Sorry, the bears are here. Even as the India Morning Report moves away from Posterous forever, Post having turned off autopost services, PC's sense for India Inc and financial markets digesting a moderate budget are the ones that are likely to get the chop on Budget day trading or immediately after. The rally did provide the right exit to everyone in the last six months and retail investors are no longer enamoured to their equity prowess given the attractiveness of the VIX segments i.e. Derivatives and the attendent risk and inflation proving to be too much of a risk. Even as Kotak is identified as a going away story for the earlier heady growth rate of India in 2004-2009, Uday Kotak himself talks about the higher hurdle rate for retail as his bank prepares to reach wealth with new structured products that are unlikely to be offered in retail tranches of les than $10000 and thus will be available to only top 1% of the Wealthy and not the real rich salaried class that pay the taxes and carry most of the country's disposable personal spend. 

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States have unwittingly contributed on the green side of the Fiscal Report for India in FY 2013 as plan expenditure which does include state allocation ( which was likely fully drawn) had been drawn only 56% by December 2013 making likely according to the ET follow up that India will spend less than 90% of the budgeted Plan Expenditure for FY 2013 at INR 4.28 tln. That means Chidambaram is under less er pressure in the last full year budget to be presented by this government and need not hold back investments in 'populism' espoused by Food Security and Employment guarantees safeguarding the few precious investments India has made in social infrastructure though not making it better for sectoral spends on Education Health or reining in higher subsidy expenditure leading to a non plan bill of INR 13.5 tln this fiscal , a three quarters of a trillion more than budgeted.

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 Twitter's posterous is not quite preposterous its also post post posterous

While US tries to balance its Economy after a spate of QE liquidity is seen as injuring fiscal and monetary health, a rise in interest rates in the Economy with or without inflation could do wonders for the paradigm of growth as China and Japan return as investors in US treasuries and 10 year yields rule around 2%. The US economy may not be able to break the limits of a sub 3% growth even if yields spurt in the next few years in the US even as Europe falls back in an extended recession and the South catches up, esp Italy and Spain with imports to offer to the rest of the Economy making a brilliant recovery this 2013

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more sectors seem to creep into the equation as the marketstructure gets hijacked by those trying to make it look like the same as a retail investor could do in the fun 60s rolling on the floor...but Power NBFCs led by REC and PFC remain good moves in 2013 and PTC could get a bigger stronger role in the quad with Powergrid unlikely to lose relevance and despite roads being deprioritised, there may be enough speciality infrastructure bids ( I mean ports and urban planning ventures as well as welfare structures for the new deal) to keep all other infra midcaps floating. Also I personally back GMR Infra and Reliance Infra while berating overleveraged pops like even GVK and some mid cap Mumbai Real estate juggalos

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Yesterday's move up was a defining one and is likely to be bet dowwn in today's reaction. Also, infra is likely to be rated down as Election year approaches and India inc battles with inflation. However shorts on larger movers like LIC Housing and IDFC are unlikely to give more than the required minimum in the reaction and remain larger movers on the upside. Also Jp associates as expected followed last eek's DLF into the quagmire of being shortlisted wwithout a salary for the bulls on offer and are unlikely to be further good for more than a 5-10% move down or up. 

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A quick re-rating of the F&O market in the early trades yesterday meant  that writers of the 6000 call had a hurried exit from trades and very few have tried to cap the maarket already at 6100 or any other digits as the markets actually show signs of a breakout. The low volumes of MCX SX are perhaps an open invitation for the short club to try something faster and tighter in F&O trading on that exchange but with index trading not open yet, it is unlikely to have any impact and in this predominantly Asian leg of the bull tour, it is unlikely they will get past petty strategies to break up the trading interest up while 1 in 3 rating agencies have already fallen into the usual rut of calling for India's derating showing up our lack of faith in India as another 90 days look set to pass without any execution bombs and those analysts and short side traders aree undoubtedly still just waiting for actual policy and roll out execution announcements which can then accordingly be belittled for giving them a leg to stan din the crowded room . Givcen that it is used by most large media as well, the tac has become almost respectable but is painfully obvious and can usually be shot down with larger negative consequences for purveyors like these rating agencies 

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If you were among those selling a strangle on network recommendations expecting Nifty to not slip from 5900, you would have realised the folly of undermining your native knowledge of the country's markets with your observations of futility on the range and almost immediately the trappers were in action making the signature comeback in the second half of the session which was fortunately not sharp like the dying minutes. Wealth investors also have much more to punt with structured and naked futures shorted in Oil and event he other base metals as China plateau is defined as was in early 2012 when we were rooting for a China comebacks. However, back in local equities, our credit flows despite retaining a skew to construction and finance companies because of the higher multiple in the factor of productivity are not as lopsided as 50% of all credit as in China and so the slowdown in Credit could still turn higher and is anyway likely to never lose the double digit growth tag.

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At 40, I should probably be more considerate about feeling young, given how I felt about India's youngest dynamic Prime Minister about 20 years ago, but Cameron's trip to India definitely highlights that young Britain though trying to make new bridges with India thru London is a different equation and with tough domestic economic conditions, the easier migration philosophies of the UK and the US for multiplying factor productivity are in danger of being decommissioned as defence deals unravel and India searches for relevance from a different end of the equation as the budding largest Economy and UK looks at being the struggler keeping the light on regulation economics of a past era alive in the new European 'coalition' 

Jeez, that was a snapper overcooked in Indian spice, definitely. 

The morning however, is as dull as last week, despite a new Infrastructure corridor, which seems to matter more to small investors with linkages to the 'barely productive' IT and annuity economy of Bangalore with theold warhorse of Bombay not the same as the Jap funded Delhi Mumbai corridor. the bangalore and the Economy of the South in general is more about spread out factors of productivity that a re more socialist and crowdfunded social media fed than the big money Economy that links Mumbai with Delhi or the more labour Economy linkages of Bombay with the East

On Morning Report questions however, Mumbai Real Estate hopes continue to drive DLF and the rest of India's Construction Economy, and in this leg of the Nifty/Banknifty rally the entire bank, consumption and pharma portfolio too that is priced into newer levels and is looking for a little lightweight and adroiting sifting thru real value and jump to all time high levels on the indices. the Budget expectation part is mostly done except for the small trading rally in the week prior asor post as we nail down the ne fiscal deficit range and if all the improvement we have espoused and made appear indeed converts into a hard positive number. While JP Morgan has been adroitly positive onthe rally too, Adrian Mowat for one, does not believe inthe Economic Miracle of India despite the Japanese engine having taken over Asia's future and China having taken a brief break into the new chinese yeara fter a good 2 month rally and again despite profittaking, made all funds flow to Asia wait and watch till liquidity returns in inflows to Japan and India in a couple of months. 

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Energy prices globally continued easing and the raising of Domestic diesel and gasoline prices have also been completed over the weekend, making the morning amenable to a quick rise in ONGC and the four OMCs. GAIL might also get good news to recover with IGL and other during the week though that would be definitely just Capital Market logic.

Also if banks are to surive with more than a dead cat bounce more policy execution nuggets and deal news are needed for the elusive pre budget push, denigrating itsel finto the ussual 3 day move before the budget for which the starting level could indeed still get lower than the 5900 we got. SBI should be able to lead the coming Banknifty recovery and even rally while Axis Bank continues its solo correction move for that trading move spike on 'real news' this time kind of biryani that the market wants for its optimism to hold

Its true IT has also reached its level of incompetence within 30-40 days of the recovery move and Infy would be a good short, TCS losing its current value premium in the coming rally and likely survivig as a defensive instead. 

