India Morning Report: HUL divines the uptrend, shift in stock weights

NEW DELHI/INDIA, 16NOV08 - Klaus Schwab, Execu...

NEW DELHI/INDIA, 16NOV08 – Klaus Schwab, Executive Chairman, World Economic Forum, Narendra Modi, Chief Minister of Gujarat, K.V. Kamath, Managing Director and Chief Executive Officer, ICICI Bank; and President, Confederation of Indian Industry at the welcome lunch for the World Economic Forum’s India Economic Summit 2008 in New Delhi, 16-18 November 2008. Copyright World Economic Forum ( http://www.weforum.org )/Photo by Norbert Schiller (Photo credit: Wikipedia)

 

One part of the funding trade is of course another substitution from IT into post result scrips including private banks. Another reinforcing trend for the market is the return of interest to Mid Caps like Tata Global Beverages for the Coffee Auction expansion in their Global Supply chain effort and the Starbucks JV. More importantly however, HUL’s mid trend reinforcing of Ad spends by 24% has signaled more than return of its brands in that despite its lack of growth in soaps and detergents as in Personal Care by 16% nd in Food (9%) and Beverages (16%) , it seems to have forced the hat off ITC which has gone into a tailspin with investors likely to exit as the funding trade returns to HUL instead. Bharti is still strong however, and likely after HUL is not taken by a majority of brokers (from old times more than anything else)

 

ITC wll return to favor as an in trend consumer staples scrip as its Consumer Brands fared pretty well and they have already taken big ad spend jumps in a 2012 quarter instead. Also P&G despite its continuing domination of US markets has not ventured that strngly upon India as China walked away with most of the “Middle Class” Consumer equations leaving India’s non encouraging performance a fundamental back bone of most Global Consumer staples

 

Nifty is strong at 6150 as Monday morning sees uick exits from IT trades for another day with the bulls before the end of next week. Banknifty is finally catching on strong results and has crossed into 11000 so there is speculative interest there to take it to 12000 in a rush.

 

In Autos, CV Sales continue to scare investors and bankers, and it may hit NBFCs and Banks with Auto portfolios as well and Maruti’s recovery is pretty much incomplete with a return to barely 100,000 cars a month rate in the last two months. Justdial success was an eyeopener for sceptics but is likely a Jubilant/Talwalkars repeat in the trade being years’ ahead of the performance volumes not unlike the 2001 dotcom boom (and bust)

 

Interest returning to Metals and Energy would be a good sign for the market to retain higher volumes and move past 6400 levels for the longer term if a recovery oes come to substantiate higher EM flows that will definitely prop up Indian equities. Bonds are still twirling as yields still hope for no repo rate hikes by mid week . If there is a repo rate hike therefore yields will move further north and the Rupee in the offshore NDF market and in bank trading will lose some sheen even as other EMs catch up on the No Taper news, now becoming the new market basis for further Economic clairvoyance

 

Signing off, Essar Oil’s squeeze on GRMs to $6.98 could be in fact a positive sign for the Energy scrips as it means international prices of crude are weak and that other efficient producers(refiners) may still be able to score on their GRMs . India is not currently on Import Parity pricing but on Trade Parity ricing with 20% weightage on Exports and the Government may well ski the Ketan Parikh committee recommendations for this term.

 

ICICI Bank performance is instructively better, and Bank nifty would do well to exit all pessimistic trades shackling it for the last 2 odd months, also PSU Banks at the bottom like Union Bank esp are unlikely to return. Some among them have since jettisoned Bulk DEposits to break the negative attern in the product’s impact on the bottomline but unless REpo rates stop moving a higher cost of funds will be the norm for those in bulk deposits and LCR inspired wholesale funding only model shifts.

 

 

 

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7 thoughts on “India Morning Report: HUL divines the uptrend, shift in stock weights

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