Today's action has likely peaked at 5250 but I doubt if short sellers or currency switchers will be allowed to keep the -1 correlation in the two markets and tke the rupee back towards 57 even in intra day rallies, the Currency Bears indeed had a lfortnight long unabated run except for the correction on Monday which they promoptly retraced.
Do not enter the rally at this point
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After market opening at 5220, some limited opportunities may exist but with most money chasing banks and select banks not ready to rise alone at the expense of the BankNifty getting overbought, action may be limited at these prices
OPTOCIRCUIT(Sudershan Sukhani) seems a good pick for 2 week periods or slightly more
BPCL will be in vogue and ORCHIDCHEM will see futher uptick but the sector may be capped by SUNPHARMA which is already 8% up in this move
IDFC is back at the 133-135 mark, breaking its short term resistance by bit and you may want to buy bigger positions in this stock
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Another one that makes you think as the bull gap today is not ripe for profit taking yet the market ill unlikely hit 5300-5400 in a straight line and will again drift down over the coming weeks, expiry week volatility at an all time low (IDV)
Currency has another gap down opening continuing from the late afternoon correction in the Euro and the Dollar yesterday
Infra IDFC may still be a good call at the OTM, Nifty Calls after the market comes a little down or for the intra day rallies.
Healthcare is a good scrape incl CIPLA but Stride Arcolabs is out of range. HEROMOTOCORP and BAJAJ AUTO will be interesting to watch after the big flash at the top . Despite the late recommendations MNC pharma turnovers are too low for investors to raise their Market Cap to Sales ratios which are under 1 for most
There are many backers for Sterlite and SESA Goa biut the case against them giving away INR 40 B in extraordinary gains to London based Vedanta companies may be too strongt o avoid and reactions to an overbought Sensex and Nifty will be fast and furious
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Infra stocks may not make more than a good audience for this rally as yesterday's razor edge close looked to mark out winners like IDFC out of the gainers' lists and keep midcaps in the running as a motley cre of non banks and banks that have not caught the bug come in without a disparaging notee on those excellent banks of course.
HSBC earned a good INR 500 Bln yesterday and as it was a planned sale, the bank may finally be ready for using the increased capital to good use int he India market as it tries to grow the personal lending business fueled by the price cut in Petrol counting to more than 50% of the announced hike. Oil companies realisations are a low $56 per barrel after subsidy computation and credit at ONGC
Perfetti Van melle has an indian VP of innovation and Business Development from the India ranks. PVM has been a regular at the Cannes Lions, getting another Bronze Lion this year. However, the Amsterdam based role comes after a long hiatus for Indian professionals and with Banking retail still degrowing at Citi and HSBC and Stanchart full up , there is no space for jaded ICICI Bank groomed pros to move in the 'city'
The big rush in Nifty options: please avoid getting in above 5200, there may be many more corrections despite PM Manmohan singh taking the chair.
Speaking ofInternational spread of our Services sector, Only $2.6B of outard FDI came from india as a hole in 2012, the IMF contribution of $10B or 3% aside, and Rajat Gupta has been convicted n four separate counts of insider trading with Goldman Sachs AGM in Mumbai still fresh in everyone's minds.
GIC of Singapore had a windfall partnership for Brigade enterprises, and that shows that the Economic amount of participation in India is getting smaller even as a RBI report flagged the Top 100 cities as getting a larger share of the credit with 73% of the INR 3.6 Tln stock South continues to dominate in credit pick up and outside the metros as the Deposits from the south are far lower than the credit share of 20% and 33% respectively. The north maintains a fair Credit Deposit Ratio of 75% while Greater Mumbai seems to be the only distribution center in the West of India's INR 3.6T credit in the report. Overall Credit stock is highest at INR 48 Tln but with Non performing growing to 2.6%, the profitability is a given for only quality large franchises
more than INR 200 BLN in restructuring applications was received by banks in Q1 after the numbers for restructured loans also grew 11 times in the last results at mearly INR 30 B. However, the Indian stress tests gave a clean chit to the banks who are well capitalised almost without any loading on short term liabilities or structured credit in their Capital and yet work ith a D rating in the international markets
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Even as Goldman Sachs walked away with advisory business worth $220 B in the first 5 months, Morgan Stanley and JP Morgan close behind with more than $210 B each, it was still a 20% weaker market in 2012, a market nearly at rest with Energy, Real Estate and Technology getting up with the most interest. India skimmed off an additional $20 B (est in Deal volumes in the months of April - June 2012 from the Deals business after the GAAR announcement as the quarter emulated the Q4 grounded business data of $3.6 B volumes ofedeals in M&A in the three months. That came on more than $21 B in the January to March period
Outbound M&A till last week (June 22) in 2012 also hit the brakes after International protectionism hit the first few and deal volumes were a third at $2.2 B after a $6.5 B H1 in 2011. Indian trageted M&A from FIIs being dead, Domestic M&A grew 27% in H1 to account for most of the volume
The new UMPPS would be bid in September as Standard Bid Documents are ready but with imported fuel prices high and Domestic Coal availability still in question with 65% Fuel Supply Agreements, it is likely that the government need to sweeten the pot till then to keep investor interest alive.
Government in the meantime considers setting back the GAAR / Section 9 deadline to pacify investors as lower Oil prices brin ginvestor interest back
(References: Hindu BL, CNBC India, various)
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One single discussion on probability of GAAR going away was finally enough for the USD to sink back against the Rupee, falling half a percent int he last hour of trading.
Markets also recognised PM Manmohan Singh was here to stay at the top of the MoF "cirriculum" for the next few weeks which likely coincides with that vital dose of politically sensitive reform and with GAAR away foreign investors will be more understanding
Expiry was a razor sharp edge of the new world kind of adventure with the Bank Nifty straddling a 10000 target and at that time a strong rupee- dollar trade, while other sectors lost most of their beauty and the nifty actually ended flat definitely influenced by the expiry. A quasi quad itching was thus in motion nad all tail events probability increased with such perfection of timing in expiry of speculation in the rupee, the rising probability of speculation in bank and growth stocks and the first 24 hours of Manmohan Singh as Finance Minister.
Meanwhile Malaysian Palm Oil joined Facebook in proving what IPOs prove. As Facebook recovers to $32 and user forecasts of 1.74B (from Goldman Sachs) by end 2013, the Felda IPO for $3 B gave people outside Shenzhen a reason to live, Asia withstanding a drought of capital better than others but only in the corrupt economies from Malaysia and Thailand to the city state in Singapore Singapore dollar has come back from $1.30 against the USD to $1.28 and is getting stronger as the nation tries to manage the transfer of convenient business to the city in currency derivatives, IPOs and US exports. It is also trying again to strengthen its exchanges and its investments thru Temasek. sister fund GIC which also owns enough of UBS to warrant an AGM in Singapore, signed up for a residential project in Bangalore with Brigade Enterprises.