ICICI Bank is a good buy. IDFC is good, ready for a move and most susceptible to bottomline news on policy execution and political stability in India which market is satisfied with but could easily unravel, yet the sensitivity is largely positive, the losing interest in IDFC largely a rerating of the sectors ready for the rally and those betting on infracos ( vs Real Estate and Construction Booboos) are more likely to win than lose though aggressive naked tradin gon real estate and the LRB prospects continues to define the market's unknown unknowns

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The Q3 results of the bank showed a limited increase in profits , standalone bank improving Net Income by 4% on last year while Net Interest income at INR 111.55 bln withstood the onslaught of a move of INR 220 bln in assets to Pension provisions making it a creditable performnce with PCR above 60% , very few banks have maintained the said high ratio as they have indiscriminately reduced provisioning to show profits.

SBI has cut provisions by just 15% or INR 3bln. Provisioning costs are high in Indian Banking already because o fnew regulations regarding restructuring assets requiring 2.75% for the first two years after which they can be declared standard assets again as per performance. 

In Fee income Loan processing has grown by 27% at the cost of other heads including public business. Salary costs have increased in Superaannuation benefits ( the same pension provision corpus) NIMs are good and the bank deposits grew in double digits. to INR 11 trillion. Advances are more than 13 tln. Cons Profit is 46.48 bln and standalone profit at 34 bln both indicating the health required for the Indian banking sector even as deposit and Advance growth has slowed down in the Industry data available till December and an immediate breakout can be ruled out but the bank stock is likely to be resilient at 2200 levels eevn 2250 by the EDO and provide support to any bullish banknifty moves. 

WPI earlier in the day came to within RBI's March target of 6.62%

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Tata Steel which pushed out another round of poor results struggling in its European pick up is ready to open new capacities for production in 2014 in Odisha and Steel may indeed pick up though not a fast ramp up with China struggling ( Open tomorrow after New Year festivities) and Domestic Auto production for one will also be out of the woods within this fiscal as low rates trickle down and consumption spending remains a norm for the younger demographic india enjoys. 

New Auto capacities in Sanand and in Tamil Nadu (Ford) as well as continuing growth in Gurgaon and Manesar will lend strength to India's consolidation auto saales while the increasing cars on the road strike another discord of insufficient highways by 2014 or 2015 and int he meantime the fiscal strength discussion between MSA and Chidu may well be more important for active wholesale Investors to watch and may careen or tank up FII flows as appropriate.

The ratings companies could have grown their franchise but have faltered in the politically opportune moments and are not likely to partner up with Indian banks and corporates in the given plop of bird produce that India begets in their global schema, leading one to wonder in cogent terms if they will indeed survive into the next decade as ratingcos.

But that is so inadroitly expressed even I just know it is a valid hypothesis for trendatchers that RatingCos are likely redundant and center of the ne fallout before 2020 in the Financial world as it tries to come out of the 2008 crisis and bad RoE math that strikes its every rich yielding FICC and Equity trading businesses and even conservative and High yield lending and issuance. 

The Bank nifty will likely run up a good score without going 3-Cliff on expectations of better improving resuults if SBI delivers on expectations and does not do another Q4 washout of expectations as India's largest bank, having presumably cleaned its augean stables and dealt with pension liabilities and in possession of a clean retail portfoliosince they strated building it up 6 quarters ago. 

Even though PSU banks have been rerated 40% down in the Banknifty the current strength in banking from 12400 is contingent on State Bank being in the green and ready to take off from atleast 2080 levels and the results need to build up from the current 2250 levels to atleast 2400 to let the others with good and bad results of the wuarter convince the maarket of the Fiscal and FY14 performance potential especially at BOB , PNB and All Bank. Axis ICICI and HDFC Bank should have no problems maintaining current levels

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Are Sun Pharma and TCS yet Defensives?

Much as Consumer goods led by HUL had been lumped in Defensives with Pharma, so also today while Pharma while awaiting the Domestic breakout remains defensive as a sector, stocks like Glenmark and Stride Arcolabs aren't and Sun Pharma is probably unlikely  to last in the Defensives list too long (it ould not be shifted on account of Taro, however) 

Similarily IT as a sector and TCS as a defensive remain sectoral strategies or more Big Pig strategies at the start of the macro uptrend where Trendlines can be drawn and in such moves as are in 2013, the stock probably would move out as a mainstream investment much like Infosys earlier. Either way those watching for a bottomed out markets are right in prognosing the comfort moves in stocks like TCS and Sun as a likely vote for no Bull run than the other way around and thus the to get cast in the same leagues as HUL, Sterlite and SESA which would be the Defensives the markets could ascribe. While Axis Bank may not get rebranded as the 'defensive' for 2013's mini moves, Airtel still likely will be as the corporate gets shafted out of bull only and 130-30 portfolios for lack of a volatility linked move in the stock

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Of course, the markets could still decide to browbeat the equities segment further from here despite the mild recovery at the end of the session. As of now my plans for going to Ahmedabad are on course and the indian Ph D programs are getting better lookie loos again with Ahmedabad "Management" ranked in the Top 100. More importantly for the markets, delivery based buying cannot be expected to ramp up in this rally as retail investors are not just stung by 2008 as journalists perceive or want to name the shroud, but are infinitely better placed by investing in inflationary spending than in equities for the future canvas.

Mutual Funds, Insurance and Bank savings still come next and pretty importantly yesterday's negative IIP score and a near 11% CPI inflation clip ( more than 11% decidedly in urban areas, but thats just the trend) are unlikely to matter to this question of volumes. A slowdown in bank deposits could be an interesting quasi middle management at 100s of growing India corporates and IT investors could take to watching as it mirrors the real response to the production slowdown even as investment makes a faltering return to the Indian Economy and the Savings Investment gap recedes.

Revival of fortunes in steel seem to have hit an "early call" WALL a new block and tackle strategy likely to hit traders nah speculators in the F&O segment and though I normally desist but the morning call on JP Associatees straddle buy invites my derisory attention by the spades. The JP Associates stock is unlikely to tank from 71-75 levels and if one expects action in the scrip in this series further it ould b  a positive, likely kicking off the pre budget mini rally instead of the rally we were going to have at the start of the series. Of course those promoting this market hiccup were the ones betting on fundamentals instead and thus calling off the big pre budget move. Meanwhile the Tata Steel calls are good to sell off probably as JSPL and SAIL indicated a slowness in the sector which is to be shed in 2013 and 2014 so it is also the time for buying this defensive as well for Domestic fund houses avoiding buying for so long since August as they get another Start of Rally point to invest surpluses. 

Banks are the move I am waiting for as PSU banks finally acquiesce to getting rerated instead of trying trading jumps to catch up witht he gap created by the NPL imbroglio int he last six months at Banknifty 13500. Thus the move from 12,400 on the Banknifty and it is not made today, will be a decisive one as Public Policy recedes and Finance takes over as the bete noir of the India Comeback strategy for 2020 and beyond. 

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Globally emerging Markets have become a unique asset class and the first month of 2013 was as sunny as the latter part of 2012 in terms of asset flows. US enters a period of so-so uncertainity in equities a stronger currency on the anvil to stew the growth equation for the largest democracy, and not mirrorred in the Yen's ever increasing appetite hitting a weak 94 /95 against the Dollar last week enroute to par economics.

