India Morning Report: TESCO gets in the door, Another rally on the brink and a few kinks in the Bank Armor

Whatever be the State of the Bank Champions, Banknifty has bottomed out at 11,200 effectively esp with HDFC Bank hollowing out the tube on a 2% cut in MSCI weight to just above 5%. Coming back to the fundamentals then, it’s a beautiful morning when Banks and lendees have to get into line for a little justice being served. Though ET very adroitly , slipped out of mentioning any of the technical line items by the NPA sub-Comm at RBI Headquarters, the NPA guidelines will go a long way towards getting the banks to wake up to a new, faster era where they cannot use just proximity to the promoter as cause for underwriting. Specific colour coding of the timeline to NPA forces a beautiful transparency onto the banking system.

Currently Banks are prone to getting CDR notices around the 90-day deadline when the loan assets sour into NPA and the current accounts with more than an INR 100 Lac overdraft exist in such plenty that they are not duly raised as line items fraught with default risk for the bank. RBI draft guidelines also propose red flagging the Promoters and Directors of such businesses that are prone to turn purple in 90 days from the first Default so they are not wont to hop from enterprise to enterprise or engage lending officers into such a scheme that encourages adverse selection.

Au Bon Pain logo.

Au Bon Pain logo. (Photo credit: Wikipedia)

ET actually would be one such enterprise forever on the brink that has to prove its Financials and its intentions and has limited its own borrowing capacity but that may not be interfering with editorial ethics and it is not unlikely however that the same will be one of the discussions in this CDR friendly patch of Indian Banking’s jump across Futures and Fortunes from the casual officiousness of the nineties to the brisk professionalism with Corporate , SME and Retail borrowers in the 21 st Century post a global crisis

A last rate hike is coming and the rest can be entered in the post policy announcement today, in a few minutes as markets last without any cash trading in the first hour and some.

The IOC divestment is good news even as Markets drive the stock down to possibly the lowest realisaations from the stake sale. The Trizivir approval is coming through for Lupin while  the same USFDA has akso approved Lupin and four others including Sun and DRL for Cymbalta($5-6 Bln per year) generics in the US domestic market (anti depressants ) Sun’s SPARC lost a generic application (LV/CNBC18)

Auchan

Auchan (Photo credit: Wikipedia)

IDFC and ICICI Bank as mentioned yesterday have righted the price trend amidships. If you are looking  at other rate sensiives suriving the coing high interest regime and leading thus this India recovery, apart from ITC whose core business showcases highly inelastic high demand for its products any consumer staple business especially in Foods is an equally good proxy as Food inflation will continue strongly thriu 2014 whether rate hike or not and GDP growth restrictions continue to bracket very few non performers except the NPA ridden PSU Banks. NPAs in the system rightly would correctly jump to 16% of the assets in the high rate scenario

And yeah, I belong to the minority that likes the sharp reaction from India to US trapping of Devyani Khobragade. Even PPP does not cover half the gap between Service costs in the US and in India

TESCO right timed its entry apparently in JV with Trent. The London based retailer is a welcome substitute for Walmart in a touchy state -Center source of friction in an iportant policy hot pocket. TESCO lands in Maharashtra and Karnataka with its first two Large Format stores ( though thyey are really bigger than the Auchan Hypermarket format) Other non stock market related news for retail came from the otherwise listed Spencers’ owners RP-Sanjiv Goenka who are taking Bangalore’s own Au Bon Pain national. They are the first Master Franchise looking to own all the coming India ‘stores’ of the Coffee/Sandwich chain (QSR). Apparently national footprint for Au bon Pain entails more 1800 sft investments whereas they have rationalised on size in home district of Bangalore except for the flagship restaurant on MG Road

The Bank Policy Date goes by without a change in rates as the RBI advises against an over reaction to the good news while they wait for data

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3 thoughts on “India Morning Report: TESCO gets in the door, Another rally on the brink and a few kinks in the Bank Armor

  1. Pingback: India Morning Report: The gradual Taper encourages a rally, India indescribable yet? | The India Investment Post (earlier india.advantages.us)

  2. Pingback: India Morning Report: Markets reach the 6300 mark, will it hold as the new bottom? | The India Investment Post (earlier india.advantages.us)

  3. Pingback: India Morning Report: A tough hand dealt in the Financial Stability Report | The India Investment Post (earlier india.advantages.us)

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