India Morning Report: Rebuilding the India Inc dream

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

The 110 odd infrastructure projects including low and hgh value road projects and prestigious and commercially groundbreaking ports, gridco and other Infrastructure projects are likely in final stages of a policy intervention currently with the Cabinet. Though they come at the end of a barrage of policy action still awaiting execution and KFA failure is more the current corporate branding influence for India Inc, the execution of these projects could enable by itself a INR 1.1 T in GDP accruals from construction and a likely 10% jump on the nominal and not the real effective GDP at 2004 prices or whichever base year is current.

Banking credit is steady and growing at 15% and if indeed investors still bet on a rate cut at the end of October, then in all probability the only possibility is of an unanticipated market failure and so the markets will have to rise to the occasion without moping much more at 5650. A fall from 5650 to loer level is again only faintly probable after dull days stretch out at least one day after the current series expiry thus the market pre expiry unwittingly again offers great buying opportunities in the otherwise scarce and right valued large cap universe back with good earnings from ITC,IDFC and ICICI BANK to YES BANK, ORCHID and even STRIDE ARCOLAB which has solved the FCCB issues and FX issues in the quarter with realised Net profit hit but not detrimentally to the company’s prospects. Sun Pharma’s issues in the US market also add to the current opportunity for buying and current levels of scerips like HDFCBANK and again ICICIBANK will likely in fact become a bottom for the coming rally which may bide its time till policy announcements including Bank Policy Tuesday are over this month and some of next.(ICICI Bank is up 3% since writing)