Though RBI 's new norms for banks may not be par for the course for the LIC subsidiary, it is growing strongly in loan assets after having controlled its growth of Developer portfolio shares on RBI insistence. NIMs fell to a low 2.1% but the 'bank' remains one of our top picks in the sector at its current prices

It had a minimal share of retail exposures in its retail growth and after the current rationalisation, it will go back to getting  to the richer Developer portfolios as it boosts its Net interest income to INR 3.54B and is likely to post INR 16.54 B for the full year 

Provisioning has dropped 5 out of 6 to just under INR 7 B keeping profits high at INR 2.47 B Business Standard reports its best growth of 36% in the loan portfolio came in June / September 2010 hence it has been falling.

As we mentioned it tried to balance its portfolio from 50% developer to more retail with RBI egging it on.

This quarter the Loan portfolio is a sizable INR 690 B at 21% yoy growth and may easily reach INR 1 Trillion by Q1 2015 esp as it may be able to absorb more crorporate exposure ( Developers) Loan growth of above 20% at this size of assset portfolio underlines the growing capabilities of this   

This is the third copy of the posterous blog i am posting as the now twitter company seems to have lost some of its softare contstructs losing my drafts and published documents ever so often

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Income of INR 1594 B produced a record INR 3.37B profits for the banker wannabe as Shriram Transport relied on Leasing Income to replace the more lending business friendly Gross and Net interest income. In its core Truck leasng business the industry leader is still moving all the gravy with a dominant 50% market share. Consolidated Net profit is INR 3.67 B 

Meanwhile Indian and European brokerages (Credit Suisse) have been upping the ante on the operator since results were announced . Its anual EPS is now riding near 60 at INR 29.14 and the growth clip of 20% of topline and 30% of PAT is likely to be an easy win for the future Bank. Off book AUMs are increasing especially in Q3 with bilaterals to banks making 80% of its securitisation in FY12

The retail market is inspiring improving NIMs for Shriram. Management commentary highlights changes in priority sector definitions to also improve Shriram's relationships with banks. It had only INR 400 crores in Q2 securitised against an improving market volume of InR 34 B till mid October. Net NPAs are a high 2.89% but have been declining steadily int he last 3-4 quarters from above 3%

Shriram is apparently waiting to season its new leased assets to benefit from an increase to Off book AUMs and tweak new securitisation agreements to the more adaptable PTC mode where credit enhancements are still allowed ( disallowed on direct assignment) while the latest cap of 8% lending rate on priority sector characterisation of a loan might be also apossible change without due pressure on profits as its market leader status allows to maintain and improve NIMs

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The bank's increased restructuring and long pain in retail advances hich are still a majority of its portfolio still did not stop its growth, finally coming ahead of the others despite taking the longer route after the Kamath bloodbath decade in retail aggressiveness. Net NPAs are down to 0.71% continuing the downward NPL trajectory and a CAR of 18.5%  the Profits easily grew ell over the 30% mark

PAT is up to INR 18.15B decreasing sequentially from a INR19.02 B in March which was Q4 of the previous year with NII up from INR27.1 B in December and 29 B in March to 32 B. ICICI Bank added provisions of INR4.66B and Other income is down probably from decline in fee based investment banking income than the retail banking and commercial banking charges Provisions are the same as last quarter.

ICICI Bank's Other income is INR 1879 Crores but Topline excluding Interest is INR5062 Crores or INR 50.6 B leaving NII at around INR32 B and Gross Interest Income has grown 580 Crores in one quarter or 6.7%

PNB NII is up to INR36.9B and seeming recoveries of INR 15B have helped the bank's bottomline to also move smartly. Its restructured assets could outshine others' gwith INR240B exceeding 50% of the Total Bank Credit assets of a YES BANK that is still growing is asset book hard and steady at almost 10% sequentially. As we said provisions at INR10.3 B look almost anemic compared to the book. 

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Now that China has confrimed in October data that there is a real recovery with HSBC PMI closest to the growth paradigm's 50 mark, at 49.5 Indian core sector's growth at more than 5% across a 13% jump in Coal production and 21% in Cement in October alongwith jump in Electricity and myriad other 'core' businesses including oil gas and steel means it would be a healthy PMI tracing the only other positive PMI among the world's large Economies in the US and Net Exports as trade makes 18% of our GDP and the deficit stays in check with Oil imports cheaper even if demand for the same rise might also rise along with the definite growth clip on Services PMI

Meanwhile Fraport exits GMR Banagalore Airport at a fair profit and again GMR might forego on the offer to buy more of that Airport's stake as India Inc gets ready for a ruch of Infraco orders which hold the ticket to its banking and GDP prosperity or India just might lose the edge it has with a 5% GDP growth and an early lead on recovery. Funds inflow have already exceeded $8bln this rally from July and with China at multi year ows in the stock markets any extra weightage for china may be absorbed without due transfers from other markets leaving more inflows marked to New Delhi/Mumbai from FII and FDI proposals

At this stage the Goldman Sachs and JP Morgans of the world might reconsider their predilection with Frontier markets and China before LATAM indeed does make a comeback capping the benefits to South Asia and India. Korea however should see more investments too, including Indian businesses oto whom cost of credit remains manageable. 

Tata Motors in the meantime got flagged by Pandya and Sumeet Jain at Goldman Sachs India for doubling to a ~ INR 500 target or double the market cap at INR 1.7 Tln based on a new Jaguar aluminium chassis/engine as the stock mirrors its latest market China's Economic performance and Landrover sales get even stevens at only 27,000 units per month

Both TaMo and Starbucks fed Tata Global remain on analyst radars as seeming corporate governance issues look to snip the investment led potential dscoveries from outgoing Chair Ratan Tata's teams. 

Reliance's big ticket investments for D6 with BP and more importantly its seeming victories in the bid to raise the price of Gas from its units remain new mysteries speculators get to capitalise on but the uptick is brilliantly pre done as the noise of future rate cyuts bring the market out of the sulky pout.

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The whole dog and pony show biting the much expected RBI policy non event and show casing a big war with the MOF in which RBI Governor was backed by all ( not just most) Economists and market commentators and markets moped as if they were being left behind on the family's "rate cut" vacation is likely to come to a blinding finish when the markets opened post Hurricane Sandy in the US.

On that side of the Atlantic NYSE is to blame for not having taken adequate measures for such natural disasters and for having the antiquated systems that do not support remote electronic operation of the markets but it is in a way a true homage to the disaster Sandy has wrought. 

However closer home, PSU banks are well and truly going under losing upto 10 basis points in NIM every quarter of provisioning and some that choose March 2013 as a one date to present updated balance sheets might go thru a sea of red too as none of these recast assets, worth INR 300B at Allahabad Bank alone on a Book worth INR 3 T and that means a loss of INR 8 B on provisioning expenses for that bank alone. 

Other good 50% + results on sales and profits will continue to pour but you have to weed out the delisting candidates with very less floating stock from amongst them such as Colgate ( Thanks Nikunj Dalmis, ETnow for the hat tip) 

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As expected RBI did not give in to market and political pressure and kept the rate slider unchanged at 7-8-9 with 7% the Reverse Repo rate and 9% the rate for Emergency Borrowing ofr the MArginal Standing Facility for Banks. the 8% bank rate as expected as appeared as a whipsaw in the Equities and Fixed Income markets, 10 year bond rates back to 8.15% despite two successful auctions for INR 1.7 Tln in the last week or so and banknifty knealing at 11300 levels. 

