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)

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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 

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

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HCL tech timed its growth digits well into the twilight of the US evening after the announcement of Goldman Sachs and JP Morgan earnings, posting sequential double digit growth in Financials at 11.03% and Infra Management Services leading the growth. The growth in TCV seems smallish on the released wire reports at $1 bln and I do not think augur well for this soon to be out of favor forever mid cap company that subs Vineet Nayar (with a bump up) witht he helpdesk chairman of the company, Anant Gupta in the true religion of non managers and non leaders flowing thru a below average morally bankrupt fabric of India's IT annuity that forms the bulwark of business along with legacy TCS, Patni and even iGates or Hexaware which got rerated soon as Infy was back in play as the local constablularium for annuity business. Indian MNCs and consultants hunched over this industry as bread and butter thus remain equally copiously devoid of work ethic recruitment values or any other corporate governance virtue which mught just raise the cost of doing busines s in India before China even gets a chance to start chaarging for Trillions of dollars of the World economy in its new attempts at revival. in the meantime TCS gets to be the star on the Indian exchanges again and Cognisant continues to challenge from afar as the no. 2. 

However, bigger business is indeed afoot in India inc, Baja Auto's great showing staying stable on last year's data and Yes Bank's trying to grow out of its first cocoon pretty much successfully organically as far as a quarter can tell. Better results are likely over the weekend or later from ICICI Bank and before that HDFC Bank. However lets let this daily report take the overview in cogent terms and not deal with too long an exposition on such subjects like performance. Seeing as the health of India inc overall is set to improve ast its own god given grace, it is unlikely that any expectations would have risen from yesterday's results action esp with IDFC scrip now at least attempting to mirror its non infra businesses while infra Financing and its 108 project proposals lay idle on a work desk unable to fathom the tangled web mistakenly woven in without realising the impacts of long term 15 year financing on raising capital and managing cash flows.

Seeing that the bull market is especially partial to performance, I would rather we take adequate action now with the Economists fully staffed and the Planning Commission in full executive action than wait for the naysayers again at the bottom of the business cycle.  

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Organic growth component of the bank's strategy has shaped up well and even the despondent NIMs shaping up into a firm 3% mark this quarter as the bank ramps up on savings and Tier I Capital thru QIPs. The bank's loan book probably increased Corporate exposure vis a vis its Agri book and the Provisions have thence grown by more than twice as required at INR 0.56 Bln but the bank has brought down Gross NPAs tto 0.30% of the book and net NPAs even lower.

The bank states in the earnings conference that any rate cuts ill accrue to NIMs CASA is nearly 20% growing from 17.3% to 18.3% and NII is well above average even for amid sized companies at INR 5.63 Bln and Net income at INR 3.42 bln. for a book of a target possibly closer to INR 60 bln for the bank the growth in NIM is probably stating that the bank is about to hit the big league as is obvious from is well rounded scores in management and corporate responsibility though its early single line focus still makes it an outsider in Corp loan syndicates. 

Bajaj Auto results are on the wire. 

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A brighter future, shining potbellies :) and a higher index

The markets are a little tired and some have thunk it to be the top , shorted it wrong and not made safe but probably have some losing money available to them from yesterday's and the last week's runs. Traders are a sharper lot though and they don' tlike it when the markets are in control. in india that translates into funny arbitrage and leaves youa t risk for not so accurate traading calls in the middle of an undecided market. The answer is not a lower valuation and the bears won't learn that till they are queezed hard after a bad run for aalmost two uyears now for the bulls. 

But here is an example of things that do not work. Shorting Reliance at 860. jubilant Foods , shorting it below 1200, Today's calls include the first already and reforms are not going to be executed byt he markets so those using fundamental ploys to get a trade in lose. like the ones who thought Bharti Airtel is finished and it did come back now at 350 and going higher. There are more but the tenets are simple stay in FAO if you cannot get the scripwise moves but only the indices and stay out of scripwise selections unless they are buys. Shorts to replace the high tide in Axis Bank are i still think unlikely. Pharma is not going to correct from here but the move up., I am not so sure and there if anyone actually can select a scrip from the dozen mid cap pack and the three big time midcaps like Sun Pharma and Dr Reddy who could never scale up to large blue chips in India's megalithic domestic pharmacoepia of drug markets, or if one can try it on Bajaj Auto and Bajaj Finserv. I thin k all of these are fundamentally heading north including Stride Arcolabs which may not get scythed in this bid in 2013 as money can alwaays add on to the India story inthis comeback year, a bottom easily formed and seen to have been formed unlike in China where the money is stuck for an entirely different dragged out bottom of the cycle and is still soaking in more because of the fundamentals of that country and unfortuantely because we know thos eills to be of a permanent nature well inscribed. 