However predominantly from investor behaviour on MCX' new segment highlighted in launch yesterday with volumes of just 1.1 bln it is obvious that wealth that favors Oil speculation, Fixed income, Currency and Commodities is wary of this simple growth paradigm advocated by equities and even when it invests in growth it by passes the "stock market" dream with much more muscle than any lip services its banks pay to the segment. Though at Goldman Sachs and European houses, equities trading for clients till forms a substantive segment of business, back int he country and in real markets Equities are failing to entice banks, institutions and retail wealth equally miserably. 

It is possible that ironing out execution flaws and goading institutions to trade the segment in due course will bring volumes to India's newest stock exchange, but it is unlikely that equities get any more weightage in this large wealth market already lening on just that precious drop of gold more than anything else and addedly missing its calling in the global markets with shallow and reefy fixed income, currency and even commodities markets though courtesy of MCS we have volume leadership in key contracts. 

Structured Term investing probably brought the equity paradigm to oratory finery professed by the rich and the nouveau rich, giving them cleaner mirrors into what they wanted and perhaps their disregarding risk is what made them pliable which would be a pity as that market is unlikely to be permitted to grow that size again as Derivatives would go into regulatory scrutiny in more regime than those like Singapore and China willing to publish new regulatory regimes with large chinks int he armor, but that in turn just crimps the prospects of banks rOE and those seeking employment predominantly in Finance in Banks and other fund investors ( shadow banking). All classes of non bank investors including Private Equity though Hedge funds still trade in equity at almost negative returns, have shunned Equity markets underlining the need to perhapds reinvent the paradigm, which iss till more understandable and germaine to capital flows than even the post Bretton woods world and its currency wars

The Stride Arcolabs deal with Pfizzer at 8X Sales at under $2 bln highlights the efficiency of Dealmaking and Secondary equities esegments are but a highlight of the equity charaacter that allows such Capital flows to underwrite the growth in both G10, G20 and the emerging economies

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No one would have thought that Oil short targets would again appear at only above Rs 5150. In fact copper watchers and other commodity watchers would also aver the current bullish cycle in the doctor of metals and the rest of them are also tentative with global pricies still moving up only to $3.67 a pound expectations, implying  asteady discount at higher levels in the indian market. A sell off in Gold too underlines belying of Domestic expectations and will with sucha broad thrust be able to move the Rupee up as a better balance sheet beckons in March and an equity rally is pretty much out of the question

Cadila and GMR results disappoint and the former's doubling of losses though expected by many,  was supposed to have completed restructuring of its structures by this time to spread the debt load , Male notwithstanding and the latter is much a shocker after Sun Pharma climbed out of its stagnation pit almost on cue of ithe global business cycles improving. Sun's loss of Taro control will continue to bite as others like Glenmark continue to come up in the domestic ranks and that anyway leaves Cadila on the back burner with no visible leadership in either international or domestic segments but would be on as many buy lists as Cipla and Biocon with bigger and better stories because of an assured growth clip while others are subject to volatility from innovation and automated trading as well in a traders' frustrated market series in February 2013 when the pre budget rally has been scotched but the India report card is sunny as ever, when Asia FDI will start retreating as China peaks but India FII and FDI interest is safe in the pockets of stable acquiescence we engender in the world investor community.

Global High Yield and Yuan issuance seem to be good for Asia in the four quarters thru to 2014 as well and if that survives, Investment grade Debt and gilts could also come back on the strength of the currencies in the second half of the year

The morning Olympics have been a subcontinent show with only one or two comments in almost rabid monlogues making any sense, almost making one feel like a backbencher has been allowed to speak and you must just suffer through. Of particular delayed incapability and thus high Avodance quotient was the so meandering opinion of parrying institutional investors who are later than the last back bencher in grasping the importance of investing and if the same backworking backbencher theorems are applied and still make sense, these would produce more defensible evidence on employing of research teams in advance than jumping on to available decisions already in action, and thus the morning has been an almost entire waste of time and as readers can pick and choose when to survivve my opinion than comment on it as is being written, I was the only one who suffered. IIMA recruitments also back those wanting to get into a research career and I am still wondering Iif I will have to go thru an entire Ph D program to get suitable rich to be employment. Research for trading desks intermingling now with Front Office Quants, look like much more succinct and concise and thus productive except for Risk managers hoping to write a book on avoiding risk. 

Hexaare has finally survived a s a reminder of the annuity business IT and BPO bring, the sector surviving the month of Rupee appreciation only because Auto consumption is still on ttraining rails on the takeoff leg of the runway

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Oh no, FII investing in Asia scrips again

And this time India story is still alive and well. Firstly however, out apologies that there was no india Report yesterdaty and the day before and while Asia was hot, most commentators would be wont to o assume that it was just the Yen running to 94 levels here and the markets having broken down in India, Apple having broken down in the US listing, and Einhorn having broken down just on the news of having lost a sure Cash hoard to the company after a new preferred issue was scotched forever by the management even as Einhorn's holdings grow. But that just hopefully shows that Apple has enough managers to not lose it to cash hungry private investors like David Einhorn who are mostly coming out on heavy losses in 2010, 2011 or 2012 or more than two of these three years on deals from Greenlight and othere PE investors like Sears' famous Bruce Berkowitz, now safer in Financial scrips

Though banks have not found a stable foothold in 2013 globally, the profit measures outperformance in large diversified India is hard to miss. At current levels Banknifty is just about done preparing a good takeoff f for a sustain rally from 12400 to past 13500 levels into new skies. Leading them would be YES Bank and ICICI Bank, loners like SBI, Axis, HDFC Banka nd kotak on different legs and ably supported by independent almost movesof Indusind and ING, PNB and perhaps, one more PSU bank which has cross the tithe to move up.

BOB and AllBank are on watch as they report long lost NPAs and a fast deteriorating balance sheet seems to have been expected by the markets but despite estimates of quantum of such bad loans and disappeared market segments ( in the case of BOB, like Africa ) are treated as fresh carrion for short vultures deprived of a good meal in the ne levels despite DII pressured into selling faster abnd bigger at every leg of this rally. However, DIIs would soon be forced to buy as Domestic infolows make a comeback, probably earlier than the comeback in GDP if wholesale investors or Corporates have their way. Liquid funds being limited now in Bank treasuries and in the shadow banking system, the degrowth in Deposits as rates come down is likely to be cited as a  non fungible risk in ongoing trading reports and keep markets cautious as the bull run builds up from this level and skips the pre budget rally as lack of time forces markets out and short interest is just about exited at flat levels here below 595. Markets are flatagainf or another week or month even

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Despite the run on BOB due to the herewarned jump in NPAs at BOB  and AllBank, the correction in others tracing the trend in BOB like SBI and Axis Bank are unlikely to fall through and banks like ICICI Bank and Yes Bank are likely to be strong bets for this move in February though the pre Budget rally's happenstance coud be discounted by the end of this week and the market stuck at below 6100 levels.BOB's NIMs have fallen on quarter by almost 15 bp though they are still 20 bp better than December 2011 at 3.08% and are likely to be hit by a falling knife as at Allahabad bank even as PNB and SBI alk out in the guise of reduced provisions, 

The Solicitor General's resignation might be a significant blip ont he horizon for India baiters and because such a category is waiting in the wings, the intellectual discussion around the government's decisions pushing thru new ordinances that led to this falling off are likely to be muted and ignored as India Inc and investors look to firm policy moves in the wake of a wasted 2012 for India when it should have been coming in to prominence for its Economy's staying qualities and instead was largely ignored despite new FDI invitations in aviation and retail 

Banknifty is likely to start a new move from 12600 (12654 at 12 noon today) and probably has at least 10% to offer even as ICICI Bank's opening gambits helped the bankex and banknifty realign losses from weakness in SBI and BOB post BOB results The bull run in DLF is a red flag though and might sour the uptrend as IDFC is rerated down with no moves on Infra financing in wake of the Fisc, though an untenable assumption, being a driving force in irrational investor minds. Reliance Infra and other Anil group companies however would be at the forefront of the markets vertical climb if it happens anytime this week. 

