India Morning Report: A GDP score of 4.8%, financial services up, tourism fading?, The Jet Etihad minority opinion(onion?)

Monsoon Clouds

Monsoon Clouds (Photo credit: Intrepid wanderer)

The GDP report was an easy one with Industrial production no longer  a riddle but  a low 2% still below potential as manufacturing remains muted. Services sector GDP could have been above 7% led by the revival in Banking and Financial Services and hence lending, however it was not just Hospitality sector, which is going thru a low in line with a Global slowdown, but also in Community and Personal & Social services that the GDP for the sector and thence the overall report was muted. Mining and Agriculture have recovered though expectations were probably higher in market watchers. Gold price for example have not really fallen from $1240 levels, supporting their way of a Hindu rate of growth/recovery like old days and furrowing my eyebrows while assessing if the recovery has indeed begun can actually remain muted after the 6 months markets are willing to wait

While utilities also jumped back , both Financial services and Utilities (Elect. & Gas) coming back to near double digit scores for Q2 FY14, the Community services cut could point to further pressure from Government spending coming down. The HSBC PMI for November has returned to a positive 51 ( 10.30 AM update)

Budgets for NREGA and other Welfare schemes have been cut with a reduction of INR 100 Bln in the rural development ministry and INR 50 Bln in the Ministry for  Human Capital but the current Fiscal Deficit target of INR 5.45 Trillion (Rupees Lakh Crores) has already been spent to 84% of the target in the Fiscal period from April to October, leaving the last four months exceptionally painful, even as public spending is up to nearly 30% more than the Planning Commission contributions in the budget or INR 600 Bln with the October deficit itself at INR 300 Bln.

While India’s Capex companies look outside India for elusive new orders, (L&T/BHEL) welfare spending will now taper off if deficit is to be reined in even as Electoral spending profligate and wilful, takes over for political equations that remain murky and public spats making the BJP/JD/Congress campaign closest to spaghetti /cesspools more recently associated with Banana republics/Southern partners in Euro(pe)

 However, with other reasons seen as impacting Banking profits the well timed thrust for Banking stocks is weaker this morning and the 6350 target itself may remain an elusive slow mountain but shorts also have time to mull and wait. A word of caution that might have filtered through earlier from us, the sector substitutes chosen , except for Crompton Greaves /Greaves Cotton ( just maybe!) remain almost as wild an imagination as 20 years ago when FII franchises and brokerages had  a hard time keeping the India story transparent or represented in Listed stocks

Markets might consider moving back after the news is traded to 6250 levels (GDP at 4.8%) further expectations of an even better Agri GDP cannot be relied upon but the India investment story rekindled in the post June rally is safe and thriving though on lower volumes till January and may not even engender a big jump back in the Rupee from 62 levels, waiting for the Q3 / December earnings season after Bonuses have been announced /distributed in MNC India

A jump trade in Private Banks incl ICICI Bank and YES Bank is probable in the afternoon, the other option being stronger infracos and we sill do not think Dabur and Marico can replace ITC and Bharti though HUL is on the other side of the trend as an almost defensive again with core inflation in control from the GDP arguments above and pricing power in retail extending to domestic pharma as well before the quintessential control from Government pushes its way in. Wonderfully, the Diesel decontrol is moving on nicely without a break as Diesel prices close up to 60 levels and the Oil ill discussions for this fiscal are probably over leaving the Energy companies in cahoots with the Metals on the strongly bullish stocks led by Tata Steel. Tata Motors and Maruti attempts to breakthrough last week, will be the genesis of the immediate correction(in consonance with Mitesh Thakkar , ETNOW)

The Jaswant Thada mausoleum in Jodhpur, Rajast...

The Jaswant Thada mausoleum in Jodhpur, Rajasthan, India in the early morning. (Photo credit: Wikipedia)

Idea may also benefit from the weaker spectrum prices as the government strengthens its revenue shortfalls with the Powergrid mega FPO going online tomorrow.

USD remains weaker, making bears at UBS and CLSA a worried lot ( if they have actually ut any money into biting the Rupee on their pessimistic prognostications) and Crude at its lowest has fully enjoyed the Rupee weakness, turning to 6000 at similar levels when it battled 4500 a quarter ago. So who is going to the first dozen to really move into rural, assuming the first three slots are HDFC Banks and the Automobile Finance companies that started in 2009? Yields may dip below 8.5% to the final top of this rally before stabilising around Governor’s further refinment of the maintenance policy for FY14 and FY15 as recovery is awaited

CCI okays Jet Etihad Deal

A lovely informed review of the Jet Etihad deal, on our favorite The Firm (CNBC) and other forums shows the combinations Commish, Anurag Goyal left in the lurch as the CCI went to great lengths to ignore trouble brewing from the deal. After the deal, Jet keeps 50% of share in flights from Delhi to Abu Dhabi and 55% from Mumbai while its dropping of Dubai means big trouble in the sector flying from Kochi/Trivandrum to Dubai where it had a 69% share. The Majority opinion assumes a 2 hour reach criteria to assume a single market across Abu Dhabi , Dubai and Sharjah, showing th limitations of  20 years of hyper growth having left in official mindsets especially as such ‘arcane’ topics are probably not as interesting a conversation in Delhi and Mumbai despite the attempt a t modernity

Road to the Monsoon

Road to the Monsoon (Photo credit: Karthick Makka)

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3 thoughts on “India Morning Report: A GDP score of 4.8%, financial services up, tourism fading?, The Jet Etihad minority opinion(onion?)

  1. Pingback: India Morning Report: Powergrid 75 Lac shares on offer, LIC and IDFC better picks | The India Investment Post (earlier india.advantages.us)

  2. Pingback: India Morning Report: What a 7000 sensex means for India Inc! | The India Investment Post (earlier india.advantages.us)

  3. Pingback: Weak demand, a concern for IT sector – Can impact the Indian GDP | Kalyan's Lab

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