India Morning Report: Markets indeed go back to 5750, living on the edge does not show

Allowing for linguistic freedom to express for layman’s and speculators’ insight and ‘gelling contribution’ to the math, India research desks must be the happiest from the market response to HCL Tech results. If you are indeed impressed by this comeback and inflows to India increase at this high, the ETFs and the DIIs still have some options with IDFC, Kotak and HDFC definite parts of India strategies of the accumulators that we have encouraged the whole last month with FII holdings still at 53%, 53% and 32% showing a distinct availability on account. Any correction needless to say will be absorbed by FII exits including Arshiya International and Jubilant, while hitherto favorites ICICI Bank and HDFC Bank see buying pressure despite hitting that FII limits way back in 2004 and new hits like Axis Bank, Indusind (in its comeback avatar) and YES Bank will continue to be buy specials as will ITC and M&M.

Another great story in the ET today highlights Goldman Sachs observations on a significant correlation between lifestyle choices from two wheelers to soaps and detergents, case volumes at HUL likely to fall in light of the anemic year on year growth in two wheeler sales under 3%. Coke reported slower sales in China but case volumes in India grew 30% for Brand Coca cola in the March quarter.

Fiscal deficit targets have been proposed to fall 60 bp every year as reiterated by the FM in terror hit Boston as part of his international program. CAD continues unabtaed at near 7% levels beating WPI’s recent outperformance into a likely mirage if it is not contained in time and that caps the non existent upward rating of India despite its continuing characterisation as an island of 5% growth as global growth depending on Europe’s comeback is rerated out of the visible field

YES Bank in the meantime reported flash ticker NII growth of nearly 50% to INR 6.5 B for the quarter and that is likely to keep the positive momentum in the identified winners giving hope to the expectations of equity markets to deliver multiples of returns in promising stocks not seen since 2004 when Airtel and ICICI Bank last reported multibaggers. those not expecting mindtree to be a multibagger are also wrong ofcourse , only i cannot really talk about that while reporting banks right now.

SBI has also reported a plateau of bad loans at INR 490 B but unlikely to show improvement in NPAs despite management assertions within 2013 leaving it to Q4 FY2014 for that to happen but performance can be expected to be stable factoring higher NPAs. Idea on the other hand seems to be targeted for FII exits but overall will fare better than Dominos or gold struck Titan and ttk stocks

Sun Pharma has again comeback strongly and the real returns may come from Cipla, Lupin, Stride Arcolabs and Glenmark

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