Markets being closed tomorrow aid a minor correction as markets sneaked into a big lead in the new series on Friday trading. Banks may not join the downard rally much and I'd rather hold them except probably Axis Bankcould play with any one sided trade ( like if Bank Nifty trades down the whole week into Monday) Shorts on Powergrid and REC seem well timed as it is unlikely that states will be so willing to embrace actual backpayments from SEBs as they are requested to by the new "reform" 

Sun Pharma and Bharti Airtel could be good picks while the market strengthens up momentum in the right direction, while Kingfisher and Jet are randomly favored by all those not beholden to Delta and NCC

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Friday's early big rally in the new series rules out much more upside and a slow and continuous erosion of value as earlier feared in September for "when" the market will correct. Banks might depend on news flow before correcting further and it could still be that the markets never go belo 5675 or at best 5650 bringing the Bull back within the starting days of next week.

Markets seem to have seen good call writing at 5750 and thus there will be a good point for the downward pressure to emerge esp as the market suddenly seemed to be in a hurry from 5650 to 5750-5800 and that meant more probabilities of the Shorts catching something good.

The Sensex 20,000 or the Nifty 6000 targets being not as evenly spaced give India shorts trading hope esp with the Rupee already crossing into the 52 range and the strong upward journey thus having completed the easy part of the target.

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The CDS currency series on the USD is finally trading below 53 as expected starting back from 53.5 2 days ago an dis this time likely to go below 52 intra day in the Ne October series as gold and Silver importscome to a standstill before Diwali on Nov 13. International prices of Gold move in tandem with Indian jewelry demand and the bottom is a certainty the market has seen over the last 20 years internationally and locally

Retail FDI aspirants are active and biudding up their real final control equation wary of the $100 m in 3 years and the back office requirement as they run for good M&A possibilities int he space. Aviation rerating from FDI is abviously because of more international demand for listed stock from Spicejet and Jet to Kingfisher and perhaps unlisted Indigo and Air India as well

The jump in Nifty is a little bit of a surprise , one expecting the bull commentators to again not again get any returns in the fresh series gambles and while new picks have not succeeded the enduring stories from ITC to ICICI BANK and IDFC have not disappointed. JP ASSOCIAT deserved the run and TELCO's (TATAMOTOR) mysterious run continues flummosing all and sundry a nightmare compared to REliance Capital and Rel INfra's expected rise and fall on good and bad days in a spree

BHARTI is still at reasonable levels but given that it is  a less than 50% holder in front office big retail with almart expect some investor groups to leave it for its portfolio fo international /US investments The bump isn profitability if that is the hope is still a mirage a nd a lot tof hard work from the management returned in kind by new consumers and governments important for that to happen. Th eDCHl case is a mite mysterious as ell, ICICIBANK obviously relying ont he IPL franchise name to the latest tranche of loansin 2011 and now the immediate restructuring while YES holds out for franchise assurances. USL rise is likely limited from here as promotores have already haked therir stake for collateral , almost the entire 27.7% and their hoep from a Diageo/KFA investor treasury purchase is on debt improving the bottomline from a upto 50% drop in interest costs

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Markets have decided to inch upwards is a clear prognosis and as of now even the new resurgent Dollar's trade on the rupee to 53.52 seems barely able to survive new shorts and likely fresh shorts in Rupee are warranted now or after 1 more 1.5 more upticks before 54 levels depending on the resurgence of the post expiry buying that ensures the trade remains up than a month long correction to enable fresh institutional buying at local MFs and LICs 

However banks seem to be quite decisive having dived 60 points to 11350 on the Banknifty and fresh buying in HDFCBANK and IcICIBANK is out by a week so more uptick will be in Axisbank led revivl stories of Canara Syndicate and the ilk like Union Bank and CBI which unfortunately is not really looking likely even now leaving Axis Bank a lone horse again to repair the points damage and ride in the first week to come Ye s at 375 and ICICI bank at 1065 may not see fresh buying now but like ITC corrections are unlikely to be deep even if you accumulate in the same levels before the upswing resumes. 

As mentioned earlier however the rest of 2012 is unlikely to see hard data backing a recovery and is only more policy speak peppered with off market and on market deals with Etihad, USL, Ikea and Walmart among others.

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Nothing much happened though we missed the morning report because of the Bangalore early morning traffic and associated hassles. if you were one  of those who did not miss the Morning report then you ar elikely one of the associated reasons this blog and these reports are not dropping in on time or making such a difference e all make. So all of you out there do start missing anything we miss and get a little verbose on it when you do. 

The markets ofcourse know its time to unwind traders itching to but no one is really ready to exit at these levels nor are they going to lgo low enough to trigger buying from those who wait.

The dichotomy between the investing priorities of the FIIs and the DIIs was obvious as ICICI Pru started unwinding on consumption initiating sell coverage on FMCG and consumption plays while FIIs and investors look for more market expansion plays in the wake of retail FDI each listed stock unfortunately quasi indicator for almost the sector than the promoter or the business strength esp at plays like Britannia Marico and Dabur even VIP almost undifferentiaated behind Jubilant and Titan.

Healthcare accumulation is what we root for and is already happening at more than just European banks and erstwhile short heavy india baiters. S&P reratings have helped the cause of the crrection and the result is a 30 point sorrection still above 5650 and a tad under 18400 for the Sensex. 