RBI had earlier moderated its FY2013 forecast to 5.7% for GDP growth and 7.7% for WPI inflation from 6.3% and 7.3% respectively. Expected Fisc(Fiscal Deficit) has also moved up to 5.7%

RBI has also pushed guidelines asking for transparency in derivativees positions and currency exposure making loan sanctions contingent on the information after January 2013 and forcing corporates and banks themselves to consider firmwide strategies for currency beyond leaving Forex liabilities unhedged after deep losses cut into bank asset portfolios as well.

The Provision rate for so called standard assets that have been recast has been nearly doubled now to 2.75% , where earlier most banks did not provision these assets

Expected M3 growth is still a healthy 14% while RBI expects the interbank liquidity deficit to go down after the CRR cut infusion. Earlier FM P Chidambaram had built a new five year fiscal consolidation plan targeting a better  fisc of nearly 3% in FY 2017

Rate cuts may follow in the last quarter of FY 2013 only if inflation rates indeed soften in the Jan-Mar period before the incumbent government presents its last full budget.

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Is there a way to improve the "weights" of positive results on Bank Policy Tuesday? Colgate for example grew Sales and Profits jumped nearly 50%, Biocon Sales are better by 18% on year though they failed to meet any profit growth expectations and even BHEL which pictured a dismal quarter early on but masked it with growing Power business scream out for more attention in the Chidu vs RBI date we look ahead to.

No, there's no President Pranab intervention on the horizon and even Chidambaram would not mind if the governor lets it be. The CRR cut may also ease the current low liquidity deficit of INR 0.60 T with another INR 10k - 20k Crs or INR100-200B released on the cut announcement.

The Risk reward has enticed the shorts as we suggested it might but we still think that given the inflows this year were of a couple of orders of magnitude higher and targeted Equities per se as commodities spin out of control to the bottom of the pool, it is unlikely that shorts in anything other than the whiplash mid morning. Banknifty is such aplump target the whiplash alone could cost it a Double century and bring it back only by the day end. However, if you were buying today the odds ( and not the long odds only) are that you would be in the money on 8 out of 10 bets ith a little patience, what you would otherwise employ with a greeen thumb on a falling knioves kind of a day in the bazaar. 

Coal gate in the meantime ( the American strain) could not ruffle Obama out of that battle state of Ohio and Romney is still looking in Wisconsin even as Florida and most of the Eastern seaboard float ( probably in an attempt to shore up Oil prices) and even in light of record inventories of Crude and gasoline, it has meant a green light for Oil bulls after a long time, again, apparently my threshold still says that Oil is likely to continue to crash despite. Festival buying of Gold is almost over and the dusaster has brought up prices too and a bull run in Gold will start from here as the yellow metal can outlast thru equities bull cycles as well in an upturn and need not signal a donturn in equities. 

Nifty Put Call ratio is still a healthy low at 1.10 and has a long way to go as shorts extend into 5700 calls after the initial interest in 5800 calls giving way to more focussed pressure on the Indian system

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Markets remain stuck to good support at 5650 and bears hoping for a better risk reward to pip the bulls to the post in November should stay away for their own capital to be safe. Indian Banking and Indian Capital markets though continue to trundle into uninterested, boring, mature markets territory with the higher volumes of business now for 5 years at current clips yet China is the one making that abysmal tranmsition from growth teritory to just so so more mature territory for global corporations in the new avatar.

The India story however did not get a big fillip from the political shennanigans over the weekend hich tried to make up for their weak defensive flavour with the quantity of action yet the opposition is in a disarray and quite unsuited to a India ready for the reforms that willg et pushed on irrespective of the government at the Center. 

However without changing the top two file notings my normally breezy language is more likely to complete this report so back to bringing the bollywood in me on to the table..

Markets look good to move north despite attempts by market commentators to cash in on the unending show of support unable to move up. i.e. The markets will go to 5700 and then probably be ready for a raincheck. Banks and infraco specialists are definitely good investments leverage being a good word for the over 105 infra projects pending in the official pipeline The pre open as usual is week challenging the buyers to come in and stay in and thus the risk reward shifting to the dowanside may actually take this phenomenally positive results season into a deeper correction in the markets. However, the india story stays invested and anyone exiting at these levels is unlikely to get over this missed opportunity even if it is for necessary expenses back home. 

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The week closed right 2 points next to the week before last levels on the Nifty and the Bank nifty is technically still able to maintain 11600 levels at its current 11585 banknifty score. The result, humdrum existence for those who thrived on the growth in India inc translating into indices moving up in a definite trend if not by leaps and bounds. An humdrum existence probably made interesting by surgical precision of tv series' characters in our "day to day lives"  including the clinical refusal to a date for candle light dinner with hubby dears like us.

Anyway, equally critical and probably funny is how another batch of shorts is out from market practitioners in a clear derisory preview of a Monday which should be extremely bullish at its key 5650 support on a Monday in the beginning of a series after such a reshuffle. It is likely my bet that the markets are up a 100 points on the Sensex today but that has been precluded by any such move likely snowballing in such aforementioned general climate into a 450 point move or the Nifty similarily running up closer to 90 points. The unlikeliness of the NIfty moiving into such comfortable orbits makes today's moves limited. Of course there is a faint probability and thus a skew in the favor of a definite move down in terms of risk rewards because of the low probability, which means markets decide to take the south direction today for keeps is rather unlikely fortunately and not unfortunately as followers of risk reward charts might imagine. 

Really if you deciphered that all, you are likely still less bright than my daughter whose schools reopen tomorrow as markets continue in a range bound equation for the growth in EBITDA this quarter which the TOI reports at 27% for index companiies having reported and includes FMCG and Cement while not giving the thumbs up to the 20% deprecation led 30% eyarly growth in IT and Pharma revenues. Net result, no picks are good for bigger and better exposures in ICICIBANK, IDFC and YESBANK which remain winners of the trend to Indian victory equation (Political and Business largesse and influence on the region) 

And apparently I would not be inventing any quantitative constructs for such clear diction ona complexly meandering subject when I do start my fellowship at Bangalore/Ahmedabad later next year. 

Banks however are likely to get more finegrained classification , the subject area being clearly defined and pushed by growth parameters from the potential of the unbanked and the unbranded to the potential of global competitiveness brought by globalising of the Indian Banking brands, no tthe outpost business we do to debilitate the banking brand from India today.

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Net Profits have grown to a never before INR 19.60 B or $376.92M for the bank as Net Interest Income climbed to INR 33.71 B or $648.27 M with Treasury income of INR 1.72B helped other income to INR17.91 B  all growing at more than 30% over the year ago quarter. Q1 2013 growth was a little subdued in the middle of the near contraction in the Indian Economy on year but still a sequential improvement on March quarter to INR18.15B. The current Q2 2013 is therefore a sequential gain of 7.33% and even with a near 20% rate of growth in credit CAR including Tier II has inched up to less than 19% 

The bank is looking at bringing $1B in NII itself every quarter in less than 2 years and with Fee Income of INR 179 B year to date is likely going to manage a superior profitability with good NIMs on a loan book closing on to INR 3 Tln 

The bank added a INR 5 B media industry account as NPA and i s otherwise unperturbed by the current sector massacre from bad loan provisioning PNB also proved results today and was able to grow credit and deposits by more than 17% on year

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Sudershan Sukhani gets another look in on our bullletin if only for the 100% trader's attempts at catching a correction again at 5700, with sell calls on Biocon and Reliance Capital. Anil Ambani is easy pickings though the rest of them may not move and then you will lose that one too. I am not on any 100/30 strategies this sector of the market and think 5700 is absolutely valid for the market to start any move. Though if you want to , markets might oblige a 30 points in the new series as they assess whether another move like the first week of october can be absorbed in the markets. 

