development sector still does not allow LLPs , but allows 100% FDI for performance, each new PE signing Infracos has signed a new road project ( $500mln each for a not too large project bid). The third sector still keeping me on a fine perch is aviation as loss making KFA and Spice jet also pick up 15-10% more traffic. Autos should become more expensive, Coal companies passed over in the next quarter even as RBI's Financial Stability reort to the MoF still shows 18% credit growth in the banking system, a near equal deposit growth and a tenuous and uncertain link to the global financial system persists and noted players withdraw from the Indian market in terms of their cash on the prowl and planned to be in stake.  In a way, we stil have the perfect insulation to stay alve in the global winter and the global winter runs prolonged but in the long run, i look slike we and the world are talking two diferent things and maintaining a sotto voce constance in the two paradigms a task akin to your English school teacher trying to teach you all the nances of letter writing and presentation, leading to another fractured new generation with their own lingua franca

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Inflation WoW came out as expected at 11.7% for food inflation, 12.86% for Primary Articles and the consolidated number at 9.02% ahead of the unscheduled eGOM meeting for Diesel and Kerosene price corrections that will keep inflation up. Exectations are normalising to a higher level and in an hour or so the bank policy for the rest of the year may become clearer with the Bank rate 100bips above the Repo rate and currently at 8.25% (Repo 7.25%) likely heading to a above 10% figure andd more as imported inflation and the one carried into input prices dqueezes proiftability factors in yet bereft India forver waiting for new investors..This article will be updated later throughout the day 

HSBC and Stanchart have come out as the only ones carrying forward from here being used to a Rupee Trillion of business assets each in the country. MoM inflation WPI figures had earlier come to 9.06% on Monday night and markets have started correcting from 5500, results a few weeks laterprobably accelerating the down move this time and the yield curve moving after the announcement further higher from 8.3 to even 9 - 9.5 % in the next quarter or so. Banks' pricing will move as also for deposits after a couple of months if and when inflation stays at 9-9.5% and RBI makes a new set of more quicker baby steps just to stay on top till the rates start moving southward in 2012

The monthly inflation figure saw non Food core inflaion move from 6.5% to 7% Month on month and base transmission is on to manufactured articles as car prices were hiked this week while FMCG / durables keep playing with their own retailer economy. 

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There were two, before you dismiss this as a flippant interjection. 

The first was a deadline on mispriced FCCB during the previous boom, which killed an already illiquid market and the DEPB stuff also a deadline. Bth of these have been revoked / extended ahead of tomorrow's 9% announcement

The second was earlier last week raising the auto approvals limit for ECBs earlier a pittance of $500 mln coupled be issued automatically despite the bigger provisions made for infracos. So a lot of the fine print comes in later as umbrella proposals and policies look friendly but lay unused ( like the US banks' reserves of $2 tln odd lying with the Fed after QE2) Alitle bit goes a long way but the nfra financing gap for India is $2 tln 

There has been oher small pieces of good news too, The Deals market in Equity and Debt for India have been down though 35% and 17% respectively and the investment banking hiring is concentrated around the top ( a very serious case of neglect) with new PE companies, new teams at UBS and Multiples first new investment, all still in process. REC is issuing its $750 mln of new ECB bonds for Capital upgrades in an otherwise very dull India season

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We were pleasantly surprised to see some old agenda items being attended to even as the Maruti strikes have taken over most of the attention outside the markets and the markets continue to wait for substantive buying. Even as DIIs and FIIs continue to take a dip in the Indian bourses, volumes in June and I am really apologetic to see, the Bank Nifty options and futures fail to take off but as surprisingly, have not been stung by repeated news on how India is not really where any of them want to come.  

As I said, news on certain old infrastructure bottlenecks and treaty shopping rules was welcome. The 1000 Acre Singur land saga has become the 600-400 saga as of immediate effect with 400 Acre claimed by the Mamta government by law to be returned to farmers. More may be deallocated in the future as Tatas do not show any inclination to come back. Of the 296 acres to be returned ( Business Standard has the breakdown ) at least 200 acres belongs to people who never wanted oto sell and as such further public land acquisition has to come within 2011/ 2012 to solve the public stand on the same and ensure that someone who invests in India and as been tested for able Corporate governance is not stopped in his tracks later.

The graft cases in 2G were also inact pleasant tio hear ( unless you still have some savings invested in DB Realty) as the vengeance modee of the dysfunctional CBI plus special courts system sprung into action to claim the Rs 200 crs of bribe stash for public discomfort to the promoters in he least. Shahid Balwa may have a few side trades going on inside the prison, but the CBI is not letting him get away with the cash. 