Here anyway is the outlook for next week after expiry, tentative buying in banks 2 days out of 5 and a rally day run by a big hefty for the banks who have increased their contribution to the GDP to nearly 10% and banking assets with their continuous 16-20% growth esp with policy segueways for infra funding making infra stock of credit more than two fifths of the 45-50 Trillion credit stock we run to from a 44 T start of the deficit heavy fiscal. 

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Markets will likely respond to a late global sell off again not a very strong one as global markets finally tire of the purported change in circumstances and wait for real liquidity and esp value. The rerating of China will likely dovetail into this inconvenience for portfolio managers though a large sell off is unlikely and yet a small short goes a long way for expiry of NSE FAO contracts ( now including BSE as well) 

The Rupee strength will also likely be on hold for the week and homegrown hits from the Kapoor cousins Kareena and Ranbir gladden the big screen ausdiences than shopping and the usual festivities as August Car Sales dropped off the cliff but it does not seem a harbinger of much more pessimism yet being a follow on condition from the "more durable" slowdown

The indices are yet inching up in pre open as markets realise that there are no sellers despite the month end pressure on expiry week to give up "extraordinary gains"

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Expiry is upon us and the markets have used lack of fresh buying as the test or the excuse for a quick short on our onerously short trading capital. That of course means that SEBI and RBI re still not considering increasing Minimum net worth considerations for Shorts and most commentators have been tired of the "upswing' for now well over 8 weeks as the markets though exceeded expectations did not get the pain they expected to react to and as the open reform agenda continues to steam up Power NBFCs and banks like PNB as the SEB bad debt also gets taken care of and the fiscal deficit targets even at an over run of 0.7% from the target 5.1% will manage to stay within the bad FY2012 performance

That though means this correction is again short lived as the courtrooms and the FM's office oblige markets. I am holding on to my longs esp IDFC and there is more good news to come as more PE funds get into the scheme of getting India's infrastructure story a running opera than just viewwing galleries on the internet

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The strength in the currency may not bolster more point dreassage on the market salad but it is certainly not going to add more burn at this juncture as the reform agenda becomes a soon to be famous aphorism for days of quick policy making followed by years of pain of non implementation as congress hangs on to a wafer thin mandate. Psephologists and rupee mechanics apart what is holding this market is an undeniable hope which is bound to get shattered when Corporate performance actually comes in.  

Even that may finally get built into expectations as China gets ready for an extanded decade or two of slowdown compared to the currenntly past halcyon days of unhindered growth and india also likely happy tohus to stay to a second to China Hindu rate of growth. Thats not very academic or journalistic or a good decision mark but trading rooms would prefer to see it like it is. 

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In this week two strong moves have taken the Rupee from 55+ to 54 and now barely 53 in the September futures with two hours left for the day to close on the trading. The Euro is ready for the Spanish bailout announcement next week and may not fall much from 1.28 levels while the Oil ticker still has not started rising to spil the rupee move. That means the Rupee will stay strong in the first half of next week. In terms of levels, at this momenet one still expects a bite back from 52.50 levels back to new stable levels before the festive mania on the Indian economy rides out its year end levels as the outgoing UPA signs off on all reform tickets.

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As suspected/expected depending on your lingua franca and the youth in your team, Markets survived 5500 so well that they could not keep their hands off a big rally into the weekend, ending Friday with a likely 150 point  gain on the Nifty and a 400 point gain on the BankNifty. AxisBank is finally1120 and so Monday opening will unlikely see a straight line improvement from 5700 levels exp the Bank nifty ripe for a few points of bargaining.

As commentators hae mentioned and has been obvious in the last few days, buying has in fact become more frenzied as institutions realise India will be the last minute pronounced outperformer int he region despite the bad news economics continuing not even till the bottom in April but as recently asa week back when the IIP dat came out at 0.1% aand prompted another string of Growth GDP forecast downgrades to 5.5% 

Most of these commentators have a bad eye or shall we say long lost cousins that seem to find their favor in the amrket rally as the obvious ones defy commentary. However the Banks and Infracos remain the sectors to invest in and again a Hobson's choice for institutions still waiting for the elusive dip. Also healthcare could indeed come back as the second leg of the rally given that Infracos were almost simultaneous in their move with banks. I am an investor in RELINFRA so that is one stock I can eagerly mention as a bull weather friend.  JETAIRWAYS IS ripe for those not locked in and roving eyes might still catch these and heath scrips like SUN at new levels for a big run. ITC would be a dream pick but more accumulation is likely as the market tries to find time for mid cap consumer companies probably even VIPIND 

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A nod from SP as expected and Financial markets actually jumped and are 100 points up on the Nifty today. It just shows when markets refuse to go down after a stinker they really can bounce North very quickly and for literally something that was " no big deal" as i thas become for players and commentators of Indian polity. This ould have been a chugging along at 550-5600 day except for the move and elections aren't farther awway than when the day started

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Bad news economics may have won both 2011 and 2012 but 2012 has come out strongly with India emergingas one of possibly three-four investments with a continuing positive return even after a 20% return YTD. Of course netwoks are trying hard to stay relevant during the bull run with all the blue chip[s having run off the top in the last week if not before and the rest of the rally looking like receding as the reform news flow is kept up by a government ready for the Election battles looming up ahead.

Straddling SP and BSP unfortunately does not give a clear window to bears and again their ould be heightened risks of a last moment cut off ( a sharp sell off) in the market when eventually Manmohan Singh "runs out of options" As of now 10 states have shown that other parties really have no hope and that these changes to India's fabric are irreversible

A slew of festival holidays should keep investors relaxed thru october and november before Global markets slip into holiday mode while mid cap IT and HCLTech will be  hoping for more weakness in the Rupee. I am expecting Healthcare to make a return tothe buy lists but not CIPLA and DRREDDY

The Rupee has really strengthened int he opening , however likely just a calm before the storm as the weakness in Global crude benefits FX reserve poor nations like India on inflation and Tdeficit fronts equally fast but at $92 it is unlikely to last too long. 