Another fuel hike well and truly puts paid to any political ambitions of the MOF /Chidu and energy stocks get another sleeping level move, iunlikely in any other sector in India an dthe positive rerating for a change, is long overdue in the sector from ONGC and GAIL tot he OMCs and even Oil India which has been neglected for a good 5 years now but may soon become more active as ONGC Videsh runs out of the big plays it had been sitting on. The piped gas plays similarily are interestingly undervalued but waiting to staay with Market Beta than move independently again after having moved once on fundamentals in the last three years. 

Bajaj Auto and Dr Reddy might be the convincer markets need to move up and printed good results. Banknifty has definitely made a fresh bottom support at 11600 now and ICICI Bank results can only move it north. IDFC is back too and so bets might change by 10 am from Sells to Buys on the trading stocks too.

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Another market day and most indices are redefining flat trades ith a half a point move on the Nifty and a stable 8-10 week run with more in the offing despite a Cabinet reshuffle on the cards. of course that would see some dip before opening up and the series for November is  likely positive with YESBANK, Jet Airways and IDFC still going strong.

Lupin, Stride and other Healthcare stories including SUN Oharma also look robust and unlike naysayers who think market is flat because it is likely to present value at lower levels to me it seems markets are not really trying for 6000 yet only because it would mean execution of policy is happening overnight or that sentiment has improved suddenyl for india which continues to be challenging in the face of a global recovery.

The commodities cycle is delayed despite the Dollar weakness because China and europe are unlikely to start a recoevry in earnest for another six months leaving India's exports stable and imports of oil cheaper while global equities respond to improving conditions using every available dollar for investment instead of staying cash as for 2 out of the last 4 years

Looks like I will be applying to that fellowship program after all. 

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Yes Bank grew NII by 37% over last year in the latest quarter, a high number eve for smaller nimble banks as BoB reported struggling with 3.23% NIMs in the same quarter. With frequent Tier I and Tier II QIPs, the Bank's Capital has hit 17.5% and Tier I Capital is also high enough to load even higher growth digits as Gross and Net NPAs fall off from already minscule levesl to 0.24% and 0.06% 

Of course with banks like ING Vysyaalmost degrowing the Loan assets , static at around INR 300 B and PSE Banks growing NPAs to significant 1% levels at the best of breed banks, the room at the top is definitely available for anothe top notch bank from the 2000-04 'era' to make an impact when new banks with existing lending books and rural branches join the club in a few months

UCO Bank may have disappointed but PSE banks have shown that the markets do not expect more than 20% Sales growth tat best of breed banks and a growth in the range of 40% matched by growing Other income does hand the challenge to established lackeys at Kotak or the survivors at PNB at the bigger accounts as MNC banks also struggle with financing the Global Indian Corporation and India's trade grows to 3 times the current levels in the coming decade. 

BTW, apart from auctions for ECB lenders to quotas for buying bonds in FII acocunts which grew the possibility to OINR 250 B RBI also lent INR 77000 Crores or INR 770 B in today's one/ten year auction 

NPAs from the Deccan Chronicle account may be t o the tune of another INR 1 B at the bank but are unlikely to pressure the balance sheet.

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It does and it doesn't. After all the ones on the right side ( yes there is one, there is a right side and that is the Obamacrats) are anti outsourcing and probably not that friendly to India. But then India historically understands that what it thinks from afar and how it will be treated at the Dining table are almost always impossible to reconcile nad it is mostly a case of the understanding sibling waiting afar to make a ritual sacrifice to the global amily than any other equal concessions or other.

Or so China an dPakistan would like to believe. Of course Anti India rhetoric aside, China will still give much more weightage to India than to Pakistan because of Pakistan's vanishing act in the Economy, in contextual relevance in defence matters and the sheer size of the Indian market. But china has been obdurate and India's policy is either expected to help US or China or stay away, making India the loser in all three hcoices and to put it rateher insensitively, equally decimated in any of the options. Defence spending , and there hads been some, does help India's Foreing policy cause but as far as Obama's win is concerned, the dividend from that is only likely a couple of decades hence when US continues to gro as trading partner.

Back to other subjects of the morning, M&M and L&T have not got permissions to expand their Defence and Ordnance business and two wheeler markets are not growing in the festive season despite the Mujals' best efforts on Hero. NEw launches from Hero are already sold 100k in M-Cycles and 50k in Scoters so the start's more than good but Bajaj is the one winning the share wars and the profit margins this season. 

New impetus to Banks wanting to set up business in the changed policy circumstance has again taken a back seat as nothing is likely before India's own elections come due and the ministers   (eGoM) realise hopefully that half cooked might well be twice the penury for them in electoral battles so they should get something with the flavour of 'execution' out of the stables first.

Markets are wehre they were yesterday and the wwait has not changed trends or direction of the markets. 

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HDFC revenues come in at INR 51.75 B a topline jump of just under 30% from the year ago INR 40.77B as theInsurance dividend likely makes the difference and the rerating of India without economic and fiscal downgrade threats can resume in earnest. 

PAT jumped to INR 11.51B at HDFC and NII will still make a bulk of the topline with 4.2% NIMs intact. Costs are up lower than Revenues incl interest costs at INR 35.41 B vs 27B 

Loan Book is INR 1.55 T up 22% over the year plus INR 56.3 B sold to HDFC Bank Retail assets up 31% groing the pace of growth to "the good times"

L&T Order book is INR !.58 Tln over INR 21 B in pipe spilling from Q2 to the December quarter. L&T Revenues reached nearer a $3 Bln topline at INR 132B from hardly $2B or INR 112B Profits (PAT/Net) are up almost 40% on an exceptional addition of INR 2.14 from sale of subsidiary to the bottomline to INR 11.4 B from INR 8 B

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Festive week bodes well for expiry as markets open dull in trade and spectrum buys or the prospect of refarming existing spectrum do not put undue presure on the surviving retail lifestyle stories of Idea , Airtel or London listed Vodafone

Infact indices have come up well since markets opened in the red pre expiry and the vacillation could be a unique opportunities for all investors Left Behind in the July Auhgust scrimmage to load up on indian festival savouries and mcFries from traders' favorites JP Associates, HDIL and new bulls in ITC (FMCG story) to more "Bombay Club" M&M and Baja Auto in their new Asian/Oriental winning Forms 

TCS results were uniquely dismissive of margin and volume issues for the coming success stories of Hexaware and Geometric and the ongoing wins in EPrsistent as they pander to demand for firmware. MindTree and HCL were the only losers in the infy  Cognizant wars or as HCLT would like you to believe they actually grew profitss despite the currency wars they lost for 19 crs at MindTree and 65 Crs at HCLT

That also brings back as we said last week, winners from Cement and Textiles supporting the north pointing directional pillars for the next few days fo the rally and 6000 a clear target for December

However, watching the F&O series for volumes and not the directionality of the bets ofr the propensity to risk in OTM puts or Calls for bullish bets is critical to that 30-50 points a day nifty move till 6000 comes. Lack of clear Volumes in F&O despite new exchanges and a clear bull in the Rupee keep both Equity and currency segments under pressure as funding calls become directional shorts on the market. 