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Axis Bank delivered a 22% Net income growth on year and 16% growth in Topline while restructured assets increased but not unduly rising 10% sequentially by near INR 4.60 bln and and a stock of INR 46.4 bln overall. last quarter in September 2012 (Q2) thebank added INR 4.3 bln in restructured assets. While the bank has reduced provisions, it may have maintained its Other Income growth that jumped from 22% in Q1 to 30% in Q2 at near INR 15 bln high profile devolutions / defaults like Deccan chronicle and kingfisher are sullying the pond for the banks as more corporate governance issues grow into the story of limited global profitability for banks. Indian banks having avoided the perils of derivatives as WMD (Buffet) have only swapped them for horrendous stories of INR 2 Tln more being added to the body of INR 2 Tln in NPAs and are looking at correct provision levels and avoiding cash losses through restructuring of loans. Banks ere also benefitted by changes in SARFAESI this quarter.

More improtantly the bank had some active liability management on hand with Current Accounts suddenly not in demand with new liquidity restictions for corporate treasuries as per regulation bu t the bank managed to keep the CASA above 40% by adding at least INR 220 bln in Deposits

The Banks NIMs consequently grew healthily to 3.57 % by almost 10 basis points making it the most profitable bank it always was though the restructuring drag in Q2 made it a little suspect. With op margins also expanding at TCS and Infy however and Metals and minerals coming back, Capital markets may have a limited upside on this stock. Both ICICI and Axis were rewarded today on the good results

Net Income was expected to grow to INR 12.7 bln according to networks but reached 8% higher at INR 13.7 bln

A very successful exercise for both YES and Axis Bank in the last two years would be coming to an end likely this quarter

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Axis Bank may not be a G-Sifi candidate in the next 3-5 years but as no one can call the banking industry superstructure ahead of that and India and China, with Poverty administration and Affordable housing auras for the big jump and the better consumer dempgraphic it may yet be someone like Axis apart from the Big three  and the younger Private Sector banks that go out as global leaders. ICICI Bank of course, the current bete noir for Axis, is already holding 25% of its loan book in International loans. 

Back on the current quarter, Axis Bank makes that magical mark of growing 20% in Topline and 30% in bottomline  while CAR grows to just under 14% making it more imperative for the banlk to not hold on expansiona nd not lose sight of Asset quality performance in the next 2-3 years whence it would also not be welcome in the markets for more Capital issuance once it  hits 15% in CAR

Net income is up 22% over the last year quarter but the bank has shown the growth to use the magic marker especially on the annual figures when they come out in April/May. Net NPas are just 0.33% and Gross NPAs 1.10% income from Loans net of the cost of funding is a clean INR 24.94 Bln, the NII being 16% higher on Q3 of last year. The Bank ahs been able to bring down the numbers on Provisions even as norms are being tightened making for a better profit. 

The bank still has available FII interest and as of Q2 2011 it had only a 31% FII interest which is likely to have grown in double digits since then.  Sequentially, the bank had a positive less tha n 5% growth in both NII and likely Other Income , . As e wwait for management speak, it would be another INR 16 bln in other income if that is indeed so, bringing Topline to above INr 40 Bln. the IB business was transferred to a subsidiary. The topline is near 2/3rd s of the Top 2 private sector indian representations and still comes to less than $800 mln failing to hit the $ 1 Bln revenue quarterly target we set as a hard target for those that can indeed grow globally. It is however the third year for the bank under new management and growth seems stunted compared to what it initially achieved in 2011-12 over 2010-11

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Ofcourse the bear trap here means bears trapped by the vacillating indices in the January series with only those able to substitute sitching out of bearish call s sold and most now ready to be caught at 6150 - 6200. But the bulls as they may be are hardly interested in buying anything more so its still not a trap till 6200 sees more OI from sold calls.  (Prime position would be 6150 or weightaed average 6125) 

And that is why we are not using the c -word 'consolidation' any more for this market. Most players are issuing bull calls, none of the brokerages are covering their positions in these buys but yet there is no fresh buying, go sell calls. But yes remember this series is definitely going to cap the new nifty series high and remain bullish. 