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The Market climb is more or less safe, SGX even tradin gint he positive minuted before the close and Nifty at its weakest holding 5550. Of course another session similar to today may start off business tomorrow but there is an even chance that by Friday afternoon some weekend buying may indeed enter the Indian markets as the Euro finally corrects from 1.31 to just above 1.29 and  Oil alrady trading as low as $92 at the beginning of today's session. The Rupee had no option but to respond in kind to the strength shown by india equities and remained around 54.20 levels and even CDS futures aonluy 54.32 meaning a stronger Rupee is trying to show even during the technical(Fibonacci retracement ) correct of the sharp upmove. 

Banks and Infracos are good for more accumulation and ITC has been picking up on interest as it remains a good delivery volume trade. Sugar trades , north or south, renuka or Balrampur, should have been unwound first though healthcare including SUnPHARMA also continues to show a secu;lar correction than only DRREDDY and CIPLA. Mid Cap It remains the only possible short on my list in this bad market just like for longs ORCHID and OPTO like midcaps continue to be strong bets. BIOCON and SPARC also seem like picks for a longer long trade than those blinded by the 10 day streak on the long side might imagine. JetAirwasy are good for a BTST and maybe not just Etihad but SpiceJet could also be getting a fe calls from other overseas investors.

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Consolidation at 5600 finally took conventional overtones after almost two weeks of positive moves on the Indian indices as the markets trade down 35 points  today. Government in fact had announced fast tracking of 109 projects in infrastructure to at least get all the approvals done as only 22 seemed to be missing financial closure and were stuck for administrative approvals regarding land use etc. 

However the reaction from Non Cong states as the bandh gets underway today and the politically agile response from the government approving 9 LPG cylinders per family for only Cong ruled states as soon as Mamata di announced her withdrawal from the government with Greece expecting a 25% cut in GDP if Europe were to end in a recession and China continuing a run of low PMIs and almost stalled manufacturing well into t he end of the year of the Dragon, it is still more likely you get positive fund flows into India and in fact though I am not a psephologist, it seems like the way UPA has proceeded might get Congress into government again. I would vote them in. The government has also shown it self willing to follow up on those policy pronouncemnts though nothing has improved yet and Infracos could accumulate a lot of interest on new levels , even JPASSIAT at 75 or IDFC at 135

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The FDI in multi brand retail is up for political tests thru this week as large bandhs and demonstrations are calendarised nationally. Political mileage for the opposition in this is likely to be double edged and lose them state constituencies later if not right now. 

Land Reform and other non environmental agenda items apart, India Inc will now have to perform and GDP growth projections continue to stabilise now to a secular 5.5% level across planners, India research desks and local banks and brokerages. 

Banks remain highly positive and ICICIBANK (Chanda Kochchar on ETNOW  remains strong on domestic personal and commercial growth while International is flat. BANKNIFTY had an even bigger fillip because AXISBANK remains a good bet and SBI of course a winner on reduced CRR. HDFCBANK is another example of a defensive caught in a long only sector, unwinding in the stock causing it some heartburn when competitor ICICIBANK races ahead. 

IDFC and JPASSOCIAT could see big long moves if the growth trends are indeed bottomed out and moneys keep flowing which could take them and the sector to 2-3 times the valuation but CONSTRUCTION is not a good pick esp kingmaker DLF which has jumped ont he FDI announcements with CREDAI pitching in on the likely growth in the share of retail spaces from an abysmal 5%  

Technically the charts are unlikely to thro up the new winners at this stage. 

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Indices have climbed comfortably and held 5600 on the Nifty yesterday. The Sensex too is taking a peekaboo at 20,000. However the markets as mentioned will no tbe in further hurry as implementation is unlikely in a hurry for whatever reform agenda policy announcements, ostensibly held up for a long time were finally approved on Friday. 

New taargets are not easy to find when it comes to scrip and sector selection. Infra sector is very shallow in terms of blue chip picks and GMR debt overhang is not done taking down with it other candidates like RELINFRA for the same reason. Project based bidding took JPASSOCIAT to INR45k Crores and they have somehow managed to pay down the FCCB in quick time and are more or less ready for the rest of the debt repayments, which gives confidence to the sector. 

Healthcare and Consumer Discretionary sectors are obviously not going any higher though select sector players have changed colors from defensive to good portfolio picks including those like Bharti because of the current undervaluation. Scrips like DRREDDY's similarliy have been dumped and SUNPHARMA has not been able to go any further either. CIPLA is definitely out of fashion but Mid Caps may also be out of fashion for some time in this melee though I ould have opted for stronger mid caps.

Sector picks like ITC for example are now attractive picks at these levels and Reliance too could be a big accumulation during this wait and watch up mode for the markets   IT scrips have definitely lost flavor this week but the Rupee may go down from 54 during the same wait and watch and so they will make a comeback. Mid Cap It should be a big No No during this period esp as INFY has rerated. 