The sale of 5% stakes in Axis and YES bank went off peacably during market hours too. Both remain good picks, the markets relying on the latter for a change, evident as Axis gave under much more mpressure after expiry trades Bank nifty ready to start from a lower base tomorrow AM for the 5400 run
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Expiry Thursday means buying would not have picked up in July series and some are not quasi currency forwards for a change. IDFC Calls at 160 levels for example are cheap and buying should be done today and yesterday. Those avoiding options can sget into July series infrastructure futures in ICICI Bank and IDFC, ICICI Bank looking like a candidate for 900. SBI could run to 2350 similarly and HDFC Bank left alone for the next run after the market corrects from 5350-5400
Yes Bank is likely to see an important correction as HSBC exits Yes and Axis Bank holdings of $500 mln each at 3-5% discount t o market
Auto companies would be great in the july series, Star (Stride Arcolabs) good for purchasing at lower levels if it comes back after usinfg $300 m from sale of Ascent for the $110 FCCB repayment
HDFC is my all time underdog favorite at this time of fast rising indices and there could be action to start the bear in Sterlite and SESA soon as their VAL load becomes clear ahead of the board meeting hich will still likely approve the actions
All the usual recommendations for this week apply as per sectors recommended especially if you are not day trading within june. kingfisher got shorted already, JP Associates, one feels may get left behind again and BHEL and L&T are buys only till the trend is up
Jubiland and Titaln shorts should also be avoided while the trend is up PSU Banks like BOB and PNB should be very good picks. Many hedgies picking up PSU bank strategies in the last quarter
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Expiry Thursday means buying would not have picked up in July series and some are not quasi currency forwwqards for a change. IDFC Calls at 160 levels for example ar echeap and buying should be done today and yesterday. Those avoiding options can sget into July series infrastructure futures in ICICI Bank and IDFC, ICICI Bank looking like a candidate for 900. SBI could run to 2350 similarily and HDFC Bank left alone for the next run after the market corrects from 5350-5400
Auto companies would be great in the july series, Star (Stride Arcolabs) good for purchasing at lower levels if it comes back after usinfg $300 m from sale of Ascent for the $110 FCCB repayment
HDFC is my all time underdog favorite at this time of fast rising indices and there could be action to start the bear in Sterlite and SESA soon as their VAL load becomes clear ahead of the board meeting hich will still likely approve the actions
All the usual recommendations for this week apply as per sectors recommended especially if you are not day trading within june. kingfisher got shorted already, JP Associates, one feels may get left behind again and BHEL and L&T are buys only till the trend is up
Jubiland and Titaln shorts should also be avoided while the trend is up PSU Banks like BOB and PNB should be very good picks. Many hedgies picking up PSU bank strategies in the last quarter
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The Big Thursday is here and stocks still have potential of a positive run despite a continuing more tentative move that seems to be taking Nifty the hole 9 yrard to each ne high especially ith the Dollar linkages still in the equities segment. Dollar should be weaker in CDS trading today as the upmove is confirmed and most tail events behind us with the Presidential battle on. The SGX is enjoying its moment int he sun as a leading indicator of the collecteive sentiment and Sensex futures are doing fine too in this and the july series. July series positions include good rollovers in Public sector Baqnks like Bank of Baroda, big moves in the Big Four in Banking and that could mena a big upward correction for Axis in which shorts continue unabated.
Reeforms are not likely to be germaine with a valid impact on the markets as most would be actions on direction we have seen turn out to be wishy washy temporary cliffs for bears in the wild. india however continues to hold the solitary hope for a global recovery with China yet not buying and the BRICs sentiment challenged globally by fears of hyper inflation which india watchers and India bulls know to be unlikely in this part of Asia
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Each policy announcement / ratification is being followed by a spurt in the depreciation of the rupee starting with $20-$25 B impact from infra ECB and GSEcs on monday, another from OFS today and in the fixed Incomemarkets because at least INR 2.2 T is coming up for redemption already in 2022 and till that is solved additional supply of 10 year bonds is unlikely. Till themn pressure will shift to 12 year and 5 year bonds. RBI would still be introducing another INR 70B of the 10 Y benchmark (8.05%) in tomorrow's auction
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Currencies strengthen agauins the rupee intra day despite expected range with RBI actions not making reform grade impact to rupee baiters
Offer for Sale is a possible route for promoters esp targeting those ith more than 75% holding but also competes now with direct auctions Thoise choosing the OFS / IPP route can now hoever commit such sales every 2 weeks within the colling period of 12 weeks
Promoters are frequently charged with managing the "marketmaking" in their scrips making votaries like India investor Advisory Services and Ingovern come up as a new segment of Proxy Advisory companies. Our home grown PACs may serve a long felt need but with limited individual experience inthe ranks their impact may be as limited as of bloggers unfortunately
Promoters of Vedanta for example have used Sterlite and SESA GOA to consolidate Cairn and other indian resources in a single company structure buut Vedanta has palmed off loss making resources at a premium for over $500 M in cash profit onthe consolidation. Also the to indian stars are additionally handling VAL debt of $12 B. Here's the amazing detail on the same
The Auction route allows promoters a lower prep time but Auctions of ONGC and WIPRO bombed soon after the announcement in January Seemingly the new thorny point will be not allowing modifications on OFS/Auction bids whence promoter is unable to gauge the degree of non interest in the issue
Sebi has also asked that an indicative price be displayed during the last 60 minutes of the close of bidding and stated that bids cannot be changed or cancelled during the last 60 minutes from the close of bidding session instead of last 30 minutes.
Any disclosure of a minimum price or floor price for the offer for sale would have to be made on the day before the offer, after close of business hours.(DNA - now under the Zee banner :)
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Though digitization has added to the fortunes of DTH operators, MSOs like Hathaway and DEN are reaping the dividends of the digitization policy that allows signals to be broadcast digitally. But between the DTH operators themselves apart from identifying Tata Sky as a first mover with quality services and products or Airtel Digital as a well endowed challenger with ability to absorb pricing adding to its marketing prowess recently the others are a mass of also been there including the pioneer from Dish Tv or the Reliance product probably. One gets to a mini project trying to identify each without adding qualitative notes in the quant phase and not resorting to just a pathetic bulls and bears story hen putting the quant and the stories together in the second phase. apparently I stil have enough intervention powers to make it happen and probablly hit the right chords for the future of the industry from here as another india consumer story gets close ato a seeming plateau in 2-3 years after a mere 10-15% penetration of the potential market.