For rivate Banks atleast the turn in the economy signifies the rush for CDR is over. 

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Though the market watchers are almost thirsty for a correction in the new series, habituated to aa trading range being established in a markett that has more than INR 10 T in daily volumes on a good day and INR 4 tln in turnover including derivative volumes almost everyday. The Nifty Call interest has moved from 6000 to 6100 but is short interest and is safe enough as the markets do not look hungry for a move beyond 6100. However, the market is holding and we stick to our 'call' of 6000 being an almost distant minimum for the series as big ticket Results from Bharti, IDFC and BHEL follow ICICI Bank, Satyam and Bharti Infratel's good showings yesterday. 

Profit taking has almost ticked up to normal levels with the markets taking the profit taking in its stride in Private Banks and other blue chips including ITC and Glenmark Pharm. IDFC could start a new move today and Ambani cos. follow after their result surge backed down by Monday. ICICI Bank couls also start back after the immediate discounting of its par results as its above par situation catches on and markets decide that corrected levels are unlikely to cede new ground. india VIx remains subdued making it more possible each passing trading day that a new high will be made this year. 

Jet is likely to sign the dotted line with Etihad this week and UAE's #3 carier look to fast recouping of marekt shares from leaders post consolidation with Jet in term sof synergistic operations

The surging CPI data to 14% and the slowdown in Consumer staples including QSR and snack foods highlighted in ET forget to note the fact that India consumers have easily digested the over 2000 pizza and other QSR restaurants and the growing market sustained by Tier 2 towns despite KFC and Pizza hut;'s earlier failures to expand the category in India. Also optimistic projections in Real Estate industry highlighting the record number of new launches though pointing to over capacity int he future point to a good 2013 with a record 500k new homes being handed over to retail customers this year.

The Rupee is also likely to capitalise on Dollar's misfortunes without hurting Exporters as Euro and Yen coast to new records after an unprecedented contraction in GDP was reported in the US bringing the year's growth down to 2%

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While not beating expectations, ICICI Bank's improving fortunes, better retail traction and control on NPAs seem to have paid off for it to score the #2 bank in the country soon aheadof PNB and HDFC Bank (Pvt sector)  with NII coming to INR 37 bln in the quarter and Other income INR 22 bln (standalone) , mainly advisory, dividend and fees and charges in commercial and retail banking totting up from its tarried state two years ago. Since, foreign banks have virtually skipped the Indian unsecured market making a fresh start. CASA has dropped in 2012, with even PNB scoring just 38% in CASA. At their best performance, ICICI Bank CDS still trade at near default scores of 160 bps

With the bank likely to report hawkish NPA policy compared to the PSU units looking to cop out of provisioning at the first sign of improvement, its profit growth in the Q3 of FY 2013 being flashed is indeed muted on year, but much better than the Q4 of previous fiscal and improving in course of the eyar but missing YOY growth except at a 30% growth in NII and just 20% profit growth even in Operating profit terms. 

However the bank has already shown the required scale to jump into an imprtant #2 position in all parameters. (Rest after the management advice on the Q3 results)

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Questions of consolidation have changed to ways of finnagling the new target for Nifty though Domestic institutions keep selling as on Tuesday and not many found reason to miss the India Morning Rpeport yesterdayas we probably cowered by the repeating of underporfming by ICICI Bank to expectations today decided to skip the report 9 strictly for personal reasons but no one would believe me) 

ICICI Bank has also not outperformed though it belongs to a sector where PNB has managed to underscore recovery with jumpo profit growth and profits of INR 13 bln on NII of INR 37 bln ICICI Bank woul dlikely outscore them by Q4 itself in NII terms and did by no means perform badly though PNB's beating estimates is finally carrying the banknifty into tomorrow's new series. Expectations of high volumes in F&O expiry are likely to come to pass as TV18 yesterday itself reported a 44% rollover in Nifty futures into the February series.

The first 6300 targets from domestic broking houses have sneaked in and we are thinking more in terms of markets managing ecxpectations as necessary without losing 6000 or 6100 in the Feb or next series and then steaming past 6600 is likely the plan but each is more defensive than the rest and it will be our recommendation too.

For one, policy execution has not improved, another, people could actually believe and wait for an up rating of the sovereign in the background of the current roadshows by the FinMin and thirdly the main perpetrators of missing NPAs coming back to bad debt like Allahabad Bank will be reporting pretty bad numbers as All bank reports today a 40% decline in Net yoy to INR 3 bln

Important reasons otherwise for keeping expectations hedged would include the importance of having a welfare budget for Chids' Rahul and congress (UPA) and NaMo's 'threat' to quietly come over to the center and rule which would likely spark off an important after reaction in India despite India Inc protestations of support with industry in Gujarat likely to be seen as a big positive for his candidature

ICICI Bank has reported a better NIM of 3.07% improving by 7 bp over last year and also sequentiallykeeping its new NIM targets alive and might even guide significantly better ranges Chanda Kochchar has been hinting at in the last 3-4 quarters

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RBI thinks inflation momentum measures are showing enough control to allow for a bank rate cut while it will be monitoring further conditions related to momentum measures including controlled International commodity cycles et al . the issue as always in this cycle, has been non manufactured products inflation which continues at high levels despite more than a year of low core inflation

As Demand is still flagging an dinvestment outlook still deep ended by scarcity of viable and interested Capital for India, despite policy measures, it is a good sign for markets which have already applauded big ticket banks while the  Rupee has gained 13 p on the day on announcement of the RBI Governor's measures in his last year as governor 

RBI expects inflation to remain rangebound at current levels allowing monetary policy intervention again as a key instrument of the bank's policy in the next fiscal. 

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Does Rao have room to cut rates

Yesterday's hawkish review ahead of today's policy meeting and announcement was very clear about the CAD reaching 5.3% with another reduction in the Central Bank's conservative GDP pronouncement. However, inflationary pressures have ebbed and since the Central Bank realises the importance of doing away with the spectre of a recession, now hinging on a rate cut with Credit growth stuck at a low 15% despite the gap from Deposits that grew 11% in the week ending Dec 28.