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The first quarter of profits after 5 quarters groing bottomline by 15% on the index companies a good base price for Gold and a palatable range of Oil prices sounds promising and data enticing enough for one to reconsider the possibility of India growing at its normal clip instead of a sub 6% growth in a not so distant future.

The 110 odd infrastructure projects including low and hgh value road projects and prestigious and commercially groundbreaking ports, gridco and other Infrastructure projects are likely in final stages of a policy intervention currently witht he Cabinet. Though they come at the end of a barrage of policy action still awaiting execution and KFA failure is more the current corporate branding influence for India Inc, the execution of these projects could enable by itself a INR 1.1 T in GDP accruals from construction and a likely10% jump on the nominal and not the real effective GDP at 2004 prices or whichever base year is current.

Banking credit is steady and growing at 15% and if indeed investors still bet on a rate cut at the end of October, then in all probability the only possibility is of an unanticipated market failure and so the markets will have to rise to the occassion without moping much more at 5650. A fall from 5650 to loer level is again only faintly probable after dull days stretch out at least one day after the current series expiry thus the market pre expiry unwittingly again offers great buying opportunities in the otherwise scarce and right valued large cap universe back with good earnings from ITC,IDFC and ICICI BANK to YES BANK, ORCHID and even STRIDE ARCOLAB which has solved the FCCB issues and FX issues int he quarter with realised NEt pfit hit but not detrimentally to the company's prospects. Sun Pharma's issues int he US markeet also addto the current opportunity for buying and current levels of scerips like HDFCBANK and again ICICIBANK will likely infact become a bottom for the coming rally which may bide its time till policy announcements including Bank Policy Tuesday are over this month and some of next.

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The growing strengths of ITC again aided by a price hike in tobacco products in this quarter, gave cause to investors and market makers inthe stock to push northto unheralded levels a sthe rally from infracos receded almost as expected after the bid to 5650 bbecame stronger in the afternoon trades this Friday. 

ITC toplines ( excluding Excise) finally seemed to gro respectably after getting pflatlined for a few quarters around the $1 B mark with a $1.2 B mark at INR 71 B helping PAT grow another fifth, breaking the jinxed 2-3 quarters for India Inc as well hich have almost straitjacketed India Inc to GDP growth and IIP groth levelsand consisstent downgrades on earnings.

While the retail lifestyle consumption groth still did not herald the breaking of the "Limited Feature" score of $1B in Consumer Brand Valuations that seem to cripple most Discretionary and Non discretionary branding stores, the significant growth provides hope to those entering India as investors in the Consumption story that indeed Multi billion brands are possible to be built despite the experiences of HUL, P&G, Dabur, Marico, Britannia and now even McDonalds and Pizza Hut in India's prolific competitive spaces filled ith 85% unbranded/commodity plays or the hitherto Mom & Pop space that seems to hit these brands like airbags deploying early on crossing a specific speed 

Bajaj Finserv growth and the resurgence of Insuranc e and NBFC consumer loans stories also underrite the same hopes with Bajaj FinServ posting a INR 10 B income and INR 2.2 B PAT

ITC Net Sales were INR67 B a linked/sequential quarter ago in June and seem to have grown more than 6% sequentially as well. Slower increases in COGS and Trading goods purchases coupled with good cycling of current inventories have been growing ITC margins in the last two quarters and the same seemed to have stood ITC in good stead as will be cleared on detailed segment results being avalable on the earnings call/ review

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5650 is already holding and the gramnd attraction of the year in the Global Capital markets has been the Northward journey hich remains intact as always after hurrying down to 5650 and the Rupee reaching near 54 levels in the Octoebr series. 

Markets are probably also affected by coming Earnings releases from TCS. Don't leave short positions open on the weekend and Don't go home without going long in what you believe in, be it failing eartnings in the sudden currency moves from Stride Arcolabs or the growing Consumer Brands of ITC with  a static 36% EBITDA ( Earnings analysis to follow) Also, rememeber if the markets survive this as we think they will going long in Bank Nifty right now would be worth a few on Monday Markets open itself and much more before Expiry strikes attempt another if any in the 'penultimate afternoon sessions' of Tuesday or Wednesday when long only investors sit down for a luncheon with their investees :D

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Markets seem to be eager to test 5650 again in what can be said to be an observable phenomenon of the the last 6-8 months whence the second half of the FnO series is geared to a cascading short thrift on expiry, banking the gains from shorting the market consistently as writing calls becomes safe enought o support a weak trend in the fourth week. There is no real logical basis to it that makes this strategy stronger execept that the bulls as usual will be in a likely wait and watch hold and most investors running in this series will not be tempted to cash out or take profits around 5700-5750 so the correction still has a less than even chance of happening making the risk reward skew to building such speculative shorts. 

Some good results are yet to come but Oil buying as expected, has pressured the Rupee suddenyl into trying to end the week closer to 54 if there is further weakness from the day open around 53.90 in the October series and 53.70 spot 

However international Oil prices are likely a dud and so the Rupee and the equities might ell gain back a big chunk of today's moe as at 5700 they will still end the week higher from last week's 5676 close on Friday

The underlying bull trend remains so this hit on Nifty after every positive move of 50 points could only lead to the corrections getting an upper hand temporarily but breaching the Nifty's 5650 support to hopes of a 5500 bottom before the Banking regulation changes and fast tracking hopes bring bavkck the piolicy steam which brought forth this big run upward.

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The week has been good for those waiting for a clear trend to emerge as the road to 5850 looks swift and clear if not 6000 on the Nifty depending on the Rupee and the levels of the Sensex that can get the indices to a 6000 Nifty/20000 Sensex orbit before seriously considering a technical correction. 

Interestingly the rise in EBITDA margins at Cement companies expected at Ambuja, Holcima nd ACC and reporte at 18.4% at ACC up 500 bps has come int andem with th jump in old textile scrips with Century and Raymond going up 4-6% int he session gicving one quick shots to move into for Friday and for next week. 

Infra and Banks may not move as a mass this time but older stock market favorites could turn up like a shnaghai surprise for investors and traders, with Raymond itself tipped for a 400 target ( Mitesh Thakkar, ET Now) 

Cement scrips are a good pick as JP Associatses finally gets a higher offer from Grasim (Aditya Birla) as well to 130 per tonne capacity for its 11 MTPA plants on Sale to reduce the group's debt burden and synergise in construction services and Infrastructure/Power

Sun Pharma unfortunately could be a miss for Friday and Monday as the markets review the loss of its Lipidoc sales in the US as the original drug from JNJ is probably back in the mearket

ACC NEt Profit of 2.42 B makes it a good pick but Axis and BOB are already up too much for a 30-5% move and I would prefer to go with PNB, SBI which at 821 and 227- are still underpriced and ICICIBANK and HDFCBANK. The isolation of CNXIT could infact augur well for Switching strategies later lengthening the move in the broader indices. A NSE 5850 target is obvious so F&O interest in Futures and Calls for the next two weeks are interesting but it is the latter half ogf the series and any carryforward positions are equally likely to bite overnight

IDFC could start the infraco bite on Monday or Tuesday for another 10% catch up to earlier stable levels from the current depressed prices including L&T and BHEL and not mid cap infra or DLF and construction biggies.

