Sell Heromoto, Buy Bajaj Auto – A pair unheard in India trades till 2007, post crisis we have seen it win since 2011 and have been telling our investors. Of course September’s 367,000 unit sales could well have taken the sheen off festive season in October but the bigger news is that the company feels good enough about a price hike of up to INR 5000 and export markets have responded well, as he just quoted examples spanning Nigeria (46,000), Kenya and Uganda. Its RE60 may well survive most objections in India for an introduction before 2015 but even if there are hurdles, the company is protecting profit margins and market share in an uncertain situation.
September may in fact have seen sales being advanced from the festive season because of an extremely dull prognosis and Indian consumers are diving off consumer staples brands in general. However, one feels that this current secondary upsurge in inflation/WPI may well see better realisations and hence profits from price starved staples companies and so the queasiness around ITC and Bharti”s retail foray may well serve to mark the return of Dabur,Marico and these two bigwigs itself as results show better profits and earnings growth , any positive number would be consistent with market expectations not th double digit growth consensus reached earlier in the year. As for Bajaj Auto itself, it is protected from flagging sales year on year in festive October as it is going through with new launch of Discover whose sales make up for it
Meanwhile, the market took 5750 /5800 levels as a sign to return to performing PSU Banks but with the punters preferring sinking ships earlier, the take off in PSU banks thu PNB and Bank of India is rather subdued even as Private sector banks make almost one off corrections between yesterday’s F&O buys and today’s trading. Th incremental AD ratio of 83% actually is rather standard for India Banks as Deposits proceed to grow at 14% behind credit recovering to 18% thus meaning the RBI will be instead under increasing pressure to conduct OMOs even as banks hang on to over INR 150,000 crores (INR 1.5 T) in overnight borrowing from the Central Bank, washing off any advantage except the sentimental from reversing of more tightening measures in the October policy.
The Rupee pirouettes around 62 levels again but Gold prices in India falling , accepting the global prognosis sounds ominous for subdued growth in 2014 as well apart from meaning better diversification and disssemination of global fund allocations even post Tapering at least in equities, markets having taen to bonds again in the interim till the schedule for the Taper becomes clear.(Duct tape now that Octaper is almost certainly gone- Duct tape = December Taper)
The new ABCs of Indian stocks, listed as Asian Paints, BHEL and Coal India figred among those fastest and strongest in the rally to 5800. All three stocks have however lost their leadership of trends as 2 of the 3 fall into sectors creating corporate goevrnance hols and braking India’s development cycle prematurely. Nifty meanwhile keeps catching up wth the air gap creatd by its futures moving faster in the morning (bigger premium) in turn as Singapore Nifty reaffirmed no investors had left and moved quickly to 5850 and higher levels. The rally will again falter around 6000 levels and as the fight gets dirtier its better to dig your heels into the better stocks we listed including YEs, IDFC, ICICI Bank, HDFC Bank and Tata Global if ineed Starbucks follows thrgh with the plan to ramp up outlets to more than 200 this year
- India Morning Report: Banks earnings, GDP scares markets despite inflows (awardz.wordpress.com)
- India Morning Report: Is 5600 the new 5000? Rupee is holding 65-66 (awardz.wordpress.com)
- Bajaj Auto likely to raise prices (thehindu.com)
- Bajaj to launch its RE60 quadricycle by end-2014 (crossroadshelpline.wordpress.com)
- India Morning Report: The Rupee holds at 64, Exports rise 13% i n August (awardz.wordpress.com)