That it does, also means that the rate could well be a good 50 bps, accelerating the dissemination of liquidity and growth from financial easing in the Economy and allowing RBI another breather to study inflation in detail over the period till June when the next rate cut would become due. one wonders though if like bank desks have forecast, India can actuall live to the top of this Economic cycle with only 100 basis points in cuts or even 150 bp till March 2014 

Axis Bank Mega QIP garners $2 bln

Axis being the speculators' pick for arbitrage and weightage balancing on both Nifty and Banknifty,    the effects of its improving fundamanetals with a large $1-1.5 bln Capital infusion are going to be important momentum providers to the Nifty and as it fortuitously looks like it will not result in Cats and Dogs moving up with both Educomp and Jubilant foods lying low ( the latter having lost its coin purely on speculative traders' dime), it would mean longer term Capital taking over some of the remaining float at Axis Bank and others in thelarger Mid Cap categories like Yes Bank ( who have changing ownership on the FII 'float' as a downside risk after having Rabobank exit)

Glenmark reports Q3 results on high expectations - 'Enriching shareholders'

The deep pipeline at Glenmark with 46 ANDAs to go in the US market and 82 products already authorised its growth at double the industry rate fof 12% in the first nine months of 2012 ill only be exceeded by itself again in this quarter and lead to probably a count in the Top 10 pharma companies and even the Top 5 in the foreseeable future.

A healthy 25% of the portfolio seems to be domestic market driven and unlike other market observers we do not believe such 35% growth as it achieved in India in Q2 is likely to be beaten by others in the Industry depending on new compulsory licensing and expensive generics for the Indian market as portals for explosive growth

The domestic market remains likely to reward Diabetes solutions and normal OTC and low value prescription medicine manufacturers with volumes and growth from the current pathetic $2.5 B mark in 2011-12 

Glenmark pharm in the meantime is prescribed for having broken the barriers with consistent 20% Topline and 30% Net profit growth parameters. 

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Korean Won's early lead in the currency scores in 2013 was blockaded by reports of a failed GDP revival in the Economy last week, while seemingly Asian currencies have kept the sell down of dollar more widesread than the Yen. While European banks do not have large operationsin 'Asia anymore, many of their important clients and Global Transaction business originate in Asia.

The buoyancy in Asian currencies therefore is likely here to stay putting Asian exportes in a bind but Export volumes, already at all time lows with shutdowns in China ( for commodity exporters) and Europe ( for Consumer goods and more price sensitive exports) in 2011 and 2012 are unlikely to fall through from here and may be able to sustain on the rising currency.

Indian Rupee is likely to stick around its neww range between 53 -55 and if it does use this opportunity to break from 53 on up, it would be because Oil is tracking down in the Global markets.

After having factored America's Oil independence in a falling through till late 2012, Oil prices have recovered, Brent as of npow keeping its "transport cost spread" from the West Texas WTI Crude rates Thai and Malay economies are already worried about rising currencies while Singapore is likely benefitted by the rising Sing Dollar and looks to reap some benefits from the post crisis Change agenda.

The main agenda item supporting a high recovery in Asian currencies is of course the reopening of trade wwith China as it helps other consumer Economies from both North and South Europe and developed Pacific nations including Australia to revive imports as they plod towards a non recession 2013 with GDP contraction decimated by the brilliant move up in Germany' s Services PMI last week though the currency market's deccisions to discount growth in the UK look to shoot the Asian moves in the foot as any such speculative recovery will have to support a stronger Pound also and not just the Euro which is stable at 1.345. The Pound fell to 1.5800 levels Friday but should be looking to come back to 1.62 in the course of the year and the Dollar index likely to remain above 80 with the Yen crossing into the 100 s vs the Dollar.

In local reasons, India's rupee was helped by the global inflows caused by optimistic readings of recovery as Diesel was decontroled with a pledge to increase prices by 20% for retail in the next 15-20 months ( To reach bulk levels of 56 per liter as for bulk buyers)

Related articles

• Top Rupee Forecaster Predicts 10% Rally on Inflows (bloomberg.com)
• India Morning Report: The Fiscal cliff unbuild, bright eyed investees and a chirruping economy without auto sales (awardz.wordpress.com)
• Rupee Leads Weekly Advance in Asian Currencies on Fund Inflows - Bloomberg (bloomberg.com)
• Rupee hits 2-1/2 month high; diesel price hike boosts (profit.ndtv.com)
• Ten Countries with Highest Illicit Financial Flows (ktrmurali.wordpress.com)

Posted via email from The India Investment Post

Korean Won's early lead in the currency scores in 2013 was blockaded by reports of a failed GDP revival in the Economy last week, while seemingly Asian currencies have kept the sell down of dollar more widesread than the Yen. While European banks do not have large operationsin 'Asia anymore, many of their important clients and Global Transaction business originate in Asia.

The buoyancy in Asian currencies therefore is likely here to stay putting Asian exportes in a bind but Export volumes, already at all time lows with shutdowns in China ( for commodity exporters) and Europe ( for Consumer goods and more price sensitive exports) in 2011 and 2012 are unlikely to fall through from here and may be able to sustain on the rising currency.

Indian Rupee is likely to stick around its neww range between 53 -55 and if it does use this opportunity to break from 53 on up, it would be because Oil is tracking down in the Global markets.

After having factored America's Oil independence in a falling through till late 2012, Oil prices have recovered, Brent as of npow keeping its "transport cost spread" from the West Texas WTI Crude rates 

The main agenda item supporting a high recovery in Asian currencies is of course the reopening of trade wwith China as it helps other consumer Economies from both North and South Europe and developed Pacific nations including Australia to revive imports as they plod towards a non recession 2013 with GDP contraction decimated by the brilliant move up in Germany' s Services PMI last week though the currency market's deccisions to discount growth in the UK look to shoot the Asian moves in the foot as any such speculative recovery will have to support a stronger Pound also and not just the Euro which is stable at 1.345. The Pound fell to 1.5800 levels Friday but should be looking to come back to 1.62 in the course of the year and the Dollar index likely to remain above 80 with the Yen crossing into the 100 s vs the Dollar.

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Seriously, How many people does it take to replace a light bulb? If you are Duvvoori Subbarao and replacing the lightbulb is the "rate cut" direction, a likely dozen spring to mind including annointed commentator and Bankers' Trust columnist Tamal Bandhopadhyaya who after more than 20 interviews with Head Honchos of Banks has finally broken through in at least he believes he can also cast Subbarao's mind with absolute certainty and get friends in high (street) banks. 

Holding on to the Capex Cycle for Growth

Investments that seemed to start to recover in the latter half of the fiscal, January's FDI flows still an enthusiastic affirmation of India Inc being the growth engine for the globe esp with most looking askance at China for investment growth from equity and bonds. Indian bond markets could well be on the verge of a colossal turn down having locked in a rate cut and equity markets enjoying a flurry every intraday as traders make sure there is a volatility iller with extreme moves intra day souring the longer run investor to no end except keeping busy before the definitive move Tuesday. 

Bank Policy Tuesday apart, Capex investment in India has also not recovered because of other substantive reasons including lack of executive approval, seminal moves like the ascension of NaMo to the Centre for BJP and the continuing dissing of the Welfare Economy as unsubstantive and too short term for India.