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As yields dropped on the reform news, good news kept raining on the markets with Duvvoori Rao going ahead with the much pressured rate cut of 25 bp to give industry a chance to shore up the IIP froma low 0.1% last week to better reports than the expected turnaround in April 2013/June 2013. The cut has not been made in repo or Reverse repo rates but CRR has been cut to 4.5% However this rate cut simply cuts possible maneuverability for the Indian Reserve Bank RBI in the rest of the fiscal. india's fiscal deficit is likely to be revised to 6% from the budgeted 5.1% as FinMin tries to revive a much hated and shelved disinvestment program but is helped by a Diesel rate hike 

Losses from LPG and Diesel have been averted to more than INR 50,000 Crs from the INR 1.3 Tln together from last week's hike and to that extent government will not be reimbursing nor Oil and Gas producers be paying foregone profits to Oil Marketing Companies. 

Yield has in fact gone back up after the policy from a 8.16% trading range in the morning to 8.1726%

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Markets have not gone nose up on news and thus are unlikely to go belly up by next week. As unexpected as it was and as fruitless it might be the sectoral runs in Aviation and Broadcast channels have been well left alone, the improvement in FDI regime resulting in gains of 3% (JET) to 12% (SPICEJET) in aviationa nd 3% Broadcast Cable companies. Sensex is up 100 points.

Holders will gain and it is not really time for fresh buying. The commodities cycles are quite done in the big run up of last month according to us but shorts dio not have a clear run in silver or Copper or even ANtural Gas. Crude should go higher but not ithout a not so shallow correction. The Euro at 1.30 is pointing to a bottom for the Dollar being very nearby though some European investors have again taken Euro into their fold, saving it to 1.36-39 by the year end (HSBC)

The policy data comes out in a n hour

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Given that Inflation was also expected to be lower before the Wednesday announcement for WPI and the Diesel hike importantly, it is understandable that 1 in 5 economists in the latest surveys still expected a rate cut to put pressure on the unruffled Central Bank Governor. Nomura economists and even Breakout Nations' Author Sajjid Chinoy however point out again that the government has no room left as do we. Though you may not be able to scroll back to views as we were also away for a month on the subjects of Global Policy and Economics, you will be able to find the thread in earlier bank policy writings here and at advantages.us. And of course as the public sanecdote demonstrably admitted to everyone, there are no CRR cuts in store.

However having been fed reform policy the markets are unilkely to react to their v"dull and drab" version of the credit policy later today. Infact except for Economists at the banks above most in the industry will be relatively busier with deals happening in the wake of Bharti Infratel kicking off a public sale of PE investments with a not so untoward calendar in just 5 years of investment. Back to the calendarised Economics though, the dip in IIP is scary and continues to run down the Economy alongiwth a double digit in Exports but none of these would improve from an easing of credit conditions as bancks get don to safeguarding their margins by cutting deposit rates to the eventuality.

As DNA also notes however, there is no time like now for India Inc and this will take almost a year to fruition in Services and Goods uptick while inflation including the dangerous fuel subindices about to make a bigger come back having come to 8%+ in the August announcement. Bond yields will be going down because of inflows and that should not be confused with a likely rate cut for now.  

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Trust us. it's not time tio sell into the rally yet. 

Banks are again the biggest victors of the Reform story. while Telcos will be apparently in with 2G licences ithout missing a beat including Uninor and Sistem buying MTS, Bharti would be benefitting more from investments in retail and its IPO getting investors out of the 5 year old Bharti Infratel restructuring

Stay long in Banks and the uptick will be tempered as we go along. Indeed some may again try a Bank of Baroda trade. ICICIBANK and SBI are the best picks going up while HDFCBANK is the one likely to lose the least value

The Rupee is below 54 even in the September series and that is saying a lot apparently as Udayan puts it from INR 28 B in one session. The gain in the Rupee is not capped yet either till December

The infra stocks ill be part of the second coming and will be from among frontline stocks only from IDFC to JPASSOCIAT and maybe GMR and RELINRA

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The usual climactic rushes surrounding India's reform measrues have effectively been canned with the coalition stuck Congress able to push thru reforms from UPA2 while keeping the support of the SP, BSP and even Mamata Di.

The usual protests and demonstrations apart, just in retail it's going to take more than a year before the existing players from Bharti's EasyDay to Reliance and Future Group reorganise their operations along statewise lines so individual permissions for JVs can decide their partner's equity in retail 

In aviation, there will be no takers for the 49% stakes except for promoters in Jet or new investors in Spicejet while one is praying for air India and Kingfisher. 

But, why waste a Monday morning in recrimination ( and last time markets would have crashed on the mere whimsy that the sky is not sunny all the time and it is not raining everyday) hen fibnally everything ont he reform agenda has been finished in time. Well, there is still the case fo a new Divestment target which is unlikely to fructify as PSU CEOs put their foot down but then a Diesel and LPG hike could have made any balanced intelligence see the folly in a downgrade (which as brinksmanship would have it, takes India to junk status)

The markets will hit the path to 6000 today but as outlined above it is likely a messy positics that ill muddy that scenario for indian bourses soon as dollar inflows make markets so steep on the uptick that a deeper fall is inevitable. However, having invested in, none of them ill be planning to leave at this stage, the waiting time being immaterial for the returns expected.

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Staying invested helps for moments like this. It is unlikely the market will retrace these levels in any hurry but upside from these levels in intra day trading are not likely except in banking scrips. 

ICICIBANK has finally crossed 1000 levels and SBI still has more upside coming at 1938 to probably 2000. ICICIBANK may not go below 950 and on the upside move to 1100 esp if there is any follow up policy momentum event

The jump in HINDALCO is inexplicable except for trading action for the index derivatives but GAIL and the Energy sector finally gets the long awaited break without Mamata Di

The jump in power and infra, despite the overhyped promoter participation in the sector is indeed interesting to watch as the Reforms bus veers towards social and welfar infrastructure and rural penetration of marketing before festival season jumps the meters on debit and credit card spending. 