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Currency markets expiry does not usually bring much volatility as the markets inherently trade in forwards and futures. However the dollar is poised to hit 56.50 today as the rupee's fortunes take over petty benchmarking to a Dollar index fed by the weakening Euro. The Dollar index is itself down despite the Euro weakening as the Yen folows to higher ground on the back of its new revenue measure ona government running a 200% public debt but required for speculators who thrive on funding trades thru the Strong Yen
In stocks, the benched NBFC sector could help the banks surpass earlier eek's levels on the Banknifty while the index rangebound till 5150 is probably ripe for the adventurous to sell a few June puts, but most should have been done by Monday. A couple of network mentions like Jubilant and Titan ind shorts are great starts. On the long side, REC, PFC, PTC and Powergrid should move at different parts of the day and typically ING Vysya and Indus Ind as well. Bank Nifty gets safe to 10,200. Setting up new July strategies should have been disturbed by the seea index moves and so one should probably wait before publishing bullish option picks in the segment esp as July options are overpriced. Futures plays in the Bullish sectors are safe includign Healthcare which may get a little cashed out as interest returns to other sectors today. Buy Cipla at today's lows, stay in Sun Pharma if you are already ina nd exit Dr Reddy
BAJAJ AUTO is again a long and HEROMOTOCORP could recover a few in the couple of nifty surges in the day bu tboth will likely start back from 1500 and 1960 again in the near future. Use discretion and exit any upmove after 3% for day trading and those staying in should be ready to stay out July. Fresh buys in MARUTI enjoy the same caveat. Banks are at a new level but may not retrace much more except Axis to 978 levels and SBI to 2110
Prime Focus (RJ), Tata Global (Starbucks, Indian promoters) and a few other mid Cap picks are around including mannapuram Finance. Reliance ambani stocks including Rel Infra and Rel media will have a move each in this run to 5400 if it happens
Infra sector is poised for a take off on its own technical steam as well as good announcements from the PMO / MoF. IDFC and GMR Infra remain prized large cap picks in the sector. GVK Power, IRB and LANCO seem to be marginalise d by their Capital structure by now but global infra financing sector ould astill have to adjust to a lot of India specific projects' independent performance strictures and it will not be easy except for Development Finance plays from Japan ( $10 B for DMIC), IFC and even ADB
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Another of Dollar's correction days is upon us easing the day trend for the Nifty qithin the flat zone and making the trading day verbose and Recommendation/Tip friendly across experts in market, analysts off market and stock market investors contributing to volumes of INR 2.2 T daily the last two days of nervous boundary wall smacking diatribe from fence sitters not able to get tv slots or investable surpluses before the last bus leaves.
The market will soon be back of course and probably not below 5000 but expiry is safe near 5200 than lower as Sir Prakash Gaba also confirmed on the first day when the policy action snuffed out many fragile hopes.
India PM Manmohan Singh taking over the reins may not change the situation on the ground but it is a material plus, the one on Tv making the posit for him being the Citi APAC MD, Pawan Vaish in end May in "THE WORLD ACCORDING TO CITI".
The material plus from Sardar Manny taking over is in all the non political attempts filed over the last one year by the Plan Comm, the PMEAC and perhaps even the RBI to redeem the current situation which in various forms had come earlier for India Inc and which is why still sub 6% growth rates are unchallenged by India detractors who actually watch India's ratings (including Indian citizens)
FDI got a big bonus with $5 B announced by Coca Cola over the next 2-3 years. It is already involved in social empowerment programs to cling to its early mover advantage and find ways to expand India's stale but potentially rich soft drinks/beverages sector wwhere it enjoys 25% share thanks to an early recovery by Kinley as Parle's Bisleri still manages another 25% of the fluids
The Global 5 by 20 program targets increasing the role of Women run businesses in its 100% groth by 2020 and was started in 2010
Trading strategies follow.
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In one day yen seems to have caught up on all the strength it could muster in rupee trades as ell. It is on the cusp of getting weaker agains the dollar again and the dollar likely finished its move against the Rupee? the YEN is falling against the EURO like a bottomless glass of bubbly and in this short week it has already gone to its stronger levels against US ready to hit 78
The Rupee in the same day went from 71.5 to a 100 yen to 71.9 to a 100 YEN (JPY) from where it started the trip back. Yen should start weakening from 78 levels against the USD
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Irrespective of a slow movign day, bond yields have moved up to 8.1% because of thin trading / under supply of the new 10 year benchmark. RBI will be holding a Inr 15 B auction on 29th to introduce a new 5 year bond which will ease trading in Indian FI markets. The supply of the 10 year benchmark is less than INR 10 B apparently. The benchmark released in November traded upto a stock of INR 90 B before the new benchmark was released.
India has added $5B to the Gilts limit with a lower residual maturity apart from $25 B for Infrabonds, permissions for QFIs to invest in Indian Mfs and another $10B in ECB limits which are unlikely to be taken up as only high quality companies can operate under the limits on cost spreads on such debt
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Sneaking away in the corner of heavy moves like the PPA between NTPC and CIL and the zigzag expected on the rupee on its way back to below 56, Amit for ET reports a new FTA with the embattled Eurozone with India actually hoping for more market access in Textiles, leather and Engineering products as well as more visas for its working professional s presumably in Banking, IT and BPO. India is also looking for an elusive data secure certification from the conservative EZ. Needless to say, most items on India's side of the FTA can be said to be a wishlist. Also not to sound opaque and narrowminded but it seems unlikely that India ill accede to the smaller bit demands from the Europeans if we are not getting anything in the FTA.
The infographic, which one assumes not be unduly optimistic or a laundry list includes on the European side, duty cuts for automobiles and wines/liquors; Market access for European dairy and increased banking licenses for banks from the region. One wonders if there are enough people in the sector to help realise the dreams on both sides in terms of knowledge of the real negotiation process?
Ikea announced its agreement to invest EUR 2 B in 25 centers over the weekend and Anand sharma expects to lead with Single Brand FDI. India is expected to refuse banking postal and legal sector access reforms for the Europeans in the time limit provided.
Again, needless to say it would be bilaterally explosive if these items were resolved with 100% agreement on both sides and unlikely to be any use with any limited agreements whence the idea of a "Free Trade Area"
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Please read with the Morning Report.
The Nifty will stay around 5110 level s unless something exceptional happens during the day. Pranab Da resigns to enter fray as Presidential candidate with PA sangma still standing. Buy Nifty calls after consolidation survives first hour and shows signs of strength
Buy banks as soon as you seel comfortable. As we mentioned it should first be the SBI, or even Axis Bank, then HDFC Bank and then back to ICICI Bank which could still become the star of the ensuing rally. Do not sell calls even for expiry in the current consolidation. There is more good nes to come and due weightage given to good news already announced. After all, we are not a banana republic and we should not expect regime changing information everytime markets move in a hurry.
You could keep a few puts in your hedging strategy abut I contine to be sold on Puts. You could sell a fe puts for expiry too. Bank nifty is the one to watch for a break down as well. Defensives might not be very positive today. I am holding on to my Banknifty Puts sold trade as of now but I will be watching
MidCap interest could be subdued except in select counters. Tata Global story or VIP Industries or even Jyothy Labs could maybe avoid intra day action. Maruti continues consolidation with extensive plans to catch up with Diesel production ahead of any plans to remove Diesel subsidies unlikely to be adopted by any Indian regime udner pressure.
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Yesterday's disapppointment in the currency market seems to have caused a global ripple as after the piping down of reform noises in the Indian polity, nothing else from India seems to have been newsworthy except the sudden slide in the rupee which was worth 1.1% of the 1.35% move on Monday morning by the time markets ended.
The diagnosis - Global ripples are mostly post facto and the Rupee may well be able to continue correcting as the Indian stock markets hold with Sensex at 16890 and 5100 respectively. If the nifty does fall below 5100 as SGX Nifty presupposed in the aftermath yesterday then there would be a lot of unlikely churn as most (including us) are bought to 5100/17000 levels and as the netorks mentioned this would be the first quarterly loss on the Sensex since December.
Trading volumes ere at their highest yesterday in the Indian Markets. If an when the climb back starts thru 5050, 5090 and the strongest levels at 5100 the banks that corrected from 10150 to 9800 on the bank nifty may well catch back with ICICI Bank getting weaker for moves in SBI and HDFC Bank instead
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A cliff of expectations hit RBI and MoF announcements of new plans to eaase dollar flows into the country and the Dollar is still climbing as if it was the end of the world in post CM trading till 5 pm
Infrastructure Funds lock in period has been reduced to a year and an additional $10 B in ECB approved. Also fund flows impacted are much larger than the EEFC discounts when last month the rupee begged RBI intervention.