Flagging India Defence

Naval approvals to be refused to KG6 and other Reliance Gas wells off the coast of Bombay bring out the real Mumbaikar and Reliance supporter who would rather point to Corruption in India's Defense ( which unfortunately may also be one of the main reasons) than having any substantive debates on India's security concerns precluded by the Indian proclivity for secrecy which unlike the US or NATO or even Pakistan, seems to be at the detriment of National Policy in the area so that industrialists like Ambani or Mittals or the Executive team at Maruti can duly come out with Joint methods and at least look to be in sync with governments in 8 out of 10 cases while the Defence establishment is probably still awaiting another pay revision and finding other reasons for supporting outdated Russion technology for its Defence plans. Not that M&M is actually proceeding with its businesssin domestic Ordnance but even that was such a coming out for India inc in the sector. Intelligence of Chinese supplying India's neighbours like Nepal and Bhutan read alongside news of Pakistan ceding territory to China is a real threat and must be realised more substantially than total bans and outright decisions with a falling out later that has destroyed years of planning while China throttles ahead

Live issues for India Inc

Doubling royalties and ITC's not breaking even on its FMCG products are ofcourse known hurdles we have discussed but markets also move on other things than Energy's resplendent freedom bid that is moving ONGC and OMCs currently . Banking will be key to India Inc's move to new highs likely in the first half of 2013 itself as Profits grow but Sales growth , in double digits in the December quarter could likely continue declining further as industrial production  recovering on controlled costs and higher profits, suffers from flagging demand and Inflation is unlikely to reduce to any 5% level on WPI and will plod around 7-7.5% for the next 18 months one can look ahead

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I don't know if you followed Samsung and Hyundai results last week as Korea reported its lowest GDP growth but Apple, Microsoft ( except Windos 8) and even Google ( though mobile ad earnings held much better) were all falling through the big hole in the sky even as Private Equity slowdown and the itinerant waitf or recovery in IPO markets ahs already destroyed the sector's hopes for at least this decade.

Ecommerce on the other hand is no longer vainly waiting in hope for FDI regulations in India or other such phantom barriers as Sales took off in the subcontinent with internet subscriber and mobile user counts as wwell as the audinence counts for Facebook ( which are already redefining strengths n aad prices, weighted down by the Asian mean) What that means int erms of a fundamental redirection for the local Indian Economy or as such pioneers would hope in the valley is not really much of an impact as India survives on an annuity based IT services sector as its weak link to the global economy and its domestic consumption has reurned to robustness in the pre election year.

News is infact worse for other Asian neighbours that depend on China with both Japan and Korea headed south on weak Chinese demand and virtual sanctions in the case of China as the change in Chinese priorities keeps the lying statistics out as the only refuge for lazy scoundrels making their living as economic commentators in the region.  

The importance of the Developed Currencies despite Yuans growth to more than 30%  of China's trade this year, makes sure that nothing from the Asian region matters and what matters is now invested and in fact growing in China except today. 

However, India will be the #3 Global Economy behind China and results season also shows up the big revenue hole facing US and now India as Global corporations find ways out of the tax menace sooner than later in every geography. India's robust Capitlal Markets can again take a global lead in this scenario as we had posited in 2008 at the start of the Global brow beat down we all reveled in. 

Apart from that Banknifty is still holding 12500 and should be a good investment. You have caught a bear if you have sold some puts aand theirs is no volatility trade going in  India right now so do not try to bet on the fact that Nifty will stay ranged despite its petty behaviousrs intra day as sooon as it gains distance from 6000 as it is mostly those who found the trend early in the series reinvesting with shorter and shorter duration ( even if not real investors, that is whaat the market would translate into in the last 20 trading sessions) before the big expiry move ( more than rather immature, likely to be flagged a s a global malpractice in another century when there is a transnational suer regulator and india as always signs the treaty :D) a day before expiry a whiplash up followwed by alikely corection wiping everything to the flat levels it started 2013 on.. The last day of the month does not add much more in interest except that the result news as expected beat expectaations by almost a double digit margin in each case it mattered, which just confirms another spate of inflowwws and investments inthe run up to March or June basedon global accounting constraints likely after inflows made aa comeback in the new Calendar year

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Seemingly though, there is no more free money in that. It could have been on a generic basis because of stricter internal risk guidelines, and fat tail events precipitating the HDIL even tcould also be innocent ones like pledged shares needing to transfer ownership and bank ownership of the same got int he way and so many other reasons. All of them a 100% unlikely. Almost. Because HDIL is paying for surrendering all its real liquidity to its pledgee bank that took all its sharees to extend it a loan and while margin calls are a norm to a down bear market, getting into the bull orbit, recovering real estate prices in Mumbai and some good real estate assets did not help HDIL

The new mid cap stars in Mubai property are Phoenix, Peninsular land ( in this rally) and even Orbit corp where they really circled up the wagons. The signature Lodha property - The World Towers - aside there are others that have captured the public imagination in Mumbai including Exide owner's "Raheja Platinum" in Worli touted as a first of its kind skyscraper commercial towers. 

In the meantime Hathaway cable is still in play as digitisation plows ahead and makes a strong #2 in markets like Mumbai while Zee's Dish Tv takes up the slack after a big run in digital stocks since November 2012 Back to banking though, the new NBFCs getting bank licenses could further reduce the universe of actinable Mid cap in India as most of them propeled into almost blue chip league by Net worth requirements alone would no longer be able to run up asset growth as a Mid Cap that they have wrangled out . Power NBFCs are a different story ith REC and PFC having much more potential for even doubling assets twice over. yesterday's almost breathable recovery at 2:30 pm after everyone did think 6000 was a bottonm signed the recession blues away too and regardless of China's strong PMI performance and springloaded reaction in equities India is likely to get more allocations in a continuous September in the Pre Budget rally and later post Budget as the government still has a quarter in which to post other fiscal discipline measures midstream however miniscule they may be and then get into a big Welfare play  as it would take if the Congress led UPA with or without the UPA components aske for a third continuous term. If trhey crimp on dspending in this Elections it could be byebye india inc though some Corporate India would still like to belive in NaMo's extremist India as the answer to big brother's comeuppance on us.

Also it was good to see Airtel and others stonr overtures for th eprice increase but attrition is likely to come back in waves, because "Momma, I still pay my own bills" and Call volume has been dowwn almost steadily since 2006 giving strength to losing hopefuls like Kotak who failed in growth herms since then too and the amrket have been waiting on their Indian style dhandha fundas to take hold on the larger untapped Indian market

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That beast dropping the burden could well be market participants once the RBI Governor reaches the comfort zone of "Sorry, no cuts" later this week before Bank Policy Tuesday strikes markets 2 days prior to expiry. FIIs brough in almost $3 Bln to Indian equities in January and while money flows to bonds had picked up again after being usurped by equities the lack of a rate cut could well force some selling into the 8% yield mark in Indian Bonds.

Meanwhile FinMin denizens with P Chidambaram have started on roadshows that sell new reforms including the ever awaited GST rollout by FY2015 end and the raising of ceiling on Corporate bond investments further to $25 bln. Nonetheless, This market could see Nifty topping before 6150 as a disappointment is near certain and the clamour to get back into HUL this morning is now a merry part of the same rerating saga as ITC and Bharti nurse ther recent high levels and HUL is still the lowest royalty paying established MNC out therewith more than a $1 bln in  Consumer staples sales. ITC's brand portfolio is surely chugging along as nicely and India's consumer consumption jump story could still be just around the corner further along in 2013 before the next Festive season rerates expectations of the secular growth trajectory for India and how China is indeed different. China and Japan's markets may not see the expected rush in equities again and it is bac to the smaller markets and some of that rerating might again positively influence Indian inflows because of the same reasons. I am intrigued therefore , as an analyst and a commentator (albeit because I have had a punting background) by the consolidation in ICICI Bank as well as YES Bank and IDFC . Not just a but all of a, b and c  could be headed for new levels for consolidation which are more than three times their current high 'stratospheric' pricing as their valuations not only underestimate India's potential but these scrips flag the best examples of trailblazers in India Inc which can ramp up on volumes, new business and secular growth almost effortlessly for the investor as we head for a comfortable 2-3 years from the bottom of the cycle

Ofcourse the related depth of research sitting alone might produce limited results immediately but one is certainly confident after seeing the fate of erstwhile trailblazers like Kotak and HDFC Banak (incl HDFC) which have been forced to stay down with excuses of sterling quality after they could not catch the earlist kindled growth in any of the last 4-5 cycles they have been a part of. They wowuld probably choose inorganic progress from here to get back into the saddle in the meanwhile as Energy and Pharma also need to prove their mettle as sectors and Aviation and consumption are the only mavericks worth backing right now. 