AXISBANK is also interestingly poised, measuring to the index moves to 5600+ trading at 977 at these levels

SUNPHARMA, MINDTREE and KOTAKBANK could start off any profittaking moves into a cascading correction ( less than 5% probability)

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The so called QE3 program in the West announced yesterdaay ofcourse is another bond buying program with $40B per month and it remains to be seen if the $40 B infusion is made in terms of fresh dfunds into the system, the Fed having a lot of inventory it keeps selling too. However, the local Diesel and LPG hikes to Rs 51/52 and Rs 800(any CMP after the 12 allotted cylinders per family) respectively will definitely be inflationary and the relief in today afternoon's monthly WPI announcement. 

Yesterday's announcement of dip in exports of 10% in August remains a matter of some concern after a 14% dip in July but the performance is still $22 B in exports and at least $2.6B  value reduction in Exports has been offset by that lower import of Gold and Silver this month. The higher duty cliff imposed by the Central Bank has become effective as the weaker trend in Gold and Silver prices is then encouraged in the precious metals world wide and Indian prices stabilise. The recent run in Silver however is likely to continue given the QE injection and the soon to be approved Spanish bailout whuich is still likely before the holidays as the Spanish try to come out on top of it politically

The markets have hit 5500 in the Pre Open and it is true festive time that a minimal regulation champion has survived globally in India at tis clip of 5-10% growth in the coming years while others experiment with over regulation to come back to a new normal

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

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

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Reliance Infra's transfer of equity out of Airport Metro to a Trust to avoid the losses blotting its balance sheet is a new challenge Infrastructure Financing brings to the Indian Financial system and in time the innovation will get its due after everyone has had its say. According to Global Accounting regulaions though, it would be clear of any 'aftermath' in terms of corporate governance challenges in accounting and hwo is finally right is not such an easy question as one reading the ET might imagine. ET still gives factual details in toto for the transaction. 

The Indian Rupee moves up in style as the expected fall or stasis did not really materialise the market embedding a distinct upside and continuing at 5400 levels from 5360 last week and 5300 being near a bottom

The shorts in SUNPHARMA, YES or ITC have not materialised and if someone convinced you to , you should sitch back to buys. Though Cipla may not be back as a side dish for the stasis. Lupin.,, Stride Arco in Healthcare, Orchid and Opto adding mid cap interest and banks led by ICICI Bank will run the lead impact on indices and portfolios. Also accumulating would be infracos excepting the midcaps and the education startups/ consolidation (Welfare infrastructure) and resource companies like Sesa Goa and even aviation including Spicejet and Jet Airways. 

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No do not do that. though smaller targets that Ashwini Gujral has suggested work, you never know which short won't work and thats a good investment on the long you are switching. Of course I refer to the markets enticing show of what's left in India anyway and exiting by the back door for the show is over kind of morning with dear networks taking turns on shorts for day traders. Yes Bank could very well come back to 320 and IDFC has already shown enough to stick to 122 levels than go back to 114 both indicating that the supposed over emphasis on both banking and infrastructure financing is unlikely to go away and REC and PFC are already at encouraging levels for an uother upmove. 

We do not expect markets to go for the South side vacation day traders are so fervently hoping for. 

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This one though is futile as the market reaching too low a level will disappoint investors who came in more than three months ago and have stayed with another $2B coming in July and August in just a couple of weeks. 

The markets are itching to trade down but have no idea if even t expect any new buyers at this stage and the correction is unlikely to be deep unless there is another inopportune exit from unsettled investors which could trigger the move to 5200. 

Coalgate's juicy details have admittedly missed me but the anti incumbent air in the coming bout of state elections would be a blow for the country and commentators would be watching

A leader in mint adds spice about firm funding for political partes in the India election scenario with BSP bypassing 2004 and 2009 poll events without a single donation (above 20k*) Companies fund parties thru Electoral trust singly or jointly with others. Another report on Page nine shows Maruti keeping its market share in August car sales with its 54000 cars still a sizable %centum of the 118000 cars sold excl those in Export markets taking the monthly low to below 160k runrates recorded in 2010. 

TV18 commentary has hit a new low with LV taking morning market open duties and destroying more market momentum ( positive or negative) than she imagines(!)  

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Trading strategies are more the norm at this time of the day but the markets have finally regressed the entire cycle of events from the mid 90s to retrieve a year or at least a month of flat no move left stock markets and the rupee after a valiant afternoon early last week, follows into submission.

By our calendar, India Inc and indian polity have more twiddling of thumbs despite the Parliament out of the way till New Year festivities start in earnest and the Opposition crosses probably into a near win zone against the losing Indian government, a sinking ship, ripe for deserters and hence the time for foreign media to make a tattle tale red ass ed monkey impact on things. 

One still thinks ofcourse that India In c will survive the remaining year as the financial markets have, propped by liquidity though consumption is likely to be a dampenedr in the coming festive season with means stripped of all respect in the ways and Means advances of a government, 33% of plan spending and 52% of non plan spending exhausted in one quarter and personal consumption enjoying the hit from inflation every week. 

Ofcourse the Indian polity has been early pioneer and we the commentators have been as usual late in adapting to India 3.0 which like 1.0 and 2.0 before simply refuses to budge from positions, movements and growth rates established last after a severe drought in the early 20th century and a westernised relief program by the then British sponsored Congress governments in the principalities of Indian maharajahs. 

