India Morning Report: The Apple does not fall too far from the tree

India for old times’ sakes again proves IMF, Brady bonds and Latin American Economists wrong, going it alone with currency curbs as more visible Asian and even Turkish economies also try to get back the democracy equations into their control matrices and China parrumpums down the road of domestic consumption. Net effect for India, at least in Brazil they can afford three years of Bread and two years of rice for about four bus fares and /or a ticket to  World Cup Match from the new popular stands at spanking new stadiums. The G3 have each other to fund but India first has the poor to feed and then the loans to make to urban dwellers for auto, house and pretty much everything on EMI except the kindle which unlike the Blackberry will actually never take up with Indians

However, the new interest rate regime is not done with just upended 10% short rates in the overnights and the kingdom will get more expensive even as credit growth comes back and markets give into a little bear now and then to mull over the water in the wine that is their domestic production and consumption, waiting for investment to come into the Economy.

English: Logo of ITC Limited

English: Logo of ITC Limited (Photo credit: Wikipedia)

The higher rates as we discussed once earlier in 2008, could actually keep the domestic economy chirruping too, but then it is not going to be that long lasting because even if repo rates start going up because there is no growth and private credit growth slows down much from its barely 20% levels we would not get to long term rates beyond 9-10% to the eighties when these were a habitual 15-20% across shor 3 year and long 10 year maturities and are still the norm for consumer credit outside auto and home loans, currently apparently giving another cause for markets to expect higher rates for corporates and even banks Or maybe the EU still has what we want despite being a dying market (PMIS actually crossed 50 on the upside this month but markets are shrinking not growing) and like the EU and the 1% jumped British we might adopt 50% tax rates to get the right liquidity for the right causes. We would still not be a banana republic.

Back in the markets these above are probably not even water cooler/vending machine or m&m talk as results look like as we said, india maintaining those few precious growth stories that make it a well run, academically productive, encouraging for services, lean mean welfare fed growth machine.

I for one, liked ITC results though markets will ignore for another week its INR 20 Bln FMCG sales growing at 18% much like it earlier chose to ignore paperboards and agri business growth which also continue to be drivers at ITC while its asset management business (hotels) continue to be stable at INR 5 Bln and the bread and butter tobacco sales have just underperformed growing by 13% instead of the expected 18%++ More than one business school campus in India is looking at a gift horse in the mouth this year venturing into 400= batches at Ahmedabad, Calcutta and now Bangalore and Kozhikode too but then thats just the suspense kiling everyone.

Coke, Apple, Starbucks have already reported their June quarter performance globally and they will continue to vaunt(flaunt) their India investments in the hope of rightly placed analysts and commentators to catch the drift of their global potential and the flows that have decided to come to India at the “fag end of the recovery” ( at the begin of it in India) and will stay the course.

Yes Bank, Indusind ( esp with retail growth) and Kotak will survive the high rate environment and force growth pretty much par for the course and as we said it is foolhardy to expect ICICI Bank to fall from 940 levels but the likes of PNB could still be the weak chink till the trading equation metabolises the right values for a bigger rally cup. Jet may be as good a s gone from India but its FDI plan which will never see Indian inflows is probably the last gate allowed by Indians in the promise of the world they live on electronic channels and the internet broadband and should not pass muster with regulators allowing real FDI proposals to burnish the brand into local populations and etihad can stay the course in the knowledge that it alongwith khazana (Malaysia0 and Maxis, inched in through the small gap in India’s regulatory armor till here

As of now the Rupee is maintaining 58 levels and the indices have moved up after slipping to 5900 ina directionless market but we are infact recommending bullish trades but not for a quick buck in this market, still precluding any money for the bears/ shorts at these levels as mos stock levels reflect deep values available to buyers. Remember, there is no new outsourcing business coming from the developed world. Thats all there is to share.

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One thought on “India Morning Report: The Apple does not fall too far from the tree

  1. Pingback: India Morning Report: The new series gets no welcome! | The India Investment Post (earlier india.advantages.us)

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