The Euro is falling thru as the main reason for the Dollar index and as that should in fact lead to a Euro cross peg ont he US Dollar here the rupee could still be correcting in a few hours again. The changes were expected to be more far reaching including rumors of Resurgent India bonds and Millenium India Deposiuts and the set up was too easy for the nascent market to burn once the announcements were done.
Indian GSecs to the extent of an additional $5 B would shore up income in many bond funds globally as India ETFs get ready to mop up extra funds after the exodus till April 2012 the GSesc residual maturity has been reduced to three years
Apparently volumes of trades organise most of the Dollar flows though Exporter sales happened in the 56 range only again earlier today and again they are just waiting and watching as the Dollar makes rupee exports competitive
indian FX resevres continue at the $289 B level but with dolla r bulls having waited for all policy ammunition to be spend before riding back, the rupee correction may well take one more week across the Expiry on Wednesday and Thursday( Equities F&O)
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Friday's intra day high was lost by more than a percent with markets opening Monday in the Rupee mode, correcting to probably 54 levels at its best in the coming weeks. However trading ranges are likely established faster in this edition i.e. Depreciation 4.0 as there is a big government policy move expected to keep gains in crude into the Economy
Expiry in currencies is the last Wednesdaya nd the last week of H1 with bank holidays means trading volumes will focus in the June series. yields have been reported to be heading down from 8% and short holdings by your floating fund manager i.e gilt heavy business in Fixed income funds , first and then the corporate money funds
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There are still some shorts left, but keep bought in on the banks and do not shorts auto further as they will open near lows. BAJAJ Auto, I will be buying from 1450 levels, Maruti is still not a bad story after the 10% drop in sales esp with a new 800 cc for diesel fuel audiences on the design board.
Sun Pharma is unfortunately a likely miss for us as it looks expensive and there should have been a correction, Jubilant is a good short and ET did a onderful round showing the potential in DLF, Suzlon and KFA to ride the correction. Gangs of Wasseypore apart, HDIl, HCC and Orbit seem to be good speculative picks with 1-2 Re stop losses
NTPC, L&T and BHEL are good likely bear picks and so avoidable for investment. It may be a busy sector and the move could be good for your purse as up or down moves in the sector are defined and MindTree is available in long term picks with a unidirectional sentiment
Currencies have corrected by more than one percent on monday morning overnight positions delivering a huge profit
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The rupee is still in a sour mood apparently despite RBI and MoF promises over the weekend to substantially improve its prospects today. Consequently, the equities going down from 5150 will be filled in by more depreciation to the rupee, speculation at its 'best'
Report card
state concerns - none
new reforms expected - none
consumption sector - degrowth to continue as inflation picks up, crude is still as expensive for us because of rupee depreciation
downside - limited. WHY?
I can seem multifold reasons for the markets improving actually. Also I think the real reasons for markets going don is just tweedledum and tweedledee. That implies that if there were new reform announcements like why Ikea agreed to plan for 25 indian stores ( likely as local sourcing restrictions were lauded for flexibility in their lobbying with the Ikea investors/founders) there would be an upmove and otherwise markets will drift lower.
Banks still have an upmove, in stock specific picks as the sector's performance is exemplary despite pressures from the mostly indigent and disingenuous ratings folks at Moodys' and S&P. India however does not attract investing flows because of ratings and banks have not faced any challenges with Capital programs. Maybe our homegrown agencies should forget JVs and build out a Chinese rating agency like presence? just kidding.
The multifold reasons for optimism, shorts are at a loose thread but watch out they can be loose cannon, the rains are okay, the anti reform bus is mostly off the highway and it does seem India's rural engine is much more accessible than we thought it would be, with autos, consumer goods and even DTH surviving onthe good news. The dorp in auto sales and likely personal credit is the most scary however and we will be watching
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here i am watching a perfectly bullish strategy selling both 5100 and 5000 puts being called a bear spread. a bear spread would have been if you had bought in the money puts and selling near the money puts or even vice versa to be funded positive. Televised on CNBC India today 11:55 am
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Mumbai it is instead linked to a higher dollar index meaning a weaker rupee and the Dollar is higher while Euro is leveled off at y'day levels
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I am holding my Nifty 5000p short and 5100c short positions right no as the markets hold the correction thought and mull moves. Carrying moves to monday would be dangerous and should be carefully considered especially if you have "not been part of the shortcovering crowd" Nifty PCR is at all time highs of 1.45
I for one leave Sterlite, SESA well alone, HINDALCO has been a buy so you could play for a little correctionand exit within INR 2. Selling It could be a nice intra day theme but as it has no basis hatsoever execept the correction in Rupee, Mid Cap IT leaders esp MindTree are unlikely to give way for better buying levels
Dow was down 250 points yesterday and Shanghai 1.40% down in the morning as Dollar is weak but commodities are weaker right now, Oil below $90. larry Ellison is buying a island in Hawaii but otherwise it would seem that Friday will see only small buying at ne levels as investors put in their applications for membership on the long haul with the India story, having just come out of Waterworld
No do not buy intra day bank picks but yes I still have a ICICI 900 call somewhere I bought last week
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The Dollar index having been a shield for the rupee move 'up' to 56.4 levels ( 57 in July/Aug futures) it is high time is ignored on the way south as the Euro is artificially pumped to all time highs against the rupee when it is ruling at a 200 bp crash overnight. And again the fall in the Dollar will not have a concomitant rub on effect on the Sensex genie as it stays at around 16950-17000 levels to consolidate and absorb the CCI landmark decision. A new FM is a mile away as the market expects to swing PM Manmohan Singh aay from the seat and convince the UPA to give it to unlikely PMEAC head C Rangarajan, or old war horse in the Home ministry Chidu.
That is a lot of fundamental actions for one market to digest, but the grain of further depreciation has been likely nipped and the markets have earlier never let the Dollar index ride it to a skew and will likely bring it back first based on a Euro cross rate normalisation and then make a nother move for sterength of the rupee or otherwise. Bu tthen that move would inherently be strengthening of the Rupee.
Sectors like Banking are good to hold, Automobiles good to sell but no trading shorts please, unlikely that they have yet to tral more bottons except for a quick correction in HEROMOTOCORP
Today, upticks in construction are unlikely to hold but Healthcare may be in for a nice cozy breakfast with investors.
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Of course now that spectrum is approved as notional full value collateral ahead of new auctions, banks ill be able to fund the license purchase without the judgement calls in most cases except for those who may not want any more exposure to the sector
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As in 2009, buying in India began on the fall of crude prices nearing 90 today as it happened 3 years ago in 2009. J P morgan however is the bank brokerage that changed the recommendation
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The rally started at 2:55 pm amd lasted till 3:05 then consolidated. Hard to see if that meant deaath knell for those how have been short on India or if there will be shortcovering further to 5165. YOu see my range strategy is just yet not making losses at the right end where i had to sell calls just to get my heartbeat back and now my currency position is also a cutting edge one and my equities too. you see it is time to short the dollar and there are One & One half hours of the NSE / CDS session left.