GAAR deferment caused quite a hearty jump in the indices yesterday so the scripts are the same. i am still not going to condone DLF and the markets will not agree that DLF should be left behind. No one believes Citi when they start pushing sell reports on India or any other ex Citibankers out there in Singapore and other Indiabulld estinationss. This time around the Citi franchise outside the US starts getting burnt till probably BofA feels vindicated for having sold all their non US assets under Treasury pressure. The US dollar bottom however has not been found yet and won (KRW) is taking away most of the fun for Exporting economies right now. The Yuan recovery blindsides others fromt he Dollar trade except for the GBP which starts coming out for a re-education move up with a small pint of the liquid enough to raise it. Both US and UK also realise this week that it is Okay they might grow better than 2012 in 2013 and then even better in 2014. I hope it is this week, because the currency markets do not like to wait unlike Equities and bonds with high but 'stable' volatility

IT is back in portfolios wwiht a venegeance and that means DIIs cover up for never having bought into this rally a s most stayed with India's real annuity sector , i.e. IT and BPO services worth $72 bln and rising

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The January Harvest Festival confused many a time for th eNew Year comes just before the Chinese New Year itsel fand the markets in india still have large sections of intermediaries and businesses that belive in the hindu rituals and cycles as key to business starts and inventories as well.

Sankranth however seems to be heading for a showdown of the Gods with Consumer inflation hitting the high notes at 10.56% on this late morning report and WPI to follow close on the heels, though the WPI need not reflect this aberration of the CPI immediately. It does seem likely that we are not going to get any rate cuts despite the production stops and Nifty at below 6000 may well have peaked out for another burst and will again rest at above 5900 or maybe one slide down at 5940

The Euro in the meantime restarted a new week with the resurgence that has become so typical of the currency since it hit a bottom in April at 1.20 and the revival of the hopes of a banking union are around the corner and likely to follow a greatly accelerated calendar given the despair surrounding the last catechism of banking union 'talks failed' after the one of its demise.

The Pound unfortunately seems to be the loser in the run of currencies coming back ont he strength of China trade and that means India's flagging trade deficit with Imports not under control yet Exports rose only 6% ofor the month and will rise less than 5%-10% on the year and europe's losses as a market are not covered by others including our metals and Cotton exports to China

European WPI has already shown indications of a recovery in last week's data and if indeed Indian WPI is below 7%-7.25% it would be a real bout of irrational  exuberance for equities as US also rules near new peaks and Europe is now never down. However, till a case for a change in the interest rate cycle is established it would be a false promise that is lwikely to be as quick a destroyer of wealth as the rise. Bnaks continue to cede with Yes Bank and Kotak and indusind likely to do well. IDFC and the Power NBFCs are unlikely to lose current levels 

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IIP struck again with the Composite index dragged down 0.1% after a positive run that lasted two months including festive October. It could not be the year on year comparison playing out on Consumer Discretionary and other Manufacturing as well as festive season was in November last year. Capital Goods are finally back however scoring another near 8% growth at 7.7% and Manufacturing lost the positive 6.6% for October to 0 in November. and Consumer Durable dragged down from 10 to below 2% 

Mining output was a negative 5.5% and Electricity subdued at 2.4% A flat index was mostly positive for markets after Core industry growth shoed a contraction of more than 2% on the 1st of the month

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Those short on Infosys are a done deal however, those short on the indices may get a  measured exit the rest of the day as Put writers were also in the market in equal force and the Nifty would be jumping back bigger later in the day after Infy alone makes the first 30-40 points up at open

Infosys raised its guidance for FY13 to INR 40,700 Crores after a 39,600 guidance took it to its lowest in recent history and another 39 clients and safe profits of a consolidated INR 2369 Crs , the bellwether is back in the reckoning in a dark quarter with dollar revenues for the Q3 running away to $1.9 B from 1.7 B expected. TCS and Wipro support the reprieve but may soon be under fire for underperforming after Infiosys sets the tone again at the high tide watermark using the quarter to break free from its organisational brouhahas and unsaid unsaids as new CEOs and old Sales Teams get back to mopping up business on brand equity. Margins at Infy did contract in face of the stronger Rupee but shockingly for some, EBIT margins ere only down 70 bp at 26%. 