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RBI's October policy statement , a recap of India's fiscal year 2013's first six months is likely to show strong enough credit growth but stubborn inflation compunded by further expected jump in inflation data on the second round of hike in Diesel prices which merits a significant jump in the September series or probably even the October series.

However the markets having survived the 5650 level is liekly to respond strongly when and not if, ne buyers enter at these levels especially with Healthcare and Biotech well poised and even select Auto scrips like Bajaj showing an upward draft as domestic sales continue to trundle down.

Banks are also readdy for their second coming, ICICI BANK coasting ahead of its own results and HCL TEch and MindTree having shown the kind of minimum expected in losses ontSeptember's sudden appreciation in the Rupee before the quarter's billing could be published to financial statements. Oil is still weak and there is no immediate threat to the Rupee's rise though yesterday's gain were quickly erased in today's trading. Oil is likely to stay weak despite  the weaker Dollar as US domestic production hits new records at according to the WTI export terminal at Corpus Christi, TX (earlier known only to import US Oil) and US domestic consumption remaining weak as per rising inventories of Gasoline and crude reported this month. 

Spanish yields have followed Italy to a new wlow as they seem to have come out trumps on downgrade fears yesterday from Moodys' and another report due from S&P later this week or next. That means also that the Tier 2 rush for European Bank Capital and a relatively unrestricted expansion of their balance sheets will flow back into their older strongholds in Asia including better rates for Asian Trade Finance

Domestic Institutions have already been investing including almost INR 1 T in Equities from LIC and most MFs out there still waiting to get in on the bull action but unfortunately having added only the slow Infy stock yet and other accumulations from ICICI Bank and mid caps like Prime Focus and Speciality Restaurants waiting for more quick action to 'ramp up the account'.

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Mid Cap IT and Infy looking for avenging the transfromation space with Indian business providers were again usurped by larger BPO deals and a good showing from unhedged HCL Technologies and one hopes also TCS leaving one critical movement in currency which is good for the larger economy as the ones hanging for dear life. 

Similarly consumer plays like Coke paid 11% in Currency headinds againsta  strengthening dollar in the first two months of thequarter as global corporations report the halting recovery in the US. Intel is down and the world as we know it unchanged thrashing ahead for those not playing in such currency movements , not necessarily wanting to be shackled with Nationalist interest. However even as IBM lookds at an inevitable yet steeper fallin hardware sales and the ones that missed the housing recovery at Citi look at a continuing salvage operation, the world has moved on whether it desired to or not. The gap between the peers that have performed in this quarter and the rest is likely to keep growing and one must recognise those that have failed in this perfectly competitive quarter as having strategically misaligned themselves and needing a relook at their global and domestic business strategy. Globally this will soon include BofA by today evening when they report before US markets open but the winners may not necessarily include McDonalds' , Starbucks and the resurgent Wells Fargo. What has probably happened is that those runnign with a perfectly operational strategy and anticipated freefall in this quarter have been singled out by us and we stand by our observation as we see the various forces of human endeavour trying to come out of the ever elongating crisis and note that no one has caught the envisioning of this new normal whether those still prognosticating a recession or those just hoping to ride on more growth allowances to make a comeback. 

The changes at macroeconomic level mean that older ties between economies in critical businesses including banking and auto have probably been running on the saame tenets as the nineties yet and that they have changed only no as have been expected since 2008/9. Investors thus would have more hiccups ahead and would likely need to pull back from equities and reassess asituationa nd a second round of deleveraging will now likely hit global economies only later as European banks re enter the arena.

However, this article does not have the answers we need to 'move on" productively, except that even without regulators' forcing it banks and global companies would do well to be more careful and are likely to be weaker to future economic crises or as observers noted, black swans could be a more frequently occuring event in the coming days. The growth of consumption as variously noted by Intel, Fedex, Starbucks, McDonalds, Coke ( incl New York's ban on supersized drinks) GM, Facebook, Dominos and Pizza Hut is not the same as it was a decade ago into which you added a health fad and a mobile. The Euro will survive but European corporates are still not ready to come out with performances worthy of a standing ovation including growing Healthcare plays like Roche, Novo Nordisk and US based Sanofi and JNJ

The going is going to be tough and the tough better get going!

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The Rupee staretd the week well and set the tone but the 'missed' opportunities to churn the portfolio finally got to traders as the index is definitely not more than range bound though biased to the Northerlies taking it up. The resulting afternoon correction should not have worried you unless you were the few who entered this week in the last INR20,000 Crs or 200 B entering the cash market, which is going to be in a little trouble as the downward trend for Hero and the continuing travails of Infy emerge again with IT scrips getting hammered for prices booked in September in their quarterly results.

The Rupee hopefully will get to stronger ground nearer 52 than 53 before Oil prices rear their ugly head again, precariously poised at $92/$116 for WTI/Brent per barrel and India staring at just concluded well priced contracts askance if they could still bite on the WAC cost of our rising Oil bill. The September deficit climbed out of the hidden trenches on mass buying of Oil atleast as it seems from the monthly deficit and the growth in China's exports can only do so much for our exports to Big brother.

Obama is back in the reckoning and though that does not mean good things for outsourcing followers, most IT companies have been hiring locally and settling down in the US as local color than exporters of manpower with a more than 10% bench at Infyand hiring for special skills in larger accounts now more than remotely likely. Banks and global financial services majors have much more bandwidth going into 22013 to expand footprint in Asia again outside of Goldman Sachs which is already fully invested in growth portfolios and the Deal markets should help further FDI/FII interest too.

India has managed to get extra flows without affecting prospects for Mxico or Turkey showing Emerging market inflows are more collaborative than competitive and US equity inflows should not impact the flows adversely either but worries come from the coming increase in share of the Commodities complex and the Japanese commitment to keep buying US Treasuries. Japan's currency's new turn is alsoa great story as the over valued currency seems to be in line for a big correction in value as China gets left behind in the list of US Treasury holders and the regional argument between China an djapan is balanced by the weakness in the Yen for Japanese and probably Korean exports as well.

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Hero is a forgotten brand today haemorrhaeging 5% market share from August 2012 to 36% in September even as Bajaj Auto maintains its key following of the brand and generates interest in new export markets. While the idle October till now sa markets reacting with aa dropin consumer Discretionary and non discretionary performance on the bourses in almost a synchronous reaction, the consumer brands including unlisted Sony, Panasonic, LG and Samsung with new lasting promotions and discount melas to save the festive season as consumers have not said they do not want to sepnd.

Financial markets in the meantime were roused appropriately by Axis Bank's good enough shoing though as promised Axis booked another INR 5 B in provisions on top of 2.5B in the year ago quarter, maintaining its 20% growth in Profits and a NII jump of only 16% to INR 23.2  B Both are nearly 10-20% lower than that of HDFC Bank and the bank is expected to lose higher NPAs than the industry in the coming few quarters. Non Interest income is stuck at INR16 B for the quarter. It seems credit growth has plateaued at the bank concurrent to losing restructuring battles and exponentially rising provisions. But as of now 'like Citi' this was expected for the bank.