The public saga of Baba and Anna, lasted quite a while before exploding in Baba's face and the now divided camp of the Civic society movement severely limited by its own actions as his own empire of $250 ml was I think shocking to both his supporters and detractors who expected that to be his annual turnover.  Anna and the lawyer father-son duo still maintain their dignity but I think mostly look for support and combined action esp with Santosh Hegde watching over each clause and each piece of action like any self respecting inflation hawk globally.

Last but not the least even as Corporate Law reform and white papers from RBI on FSDC and bank regulations/ new bank licenses have come and gone, the mysterious DTAA negotiations with Mauritius have reached a finite shape with Mauritius looking to cooperate in making sure corporate chicanery is not welcomed in the guise of tax breaks from the island government for pass thru agreements. Whether the cooperation on bank account data and taxation will eventuallly lead into any important breakthrough on Banking secrecy laws remains fuzzy. 

Infosys Board

An interesting footnote to the day would be how no internal woman employee of Infy made it to their board with BG Srinivas and Ashok Vemuri getting support on their new appointment from an ex Unilever Director, Ann Fudge. Also Accenture, CTS and HCL are still facing a ban under BEP procurement of Visas for their staff wishing to travel to the US and with elections around the corner i doubt if further lobbying will help. This H1 season is sure over too

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We were pleasantly surprised to see some old agenda items being attended to even as the Maruti strikes have taken over most of the attention outside the markets and the markets continue to wait for substantive buying. Even as DIIs and FIIs continue to take a dip in the Indian bourses, volumes in June and I am really apologetic to see, the Bank Nifty options and futures fail to take off but as surprisingly, have not been stung by repeated news on how India is not really where any of them want to come.  

As I said, news on certain old infrastructure bottlenecks and treaty shopping rules was welcome. The 1000 Acre Singur land saga has become the 600-400 saga as of immediate effect with 400 Acre claimed by the Mamta government by law to be returned to farmers. More may be deallocated in the future as Tatas do not show any inclination to come back. Of the 296 acres to be returned ( Business Standard has the breakdown ) at least 200 acres belongs to people who never wanted oto sell and as such further public land acquisition has to come within 2011/ / 012 to solve the public stand on the same and ensure that someone who invests in India and as been tested for able Corporate governance is not stopped in his tracks later.

The graft cases in 2G were also inact pleasant tio hear ( unless you still have some savings invested in DB Realty) as the vengeance modee of the dysfunctional CBI plus special courts system sprung into action to claim the Rs 200 crs of bribe stash for public discomfort to the promoters in he least. Shahid Balwa may have a few side trades going on inside the prison, but the CBI is not letting him get away with the cash. 

The public saga of Baba and Anna, lasted quite a while before exploding in Baba's face and the now divided camp of the Civic society movement severly limited by its own actions as his own empire of $250 ml was I think shocking to both his supporters and detractors who expected that to be his annual turnover.  Anna and the lawyer father-son duo still maintain their dignity but I thinl mostly look for support and combined action esp with Sanosh Hegde watching over each clause and each piece of action like any self respecting inflation hawk globally.

Last but not the least even as Corporate Law reform and white papers from RBI on FSDC and bank regulations/ new bank licenses have come and gone, the mysterious DTAA negotiations with Mauritius have reached a finite shape with Mauritius looking to cooperate in making sure corporate chicanery is not welcomed in the guise of tax breaks from the island government for pass thru agreements. Whether the cooperation on bank account data and taxation will eventuallly lead into any important breakthrough on Banking secrecy laws remains fuzzy. 

Infosys Board

An interesting footnote to the day would be how no internal woman employee of Infy made it to their board with BG Srinivas and Ashok Vemuri getting support on their new appointment from an ex Unilever Director, Ann Fudge. Also Accenture, CTS and HCL are still facing a ban under BEP procurement of Visas for their staff wishing to travel to the US and with elections around the corner i doubt if further lobbying will help. This H1 season is sure over too

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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%

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As the old series had more than 30 adjunct categories that were unlikely to make sense with typewriters, radios and fan peripherals included multiply and services exclude, the new series' first results are an eye opener. Though detailed analysis will come later MOM figures from 8.8% in the new series for March and 6.3% for April 2011 shows a robust production factor in the economy. 

The Optional technical ping pong (they didn't say on the networks)

The Consumer Discretionary or the non durables dipped to a low 2.1% but may now be just the cost of inputs braking our IIP and thence the economy. The Infra sector in April constinues to 14.5% and in fact is a good support to the 23% a year ago. similarily, in the old series the April no. would have been 4.4% overall. Intermediate goods at 3.4% along with Consumer Non Discretionary at 3% show the retail inflation concerns that straddle the bear game with Dutch rollovers at our banks precluding Fresh bailouts by investors unlike Greece  and yet don't invite venture investors .Elec./utilities at 6.4% are a good scream along withthe Capital goods at 14.5% and manufacturing nos at 6.9%

I do think that the technical para above means Economists are and should be a useless breed without a future in the business sense of things but India has moved on to better statistics than investors..and school kids would very well by waiting to go urban by the time lunch hour comes :D Cheesy slices I bet. 