I expect YES to continue the climb, JET to join after a couple of rallies avoiding mid caps as money flows to the designated bluechips and ICICI Bank and other Private banks come back before the end of the day

Infy is up 12% in opening trade and if I were me I would be accumulating shorts on HCL Tech from today and TCS after a couple of days of industry heat, i.e. near COB Monday and pick up longs in HDFC Bank and HDFC in the hour before that

Nifty 6200 is a done deal if done right and speculators stay happy in Axis Bank and Yes Bank.

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Of course Banknifty still has another 1000 points to go but the rampdown in PSU banks comes at a price for ICICI Bank and HDFC Bank specifically and PNB's rise similarily would cost the markets more understanding for the non performing PSU Bank portfolio that will also rise, PNB having no real score on NPL performance either, clubbed with the worst of n="government owned banks" whose non reporting of NPLs in time earlier costs the Bank capitalisation a good 10% on more than 5% of the Loan portfolio having to be put to waste immediately.

Jubilant Foods has a short call on it finally even as Jet Airways continues its uptick and IDFC also corrects till policy execution calss die out or are converted by the government positing asalways more on fare hikes which can be rolled back and diesel hikes that cannot be implemented from the looks of it. Add to that , traders and investors (foreign) would also like to see actual divestment in Hindustan Zinc and BALCO as Vedanta has already made a good offer for the residual stake and legal issues bogging down this government would not be easily tolerated. But then the spectrum discussions have already panned out for the government after the setbacks from the Judiciary almost a year ago. 

A Jubilant Food, Titan and JP Associates move down could also signal today being the last day or the endgame of the correction as the weekend would likely be positive for the markets when they open on Monday. All in alla lazy Thursday and a reconnaisance up for markets on Friday tomorrow as they fgure out any new costs of arbitrage on fundamentals as we remain part of a high interest rate economy in terms of market structure with growth concomitant with inflation and depth of market  ( as opposed to nascent high speed growth in Indonesia, Thailand and even Pakistan) coming at the cost of lower available floating stock with only 3% of the population at high tide estimztes investing in equities and Domestic institutional portfolios and Asset allocation strategies well worn with two decade old picks.

Pharmaceuticals are doing well as they are not undone by circumspection or saturation at lower levelsof penetration still dogging both Discretionary and Non Discretionary consumer plays

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Indusind topline and bottomline growth have managed to cross the health indicator of 30% increase in topline and 20% increase in profits we established a few quarters ago and even as India Inc widens the gap with the performance of the overall Economy, it still likely means that the number of companies performing on this measure and Economy's overall growth are likely to be a boon for the markets in 2013. 

Bank NIMs grew by 21 basis points at an extra large 3.46% in the INR 5.77bln income from Interest net of interest on borrowed funds. Loan growth and PAT growth were in line at 31% and 30% , Net NPAs translating into an increase of 11 crores (0.11 bln) at INR 1.25bln

Bank completed a QIP of INR 5-10 bln this quarter and Tier I capital is closer to 15% bank expecting not to raise funds till 2016. NIM increase may be attributed to decrease in cost of funds for the bank and seems to have added 21 branches and over 400 ATMs. CASA has grown with deposits up 26% The banks INR 350 bln book is giving a ROA of 1.6% RoE is down on expanded Capital base.

