India Morning Report: Bank shine again yields to Yes Bank and ICICI Bank, IDFC and quality promoters in

It gives you the feeling of “every thing is right with the world again”. It is not deja vu. It is the latest round of banking licences and yesterday’s guidelines with a lot of fine print was given the green signal by the government,. The reason it is why everything is alright with the world again? A corny one as i fettered in between remunerative careers and higher education can see the trees off the woods. The trees claiming India’s recovery has broken down. And the trees are too close for comfort. This 2012-13 boost of liquidity in the markets is on the bink of withdrawal, India despite being a sticky destination , likely to e among the first to lose money once the Fed ntention is firmed up because of its ow weightage among the Asian markets. Others have different barriers to High frequency trading and other Hedge fund and global bank strategies also and asia is likely left with root long term investing stock by Q1 2014. The long term trading caital stock however favors India continuingly and the new banks with 10 year promoter track record and financial businesses consoidated under a single NOHFC may shorten the wait and watch period by having established promoters spend 18 onths after aprovl to get into the thick of things and thus sustain investment interest from the get go. Yes Bank and ICICI Bank remain more transparent exapls of a growing banking business which have more or less stuck by the new regime and along with HDFC Bank and HDFC represent the growing size of Indian resurgence as global participation by the big banks is negated by the requirements of new Capital for india ringfencing it as it must in line with other non US/European operations for the same banks

 

BofA ML’s revision of India’s GDP growth to 6% and 6.8% in fy14 and 15 will likely pass away unnoticed as RBI already has pared forecasts of FY14 to 5.7% and no autos are not turning around in june or september quarters. Especially of concern is the continuing accumulation of volatile interest around Hero moto as just OTM options at 1700 strike have barey pared premium to 40 despite the stock’s hitting 1670 at closing yesterday and that is what sets off the infinite loop of disinterested traders willing to exit India markets again and again, which on must guard. however able the stock may be in terms of blocking out shorts, the markets have no other mechanism to furrow out that excess premium in the 1700 strike and that ungainly thought is what makes it a tiring build for India Inc. One must recognise that waiting fast and furious for the auto sales to come back is not the deal and “another massive upsurge” is not just around the corner.

 

Yes Bank

Yes Bank (Photo credit: Wikipedia)

 

Unfortunately while such corners of FNO interest fail to hit other bellwethers like ITC, certain speculative favorites that have repeatedly created a phantom Bombay Club of Tier 2 Indian promoters continue to get to block entire trading series in whichever front month is appied in this case the June series. Bajaj Auto has shown better resilience in performance and similarily there are others like the banks and candidates mmentioned above that  an sustain higher series interest Changes in preference to Diesel ad other such changes in the structure of the markets may not allow customers to respond to falling oil prices and a market still not accepting ford and chevy produce or even japanese cars except toyota after a short honeymoon with hyundai in the last two decades unable to afford quick model changes while xports may pick up for all players incl nissan. VW’s probably happy enogh playing at the premium end making this large consumer market a “niche” structurally

 

Deal canvas was also extremely pretty in India with Axiata getting a play in Idea as Idea looks to divest the Tower business to its partner. Birla’s interest in a bank is also sustained despite the refusal of RBI to allow JVs with other promoters for a bank NoFHC. Sun TV results make it extremely likely that the DTH/TV software sectors finally rise in scale to cater to the highly lucratve fast growing market in India but they ar einstead likely to scurry around for a bank which RBI can handle . Bajaj finserv and Bajaj Finance are perhas close to a NOFHC structure already and can jump right in with the branch structure of the Fincos as with M&M. REC and LICHFL may likely not be allowed by RBI. In Deals, nyse Euronext has exited MCX as well. Concerns around Orchid’s 2010 sale to Hospira in Chennai may dissipate allowing it to pursue the other unit sales in due course. PFC is in the meantime picking up stakes in NCC for some infra projects in power and highways which must help NCC. LB holdings and WIpro are others in what seems to be the new gold rush circa 2013-14,th one day//week/month when all deal announcements almost com close to complete the years takings for the banks as the recovery is well close to drying up. Axis bank seems to have lost the deal truck to SCB and even Citi this year in India as even HSBC is not getting its share of deal cash in the medium sized QIP rush and a flurry of infra debt reduction. S&P/McGraw Hill’s interest in crisil to 75% is heartening to note but one though unwillingly must raise the specter of a going private transaction for the increasingly clouded suture view of the global rating agency

 

The Rupee is yet not done its move down likely to 57 and beyond though most of the move has played out.

 

 

 

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