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That beast dropping the burden could well be market participants once the RBI Governor reaches the comfort zone of "Sorry, no cuts" later this week before Bank Policy Tuesday strikes markets 2 days prior to expiry. FIIs brough in almost $3 Bln to Indian equities in January and while money flows to bonds had picked up again after being usurped by equities the lack of a rate cut could well force some selling into the 8% yield mark in Indian Bonds.

Meanwhile FinMin denizens with P Chidambaram have started on roadshows that sell new reforms including the ever awaited GST rollout by FY2015 end and the raising of ceiling on Corporate bond investments further to $25 bln. Nonetheless, This market could see Nifty topping before 6150 as a disappointment is near certain and the clamour to get back into HUL this morning is now a merry part of the same rerating saga as ITC and Bharti nurse ther recent high levels and HUL is still the lowest royalty paying established MNC out therewith more than a $1 bln in  Consumer staples sales. ITC's brand portfolio is surely chugging along as nicely and India's consumer consumption jump story could still be just around the corner further along in 2013 before the next Festive season rerates expectations of the secular growth trajectory for India and how China is indeed different. China and Japan's markets may not see the expected rush in equities again and it is bac to the smaller markets and some of thatr rerating might again positively influence Indian inflows because of the same reasons. I am intrigued therefore , as an analyst and a commentator albeit nbecause I have had a punting background by the consolidation in ICICI Bank as well as YES Bank and IDFC . Not just a but all of a, b and c  could be headed for new levels for consolidation which are more than three times their current high 'stratospheric' pricing as their valuations not only underestimate India's potential but these scrips flag the best examples of trailblazers in India Inc which can ramp up on volumes, new business and secular growth almost effortlessly for the investor as we head for a comfortable 2-3 years from the bottom of the cycle

Ofcourse the related depth of research sitting alone might produce limited results immediately but one is certainly confident after seeing the fate of erstwhile trailblazers like Kotak and HDFC Banak (incl HDFC) which have been forced to stay down with excuses of sterling quality after they could not catch the earlist kindled growth in any of the last 4-5 cycles they have been a part of. They wowuld probably choose inorganic progress from here to get back into the saddle in the meanwhile as Energy and Pharma also need to prove their mettle as sectors and Aviation and consumption are the only mavericks worth backing right now. 

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Even as Novak Djokovic made it thru another Marathon qualifying round with Warinka this year in the Aussie Open, markets wait nary a move on results from the likes of Hindustan Unilever and Kotak Mahindra Bank even as leading lights from both the non-discretionary staples sector and banking have already been awarded in market terms to Yes Bank ( and HDFC Bank & Indusind Bank) as well as ITC.

While Bharti and ICICI Bank follow in the wake of these results that come in today, after the Auto (2-wheelers) war of market which Bajaj Auto scored over Hero motocorp, it is but a residual interest from major institutions that brokerages wait on stocks matured and still having signifact float as well as share of their respective product markets. In more simple terms, no one is really interested in HUL anymore or even Kotak except for their most hardened followers.

Even ICICI Bank may be called matured in similar terms but  closer look reveals that stock to be more response and volatility hungry than these annabes that have managed to be the lead stories of India Inc for a long time. Yet, they still produce growth and in case they are truly able to break thru the barriers that stop all indian consumer and growth stories to $1 bln a brand, they both might yet throw a good surprise. 

Change in regulations on road highways allowing projects to proceed are a good sign for those waiting for the infrastructure juggernaut. Also great were stories of Spicejet's success in growing realisations more than 30% to INR 4400 per passenger and operating profits up nearly 40% this quarter even as investors wait for Emirates and Etihad to finalise their India deal, the Dreamliner stand down having also meant better revenues for global airlines and to a limited extent those stranded by Air India in India. Jet Airways continues to show good competitive spirit with Spicejet and with the market yet not tapped much more than the surface , even Koingfisher's dud mismanagemnt continues to be ignored in hope of FDI. 

China's dynamics are changing slowly but its revival is no t history. The current lull in commodity prices was however expected as it has happened in other cycles that China really does not need to start buying metals cottons and even its other Export industry raw materials like for Silicon Cells (Photo voltaic) at higher prices and so the commodities are going thru a natural correction.

The Fixed income markets have apparently overshot the 7.9% mark, making the 7.9% mark a support on the way back but a rate cut of 50 bps or 25 bps apart the market might yet come back to above 8% as RBI does not have many choices when Policy is announced on Jan 29. 

Duties on Platinum and Gold apart ( from 4% to 6%) the precious metals remain dull and Silver a good trade from 58000 to 64000 and from 63000 to 58000 whene evr you get the time and the patience

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Though the Planning commission decides most of the Capital investment allocations beforehand including government's share of state spending and Big Ticket Infrastructure spending, the Bidget document next month is still likely to give enough impetus to the incumbent government to approach the General elections in 2014 positively 'under new management'. Apart from Rahul Gandhi's ascension to the throne which needs to be sponsored or vetted by India Inc sooner than later, India is now mostly looking at global cues after, as the MOS man, Raamdeo Agrawal said on TV18 right now, problems in both the energy and IT services sectors have been resolved for the time being.

We are headed for true deregulation in energy prices and that's a relief for ratings hawks as well as those items of profligate public spending when it was indeed all getting burned up in oil spend (subsidy) 

A few items of trivia glue that has confetti sticking to India Inc's big weekend party and the world at large before we begin the Monday Morning Dharma. China's labor force has decreased by a large 3.45 mln this month from more than 940 mln last year. GDP growth in China was yet 7.9% after a 7.4% November taking the 2012 number to 7.8% overall and likely saving it from recession adding just under 3 mln in new jobs, and urban populations almost stopped growing with expected rural migration to 712 mln (urban population) 

Also our working population of women may be interested, women seem to more heart attacks on Saturday and Monday and as this data pertains to North America, it can pertain to only Working women and not homemakers. Heart attacks are 27%  more likely to occur around your birthday, and though this article pertains to our female friends, in our country at least more men than women die of heart attacks)

Swiss banks are indeed closing down, the first one in the world at Wegelin the first victim having started in 1741 but Davos is still happening with the wworld's wealthiest and the large Bank CEOs and Presidents making it there to party into the night. JP Morgan CEO Dimon though paid out $11.5 mln half his 2012 package for indiscretions as head of CIO investments. Global banks have paid nearly $5 B in fines between HSBC and UBS for regulatory oversight and half , especially those with European lineage are shutting down their business in Investment Banking

More importantly the Aussie is roaring back even as US markets remain closed today and the BOJ likely to hit the precipice button when they meet on QE spending for Japan later in the day, the Yen already circling 90 and in recent history reaching almost 25 years since it has eyed the 100 mark to the US Dollar, let alone the AUD

