India Morning Report: India looks to up the ante on quantum of Foreign investment

Even as Auto Sales temper expectations in the subcontinent and manufacturing IIP slowdown causes the March PMI to be a sharply down 52, consumer cyclicals retain the object of profitability and positive market expectations could well careen over in the first few results. However, the market has absorbed bad news well, probably buoyed by better news on Trade data and strong performance on February revenues in the closing Fiscal. Bajaj Auto , a mainstay in the attriting two wheeler market finally dropped a whisker as year on year primary sales reported a fall of over 10%.

The currency , the low core inflation and the better exports to China and the US further buoyed by the jump in US Economic sentiment for similar reasons of better than expected fiscal performance augur well for the first quarter of the next fiscal but by then it would be clear how we are looking down the long barrel of a possible dip in growth. US auto sales reported a probable high number for the year at near 15.7 mln run rate for the year.

On the home front, boosted by Honda’s true blue step up to 252k, motorcycles still totted up more than a million in sales, Bajaj Auto still managing exports of over 100k and Maruti reported a stable 107k cars sold for the last month of the fiscal. SIAM expectations having already been downgraded twice and ITC boosted by Tobacco sales, Consumer businesses look t reporting a good quarter esp midcaps still sporting old niches profitably with abalance of marketing spends at Dabur and Marico, Godrej still being a concern.

Services businesses are likely to be leaders in growing further share of GDP and forcing redenomination of IIP and other production series as Services PMI continues to supply multifactor productivity and growth regimen for India inc led by Financial Services, Transportation and even Utilities coming back followed by the all round recovery in metals and mining slated for 2014.

Technically markets look unlikely to forget India’s lead on global growth in 2013 and hope for a 2014 recovery rather than correct beyond a 150 odd points on the Nifty from current levels keeping invested bulls happy at market open though calls for intra day trading and even monthly bets fail to show up in the green this year beyond the inexplicable jumps and equally sharp travails of event based news in sectors like healthcare, telecom and real estate. Investment bets in Healthcare remain Cipla, Glenmark, Stride, Lupin and Sun pharma while Ranbaxy and DRL remain sharp losing trades for large traders looking for hurried exits on a bad day.

TPG seems to have turned venture/PE investing into secondary punting on rumors, exiting the TRansport finance specialist in the heat of news of a coming banking licence with a six fold profit, the news unlikely to sweeten the deal with regulators even as news of a good exit bring in follow on money into the market. KKR investments for example, showcase the long 5-6 year vestment in consumer companies , a scary phenomenon for PE globally where consumer businesses now almost warrant a shorter 3 year timeframe in tougher lifestyle and retail businesses including Burger King and Pizza Hut

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