The highlight of the day and probably all week was the jump in refining revenue for Reliance at a new $9.5 GRM for the company. Its other two businesses hasd petchemh holding to its share of revenues of nearly INR10000 Crores or INR100B, overall topline slowing to INR 90.3B down 6% sequentially instead of the usual larger drops due to the continuing reduction in E&P revenues as E&P slows down at KG D6. RIL revenues are up 15% over prior year and the stock has finally got a new range perhaps still redefining ruling Sensex levels after any correction as it moves up smartly from 821

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As expected, fuel inflation jumped to 11.88% and though Food inflation was below 8% a drop of almost 1.5% to 7.86% and primary articles to an almost respectable 8.77% from above 10% the overall inflation dis too high for the government already blackmailed by the prospect of rising oil prices to factor in a rate cut or ask the Reserve bank to implement one as a quid pro quo to policy reform. Manufacturing Products inflation is coasting at 6.26% from 6.14%

The CPI data for the previous month already came in at 9.7% with the Rural data even higher at 9.8% and a rate cut could artifically support the depression of prices with financial costs coming back into alignment

The WPI number for September is at 7.81% and almost threatening to take Injdia into a hyper orbit above 8.5% on the WPI basket itself as Fuel will llikely remain higher. SEB Electricity price hikes were factored into this series' data as well

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The unwillingness of the markets to go above fair value in festive season does keep hopes of futher buying improved while consumer plays from TTK Prestige to Sintex and Bharti to even Jubilant and Titan close ont hemselves to reset to their prices arnd 5300 levels except in the case of Dominos which remains a speculatively priced playand yet does not lose more than 4-5% on a week's downtick. remaining above 1250. 

Tata Global seems to be well priced for a SELL with a solitary Starbucks store coming up in this calendar year at best 10 and the p\otential amply rewarded already. Healthcare scrips and Auto scrips remain int he red zone for the month led by Hero Motocorp and Dr Reddys' .More price correction will filter through Hero and Dr Reddys as they are derated by vaunted FII portfolios and it seems ICICI Bank, Bajaj Auto and even down beat infosys have more capacity and demand from FIIs for holding the stock. ICICI Bank FII holdings are yet just 36% and Infy 39.7% as per the latest data released. HDFC Bank does have a much higher holding of FIIs and may not be able to sustain if some portfolios sell it down. However as of no the four mentioned have managed very well in the dull 5% economy and are thus going to be outperformers despite Industry worries. The Rupee has also run out its build up of two weeks ago and remains weak though the Dollar is not on a very strong wicket close to the elections with S&P near 1430 levels and not really crashing out of play

The reratin gof Infy has in fact taken down beat INFY's institutional holdings domestically to near 20% from just 10% a year ago but the stock is not going to rise too much from 2400 levels currently as and when it steps outside the range of 2200-2600

Festive season spends will beat expectations albeit downward as December quarter results seem headed to herald the ever elusive bottom most had called early in September

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Despite slow/soft FX and Derivatives business int he quarter, 23% growth in the Corporate loan book exceeded the industry growth rate of 16% by nearly 50% Including the current Fee income the quoted Net interest Margin is a high 4.2% even as provisions dipped by almost 30% to INR 293.3 Crores or less than INR 3 B

Indusind Bank grew Q2 net to INR 250 Crs or INR 2.5 B at an almost 10% clip over Q1 2013 while HDFC Bank also grew profit sequentially from INR 14.77B to INR 15.6 B at nearly 6% on a much larger base

HDFC Bank has grown Net interest Income almost 10% sequentially from INR 34.8 B to INR 37.3B on the wires while Overall Operational Interest Income has grown to INR85.3 B or 30% on year from INR 67.2B. Year ago net profit was barely INR 12 B

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The 5650 mark holding, markets see saw with two up days on Tuesdaya nd Thursday and rejuvenating interest in South East Asia and China with Chinese banks agains ppushed into increasing credit outlays at lower rates.

Portfolio investments in Inida have shown interest at current index levels between 5650 and 5675 and as expected rerating has seen knowledge of internals coming tot he fore with the JP group scrips making a late rally since midweek leading with JP Power and JP Infra but more pertinently, superior stock selection showing in Dr Reddys Sun Pharma, Bajaj Auto vs Hero Motocorp and even Maruit Suzuki. Healthcare uptrend continues with market expansion and 30% plus growth in Healthcare sector moving more investments to the sector while lowering hopes in Consumer Discretionary and Non Discretionary (FMCG)  leading to more movement towards ITC and Baja Auto and the returning bulls in Jubilant Foods as Yum foods plans for India and that of P&G find few listed companies for the bidding consumption wars. 

The Power NBFCs incl REC and Powergrid (plus PFC and PTC) are on cue for the SEB Bad debt while SBI's derating on 25 stock of restructured debt staying to cause heartburn even as sector scrips from NBFCs, M&M Financial, Bajaj and LIC Housing taking up the slack and ICICI Banka nd HSFC Bank moving into position for bumper results. Infosys seems to have avoided the Friday morning rush to prove its results on the investorate and the weekend will get busy rerating India's old numero uno in GDP contribution, the IT Services and offshoring sector.

Infy reported lower Rupee revenue growth with less than INR 100B in Q2 Revenues and the USD revenue or the Net Profit weakness did not help them. The bargain price of Infy questionably could be below 2000 and not the current 2300 as management takes over the dias with network broadcasters. EBIT's actually fallen sequentially despite the good Rupee Dollar Conversion in the quarter A rerating of the annual Dollar growth in revenues ( constant currency down to 5.7%) acould not be balanced by increase in wages. 98.58 B INR revenues up only 2% sequentially or $1.797 B in USD terms down from conservative estimates. 

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Among old IMF triaging for its loanee countries, ws a pet notion of local development being a hindrance ( the way india sa it) and before the currency crisis of the 90s in South East Asia, infact propeled the ASEAN region to higher growth at the expense of those creating both production and consumption domestically. Today ofcourse, we have the dichotomy betweem Resource ( Exporteers) economies and Producers ( Importers ) economies with the share of manufacturing in Global GDP uniformluy down across the board and China trying to globalise its production and generate domestic consumption at multiple levels to survive the change, while IMF is busy with funding Europe and surviving as funds also come from the same bloc of nations to support the ESM

Why this comment is part of the morning report, is mostly because the regular chain is so obvious and traceable thru the 2- reports of this week and some from last week. However, the requirement of investors to focus on execution after policy reform actually hinges on such philosophical choices as above as and when liquidity from Spanish bailouts and expansion of European Banks ( to $40Tln in assets this June 2012 a growth of 30%) despite the stricture of new Capital regulation keep pouring in.

