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

Yield has in fact gone back up after the policy from a 8.16% trading range in the morning to 8.1726% The future of OMOs is quite clearly what is upsetting as the CRR cut implies RBI would not like to provide further liquidity using adhoc operations later in the month though banks seldom use the liquid assets blocked by CRR even when they are freed.

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

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

The policy data comes out in a n hour

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English: Source: http://georgewbush-whitehouse.archives.gov/news/releases/2008/03/images/20080324-6_d-0665-2-515h.html President George W. Bush meets with India’s Minister of External Affairs Pranab Kumar Mukherjee. (Photo credit: Wikipedia)

Mr Pranab Mukherjee can possibly land a 73% vote in the Presidential election later in the week as Mamata Bannerjee capitulates for a fellow Bengali. Early monsoon worries caused a big hole in the states of UP, Punjab, Maharashtra and even Rajasthan with more than 50% deficiency but Foodgrain production is already 257.44MT for the year ending June if government estimates are believed with Record production in Rice(104MT) , Wheat (93MT), cotton and sugarcane keeping prices down in the meantime. this last estimate has been revised upward by 5MT from April.

However Nifty’s rangebound worries have initiated more correction calls and already stopped out some shorts at 5200 where it lies in wait, as the most undervalued emerging market and also as the fastest growing Coke market where Coke and Sprite both grew by more than 30% The MF reforms are going to come in with commissions restored but the usual halfway house on the bridge of expectations draws a line in the sand for what uptick you will get from further policy pronouncements. The macro Indian story has to celebrate but next year is going to see contraction in agri production with Sowing in crops down from 10-30%. Even in hot commodities like sugar and cotton, the downtick is there though just 2-4%(in sowing)

India is still 15 points ahead of China in the Nielsen consumer confidence. However IMF seems to have given it the thumbs down despite keeping growth estimates north of 6% with India’s Fisc targeting a number the same as Ireland and higher than Spain , vying for the 8.9% mark in 2012 behind Japan’s tsunami restructuring funding and not likely to improve in 2013 either , making mockery of india’s budget estimates brazenly, giving Moody’s and S&P fodder as they are set to evaluate the india rating in the next 8 weeks. Guar seed is the only commodity doing well though the shutting of the Straits of Hormuz mean Oil could march ahead again. India’s trade deficit data for June found Oil buying missing ahead of a probably ban on Gold imports to $10B from $16 B in the month of May

Bajaj Auto reports today and Hero Motocorp follows tomorrow while non discretionary consumer companies ares showing health in Sales and in marketing spends at 12.9% for Marico

Dr Reddys and HT Media report this week with JP Power closing out on the weekend with Q2 numbers. JP Infra is poised to report the Yamuna expy opening as well. Monday opens to expectations of good results from Colgate and HUL. TV18 also reports on Monday followed by the Pizza guys and Dominos franchise holder  Jubilant Foods on Wednesday when the IT saga unwinds with par for the course HCL Tech results

Smaller banks Karnataka Bank and Bank of Maharashtra report this week then ING, Canara, LIC Housing  and SBBJ set the stage for the big Yes BANK reports on Wednesday (24th). Kotak Mahindra Bank reports tomorrow.

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MK_GMR4827 (Photo credit: Presidency Maldives)

Late Morning Trading strategies (DID you buy your ITC yet?)

As the title suggests most of the activity is in the silent bond and currency markets with Indian bond rebound and unrelated yet unlikely dollar rebound sees hectic activity as accumulation continues n the suggested consolidation, the market having not seen any exits and the rally probably been too quick for the bus to fill up before it moved.

The marktes are healthy not waiting for a fall though a dollar rally cutting off air supply cannot be ruled out and hence the unwillingness to move from the enw normal – right priced in ne light after  a 5600 year to years back left investors bothered seemingly

Buyers have to stick around and probably get in today or tomorrow. A dip does not relally add more interested investors and thus is unlikely.