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The y-o-y comparisons are likely unnecessarily expansive and impressive at 34% rise in NII to INR 5.77 bln bu tthe bank has justified the run up in its shares in the last 6 months as its loan book probably advances to better days without just inorganic expanse of bad deb tin retail credit cards

Again, Net Profits increased nearly 30% y-o-y to INR 2.69bln and Gross NPAs have reduced below 1% but Net NPAs have inched up to 0.30% But provisions especially seem likely to rise for this bank as new norms kick in, making the bill higher by 50% at INR 0.78 bln

More can be expected from slower yet private bank competitors like Federal Bank and Karur Vysya and South Indian Bank in this leg of the recovery esp as new norms make it likely for these banks to be takeover targets for the last edition of banks in 2003 and neww and old incumbents like ING Vysya and indusind as their size makes them relatively well placed if they buy the right distrbutor franchise in the form of another bank. Ideal Targets are most likely banks and NBFCs like IDBI and IFCI

Unfortunately DJ News wires have seemingly missed the flash reports from the bank and we await full press conference before we get the earnings release

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Some interesting first moves from Bankers seemed to be on in Pre Budget parleys on Monday with Bankers looking for tax wrteoffs on loan NPLs to encourage new faair practices and bankers emerging wwwith a Commodity Transaction Tax to help the government tide over losses from the ensuing discontinuation of STT as Securities Turnover has stagnated since 2009 despite the market being in the bull orbit for over 6 months

Meanwhile the first novel biologic from Biocon has been approved for marketing in the US. Itolizumab's successful clearing by the FDA after meeting the treatment score for primary and secondary endpoints in the treatment's clinical trials. A read of the last investor presentation in April shows that the company will find best market openings in Mylan's oncology drugs and this new psoriasis treatment in global and US markets while keeping pace with Global partnerships in Sungene with big pharma and obviously growing in the Diabetes treatment segment which has been growing equally well in 2012 even after a good 3-5 years globally. 

One wonders though why coverage has been initiated seemingly in private banks with sell calls on HDFC Bank again probably just because of hopes of a rate cut receding before the release of comprehensive production data. Selling is however unabated in PSU banks and they  make big shorts with good targets while the Banknifty, Nifty and even the other bull/bear picks on networks today like Renuka Sugar seem like well left alone including any bump in goldman Sachs and Morgan Stanley backed Bajaj Auto, Tata Steel or other stories. Nifty 7000 wis more exploratory than a serious accusation by the sell side team at GS and Banks Pharma and Retail consumer (discretionary incl ITC not HUL) remain firecatchers in the rally(ies) to come in 2013. We ourselves expect GS has underplayed China and even Indonesia in the Asia spreadsheet released yesterday (Check ET of date)

Meanwhile Kaya (Marico's hair and skin care saloon business) and Spencers ( RPG's Foodorld led retail superstore business) ill be spun off into listed IPOs in 2013. kaya is a part of Marico's core operations and Spencers is apparently ready to be spun off from the CESC utility balance sheet for the Goenka team

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Post festive season Automobile sales are still not taking off though the monthly sales data for December is unavailable. Indian Auto Sales have stayed on a neww 220K cars per month plateau for well over three years and we do expect the new plateau to be 260k cars per month or even 300k per month by 2015 if not in 2013 itself that can last another 2-3 years. Meanwhile Motorcycle sales across the Top three is likely to reach 900000, 500000 and 500000 in the same period and Export markets are likely to add volumes

Global macro has improved just in time for a happy end to 2012 with good Economic grip and Corporate results also likely to report a fat crop after the dim prognostication of Q3. Europe is likely to move into positive territory into the second half of 2013 as Greece loses concerns about being left out and gets upgraded at S&P to B+

European markets in trade exports are likely to be replaced by new markets in Asia, Middle East and Latin America especially if longer term negotiations are completed instead of trial batches for the likely two wheeler and 4 wheeler exporters. Trade Exports are unlikely to rise above the current holding levels in India till Second half of 2013  

Indian businesses continue to be driven into a bigger future and as was mentioned on the TV18 morning preopen as well, Healthcare is likely to be a mainstay for investors riding the indian currency.

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Nifty near 6000 mark has a never before volatility level of 13.4 on Friday closing and as I can see it not only is a harbinger for sustained buying (hat tip Mitesh Parekh, ETnow.tv) but also for a reburnishing of banknifty as a support than a resistance below 13000 without pushing the PSU banks or other resource economy stocks like mining and energy for fundamental buying and thus apart from the flourishing mid cap trades, time is ripe for a big move up with or without Cipla, M&M and Lupin. 