Whatever be the cultural reasons most of the new liquidity may chase deals and High yield/Corporate Debt in China, Indonesia , Malaysia and other Asian markets outside India as Deal flow also tackles interesting propostitions for China's Banks and consumption plays like F&N or healthcare denizens

India inc as i sknon , will keep an even pace print good Q2 numbers fall on being asked to groww more till December but easily deserve to take local indices including th eNifty to nearly 6000 given that these differences underscore their own ignorance and eventual realisation that the 5% growth ( earlier Hindu rate of growth) is indeed the magic of India as an Economy and it does not require a depreciating currency to achieve that 5% or a nominal 12-14% rate of growth on the GDP

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As coalition politics and bugles of mid term election cornucopia continue to entice india baiters in one  of the toughest periods for non US non OECD, Developing Asia, politically savvy options have again and again emerged for bureaucrats to lead the Reform inc. proposition. Bureaucrats have long been carrying out the Reform mandate whether BJP and NDA or Sonia and UPA ar the Executive leaders with a tightly calculated majority. The GST, DTC and Land Reform Bills are yet not here but the next line of leaders for governance of this country now includes less of Rahul Gandhi and Narendra Modi and more, like  shashi Tharoor, Montek Singh Ahluwalia, Raghuram Rajan and probably more to follow. Unfortunately one also thus has to explore what difference in style makes MSA as suitable for politics and office as it makes denizens like Deepak Parekh and C Rangarajan stand outside , continuing in technocrat roles for India Inc.

That does mean though that I do not believe Arvind Kejriwal is worth his name in tthe political firmament, but failures like the Anna movement, Kejriwal and even Ajit Jogi show that even being a Technocrat is not enough and thus the lack of majority mandates and the requirement of reformscontinues to stress the importance of going by the book and that the majority of Indian electorate understands that without the UP and Bihar brand of caste politics or the AP and TN brand of subsidy politics.

Also, it still leaves the quesdtion of howw slow implementation will be allowed to happen across India''' s reform stories, Infrastructure, subsidy structures and Center state relations.  India inc has to make a consistent and faster attack line this time in probably the last chance to lead Asia as China steps into a bigger illusory slowdown to transition to a "Big Brother" economy and still grow, while india despite the policy reform awaits real redemptiona nd thus faster clip of growth that can be relied upon for investment

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The indian Rupee has crossed 53 today in spot trading and may likely traverse a further limited range down before initiating recovery. That may well be timed with the so call mid Cap rally in IT as the future strength of the Rupee overshadows IT sector results in Q2 a key contributor to the growing confidenc ein Q2 earning reports

Bajajj Auto exports in Phils and Sri Lanka ar ebeing followed by new markets ith Kawasaki, while Domestic market sales are saturated inthe current climes, making it however more positive for Bajaj Auto vis a vis Hero motocorp

Indian Bonds will also continue to inch up in the coming fortnight and month as the availability of liquidity in excess of INR 50kCrores of $ 9B ( more like $14-$15 B ) and urther CRR cuts likely. Both factors should let th eRupee climb out of its downclip before it hits the 54 mark as the Crude rally also look ssuspect and Gold continues at its lowest levels for the year per the norm Thus anyone buying Dollars may be in a hurry to close the deal ath this week's levels triggering the comeback. 

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Most likely jump back for the markets start from Friday but at 5650 and 11300 on the Banknifty an  immediate jump on Thursday itself cannot be ruled out. RelINfra, Orchid, IDFC and ICICI Bank however have been unwinding and that combination can taake the market out till Axis Bank or  RELINFRA bottoms out. RELCAPITAL and BAJAJAUTO can both lead the rturn in that case midweek next week

Banks may not start into a higher orbit as they hardly move without a defined target but as networks also mention Puts are unlikely pay and Calls are yet likely available at a further 5-10 Rs discount in the 5650-5750 series'

Infy again ahs a couple of 20s to shed before its negative contribution to the Nifty rebalances

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The markets continue to allow a much pushed out correction but stand on 5650. While yesterday's Bank Nifty risers were targeted in the afternoon itself Axis Bank, inexplicably ticks down further strongly to an almost binary state of 5650 = below 1000 target though once in four months mean  most traders have crossed the rubicon and are shortening the trade cycle this week to a daytrading drill even as Emkay pays up instead of cancelling the 509 trades that caused them grief.

Bear Calls on the IT sector are in surprisingly good time as the Rupee weakens this week and thus IT continues to enjoy support wiht Infy maintaining its hiwgh wter mark above 2550 right now. Verdict, irrespective of sectors rerating downwards, traders will play safe IT trades in results season, and will evoke retail interest as well. Consumption sector's rerating may prove to be tempestuously short of the mark during results season as wwell as there are no real hopes for good results in Q3 December and the "bottoming out" may have only Q4 of this Fiscal. The prices of Crude, Palm Oil and the Dollar offer injunctive relief and market will probably pick and drop stocks as volatilely it does esp among tier 2 plays like Dabur, Marico and Britannia, instead ITC and YES BANK may continue their breakout in this uneven quarterly evaluuation in the coming fortnight, esp as 5650 is likely to hold.

JET and JUBILANT rallies may again provide the sparkle to the debate and the KFA story promises more twists and turns with its show cause notice likely expiring without KFA losing its licence. The already pledged USL and UB Holdings' personal holdings of Mallya are likely to still carry some optimistic tones though you are welcome in anything except ITC, YES, JUBILANT and JETAIRWAYS wtill you can keelp a singular focus on these. BIOCON and SPICEJET probably stand out for special attention and may be surprise picks in the return of the bull tot he likely 6000 targets still open with the bull. That would not be in a hurry this week either.

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A downgrade from Morgan Stanley (RIL), an India on call report from Credit Suisse asking for reform implementation and eGOM's easy billing answer to the fiscal deficit ( from Telecom spectrum) alongwith the age old Cauvery issue complicating mining ban and drought hit Karnataka's problems contributed to the background against wich the inevitable happened yesterday. The Emkay event is not yet forgotten and DLF has paid for an 'unraveling' of a very public Vadra connection but the indices are still above 5670 and going back north today from the looks of it as the welcome corrections piques the watchers of the Indian markets from foreign shores.

A 2013 story train from us  

A title "Contemporary Banking in India" edited by Naina Kidwai of HSBC forms the bedrock of my missing gaps in the knowledge of all things local and as the author of "100 small steps.." takes the inevitable podium on thought waves, the growth of Tier 2 towns and NBFC based financial inclusion alongwith ECB avenues for NBFCs are likely to be 'revived' as and growth truly coems back to India after the bottoming in Q2 or Q3. However, the important thing remains to be that results in our deficit numbers CAD and Fisc show up as soon as possible and we move on to not just a buoyant Services PMI but take the Consumption story forward from the undeniable stamp of nondescript plateauing at $1 B for alomost every consumer brand in every sector int his country

The rest of them and reform

The final nails in the coffin for Kingfisher have arrived and the key issue likely to make the media strongly in the next few days is their wage bill which pays 13 managers 67% of their INR6.7B compensation costs. Foreign banks have made a comeback in assets from Citi and DBS while HSBC still has the strongest branch network and SCB inexplicably stuc k in telecom assets syndications despite having won with extensive outgoing FDI support cases including Bharti. 

The reform, what exactly does one expect int he next few months to come back from implementation. Perhaps the real FDI reforms only and no GST , Direct Tax code or Companies Bill yet as it might need to be introduced in Parl again. 

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The results preview of later this week and next have begun its own independent trading cycle in the mainline IT scrips and a completely independent run of sharp calls on Mid Cap IT

As investors in IT scrips still make for a substantial body of "active" investors in India, thos phenomenon could remain a striving juggernaut even as It 's contribution to GDP is darfed by banks and financial service now and maybe education, Healthcare and Welfare in a decade. 