May however would have given a jump on inflation and ahead of the new trade deficit numbers due next week, India seems to be well within its growth assured, nothing new band in progressing the retail lifestyle, welfare and the infrastructure economy

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In the vein of serious statistics collected and regrouped by the nations Economists, here is the latest symptom of the double digit interest rate infection..With global commodities holding,raw material inputs keep moving up higher as Primary Articles for WPI inflation crossed 12.5%.

Food group ran up 100 points from 8.06% to 9.02% while fuel is holding at 11.46% Scary figures but soon the lull in global crude and commodiies should make is way into thisese numbers as second half of the year might perform well for the Economy as per RBI Governor Duvvoori Rao's expectations

As mentioned in the other posts of the day and in May, India and China would continue raising rates for some months to come thought he reasons are fundamentally different. Also, much like QE2 went mostly into a equity boom preceding good results, the FIIs are here and ready to take the indices north in line with India's overall outperformance even as profitability will remain hurt by these hot numbers from the WPI baskets and transfer to manufactured goods is likely unavoidable. 

Though, anyone maintaining shorts right now can roll on for a couple of months without being pushed out, the markets remain dull waiting for the inevitable northward move after just 4-5 sessions of uncertainty in which we have all recovered our growth expectations not to miss the opportunity to invest in the India dream.

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While the "bank rate" has been already used into Indian policy as the commercial benchmark for banks to lend and thus borrow, the policy rates set by the RBI in the ordinarily and now by policy fixed channel of 100 bp has definitely made Fixed Income more interesting with yields touching 9% soon whenever a rate hike of more than 25 bp or a WPI inflation move to double digits is confirmed even as a blip. Luckily, the ECB rate hike would already be doe today and we have a week before talks on QE3 are more than an idle opinion at PIMCO.

As mentioned in the networks ( by Commodities experts, I suspect) the end of QE2 would soften the inflation blow for us and if it had come six months earlier, India may not have been tackling hot inflation either, which unlike in the case of China is not from overusing existing domestic production capacities and is more from supply inefficiencies and the skewed pricing vis a vis dollar we sustain for our exports. Also, before we forget challenges continue for our forex earners in other punitive action vis a vis knowledge workers and the expiry of the Doha round, even as a great performance on the fiscal deficit at 4.7% outruns aour dismay in FY2012 for a likely 5.5% deficit an almost 20% jump without Telco licence revenues and lack of availability of cost cutting measures as we continue to under invest in Infrastructure as also Education Welfare and Healthcare. 

My analysis however begs again that we find the space from the globally inspired inflation that has been unwillingly thrust on us and soon because we really never could afford a tight monetary policy for the Private sector or sop printing money for Welfare schemes. The catstrophe being in the RBI having to hike rates ( and they will raise it again) to bring inflation under control and keep growth moving forward when a drop to 7% growth does almost become standing still for us because of our size and diversity

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Rating agencies globally and in the Barney Frank / Chris Dodd shadow seemed to have become more about running ahead of the curve and putting their own house in order coming out with last weeks warnings on the Big4 in banking and warning and degrading the peripherals and Euro /US Treasuries from Moody's to Fitch. However judging from the timing, S&P is not in a hurry as in the case of the report on Indian Banking, it is diversifying into knowledge based analysis of its coverage of the Indian Banking super sector. 

Key Facts according to the S&P Data

3.08 average NIMs ( presumably weighed down by the 70% PSB bank assets) in 2011 ans 2.92 at its peak in 2007. Also an average of 2.7% NPAs expected in FY2012. 

A shadow of doubt on the Data

Before tackling the opinion for its repercussions if any on the banking superstructure, and the sectoral performance, the first thing one needs to point out is that public data on banking balance sheets and the restriction of the universe to active banks with more than INR 20000 crores in assets ( $5 bln ) one would find that the NIMs in India were more in line with those in the US in 2007 at 3.4-3.7%.

Also one can see that NPA definitions are likely to be different with S&P and their release to the media like all things rare and beautiful, are short on words and ignorant of their non standing in the arena. Even borokers have been circulating reports on banking NIMs for 3 weeks now , and someone like me could have reported what they are presenting on demand/per mandate, just from public dat.