The yes and the kotak stock have been stocking u-p for such a move with kotak backing a call for rate cut and goldman sachs having moved to front and center in this drive with a call for 50 bp rate cut. Of course, Urijit Patel for one is made of sterner stuff but if rate cuts are to happen in the first meeting of 201 they will likely agree that inflaiton has peaked and thus will maximise their advantage to the credit economy with a 50 bp cut. Those out there who still think India has growth possible from cash hoards should hoowever consider sabbaticals and more AML coming our way as the insurance and mf industry growth show the limited capacity of savings to absorb any such parallel economy plinths into the fabric of the one nation that we are bound in the parliamentary system

Again if a big move were to happen IDFC will lead the move deservedly so in this section of the Economy's recovery and as 2007 told us, DLF or other leveraged astocks need not apply to be the bull chip

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The shorts will likely pay badly for their early 2011 shennanigans as bulls leave the outside the offstump temptation well alone unlike that famed middle order and the retired doppelganger and a to be coach with the big win record ( those not interested in Dhoni semantics and test cricket may leave the outswinger / beamer / valid ball too) Dhoni of course should have tendered his resignation in any other day and time and become a selector instead.

Back on the markets. the markets are on the ball and the budget expectations would be built by a media raring for something at least as positive as a 10% growth target but which realises that India Inc is up against a wall and continuing to perform for one of India's best performances right in the middle of the Big Fisal Canyon where governments of NDA, UPA, Economists and Politician Heirs have hung themselves out to dry, India Inc having left behind the game of riiding on low base performance effect to produce performance and India's fiscal disadvantages showing in each month's import bill like it was that night club in Paris

And there end's Thursday's serial effect on my language above. 

India inc has nothing to report having already set up great expectations for FY2014 and the government has nothing else to showcase having already shown its hand and unlikely to be able to do more than basic math to produce anything inspiring in the budget and that would (wince@leisure) likely lead to electoral giveaway type weak discipline being held up while like the DTC , GST and other fiscal discipline thru math and thru law is thrown to the wind a day after the Feb 28 budget presentation. 

Why any of it should lead to any further reduction of FII interest is the pertinent question for the markets and having founded a specific India club like the very standalone India Inc itself, India is unlikely to see anything less than a 50% increase in FII positions as they know exactly what is ahead while the Emerging Market Juggernauts which ETFs received 50% of the $8.6 B into equities in the first week of December and FII inflows and FDI inflows would scale near to their all time indian peaks at $35 Bln in FII and $25 B in FDI instead of $45 Bln or as China produced after two years of struggle at the bottom -  a clean $100 Bln for CY 2012

One hopes the budget is able to operationalise Debt financing and quasi SWF  financing for the great $3 Tln Infra spending chasm  and add to education and healthcare funding but " it ain't gonna happen" dear

in specific stosks, ITC seems to be targeted to correct all lifestyle conpanies ( Consumer Non discretionary) to a good restart point and that tells me both ITC and Bharti (Discretionary/Infra) will likely keep most of their new levels in the new rally to come. IDFC is up next for big hitters and should continue the strength in Power NBFCs from REC and PTC(despite the odd ball newsiness) or PFC and Powergrid while LIC Housing finance has definitely moved int ot he bigger speculative position plays than in 2011 or 2012 . Kotak and YES could be the ones benefitting most from institutional reclassification into "BLUE CHIPS" of the india portfolio

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Fundamental strctural changes notwithstanding rating agencies globally keep getting the same standalone cues for India and India fortunately or unfortunately remians studiedly isolated out of world karma. For instance, the new Dy governor of the RBI, Urjit Patel might have a hard time marrying the global recovery in auto sales with India's first Chinese imports and the M&M resurgence as part of any global trend.

But then inflaiton is unlikely to go away as a critical agenda item soon and nbeother is the return of Net Investment by Corporates in Infra or otherwise ( I heard the Infrastructure Commission has been redesignated as the inter ministerial committee on Investment or some such thing, equally incapable of moving the 1000 odd projects waiting for final approval(s) for finanial closure and take off. 