The Anna movement has fizzled out without a viable political color, NaMo and Nimo apparently not good for a national calling and Rahul Gandhi not coming out to take charge, the old generation moving on has also provided pause for those of us born in the 70s as more entry line recrutiting takes salaries , if any , to 20 somethings and no growth industry replaces againg telecom infrastructure stories banks amnaging to gro credit to NBFC, Real estate (Affordable Housing) and other services industries. 

FDI collars for old sectors, new banks and growth calls for the pack waiting for work yet still snagging salaries at IPL linked marketing companies, erstwhile growing BPO and It companies or NPA hit PSU banks are yet a year or more away. Not much is expected from IIP data and Manufacturing Output growth data on Wednesday while Friday's WPI data and that of FX reserves is unlikely to move decisively either, yet not be in the rut, WPI having improved for the last three-four months. European inflation data is likely to be worse today when most nations report than tomorrow when Italy and Sweden are scheduled to report while key South Korean, Russian and Aussie data speeden the recovery by the currencies against the dollar. 

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The One hour saturday session did not help nor the coming likanen report in the EU scare banks and investors on the Asia story as Monday began apparently without due cause or available discretion. Not to give in to rabid bursts of disgusted incompetence but, india remains patiently in wait to distinguish itself from the Asia story and though stocks will trudge up to 5500, Banks from Europe could be otherwise occupied in the coming opportunity of the Spanish liquidity event as unlimited bank buying replaces and supercedes all current monetary supports and back in Bangalore Infosys catches the scenic express from Zurich buying SAP and product house Lodestone. The Swiss Lodestone 's 850 consultants do not work for bugger or private banking clients but in manufactuing and automotive verticals with it also missing the in fashion healthcare business of the scenic Alpsdespite being in Swiss. 

The Liikanen review needless to say, adopts a lot of the Volcker and specifically it pays heed to the Britishconstituency and perhaps brings UK closer to agreeing with the EU on Financial sector reform for all in one size fits all as the struggling EC wants to. Vickers had recommended and had been approved for a new proposition in UK banks limiting trading assets and non business banking assets from participation of retail banking capital However anyone with trading assets less than 5% of (RWA?) assets could keep the trading business in the same company

Meanwhile a new staying power has apparently been reached for the Jobs exodus as a less than 100k nonfarm payroll addition in the August report from the BLS did not cause much accidents while we were away unless the Euro shuts down in European trading n a couple of hours. 

The Saturday session was evetless and the Index has hardly moved shape or sectoral preferences from Friday. However, banks completed a little ceremony where Dun & Bradstreet asserted HDFC Banka s a overall no. 1 bank for Fiscal 2010-11 and ICICI Bank and SBI split 3 awards each across categories with SCB winning the best Foreign bank ( parameters incl Quality of Assets) and Citi the best Foreign bank in retail ( old hat, new takers?)

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Commodities did not have as much fun as expected after the Euro strengthened on further bond buying introduced by the ECB. Oil is still at pretty high-ish levels at 5280 but you should probably watch out as liquidity concerns going away and its virtual peg to gold meaning buoyancy for Oil prices.

Gold will remain a long but for now US Treasuries and Gold may join Silver in a sell off as non one has the latest in demand assets, i.e. Italian and Spanish 10 -y and smaller maturities which have jumped 5-10% since yesterday's announcement. nifty is hholding the morning's 5320 levels and will likely cap the long rally in anothrer 100 points. Of course the buoyancy meanas long intra day trades for those who have the time and the capital

Indian markets are going to get insulated from being "corrected for premium and over valuatiion " though as China struggles to put a recovery in true perspective and is likely joining others in a recession. ECB also marked down Europe's growth targets to 0.5% for 2013 and Inflation to nearly 3% and 2% for 2012 and 2013

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As GSAM and a few others will willingly admit over the air, there is no return on your investment in China for a few more months. Of course the most important news of this market and it is affecting pre open rates as we speak is the Central bank liquidity thrust which has started in earnest even before the last obstacles toa Spanish bailout have been removed from ESM approvals to Spain's own assessment and formal request. Bond buying in the 1-3 yr range by the ECB was announced at the monthly ECB meeting yesterday and was good news fo those already picking up 7% and 5.5% bargains in Spanish and Italian bonds. The resulting liquiddity esp as China is crushed under its own policy weight of the last twenty years is more investments in India.

However sooner or later more backing will be required for this rally as the BHEL and SAIL disinvestments look ticklishly unlikely despite Chidu's best face on it. Bank nifty should be an important gainer if not today, tomorrow as 9850 was an important point of support.

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Flailing Auto sales in July and August have been estopped by the advent of the Holiday season and Ganesha and Dusshera will not let optimism go down in banking, auto or consumption sectors in durables and Non-Discretionary. However while many have beenlooking askance no one has called for the correction in Healthcare, Ashwini Gujral / ET Now biting the bullet again as Energy replaces any gap and older commentators hoe for a quickfir IT buzzer round to rate up scores , Infy and Bharti evenly priced. I would stay with longs in ITC< ICICIBANKand IDFC and not go short on SUNPHARMA though DRREDDY may stil have a few spinning out moves to the downside. Similarily, LUPIN, STRIDE ARCO (STAR) and the newly resurgent ORCHID and OPTO are unlikely to be part of the correction opening Ranbaxy and Sri Aurobind to more nervous action in the very few moves we will see this fortnight till expiry targets become clearly polarised. 