Also, not to be a persevering niggle in a deserving foot, S&P are already minor fry outside indices and should not have bothered with a big bang sector when they invite being discredited, seeing as they have also not started being proactive about ratings in the region/ even Emerging Markets as a constituency

The take on the future

What S&P have attempted however, would be more creditable in terms of the effort and more analytical insights for your nd my business are possible only if the methodology is shared on the same. Till then, a margin compression of 50-60 bps for the sector can be easily negated by the global players with a 10% share of assets in the country who have trouble maintaining their margins across their smaller branch base; it can be negated by more than 100 bps compressions in SBI that would continue to maintain extra provisions of $250 mln each quarter; it would be negated on the positive side by those like HDFC Bank, YES and Kotak because of increases in their corporate credit offtake even as YES goes out of the way to ramp up deposit rates ( it is ready to take savings rate to 6% and more in line with bank policy) . S&P thus would be happy to take home the result from just ICICI Bank and none else. PSE banks would either follow SBI's lead in increasing Money market deposit rates to bring equity and grow Deposits to add to the CDR balance, while traditional bank directors would coninue to balance the arguments with the historically low CD Ratios in the Indian Banking System. Even with a size of $2.5 tln in assets Credit deposit ratio in India has been as low as 30% in the 70s just moving to 60% now ( ET op ed of 09/06/2011) 

However the NIM compression has likely been not compensated for credit growth as a growth market like India can still deliver 20% credit growth and take the NIM compression to negligible levels. As this is more rudimentary as a rebuttal, you ar einvited to post me for more suave copy. 

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With improved equity allocations and pensions from private sector also moving into annuities, morde fixxed income funds parked with L"Ic will reach the market for equities sooner than later. LIC's own purse for the year's shopping list for equities is $10 billion or INR 40,000 crores

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Saved by the bell became a fresh lease of life for the India story today again at a mid high going nowhere watermark for the Nifty at 5550. Jet Airways report found on the Dow Jones Newswires posted 26% higher nos. for passengers flown in May to 2.02 million passengers, a creditable number for the embattled airline. the legal penalties finally out of the way for Jet, it can concentrate on regaining market share if it can invent another few market making strategies in a upscale market waiting to reward higher quality and good business.

Kingfisher also reported higher requirements for aircraft pending its 120 deliveries starting 2012, goign for an expensive leasing option to cater to summer traffic in ano otherwise struggling 2011 with banks and Autos looking increasingly anemic in  consumer perception for current business volume and the rate high coming up before the ECB meeting next week tries to even up things in the Continent.

Spicejet is the other airline likely to report healthy numbers flown in May 2011. A likely 5 million passengers flown in May means FY 2012 is looking at 60 million passengers in full Service Airlines and another similar number in their poorer cousins also struggling to stay afloat albeit hit by discount wars of their own. Economic challenges notwithstanding, business is looking up with consumer spending keeping up with inflation currently

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Yes. Despite rationalising everything in "Happy Thursdays" we could find you confused about it so we pointed out the things that don't make markets happy. The Thursday excuse of retail inflation reports is working out well for markets looking for a daily see saw till Thursday afternoon to decide where India will be based on those sweet inflation numbers, which is really overdoin it, but then as long as turnovers are good, this seems to be better than any other way with the investment schedule quite stable for most investors after the FY12 downgrades made possible by a 5-10% PAT growth reports from almost all sectors led down by big cash governments in SBI and ONGC. India's headline inflation crept up to 8.66% and bank rate hikes may yet turn out to be the least of our worries ass the commodities trading cycle are intact in most assets like Silver and even Copper. 

The results season confirmed as post analysis in the media suggests, that Sales momentum is still at 20% growth yoy, and interest rate sensitives have just set lower benchmarks and thus taken down the entire indices o a lower bottom to start off the bull races. Banks and Autos thus will remain on watch, losing that Sales momentum others have and winning on cost reductions ( Citi and Deutsche have a global program for cost cutting to improve ROE, DB targeting 25% ROE in the CIB business with 5% from cost improvements as RWA weights go topsy turvy and need to get in line befor eBasel III Capital improvements burden the bank). In all sectors input costs have gone up to 36% (Mint analysis of index companies) we remember seeing input costs figures as high as 45% in results gone by

Weekly Food Inflation whipsawed again keeping analysis waiting for a secular trend , down to 8.06% for the week ended May 21, Primary Articles also climbing down 74 bp to 10.86% but Fuel inflation persistent at 12.54% with another bigger jump coming after the Diesel and LPG hikes next week. The new guard is taking up jobs wt most Investment Bankers and DEalmakers as the remaining i.e. MS, Citi and GS come back with an active team to proposition deals. Deal Flows in India remain stunted with the random deals in Africa from mid tier Retail Lifestyle companies like Godrej and Dabur and FDI in India less than $1 bln fo the four months compared to $8 bln for April alone in China. Even after the $18 bln filight of Capital from Egypt, the Middle East expects FDI inflows of $55 bln for the year, so India and the other Emerging Markets have to do much better than wait for everone to get into China investments. Encouragingly, those in the US might be replacing investments in China with some in India apart from the newly active Indonesia and Vietnam as China manages its FDI calendar much without US help this year. Also, the US Fed is expected to continue exerting downward pressure on the Dollar as the recovery gets weaker and weaker every week. Time for that beer! 

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