India Morning Report: There is the Rupee and then the equity markets…

Map of South Asia in native languages.

Map of South Asia in native languages. (Photo credit: Wikipedia)

 

Frankly, there is nothing much to hold the markets after they broke 5500 and the markets below 5000 Nifty levels are likely though still not extremely likely as values identified in the Top 20 liquid counters will probably include those already having fallen to their lowest levels of this rally’s beginnings or within 10% of the same as ITC and Bharti Airtel indicate. That also means institutional buying that has resumed in bits and pieces will characterise this market thru the breakdown. Even though Bharat Iyer of JP Morgan also put on a brave face and assumed Fixed income to be just duly following the currency mechanics, structurally markets are ready to ignore the falling Rupee between 64 and 68 once it starts that leg. I personally do not think interest rates derived from FX have any significant accurate behaviour, esp where in India both markets are relatively illiquid and dependent on key PDs for volume business

 

Though nominal growth is unlikely to be the promised 15%, shift to it sector has created an exchange that is leading scrips to oblivion and not really any structural factors as they remain exactly where we always were. Infrastructure and Metal sectors are actually at their best take off points now both for Fixed income and equity QIPs the latter a little harsh for promoters, and secondary market floats in infracos could find considerable long term investor demand soaking it up.

 

Similarly, rating agencies’ almost junk BBB-/BA2 ratings on India are in fact already indicative of this breakdown and may not need a correction giving the rating agencies to correct their now identified goodwill gap in asia esp india and South Asia, that can thence merit a suitable upward notch everytime CAD is actually brought into control. Strange, but true.

 

Fixed income markets are set to lead the way meanwhile to double digit yields on the 10 year bond already hitting 8.95% in morning trades as Rupee takes up 62.3 levels before moving on to 63.30 ( TV18/CLSA) as the next Technical target. Banks presumaly are also paying for their investment portfolio breakdown in this move and do not have fresh cash to borrow and place in the 11% short term and even the 8-9% 10 – 30 year bonds for substitution of current loss making AFS and not taking everything to HTM.

 

One year down the line, with a stable government maybe instead of hiking deposit rates we will see the yields going south again. Oil is back above $110 levels and Indian buying will comfortably take out 67 levels for the Rupee

 

 

 

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5 thoughts on “India Morning Report: There is the Rupee and then the equity markets…

  1. Pingback: India Morning Report: The President of Rollbacks, and the nadir of the Rupee | The India Investment Post (earlier india.advantages.us)

  2. Pingback: India Morning Report: The Rupee, it counts 62..63..64..65..66..67..68 | The India Investment Post (earlier india.advantages.us)

  3. Pingback: This week in Asia: India Morning Report: The Rupee continues to not find the levels to be looking for .. The SGD enters the Discount Store portals again | The Banking and Strategy Initiative

  4. Pingback: India Morning Report: The next sharp move in the Rupee is still nigh | The India Investment Post (earlier india.advantages.us)

  5. Pingback: India Morning Report: The Question is if the Rupee has bottomed out | The India Investment Post (earlier india.advantages.us)

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