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S kumars or partners Future retail coul deasily pick up Only CVimal's lossmaking textile production and distribution infrastrucvture from Reliance as ell as the residual brand even as Reliance remakes its overall business portfolio centered on Energy and Petrochem Cashflows. As of now all retail, consumer finance and Telecom interests fo the onglomerate as ell as ne sports outfits are under the umbrella ownership of Reliance Ltd
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You can picture India thus - the Nifty and Sensex ranges decreasing in movement yet not at higher levels really waiting to start over, wordlly fallen currency icons of the Dollar and the Euro trading undha badla and getting paid for being done in globally in Rupees, esp the Euro "winning" against the Dollar at a move from 1.27 to 1.26 instead of losing as it counts to have in most currencies, and a India inc oblivious of currency movements as core inflation is taken care of and of falling sales as probably a new set of cheap Dollar capital will finally overpower homegrown remedies' businesses and mining resources sweatshops run out of London.
Governments will glorify inaction, exclusion of reforms and inefficient foreign policy. In fact if you are not careful, a vitriolic, irresponsible and blatantly communal and Swiss 'Galla' funded opposition will replace your institutions that survive with regionalistic turds and an equally corrupt and ready to kill politico who was a lowly gunda of the area because his party was not in power
Tired equity markets ill never tire of spinning moneymaking tales, 9 on 10 true and reflecting the spirit of the nation that remains outside the eye of the media. Or so the romantic tale goes on!
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Another shot in the arm for bears mid rally but the Dollar is more than little out of range at 56.38 in june contracts or spot effectively. spot can easily come back to 56.1 levels or the Interbank rate outside the NSE to 56.07 in today's markets
The Digitization spiel has not worked on MSOs in the metros targeted but when it happens at a favorable estimate 50% of the 20 M connections may walk to DTH providers ho already command a 20% share of TV homes, much higher in the metros. Of course MSOs digitising their technology will also walk away with honors and in fact have been doing rather well on the news
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The Dollar apparently 'unfairly ' beat equities to the open, climbing to 57 despite weakness in the Dollar index, again designed to keep the falling euro in balance and rising against the Rupee
1. Apollo Hospitals are setting up 2000 pharmacy units in the next 3 years, though 5000-10000 will be critical mass EBITDA of the private label business is expected to grow by 12-15% and that of the overall branded business by 7-8% Pharmacies sruvived 2012 March with a 5.7% EBITDA and apparently older non performing stores will be shut down
2. Reliance Anil Ambani is buying into Shopper's Stop spending INR 515 M on 1.76 M shares
3. Jyothy is likely to relaunch Henkel Brands, Margo, Pril, Henkel and Fa this year and Mr White and Neem next year
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There is still one eek to expiry but those selling puts to stay long onthe Nifty are safe at expiry also, a rather one ay strategy in terms of flows as you do not expect to do a transaction cancelling your position. However, if you have also sold calls and you should always be careful about that, the exit of the bears is on and 5 trading days could still take out 5100 calls into losses which happens above 5160 odd at yesterdays close.
The USD INR move, very wild in the post CM closing yesterday was strong and the global developments on the Euro's crash also mean that the Indian markets will remain bearish on the Dollar intraday but as it means a bullish Capital Market segment ( and vice versa) it will not fall much unless the equities want a breakout in this series itself.
Banks are good investments as suggested yesterday, Healthcare will remain great and there is a bear play in Two wheelers yet with construction lagging a week of byull sessions before a rally ensues. JP Associates has a play though with a deal in the pipeline hopefully. Market is rangebound and choppy unless you kno your picks
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RBI followed up on last week to allow specialist NBFCs to set up ATMs for a cross section of banks. Except for Net worth requirements and the attendant focus on security, the guidelines do not constrain the selection of organisations allowed to set up ATMs
One needs to establish a net worth of INR 1 B or 100 Crore ( Sau Crore) to set up these useful machines at more convenient locations as banks have been constrained by higher real estate costs and the rush for prime spaces in bustling cities. Lo cost installations have long served customers in the US with a low withdrawal limit including 7000 at 7-11 stores alone.
Meanwhile Visa conducted a financial literacy study where the best countries came in at a percentage score belo 50 , with Brazil at no. 1 on 47.8%. India is a poor no. 23 but the gap is not so big at 13% leaving India with a 35% population that is Financially aware, indians avoiding discussions of money in family situations
India has only 87000 ATMs. The WLAs (White Label ATM entities) have options to choose between Schemes A-C with Scheme A allowing them to set up 1000 ATMs in year 1 doubling in year 2 and trebling in Year 3 while Scheme C requires the operator to set up a minimum of 25000 ATMs in the first three years
The WLAs have to align with a Sponsor Bank with RTGS membership and Card Payment Network operators. Authorisation has to be sought within four months of these guidelines issued yesterday
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First of all, for theinformation of readers who may now be coming back after a hiatus, now that Capital4 servers are seemingly under pressure I have been picking actively at yourmoneysite.com/
Secondly, i still primarily believe in fundamental stories, but most have been played out and replayed for a few times to warrant spending time now on finding a new set as well
A quick review of the primeHD feed with MC/CNBC India can get you most of the brokerage picks but sometimes they will overlap with my commentary and differ in time span, start date, duration and mostly direction when I can see a transparent weak pump on the stock.
GAIL put on trading buy to 360 is a good pick with ICICI Direct. However another from ICICIDirect backing Bharti Airtel remains out of my comfort range. Bharti Airtel is a dead story till the margins get out of the ropes they have bound themselves in with falling ARPU back and investors able to see thru that despite the great performance in April
Selling Cement / ACC/ Ambuja on the CCI decision against 39 companies later int he day is entirely upto each of you on your 'whim and fancy'. I do not see it fundamentally changing their down days yet they will have one extra rally later that will count while Infra and Construction will only move on REAL good news on the Economy, due about six months from now in most expectations
Aviation and consumption goods are worth only for long term and medium term plays and Jubilant Foods must be shorted at eveyr opportunity with quick exits a range of around 35-50 should suffice. when it picks up steam it is better to let it go above 1215-1220 and then act RBS pick SEsa Goa does not seem like a good idea and Citi for a change after a long time is likely good on Energy as the new diversion to keep Nifty from sagging on banking 'fortunes'
However my picks would be the following
CIPLA (Long, Medium, Short Term)
LUPIN (Long term)
ORCHID (medium, Long)
I would hope for a correction in SUN PHARMA and have no opinion on Dr Reddys
Again on the fundamental space the Orbit Corp, Phoenix and HDIL stories are off. do not pursue them
DLF is a good short in the segment till 185
JYOTHY LABS is not a good pick till you are certain, Auto Ancilliaries are a good segment ont he move with increasing sales traction. JAMNA Auto ( a long term holding for me) has been giving a good Beta on the market average
The Bansk are good except that Axis is not a buy yet in the "Big Four' in trading ICICIBANK, HDFC BANK, SBI and AXIS BANK and are all buys for the long term. Axis would likely bottom to 938, SBI will unlikely break below 2000 and ICICI is a good buy at current prices. HDFCBANK seems to have decided to consolidate again till real news comes in
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The Euro ready to give way from 1.27 levels to 1.26 levels, it is unlikely that the Dollar would get brobeaten and the Dollar Index rising would mean the Rupee continues to settle to new final lows as no fresh probability to assuage the larger revenue deficits in India is seen. However, in a few days our imports will actually start getting cheaper and impacting a lower core inflation. When that will translate into CPI inflation improvements or actual action on the Diesel and Fertiliser subsidy programs is anyone's guess. The currency is unlikely to benefit from small fills / corrections on the Fertiliser policy
Aviation stocks were back for a fleeting moment when the up trend was in acton Monday, but a Dollar depreciation seems to have put out prospects on them in these uncertain policy times. India specific political reasons like NDA have largely become dried up wallflowers but a hope of Manmohan Singh getting FM portfolio being dashed might still mean more pain for the Rupee. Of course with a majority of the GDP benefitted by the Rupee the stock market might start seeing the Depreciation ride as more fun than pain.