Buy Infra stocks, GMR, RelInfra and RPOWER and even RelCapital and of course IDFC

English: Diagram of covered interest rate parity in the foreign exchange market. (Photo credit: Wikipedia)

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GMR Malé International Airport Private Limited (GMIAL) Office (Photo credit: Ibrahim Asad’s PHotography)

Auto sales being okay for maruti, it has been hidden that Tata motors production is falling off a cliff an dmonthly auto sales from Renault, Ford , GM and VW have not been great either. Toyota alone ploughs through with Honda also contributing to   positive variation since its closure thru 2011. Two heeler sales did well enough but the sector is still ripe to be targeted for correction. Bajaj auto one feels is a good longer term pick at least and one expects a jump during trading in the scrip.

YES Bank and DLF are near the cliff they normally share but ICICI Bank, SBI and HDFC Bank have the potential to move up while Hindalco, Hindustan Zinc and yesterrday’s stars SESA and Stelite will continue to see action. This edition of trading strategies is a trifle early and some of you might even appreciate that but we will be looking closely at the trends in pre open and after market open before taking the choices for the day. IT is bearish but there may be no profits except in HCL Tech on the shorts till the market hits Correction Bell

July (Photo credit: kurafire)

Expiry Thursday means buying would not have picked up in July series and some are not quasi currency forwards for a change. IDFC Calls at 160 levels for example are cheap and buying should be done today and yesterday. Those avoiding options can sget into July series infrastructure futures in ICICI Bank and IDFC, ICICI Bank looking like a candidate for 900. SBI could run to 2350 similarly and HDFC Bank left alone for the next run after the market corrects from 5350-5400

Yes Bank is likely to see an important correction as HSBC exits Yes and Axis Bank holdings of $500 mln each at 3-5% discount t o market

Auto companies would be great in the july series, Star (Stride Arcolabs) good for purchasing at lower levels if it comes back after usinfg $300 m from sale of Ascent for the $110 FCCB repayment

State Bank of India Logo (Photo credit: Wikipedia)

HDFC is my all time underdog favorite at this time of fast rising indices and there could be action to start the bear in Sterlite and SESA soon as their VAL load becomes clear ahead of the board meeting hich will still likely approve the actions

All the usual recommendations for this week apply as per sectors recommended especially if you are not day trading within june. kingfisher got shorted already, JP Associates, one feels may get left behind again and BHEL and L&T are buys only till the trend is up

Jubiland and Titaln shorts should also be avoided while the trend is up PSU Banks like BOB and PNB should be very good picks. Many hedgies picking up PSU bank strategies in the last quarter

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India’a FDI process received a tremendous boost in March after $2 bln flows in January and February, itself a fair score were boosted to $8 bln for March even as international media slips into a morass susing the Indian voice and using their ignorance of India to blindfold and then play with Economic Darts ( or half cooked $$art points).

Hamersley Iron 20 class locomotive at 7 Mile Yard entrance, Dampier, Western Australia. (Photo credit: Wikipedia)

India is well provided with such munition for its unfriends starting with the 4% Current Account Deficit and the double digit depreciation of the rupee to the curbs on FX trade imposed by RBI since October and added to today with punitively enforced conversion of Export dollars to a local currency. That boost was also needed for the Rupee as it faces severe action by European speculators stunted by the lack of LTRO ritual and a drying up of business back home.

FDI grew in the last month of the fiscal and even allowiing for the fiscal end corrections if any in the tabulation, is still a great score considering that FDI in multi retail was never satisfactory after coalition politics robbed the Indian markets of a great expected boost in the Hindu new year. The $36 bln FDI in 2011-2012 is still below the FDI receipts expected when the Fiscal began last year before it ended on a low note, expectations of growth scaled down to below 7%. Asian competition from China and Indonesia apart, India still expects to see a boom in retail consumption and needs a lot of private participation in infrastructure. Telecoms and GAAR apart as they target specifically sensitive corruption and governance issues, Foreigners remain welcome and banks may not be the only ones growing business in Asia esp India in 2012 and later.