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Though unexpected, the markets still seemed to be disappointed over the developments in Europe, where overt hopes of immediate liquidity, as we have warned before , are unlikely to help. the WashPo article from a former Reuters hand covering India did not help the local markets cause either but is likely winded by Political PR engines more than one cares to admit. The Rupee made its trade without unduly affecting the equity markets at 56 yesterday and September series on the CDS is trading above 56.

However the equities are very careful about going down. IDFC again though hit by quick fix investors leaving seeing time at hand to a bigger rally and is likely to head towards immediate support levels. Axis Bank ofcourse was hit by a downgrade but with MARUTI and RELINFRA responding to the selling with a natural uptick the next day, its likely business as usual sooner than later

Reallocation of Coal Blocks(5 out of 25)  is a positive step and a PlanCom reaffirmation of non competitive bidding as a viable route also well timed and could have been used in Telecom too if not for the government and bureaucracy leaning toward competitive bidding and the excessive graft seemingly in those later telecom deals. 

Fuel hike rumors are carrying the Energy Sector this and next week. Poer NBFCs are back in the hunt as Public Sector Infrastructure still seems to be filling a critical gap in provision and performance in India. 

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The trades are there for those with a little committed trading capital as Banks hit 9850 on the banknifty this time with Axis and the Big 3 winding down positions and European yileds hit ting the high note for International investors to accumulate ahead of the pre holidays liquidity exercise. the Euro has in fact already started down from the above 1.26 levels on the weekend, a little slow in the short US week that started yesterday IDFC apparently will go baclkk to 123, YesBank is already at 330 and Axis is now trading at solid supports at 933 but buying interest and the expected fundamental reform  except for the diesel price hike which will apparently amount for more than INR 1.1 B or 20% of the daily losses being incurred by the Oil marketing Companies this year. 

The loss on Diesel is Rs 17 per liter and on Gas Rs 347 per cylinder. Goldman Sachs sell side has obliged with trading buys on the weaker BankNifty members but it is more likely that the Big 3 and Axis will start the up move around the corner and it will pay to buy into Ais, HDFC Bank and ICICI Bank at all levels as also Jubilant Foods, Bajaj Auto and ITC which has finally settled up at 270

Mining has begun is A grade mining companies in karnataka pursuant to a Supreme Court order and more action is expected as action shifts from allocation to production in Coal mines and the Land Reform bills and others with the government /parliament. 

Parliament's close may not be the desired catalyst for the Diesel price hike though.

Beaare of the Bharti rerating in process as the current positive bite is pursuant to an incomplete rerating and may not be a good indicator. Same goes for Kotak Bank which shows YTD gains only on a bad pummelling in the previous Calendar year and is not changed up in prospects nor able to work the new banking guidelines virtually killing expansion for the bank and MNC banks reclaiming retail market share sooner than later in urban areas. 

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Though Priyanka chopra is releasing her single on the NFL Opener stage on Thursday and Reliance Infra has suffered from another mishap on the Metro, llife in the Financial Markets is finally undisturbed and without any undue pressures north or south. Markets wll last another couple of days in the range and if still there are no extraneous pulls and pushes, move in a defined direction

Coalgate, Automation at Maruti, the ysterious honesty of the NDA constituents now in the opposition and the incessant tweaking of retail FDI norms and yet not having a couple of billion from that table has no thurt the markets either, India's new normal predicated on the good old..

All infrastructure groups from JP to Anil Ambani's Reliance and others like Jindal and Bharti  ith overseas acquisition will like to use this opportunity to cut ont he almost INR 1 T in debt each holds, esp with overseas acquisitions not paying for promoters like Adani. Banks till now have not suffered from Coalgate either and Orchid and Opto among others have recovered from the continuing FCCB pressures. Another update on the BOP is due and likely will show the situation statistically to be right up there with the Fiscal end report which means more than $360 B in eternal borrowings and that ratio is definitely not near the infamous 90% mark people keep adding to using perhaps all state and municipal debt and that is unlikely to be India's problem not interested as it is in adopting any new ways. Bank expansion though has likely been affected in pace this year but Credit Growth will likely remain in double digits at its worst where I assume all retail consumers fall off the loan and credit card habit for good too, esp in the new rural / Tier II town growth in the sector. 

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US markets open after a long weekend and the Euro starts a downward trudge from 1.26 this afternoon to 1.23 or 1.22 levels and tha is very bullish for the Dollar but this time more so for Gold as Oil reduces the money going around, this time by falling from its 120 levels 

Rupee is going to be a strong trade and so any spike is a good chance to accumulate. Daily trades are hardly 10 paisa in range

Banknfty is unlikely going down from here. If it does , buy some for expiry but then wait for the complete Banknifty move. Union, Canara, Central remain sells and the BOB buy reco is not back but PNB has bottomed out and SBI is fed up of the traverse downwards despite unfriendly media noises which the market would not decide to take seriously

Bharti is not a buy, ITC is not a SELL and MARUTI is a SELL not M&M or Bajaj auto

345000 and 445000 (Bajaj and Hero respectively) two wheelers should be counted as a pretty robust performance, above their starting point in 2010 when auto sales ramped up for all the wrong reasons, hope in front of results and economic performance could have taken much more off than what now seems to be just the fat except at MARUTI where 50000 units sold in the month is a precursor of things to come as it continues to lose market share and there is  a surfeit of B launches from Renault, Skoda and others. 