Infracos have also come in to separately run a trading cycle to moderate the impact of IT runs as were prominent in 2000, 2005 and even 2009 after the first handovers at Infosys

The current week's machinations mean though that the Rupee's new strength that is unlikely to trun back will temper IT's extraordinary September results again and more targets will go out of the window making negating DIIs who just did not quit on their Infosys portfolios at risk to redemption runs but that is an unlikely event 

Preview week began with a sharp cut on Nifty enabling unnerving HCLTech and Infy cuts to go through without a whimper and thus a heavier correction is likely to 2450 for Infy and probably 532 for HCLT before  a fresh call on the sector prospects is timed with Infy September results . Bank credit policy comes out in the last qeek of October and I am not sure how Banks will play the "unbothered" card with results date as they have already been bothered by passing around published press releases once in the last 5 years and the calendar remanins a mythical Olympus/Unicorn or another Hellenic / Scottish tale of bed bugs

That means that the body of investors has to to be extra carefull in reaping profits from IT's last mega performance ont he back of the Rupee making more plus plays in this week in mid cap IT likely. Suddnly Mindtree looks overstretched again and KPIT is no tin play though RJ's Geometric is.  

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It could still be a time to buy..

Ofcourse anysuch big move like the inflow of INR49.50 B in September would cause the 6000 target to be completed in December on the Nifty. The time to buy stems from recent well timed correctionss bringing up time to fill the tears in India's struggling and listed consumption story.

The tear in the consumption fabric has filled up

While markets are tentatively suggesting a bad Q2 which just means it would not be a surprise when it does land, the mid cap Consumer plays have filled the gap for seasoned traders with Dabur still on play today at 135 levels. One feels similarily Lupin, Cipla and ITC and Bharti Airtel could be buys and no one attempting shorts on those plays will land anything tenable this week or next even if the markets stay in consolidation not uptick. 

Real consumption is going to bring the real scare..

It is also similarily obvious that despite the protestations, Q2 results will actually revive profit growth and thus the real scare is that the slowdown has continued from September into Q3 and thus the jump in September results will be actually followed by a dumping result of the real bottom in December while India's services PMI supports the current India outperformance fable perfectly with a 54 mark from 52 in August keeping india in the lead with 5% + growth globally. 

Time though for the banks to not rise too fast in the meantime and HDFC Bank is right now correcting sharply to keep the indices from floating up beyond reason for pressure on DIIs and other traing FIIs to enter the market at this stage and book 200 points on the NSE indices having already spent two-three months waiting

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The much publicised "flash crash" on the NSE in India was actually part of a daily phenomenon where proprietary desks of brokers with risk give exploratory trades without any circuit breakers and other exchange controls in play during the first 15 minutes and no trades are consummated. The broker Emkay involved in passing such "erroneous" 59 trades on behalf of institutions is likely just using the template to look for wa swaying trend to a correction in a more "macro" pr "global" use of technological failures than the high Frequency trading algorithms used for institutional advantage legally in the US. Hopefully, the broker will be investigated throughly and thence the pre open session per se which gives the Rupee a 15 minute headstart on the Equities in trading as it opens without a Pre Open session at 9 AM IST

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Ofcourse a coupl eof bank trading desks have been waiting for this moment and have pushed a 48 target for Fiscal 2013, but the long term trust and focus built on a tirade of FII participation in the World's "only" market growing at above 5% and showing having likely bottowmed out is serving Rupee traders sell as they bore the weight of  a big down move thru the first half, hitting 57 as late as August.

The Rupee todyay officialy channeled into below 52 trades at the start of the October series, the spot rate likely near 51.70 and lower despite weak equities egging on a blind man's channel up for the Dollar on the Rupee. The Commodities situation has also reached a peaked state and Oil lost to the bottoms in the traditional india month for Gold buying stabilising international lows on the currency

Copper is likely headed for the correction down and probably Natural Gas and Copper will both run down quickly and stiffly as Oil rifles up the cleaning bore and into more demand charts

The Rupee thus has again landed the 2009 international vortex from which inflation risks stay abated and CAD has already come down to $16.7 B for the period April - August. 

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The Epic reforms in Insurance and Pensions started off the day adversely affecting the existing Insurance plays from Max India to Bajaj Alliance and other likely as markets were still excessively optimistic of action despite temperin gof expectations over 6 months. The cleared Companies Bill ith a 2% PAT surprise "social tax" is unlikely to not add to the bottomline challenges for the Nifty 50 firms whch are ready to rebound in profit growth by next week when results start pouring in. 

Q2 will provide more impetus to the running recovery board and then the inevitable reaction from higher levels as we come to terms with Economic armageddon as it continued from August and thus pretraces another reality check for the markets which will unlikely try to get to a reaction before the last week of the year.  

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The 49% FDI in Pensions and Insurance is close to getting Cabinet approvaal as well as it seems the long pending Companies Bill 2011. Like FDI in retail, the bills for Insurance FDI may not reach parliament again and is thus safe meaning good upticks in Max India, Bajaj Finserv and HDFC that gain from the continuing investment in the dormant sector.

Max India has been lying low for a long time and pushed up from 180 sometime in the second half of September and is good for another 50% rise. ( affirmed a 300 Traget by Angel Broking's Shardul) likely leading to another bounce based on 2013-14 performance as HDFC and ICICI start receiving bigger dividends from insurance plays. PFRDA and Companies bills would need to go thru Parliament and are unlikely to be seriously counted by market watchers, also as Products are being finalised by IRDA to stop the exit mess in Pension products that currently compete with mutual funds and thus as derivate with direct equities than with insurance and pension annuities 

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October Global Gold prices continue to be under the grip of the Indian equilibrium market prices as Gold prices remain in a low enough range to encourage the festive buying of Gold jewelry into Diali on November 13 this year. 

Crude's dumped but Euro's may start shredding down after only Germany and Italy could survive the pressure ont he Service sector, the European Economy almost shutdown with Frencha nd Spanish Services secotr PMI at 42-43for September. No Trade improvements with China mean a limited upside for the Australian Dollar from the rate cut and thus on the whole, Dollar could remain strong in October and keep Crude higher too instead of falling further from $90/$109(Brent) /INR4800(MCX)

That brings us back to the Equities, which even as Copper corrects at the top of the Economic cycle must continue forward without any sellers. Though volumes in the Bull rally are adequate and the morning has taken the Sensex to 19000 and Nifty to 5800, the sooner the market reacts the FII $3.5 B in September could walk on to even $5 B another month. 

The market is unlikely to turn back before 6000 as most speculative rally bauying was done as high as 5300 and even 5400 levels leaving 6000 as a basic minimum for profit taking. Implementation reports or the lack of them in follow up to announced policy measures will come into play only in Calendar 2013

Bharti is moving up to its due place on the Blue Chip list with 271 on the ticker and ITC has been quite enough to run amok even as YESBANK and IDFC pause at 400 and 162 after a torrid correction induced blue face all of 2012. 

Kotak and HDFC could remain in reaction mode as long as the indices are able to carry on in an upmove preserving possibilities of a rapid run in them later at the buzz times of the rally when speculators enter Axis again. 

Posted via email from The India Investment Post