Routing of FDI thru Mauritius has been a special charm for the India story signalling to most Indians on the ground that jugaad is still the order of the day and hence the efforts by the government to re emphasise that india is not one of the banana republics or one scrip economies that Western investors seem to favor. Indonesian and ASEAN FDI story is however more freely linked to Chines e FDI into and from these Countries.

The March rush may be explained by earlier announcements, large ticket investments expected in Mining and Energy from BP and other global players. Rio Tinto is part of a diamond exploration project in Central india.

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Global sentiment has again turned in favor of India as a leader of the trend of survival led growth, thaat is bleeding the best of developed world markets dry with expectations of QE fuelled growth that are increasinglytemporary growth humps on the chart and trending down like a dampening whale’s breath on each injection of liquiidity.

हिन्दी: ताजमहल English: Taj Mahal, Agra, India. Deutsch: Taj Mahal im indischen Agra. Español: Vista del Taj Mahal, Agra, India. Français : Le Taj Mahal, à Âgrâ, en Inde. Русский: Мавзолей Тадж-Махал, Агра, Индия. (Photo credit: Wikipedia)

Put in simpler terms the yields from $100 in first round of QE is probably as much from $230 in the second round and now that most have more than $1000 invested and are getting half the strength expected to continues in housing and treasury markets, the Indian yields are good to be shopped leading a trend down, though RBI was also mopping extra liquidity out from the markets in today’s run

Indian spices (Photo credit: Wikipedia)

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Fidelity (Photo credit: roujo)

And like the jumbo jackpot in the sweepstakes, the CAG report choose to value the losses as every penny of extractable reserves from the Coal field allocations with 33000 MM Tonnes of coal realising a INR 10 tln loss to the exchequer or whatever new price is assumed. That is a bit like charging L&T INR 100 bln for the INR 100 bln of assets Fidelity sold to them, much to Fidelity’s delight!

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AAjivika women self help – bank credit -> extended interest subvention ( eff rate 4%)

NRHM allocation INR 208 bln

Addendum: India to get its own Huijin as holding company for Bank Capital 

National Credit Guarantee Fund for Youth, Rural Development Fund!, National Social Assistance increased by 37%, INR 255 bln allocated for Right to Education, INR 200 bln for Rural Infra Devlpt Fund

Kolkata water purification and Kerala Agri separate allocation, Hissar allocation allocation (, Hyderabad ..NCAER INR 1 bln and lesser INR 0.15 bln for NCAER and a Pali language research center ( India is diverse, definition of weaker sections is even more diverse)

Avlblty of residential qtrs for Central Police Forces (8000 units) and separate allocation for Office bldgs ( INR 10-20 bln each)

AAdhaar platform – compulsory Id for all above 18, used for beneficiary accounts…

Black Money Control: 82 DTAA, 17 TIEs signed, 33rd signatory of Mutual Assistance in Tax Matters,

Defence Outlay of INR 1.95 Tln or $39 bln higher significantly

Benami Transaction Prohibition Bill to replace 1988 act

Narcotics control provisions to be also updated

Rest Tax performance after study, review and analysis

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REC’s revenues grew to INR 27 bln or $520mln in the current Q3 again building a 25% topline growth in rupee terms as a rupee lender, it will not face much losses from ECb/FCCB having finely priced QIPs as it reported a INR7.7 bln for the quarter or $ 154 mln

REC grew advances to INR 813 bln or $16.3 bln with Tier I&II Capital of INR 148 bln or $2.8 bln approx

3 month PAT is just $400 mln

Its NIMs are low but consistent at 3% and it has not been plagued by its SEB portfolio’s NPAs. REC would have been hedging its loans with SEBs as lease backs or to first lien but the rest is for a full day to the company later. My last quarter’s review should have been useful as well as last year’s NTPC/other PSE dealmaking coverage

PFC however is likely to be watched for NPAs and PTC facing other implementation troubles with its Hydro elec projects

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Indian outbound FDI reached a $43.9 bln mark in 2011 till March 2011. This includes the Q2 purchase of

Image via Wikipedia

Airtel Africa (Zain ) in 2010 in 15 African countries. It also includes the $3 bln and more purchases of Shale by Reliance  across Pioneer, Atlas and other shale owners in the Marcelus and other shale areas in the USA.