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A directionless day awaits us as everyone in India is out of options, esp evident in the flurry of market recommendations in the markets and bearish prognosis from Jim 'O Neill and of course Jim Rogers, both almost indistinguishable because of the stress on Indian and equity premiums. 

Bond buying of a different kind has already begun in Europe stealing precious liquidity from proven cores of self worth like India as investors hurry to catch Spanish and Italian bonds at the top of their yields in the ensuing liquidity rush, probably just before the holidays. 

I would advise one however to stay away from trades such as short on AXISBANK as the usual suspects in the BANKNIFTY are still on the down curve except that I agree with only one report on themorning ticker which is more in cue from my earlier report, that of the sell on automobiles , taking a buy on Punjab National Bank. No india's reform story is not a hare, it is a tortoise, No money would leave India and thus at 5250 ithe market is a buy more than a sell to "better" levels as new European funds are back only in 2013. 

SS sell call on GAIL is also a bit mystifying but I must confess that is one mini set of three companies including private IGL and Petronet whose legal and market price advantages have become issues in India and are unlikely to be clear recommendations in either direction and probably traders are jjust fishing to find the rocket launch levels for such stocks including Axis, GAIL and even SBI. That is why sell calls are futile on these at this point

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The expert himself was on tax speak on ETNOW delineating the difference between SAAR and GAAR and how India is not ready for GAAR principles as evidenced from the bout of foggy complaints of abusive treatment from the government after President Pranab's retiring salvo was discovered by the markets six months ago.

However Mr Parthasarthi Shome was exceptionally diligent in listing all the applicable exceptions to GAAR apart from recommending a deferment of implementation till FY 2017-18 made necessary by the immediate flight of Capital after the provisions were announced. 

1. Changes to the Mauritius treaty will be made separately and such compliance issues will not be confused in a GAAR notice which will apply to artificial and abusive arrangements

2. Dividends and Buyback arrangements as also any other intragroup arrangements including setting up of branch/subsidiary or transfer pricing issues will not be subject to GAAR when applicable ( Advanced pricing has been concurrently introduced by the CIT/DIT alloing companies to use pore approved rates of transfer pricing)

3. Tax mitigation is separate from tax avoidance 

4. GAAR ill not apply for investments through Debt/Equity

5. A minimum requirement of commercial substance and minimum transaction of more than INR 30 million in tax benefits

The widespread lauding of Mr. Shome consequently is all over the fourth estate and the excitement is palpable. However none of these enablers count for immediate positive dollars which will likely come in CY 2013 now when policy is indeed changed. It can be argued by the polity and thebureaucracy and indeed it  such that these clarifications cwere never intende3d to be crossed by the DIT in its bid to increase revenue or prove such points to transnational corporations, but the clarity is late in coming and should have been provided when each such doubt was raised which Mr Shome has shown can be done with clarity conciseness and effect. 

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TCS role as a good defensive will see more substitution investment into the scrip and unlikely that ITC or HUL woll lose as a result. Infosys in the meantime seems to have found other buyers and even PE investors in India inc are having lesser trouble sitching investments despite mroe active market information and agencies like InGovern Federal Bank's stake purchase by ChrysCap however is not a n immediate rub on to the stock as the bigger ones continue to smother the market sentiment when they buy a quasi promoter stake in such companies.

JPASSOCIATES, IDFC, ITC, ICICIBANK And POWERGRID are all ready to 'recover' and groww back claws on those who wrought havoc on the weaklings of the banknifty from Union Bank and Can Bank to Central Bank and PNB. Only PNB and BOB might recover ground with SBI in the ensuing rally while HDFCBANK, HDFC and YESBANK rocket back to a  positive slope near their all time highs and raring to go. 

AXISBANK will continue to be the deciding stock for the modicum of recovery for now. 

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India Inc may not get another chance to grab centerstage as global markets are closed with the US celebrating Labor Day weekend. China and Australia threw in the towel on the economy with the China PMI hitting a nine month low as it showed in the flash estimates last week. Aussie retail sales were down after a three month buoyancy from handouts for carbon rebates and benefits cheques dried up. Department store sales were down 10% for the month of July. 

That shoulld have made India the continuing star in the region but US markets are equally buoyant and should cost India's fast rising moonshine some good market share in equities investments this month. Jackson Hole is past and there are no more than vacillating noises fromn the Fed to support a run on equities in either direction, that itself being a buoyant prognosis for performing corporates. 

India's own BSE will be following MCX into a public listing as more realise the folly of not using the cheap public sources of funding and questions on shareholder activism and / or questions on claims of "ownership" by financial investors are more or less settled in favor of the management

The markets are unlikely to fall below 5200 even in this series and not many are going to hold the governments responsible for losing the early momemtum of the return to reform despite the hundred small steps that have already been operationalised in India's own paper bound ways as Central Bank policy for the Financial sector and finmin cannot find Disinvestment candidates for the burgeoning Fisc that stayed above 51% of the target, down from 55% because the target was more sensible this year. The data is for the first four months of the fiscal.  The BOP / Debt balloon despite continuing to increase on faster short term borroing by Indian corporates is not fuelling new investment and is yet servicing old FCC debt and retail consumption is likely set to increase from a bottom

All this does not preclude India's premium overother markets esp as Asia follows Europe into a contraction and US recovery remains much weaker at this point also scutting investment dependent "Breakout nations" as well in this decade and only trade continues to grow relentlessly. 

India does stand alone but it is head and shoulders above the rest as a big economy and as a growing investment and this week will cement that further as the dip in banks dies out and a quick recovery is earmarked. 

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