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India Inc yet a non performing delivery forward, for those FIIs looking for bargain time, NSE makes a point that if one needs to invest in India they should have done so yesterday as the market finally shuts down the blues generator which took down most equities, including banks on monday after the policy announcement. Tuesday's recovery in indices would be followed by a stronger surge as buying interest comes back and then the market prepares to go southward from a due peak.
However, this rally is not likely to sweeten the India pie for FIIs. $14 B FDI in four months according to the data released for April 2012 is still twice the data for 2011. The FII bashing of India, seemed to be a popular sport in the Financial Markets and backing India seems to gut most of them. Yet, here we are, happy that we can run on our own steam, the Current Deficit in the process of getting filled in by a depreciating Rupee
Silver and Gold will correct as Global equities continue a sharp comeback in the face of liquidity infusion in Europe. However as the Fed annoucnement tonight is no fresh QE and Euro may get battered in Asia today after its meteoric day charts, so tomorro may yet be the last day of the up move.
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11.52% Urban Inflation and 9.57% Rural inflation played to RBI's playbook suggesting it should hold fire on its remaining rate cut ammunition of less than a 100 bp for 2013 FY. That means still CRR is a lo 4.75% SLR untouched at 24% and Repo rate at 8% in a corridor of 8.5% MSF and 7.5% Reverse Repo rate
Meanwhile it did not help that USD was at the same time weakest against the EURO as well as the AUD, Rupee choosing to snort at RBI policy to a 50 p rise to 56 levels in June futuresUSD also strengthening after a post weekend opening lows against the two currency. Common sense dictates that the rupee should start back against the Dollar and ECRF flows may or may not be substantial so one wonders if we will create another gap with global currencies in the quest for a news flow saying rate cut positive, IIP negative because no rate cut?
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RBI took matters to heart and penned a serious repair note for india's fiscal and monetary policy ithout resorting to any rate cuts to stimulate markets. it will continue liquidity operations to shore up the market and that interest rates are lower today than 2 years ago and cannot be blamed for the slowdown nor be allowed to exacerbate inflation pressures
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The precipitous drop in the VIx with 10 days to expiry hit all the OTM Calla and Puts so hard that active bargain speculators got caught in the 5400 Calls on the Nifty or the 900 call on the ICICI Bank. despite the meteoric rise in the underlying and the run on the dollar! Whoa, half baked knowledge is aworse than no knowledge
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A preponderence of Euro Citizens saved Greece by the bell but left democracy in the lurch as the pro Euro New Democracy landed 129 out of 130 required in the 300 member Greek parliament. The ultimate winners get 50 extra seats in the Greek system. New Democracy leader Antonio Samara would therefore be in hectic parleys to put up a coalition with other Conservative parties like the Pasok administration who were in power when EUR 174B in bailouts was granted to Greece after GGB haircuts that reduced investor obligations
The weekend achieved its "targets" leaving the week to a relief rally till Euro gets into the short mode again, this time from 1.28 to 1.26 levels, while the Dollar index trends down from 81.5 last week. Good news for the rupee and the equity markets, continuing from where they left off on Friday
Autos remaina lousy bet in India despite the interest rates getting better but Banks will likely star in any ongoing rally and even correction and ICICI Bank remains a good bet for the good days. HDFC Bank hasn't been really overbought either and others could wait a while to shrug off the excess momentum from a week back
President Mukherjee's announcement as candidate would be welcome news for the Indian markets before RBI policy hour on Monday. The elections for the president are unlikely to yield any other result though with elections still likely even NDA may yet get confused and get a candidate out there.
India's exports have crossed 25% of GDP and that statistic alone is the reason rate cuts have already been achieved in the 25% depreciation of the Rupee. Even if the Rupee settles at a 15% net depreciation over the year ago rates, that would mean 1.5% in rate cuts plus the 25 bp factored in by bond markets today Probably because of our imports, a mint report puts together RBI and IMF data that says, a 1% decrease in rates is equal to a 1.4% depreciation for the rupee in Economic results
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The Euro of course is at 1.26 and the Rupee, happy kept its level to the Euro as benchmark for Dollar's movements against the Rupee has gladly tempered this rise of the Euro to 70.40 in morning trades ( Interbank rates at 70.4, nse can run at a retail premium to 20 basis points - not just points)
The Dollar's weakness in the eek of more QE ahead of Greek elections has been shortlived hopefully because the QE rumor is a shortlived one, hoever, the Fed would extend its support thru Central Bank swaps ( see advantages.us - It's for sure another LTRO, but QE? ) Anyway it means the system would be awash with liquidity and Gold, Silver and Oil are back on the (upward) run. That is another week of respite for the Dollar index hardly corrected from its peak int he first 3 days to 82.5 and no falling rapidly, with the Euro 1.26 levels likely to be a strong support in a liquidly able banking system funded from Europe, other G20 or the US
The Rupee is likely to breach 55 on the long side if the trend lasts long enough and the fall for the dollar may not be a one ay street in the Indian FX markets as the USD ids defacto the only currency traded including cross rates to Euro and JPY good reference for currency moves and the Revenue account having limited avenues for Dollar speculation, Hot money flows still find a way to keep the Rupee excessively week
MidCap It is ebullient at the improvement in Margins but unfortunately for the lean prospects of IT the Rupee is unlikely to help more than the 26% depreciation at its 'peak' of 56.50 to the US Dollar
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Finally the details of the Macquarie report "The Last Bastion Falls" are available for the case of HDFC alerted in yesterday late afternoon's nes alerts. Macquarie's protestations of research may ell be comparable to current /industry standards of promoter and financial information acccess but the research report is the result of HDFC having adopted a practice as an Industry leader might, with due recourse to the management's judgement call. Hoever the information provided in the report could easily have been sharedby HDFC in an analyst groupinstead of being "discovered" bvy HDFC.
The issue at hand in financial accounting terms is simple, while provisioning for standard assets, making capital avvailable against future losses is made by due modelling and expensed thru the P&L, when a new provisioning was requested by RBI on teaser loans, the institution exercised its judgment, made its stand public and passed due provisions without expensing them and held it against reserves of the institution.