FT reports the Sahara acquisition of Grosvenor House as the landmark UK investment while M&M snapped up the SSangyong SUV business in Korea for pennies in 2010-11 less than half a bln, rumored to be headed for Saab from Spykar this year M&M scraped its ventures with Ford (earliest) and Nissan – Renault ( 2008) as it still produces the M&M Verito on production lines set up to produce Logan and Nissan’s India car to be designed by them.

Liquor baron, MP and Force India owner meanwhile is embattled in a fight for the survival of Kingfisher Airlines and Tata consolidating its JLR and Corus steel purchases from more than 3 years ago. Indian Financial services business never reached the required scale overseas either but carries a book of more than INR 8 Tln or  $ 160  bln in SBI and $3 Tln or $60 bln in ICICI Bank following on the heels of Chinese and US Top 4 with over $225 bln in assets each

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India’s first infrastructure debt fund is well on its way with the $1 bln corpus mooted by IIFCL successfully

Image by Scottish Government via Flickr

siloed for a launch of the fund in February 2012. the first fund will include IIFCL participation to 26% or $260 mln only as Asian Development Fund and HSBC chip in with $250 mln each for a 25% stake. LIC and IDBI get to participate in the fund with $140 mln and $100 mln each

As a mutual fund the Infrastructure Development Fund, first proposed by the MOFFIN in the 2011 Budget, will invest in debt of the infracos , allowed 90% by its mutual fund charter

The government is infusing the INR 10 bln required by IIFCL the first of India’s public infrastructure funding vehicles set up by the Indian Budget of nearly 6 years back and has failed to tak eoff while Pwer finance companies also set up by the govt and IDFC in the private sector have

Image by nimboo via Flickr

picked up the funding requirements and turned in a few successful projects each with a good interest margin on each sale.

The debt fund is part of the 12th plan charter to ensure at least INR 1 Tln (Rs One Lakh Crores) in infrastrcture funding primarily via PPP projects if required and ensuring Private participation to close the Infrastructure Financing gap for the country.. India’s overall financing gap coul dbe as large a INR 2.5 Tln or 4% of its GDP

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The Bajaj auto effort to showcase the 3 wheeler market is an honest and probably remunerative strategy to capture latent non markets for consumer goods and durables in India as most categories have less than 50% attributable to brands and we have npot progressed beyongd the first few gains for brands last heard in the nineties.

In the meantime Datawind is reaping gains of consumers realisign their world ahs changed with more than amillion $35 tablets ordered. Blackberry sold 7000 of its tables it two days after it brough tprices to $200 closer to its international rates and half of its offer price earlier. Datawind is expanding to four mfg plants adding Noida, Kochi and Hyderabad 2 to its one plant in Hyderabad right now.

Meanwhile, the younger Ambani still has traction left in public and power infrastructure play Reliance Power,

Image by xnmeme via Flickr

while its other flagship infra and telecom plays are losing investor confidence. East coast gets its first LNG storage plant at Samalkot, near Rpower’s own gas power project. The LNG facility in partnership with shell will cater to 7GW of power generation capacity in the area including GVK power

Zuari has a JV with Mitsubishi in Singapore, the same being used as vehicle to buy both a Fert unit in Peru from Fospac for $46.1 mln. Whatever happened to our post Airtell/ ONGC foray out in Africa and Latam!!!

Almost all from pg5 of today’s ET

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