Taxes on the super rich, seem unlikely unless the next General elections cause another rupture in stability that the media is almost imperceptibly wishing for, to solve their quads of issue boredom. Another month and we will be just tlaking budget wishes in duty cuts and tax writeoffs in the run up to the budget , all serving to mask any new legs of India's Economic policy that may be unleashed in Budget 2014. Stock up on big banks and Infracos apart from the leads on NBFCs unloess you had indeed been waiting for Infosys and OIL to come back, whence you must book profits this week and watch. The OIL divestment will indeed release nearly 30 bln for the GOI fisc blues. Another intersting issue taking shape is how the regulators and FinMin will stop the bleed as MNCs dry up profits with larger royaalties back home leaving their now not to be delisted Indian arms with nothing to entice domestic shareholders and a government backlash is inevitable despite the GOI having allowed then unlimited royalty just in December 2009

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Though the Planning commission decides most of the Capital investment allocations beforehand including government's share of state spending and Big Ticket Infrastructure spending, the Bidget document next month is still likely to give enough impetus to the incumbent government to approach the General elections in 2014 positively 'under new management'. Apart from Rahul Gandhi's ascension to the throne which needs to be sponsored or vetted by India Inc sooner than later, India is now mostly looking at global cues after, as the MOS man, Raamdeo Agrawal said on TV18 right now, problems in both the energy and IT services sectors have been resolved for the time being.

We are headed for true deregulation in energy prices and that's a relief for ratings hawks as well as those items of profligate public spending when it was indeed all getting burned up in oil spend (subsidy) 

A few items of trivia glue that has confetti sticking to India Inc's big weekend party and the world at large before we begin the Monday Morning Dharma. China's labor force has decreased by a large 3.45 mln this month from more than 940 mln last year. GDP growth in China was yet 7.9% after a 7.4% November taking the 2012 number to 7.8% overall and likely saving it from recession adding just under 3 mln in new jobs, and urban populations almost stopped growing with expected rural migration to 712 mln (urban population) 

Swiss banks are indeed closing down, the first one in the world at Wegelin the first victim having started in 1741 but Davos is still happening with the wworld's wealthiest and the large Bank CEOs and Presidents making it there to party into the night. JP Morgan CEO Dimon though paid out $11.5 mln half his 2012 package for indiscretions as head of CIO investments. Global banks have paid nearly $5 B in fines between HSBC and UBS for regulatory oversight and half , especially those with European lineage are shutting down their business in Investment Banking

More importantly the Aussie is roaring back even as US markets remain closed today and the BOJ likely to hit the precipice button when they meet on QE spending for Japan later in the day, the Yen already circling 90 and in recent history reaching almost 25 years since it has eyed the 100 mark to the US Dollar, let alone the AUD

Taxes on the super rich, seem unlikely unless the next General elections cause another rupture in stability that the media is almost imperceptibly wishing for, to solve their quads of issue boredom. Another month and we will be just tlaking budget wishes in duty cuts and tax writeoffs in the run up to the budget , all serving to mask any new legs of India's Economic policy that may be unleashed in Budget 2014. Stock up on big banks and Infracos apart from the leads on NBFCs unloess you had indeed been waiting for Infosys and OIL to come back, whence you must book profits this week and watch. The OIL divestment will indeed release nearly 30 bln for the GOI fisc blues. Another intersting issue taking shape is how the regulators and FinMin will stop the bleed as MNCs dry up profits with larger royaalties back home leaving their now not to be delisted Indian arms with nothing to entice domestic shareholders and a government backlash is inevitable despite the GOI having allowed then unlimited royalty just in December 2009

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Despite warnings by Joseph Stiglitz and the IMF on granting Licences to corporates to banks , NBFCs like Religare, M&M, Sundaram , Bajaj Auto's to financial businesses  and even others instill confidence in one thatt Corporates would be equal to the task and can be well regulated with the trifle onerous but well though super holding co, structure. A similar one has indeed been adopted by US also in G-SIFI introduction inthe US domestic map, allowing global businessess to use holding companies to hold capital domestically for banks .

The NBFC operations allowed to convert into a bank would thus be held by a supernary financial holding company which will allocate capital to banking and other financial services businesses including Insurance in the Indian map also if all goes well and one might still end up overthinking it instead of allowing good regulation to prevail disregarding both minimalist and microregulation options given to central regulators incl Central banks today

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The sterling performance from the bank even as newswires flash the first digits however confirm the bank managed Gross NPAs under 1% and Net NPAs at just 0.20% 

Provisions have increased marginally to INR 3.07 bln from INR 2.93 bln and NII has jumped the 20% growth mark at 21.1% to INR 37.98 bln Fees Income including all charges are INR 18 bln Net Income has jumped almost 30% fulfiling its other base criteria as we see it posting a Net Income of INR 18.60 bln for the quarter. However the lack of float aside the bank remains a good investment at any level even otherwise. 

The Q2 Performance would be aa tough act to follow with credit sturating and IIP not picking up but detailed reports are awaited and then one can check whether this bank alone can help redefine India's secular non food credt growth bu twill continue to groww over the all India average and likely we should look for it to double the NII component in less than four years from here. 

(Flash Q3 FY 2013 December 2012 India Earnings Surprise) 

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Controlled Pricing for Diesel and Kerosene accounting for India Inc's largest CADs in recent times finally crumbled when last year Governmentaccede to a first subsidy cu ton Diesel, allowing OMCs to raise the price of Diesel a lil up. In today's move that left market speculating since mid day yesterday, the stepped regime of decontrol for the year ahead was put in place wwith a first INR 0.45 increase in Diesel. Supplies to Defence, Railways, commercial establishments and State Transport companies will now be priced at free market levels based the new pricing formula recently established from india's import basket and use to compute as the price for which subsidies are posted to the OMCs 

LPG Cap moved up to 9 cylinderss per family, wwith more than 2.5 million cylinders saved in the first months of control since October last year mostly accounted by diversions for auto lpg and other commercial uses. 

Pre Budget Fiscal hits include the establishment of a rule to assing Divestment funds to PSU Bank recapitalisation. The government is going to redo Spectrum auctions with refarming for base spectrum in  Delhi and Mumbai circles in March at 30% lower prices of INR 2500 Crores or INR 25 bln per MHz for 800 MHz spectrum and INR 18.3 bln for National CDMA spectrum  

Meanwhile prices of soyabean have fallen 38% since the crop was sown in July so the government has updated a new 2.5% duty on crude palm oil, an intervention which only makes crude palm oil 1% pricier while Sugar prices are set to roll 30% higher with the current SAP for Sugarcane and the reduction in subsidies may bring a cascading impact for multiple months on dal and vegetables as supply costs creep up.

Inflation will thus remain high and rate cuts are unlikely immediately making 2014 more amenable to the bulk of the recovery in growth. Auto salesa re likely to start inching back but not too fast as Petrol prices ar e not going to reduce by much and disposable income spend remains higher but skewed to eating out and entertainment while we sort out any possible plan for India Inc returning to double digit growth

Meanwhile page 14 on the TOI says Reebok is indeed back in India under new management  while Walmart docked its suppliers and their consultants last week marking many red and a few yellow meaning shut down in prior modes of approval for business at Easy Day and Walmart stores in India. Honda is also rejigging its portfolio with the new CR-V ad the Amaze sedan. In the exchanges only OMCs are moving even as Nifty trades up to near 6100 levels

Posted via email from The India Investment Post