Similarily, the institution has passed thru reserves Interest "expense" on Zero Coupon Bonds to raise monies for investing in HDFC Bank and the insurance JVs. In both cases the use of reserves is undeniably justified and the management has not had to pass any deviations to policy or contravene accounting standards The said analyst in question perhaps assumed the HDFC profits already discounted these provisions as ell and needs to just review those Earnings based forecasts here he has made the wrong assumptions
In both questions, HDFC's NIMS ill not suffer materially even if the expenses are passed thru and as such are incomparable to questionable accounting practices adopted by Macquarie and other OECD based Financial institutions in the last decade with two financial crises in 2000 and 2008 a direct result
HDFC has clarified that current recognition of Income from subsidiaries has been compensated by the said policy as they only recognise dividends and not the subsidiary revenues and profits which will be part of its balance sheet under IFRS. This treatement does advance the benefit of a new aaccounting standard but as HDFC has bee clear and unequivocal in the use of accounting policy it cannot be said to have deviated from conservative accounting standards or other such. However the question against the company owuld be that the impact on earnings was not clearly specified at the time of announcing the results as RoE and NIM calculations would have been different for us in folloing the company's financial performance.
That also goes to a comment on the Indian environment here such clarifications are alays issued after the event and being part of a clique in the know still matters more than your expertise and depth in the subject.
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Exports continue to consolidate at May figures above $25.5 B. imports are consistent ith this year's degrowth at $ 41.5B and the trade deficit at $16B may mean more weakness for the rupee though policy measures are in place
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The use of monthly CPI data for now more than 14-15 months with Y-o-Y inflation comparisons available for 2 months on the trot, it may now be a matter of time before the WPI data becomes secodnary in the Indian scheme. Consumer point inflation though has been refashioned and some may want to verify it further and the WPI trends at sub series level across Core, Primary and Fuel as well are available for estimation quite discreetly and forecasts may not get market confidence for some more time.
The Core inflation is expected to be the biggest encouraging figure in the May data at 4.7% almost half of the data till no in the past one year, which encourage bonds to move down to below 8% in anticipation of a positive RBI Monday. Fuel inflation though likely to go back to near 13% is s till belo the 2011 benchmark of 14.5% and the Primary Articles data of 12% is actually understandable and does not require more policy action as commodities trend down steeply in many cases despite China's buying having begun in earnest in May
The rate cuts may be 50 bp as pointed out by current 20Y yield movement but then RBI will be not expected to do more than 150 basis points in the whole year and a 50 bp cut removes the flexibiliity from its hands having committed then 100 bp before JAS and OND quarters even begin and that likely means the markets will prepare for a slow(25bp) of fast ( 0 bp) descent on Monday
The inflation data is a little late but safely bullish for the RBI Policy day at 7.55% Primary inflation at 10.88% was still less than 11% and fuel inflation did not get most of the fuel rise in the last week at 11.53%. The Core inflation was below 5% at 4.99% primary and Fuel inflation ere at 9.71% and11% in April 2012
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The Dollar index (DXY:US) turned don precipitously as the fight in the Euro remained about the semantics and the sufficiency of the EUR 100 B, France stepping in to say why it should be an ESM stability pay ou t than a bank rescue. That meant the Euro us trading close to 1.26 andt the Dollar Index already 82 a full point down from 83 levels when the rupee hit 56. That means Rupee’s going to be very strong in intra day trade tomorrow.
Go Long in the July and August Futures at a good price if you want to bet with the Dollar and is hould think short the june positions to 55
Better Than Expected Economic Data (Photo credit: Thomas Hawk)
India’s monetary supply data trended with growth in Deposits to a safe 13.7%. I would say numbers below 16% are even anemic for growth but definitely that means the inflation report tomorrow will be a brilliant 7% or even lower unless the Economic data is not in sync. The base effect on the IIP hopefully is the only thing that is keeping it low now as Infrastructure looks at ne investment and other sectors of the Economy also report higher investments this quarter, reigniting confidence in the Economy
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indian equities started off a rally yesterday to upturn its nose to ratings agency S&P for daring to suggest India was closer to a downgreade two days before IIP announcements and a week before RBI policy is expected to be announced.
Surprisingly, even naysayers, including us in this cycle who thought RBI need not cut rates now have been silenced by the intervention from S&P. While fortunately there have been India Bulls that have defended India saying this is the bottom of the barrel for India's raft of bad economic data in the last six months there has been a precocious turning down of yields in the fixed income markets pointing to a massacre on Monday if rates are not cut by the RBI.
India 10 Y yields are trading at 8.06% having started the week at a low 8.14% from before the S&P announcement, thumbing the nose at Cassandras of doom. Again though not unsinged even in fully hedged trades, I recommend staying away for this entire rally in terms of ne positional trades and let your existing holdings and positions enjoy the sunlght till the RBI policy hour as expectations become clear.
Though it has not been opportune to say that Indian Capital Markets are thumbing a nose at short-term flows from India oriented FII investors at these high levels (FII also took positions in January to INR 450 B) it is foolhardy to stop the market to its 5400 levels as the underlying fundamnetals have not changed for India despite the statistics.
Yields are likely to stay below 8% and the standoff ith the RBI trying to absorb more on the existing 10 Y bonds turned out to be till only an absorption of INR 900 B on the 10 Y bond released in November, now having gone for the new 10 Y paper with a coupon of 8.15% Traded vbolumes in the G-Sec market doubled according to a DNA report
Also seemingly RBI is still conducting OMOs to enhance liquidity and the new Government borrowing programme is as much a challenge as ever despite the liquidity conditions being better. That hoever means the Rupee will start trending up firmly after Monday again keeping the impending correction in equities away but this week may trade weaker esp today's continuation from yesterday's Dollar rally as the Euro gets extinguished again overnight.
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India's first risk on rally in a long time has probably been nipped int he bud effectively by the S&P announcements ahead of the IIP data for what is likely the orst quarter for the Indian Economy Credit Suisse joins us in suggesting June's numbers ould not be good but that the next few months are unlikely to be as bad as Pranab steps out to Raisina Hill from the Congress stable and Manmohan Singh itches to take control and bring in a 1Tln worth of pprojects back in the reckoning
The Rupee will suffer all week and thus equities will have to stay away from tracking the upside they had started on in the morning earlier as S&P gets ready to probably conbvert the negative outlook into a lasting dongrade that takes India below BBB- It on' tbe the first time S&P has pre empted a dongrade based on the last of a string of bad results for the Indian Economy as it also holds a unregulated negative bias andants to play catch up more than review the reasons set in the outlook for a downgrade/upgrade. If the downgrade does not happen it would be because indian liquidity prolem long solved has taken interest rates to a low of 8.1% and after a rate cut this eekend the interest rates ould trend down below 8% before growth also responds. The problems of the CAD and the Fisc have hardly been solved but are unlikely to see any deterioration and political inaction is unlikely to take our costs or the fiscal and current deficit to any orse levels. For Fiscal 2013 we would repairt the deficits to at least 5.5% and 3.5% despite the political inaction.
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India's Financing continues to catch up ith global coprorations ith three Indian banks accessing the Dim Sum bonds market this year to raise CNY 2B or $300 mln including a small tastemaker bet from ICICI to take advantage of the 0.5% lower costs eeven fopr Indian companies.
Fixed market yields are range bound and Domestic credit has also picked up with the stock of Cheap ECB credit despite depreciation at $40B. Also rupee is likely to follow the downfall in the Dollar indices to some extent as the Euro xzone gets ready to fund EUR 125B to Spanish Banks as requested on the weekend by Spanish FM De Guindos.