The Rupee in the meantime responded to the great optimism in the PMI data and reform cues even as details continue to lude and the question of criminalised politics, a tell tale barometer high mark of inactivity on the horizon become the key issues of the day despite shorts trying for a quick comebak from the new 6000 mark and probably encouraged to journey up their stakes on the ennui coming into the new year. 

Lupin and Glenmark remain good picks in Healthcare and Ranga committee's answers for future Energy projects and thus Gas pricing get closer to  being implemented. Reliance Power has already ccrossed the hurdle where it can now repurpose coal allotted to SAsan to working projets including units at Sasan. The Diesel subsidy degrowth thru step increases may see light of day only in the second half of the year while the 30% + deceleration in Gold imports by nearly 50 Tonnes per month is apparently not enough for the Indian currency to come back meaning Gold smuggling may have further skewed the data

Stride Arcolabs also celebrates another good day on the bourses, we also remain optimistic for banks even at a 12800 Nifty to keep getting rewarded for being private sector performance and get questioned for being PSU unless you are PNB or BOB and we hear BOI. The last two could not hold on to any semblance of performance in the last quarterly results either and PNB itself is struggling with increasing NPLs while others seem to be dead in the water including Canara, Syndicate and UBI & UBI. 

Credit card spending (ttm November 2012) has irecovered but is still 20% below 2007-08 levels and more encouragingly DEbit Cards seem here to stay. MNC banks have restarted consumer credit operations as ell but their market share remains below 5% including their strong Corporate Credit business and strctured risk sold to corporate treasuries

Education and Healthcare spending are unlikely to cross the 1.5% mark of GDP for annual spends till the end of the current plan period in 2015. The more things change, the more they remian the same. 

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Those hoping for a correction as DIIs called the market wrong 2-3 times before the markets left them selling into a rising market and handling redemptions but based on the predilection for that correction shorts have already bled in trying to sell 5800 Calls and had to roll to 6000 calls in December series. That ould seemingly have been a nice time for an exit and now, new top range of the market is well settled nearer 6200 where the new Sold calls set up the top of the range while those holding the 6000 Call premium of about 100+ are likely to be trapped by bulls and doused fully in the run past 6100.

That of course is just more details of how shorts including DII managers like Madhu Kela who were long on the Indian economy but haave been battling continuing redemptions and the lack of opportunity to buy will be hurt in the January series before the markets start a downward trend most likely post budget as euphoria over policy finally dies out only after new budget announcements and tolerance for fiscal slippage and the new range for targets for FY14, 15 and FY16 that governments across the world and P Chidambaram must use wisely. 

That also means that markets will likely remain above 6000 in the run up to the budget and supports at 5900-5950 are likely to hold allowing Indian currency to catch up on the bad year past in 2012 and strengthen in the periods the Won and the Singapore Dollar create as they continue to run up past the US Dollar on continued good performance by Singapore and hopefully bad December trade data turning out to be a chimera for Korea whree the WON nearly ran up 10% on the Dollar in 2012 on trade resurgence but China may be looking to other trade partners at the beginning of the recovery while Korea has to wait for the consumer boom in China and its other Export markets.

Asia leads strongly in today's open as Europe is also likely to rejoice on the postponing of all arguments in the US Senate and House for another two months as both Republicans and Democrats try to get a hold on their contribution to a longterm restructuring of the budget deficit.  

Meanwhile LIC's investment charter is likely on target to receive the policy endorsement needed to own up to 25% of a company in equity and the Indian state gets a strong ally in Institutional investors resulting to that. 

Manufacturing PMI data to be released later in the day may not be able to hold on to its gains at last months near 54 performance and December's lukewarm auto sales ( to be confirmed by Bajaj Auto and HMSI) with TaMo scoring just 15000 sales for the month and Maruti sticking around 80,000 vhicles for the year near its recent bottom for the year. Hyundai also reported sales of less than 30,000 for the month while M&M nearly topped off the 50,000 mark in a strong performance and its new SUV range indeed catchs on the fancy of the budget buyer, a big category in India's consumernomics.

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