Domestic credit groth is of couse still 14% levels after the jump in the last week of March and has along ay to go with NBFC exposures pared. The stock of bad loans is expected to gro from the current 2.3% albeit at a very small pace and unfortunately, because the trate cut is not coming and the market is still hoping it will follow after global easing moves in May, I exited prematurely at great losses on the 5000 and the 5100 Condors/Straddles at the 2 pm see-saw in the market. The FII strategy of buying futures ith 5000 puts remains safe, most can not necessarily bother with buying any puts as the market look unlikely to turnaround before 5150. Banks are good long term investments but before the weekend policy announcement the markets are likely to lean towards there won't be a rate cut or accentuate the massacre on Monday
Demand from China has picked up including imports of Copper up 65% Y/Y which include a genuine pick up in demand as it was planned for long time. 200,000 tonnes of stock were reduced in Shanghai in Feb 2012 and any physical transfers at LME prices to Shanghai may not explain the complete pick up in demand leaving Copper happier from current los. india does expoert most of its stock ( not refined copper) to Shanghai,, so it should have more cause to cheer. The gap in Shanghai and LME prices continues to be more than $1000 a tonne and Oil prices keep falling even as Dollar now is a week into its roller coaster don with or without more QE from the Fed
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In a pattern that has repeated earlier Indian market cycles, India again came out tops on its long running market crisis just ithin a eek of the orst ETF outflows from the country. Emerging Market ETFs lost $3.5B in May and Sovereign Bonds & Investment Grade bonds gained $5B and $9 B respectively. India ETFs lost $300 M in the same three four weeks and instead of craling back into the bunkers for the 30% premium to other Emerging markets , India has broken out north of 5000 as inflation trends down on the commodities don cycle and the currency continues to a near 30% depreciation from last year (27%)
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Concerns over India's rising inflation attributed to structural issues as imported inflation hung over India like a blanket have finally ticked down as Commodities remain downbeat after China's rush in Copper precludes much more of a safety hike to Gold and Silver.
Though the bull will remain in precious metals and Copper most other commodities are down as is the Dollar India inflation reports marked up the MArch data of 6.9% to 7.2% in April but it is not expected to go up much from there as the Indian currency joins the fightback against the Dollar Further drops in the Euro are unlikely to affect the Dollar index per se.
Indian indices continue consolidating above 5000 ith the Global rally in equities and the prospects of Manmohan Singh taking over the reins from Pranab Mukherjee as the next Finance Minister.
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The past months made the current 135 point rise in the Nifty today almost an Herculean effort as 1 in 6 $ for Indian ETFs have been withdrawn. Also 25% of the Futures derivatives Business has moved back to SGX Nifty in Singapore and Dubai General DGCC Exchanges as nespapers report. Pranab da is seriously moving to Raisina hill and everyone's on edge waiting. The government meanhile is trying hard to get the retail FDI saga restarted having withdran most of the discretion from the retro activation of GAAR rules.
Of course the current rally is a temporary respite and there is more pain to come as the new old 6% watermark ( remember the Hindu rate of growth) comes back for India. And then thre are the FII investors and analysts bothered by the 30% premium India enjoys for its liquid markets and developed industry et al that they do not want to come in the way of a good return . so buying could still take some more time to return, but history tells us that india would not ait for Secondary portfolio investing for much long once its hardly 2-3% of the retail population gets activated on the trading and the Indian story starts working, most non India centric Investment Banks having suffered the fate on missing half the India bull run. But the Current Account Deficit issues are not solved yet and the Fisc is going to stay at least around 5.5% and the current conditions are a sea change from the growth momentum that has become a benchmark for India. Meanwhile China controls most of the Shanghai Cooperation council and may not like India onthe board of the Old Silk route nations,
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The S&P JV in India, CRISIL, India's own rating agency which has been pioneering Equity ratings and leading the three rating agency field in the sub continent picked up Coalition Development Analytics for $43 M
A human capital company, Coalition Development provides revenue and market sizing level estimates to Global investment banks
According to Dealcurry, CRISL's Global Research and Analytics business operates out of four International centers including Argentina, China nad Poland ( and of course, desh)
CRISIL's KPO is Irevna. it bought Pipal Research for $11 mln in 2010
The GIR effort thus continues to look for scale. I wonder if the KPO model is indeed going anywhere. Yes Bank abdicated its KPO extension plans in 2007 before the Financial implosion in US stopped groth in its tracks for the outsourcing industry. Yetr the outsourcing annuity business is worth INR 750 B or $13.6B apart from any single digit growth they can still get. Infy's the dark horse now and CTS keeping the dream alive. Needless to say, size dictates that the KPO model is also best served byeither a Infy subsidiary or a global client subsidiary. Hoever Goldman SAchs and JP Morgan for one are happy enough keeping indian participation to tecnology.
The limitations of niche KPO businesses arise from the proprietary nature of most critical Financial research and the closeness of research and trading teams ( not insider trading) that is a necessity for executive direction and maximum benefits to the banks.
Of course global banks already working on 25% reduced business in Commodities ill be back to a low revenue base in trading businesses this quarter and Commercial Banking ill be trying to make a return as the mainstay business of the banks.
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Though the SGX Nifty has factored in all eekend heebie jeebies into the opening price, the increase in Volatility on Friday to 26-27 would indicate a likely rush to reach the "ultimate botttom" and shorts on Nifty seem to be controlled and careful hile the buyers have been out in full strength at these prices even in 4900 calls now. At the worst it will be more 4400-4500 puts and 4700 calls. However, the week is crucial to determine india's fiscal and monetary future. If it enters a bottomless pit behind these 4700 levels it will likely find more bananas than the precious investment which has already jumped to 3.5% from a contraction in the earlier quarter in the latest 5% growth shock
Consumer and Pharma remain very critically poised sectors as ell. IT is more negative than positive and Banking is more positive but yet thae pressures on the Sector are really higher even in quality like ICICI, HDFC, SBI and of coure the vulnerable axis under new management
Going back to the VIX, a higher VIX should mean higher returns on the Spreads, esp if you use Vertical spreads. Also cover asymmetrical strategies if you have sold calls
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India managed to maintain last april's exports value that was a pretty big jump from April 2010 at a 20% groth but there was no growth. Auto sales have started trickling in weak though markets and currency having over corrected ere more comfortable rising back than staying don Nifty stay near 4850 levels at the close.
Maruti's downtick in sales or the recent spiralling ccosts continue to orry the behemoth as the Yen also rushes up t o cover its global strength. in that case however, the Yen Yuan trade will likely cut down the aged triggers appreciating a "deflated and downtrodden" currency like the Yen as China welcomes Japanse trade to grow its yuan tentacles and rejuvenate larger ties beteen China and Japan.
Indian exports survived the duties on Gold and the clampdown on Gems trade hich though large categories apprecaiate distinctly standalone cycles for the rupee including Laundering in the Gems trade. The Auto Sales in the meantime seem still likely to cross 3 million for the year if not 3.5 M despite Maruti's losing share.
Most BRIC and ASEAN nations reported an export contraction in the mean time in April incl China and Japan as shared earlier and South Africa here the trade deficit for April ballooned to ZAR 6B (Google it!)
China's Export data is likely to bounce back in may from data of the first fortnight. Indian export groth ould be fine as long as it remains above $25 B or near the number as the May PMI came in really strong compared t global oes at 54.8 showing the strength of the 5-6% groth number as we return at our worst to the Hindu rate of growth ith Q1 bottomlines still up in double digits and topline up by 20%
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India
