India Morning Report: 6200 on expiry day, not ready to ooze out to 6150

As we said taking ranged positions went out of fashion pre expiry Friday, and markets madea quick climb on 6200 hill which just means Expiry could now choose to be around 6150 or 6250. The sold puts hedges effectively outran the straddles with all players participating in the market mechanism forced out of neutral positions, shorts exited after a battery of trading losses since October, markets down but holding first 6050 then 6100 and 6150.

Some other stock specific plays are more important than others today as markets now bet the flow on small ‘binary’ bets on new license applicants. Plays on IDFC,Bajaj Finance, the other Bajaj and even LIC Housing which is an almost safe play are actually quite risky shrieks ( single point jumps in interest) and investors are welcome to accumulate thus traders on these can be easier branded losers than the Archana Bhargava’s  United Bank hide, ill educated players(or not bothered with education) might think. However, while India’s deep Financial markets may not entertain such arcane history they will be quick to show the door to such plays given the sensitiveness of expiry and vols floating near the bottom at 14 in still waters.

Bharti and IDFC have used up more of the funds headed into the markets as a new series looks at more encouraging inflows based on the stoic handling of the pressure on 2014 by India irrespective of its classifications in EMs , G20 and other such fragile groupings created for an overarching dialogue but India managing to duck each classification as far as the long term buyers are concerned. Again, early snafus by students of the markets would have confused such committed investors enthiued by the performance as residual interest and China the big white hope that continues to hold most international portfolios of US and Europe in sway might still cause additional flows from that.

The class of investors in India may also note that we do not again do not support old ham handed organisations like L&T or BHEL as Investment sector plays or for bank interest in the case of L&T. L&T and Shriram Transport should have been big bets by analysis for their existing asset portfolio and market as LIC Housing and not for applications to the banking regulator. However, be that as it may, Jalan committee has completed the process and submitted its report on all hopefuls, asking clarifications from 23 players excluding India post and IDFC on the NOFHC structure for the banking company and though there was very careful vetting during application by the corporate hopefuls itself, there will be 2 or 3 applications denied for specific judiciary actions pending against them. Only Aditya Birla and Tata seem closest to the post for the limited number of licences this time and one wonders how anyone will distinguish between Muthoot and Mannapuram when only one of the two has to be chosen for issuing the license. Tatas have withdrawn their application, probably trying to finnagle intra group exposures also but struck out at the NOHFC level itself

Expiry trades may finally see rollovers catching up on the robust monthly statistics by 2 pm and markets may allow levels to drift lower in the next 2-3 sessions before public news is again used to build buyer orders into a new level as there is no profit  taking at these levels and no real chance for shorts either. Volumes in equities remain low globally and the Dow did have a mcorrection on Tuesday despite a great presser from JP Morgan on investor day and the first few retail earnings shows. The retail dog and pony show will overtake other market news mid week with a half dozen reportign today in the US and through the end of the week

ETF inflows may not get another chance to dive into big plays in India as it makes a standout bet for Global equities. IDFC, YES, Bharti are today’s superior line, followed by ITC which has remained static for over a week and the infra probables will continue to generate ‘ikka dukka’ buying with Consumer Goods makors priced out for longer term investors looking to add positions. The bear is back in gold and Titan, ttk and jubilant are all big no-nos for us

A small correction in HDFC Bank and ICICI Bank may be due. However,  as most of their gains are sucked out of counterpart PSUs and shorts in Maruti and SBI continue to be an important cog of reality for investors, the Bank nifty is likely stuck again at 10650 levels.

I agree Tata steel is out from 360 levels and a good short if you are not exiting Infy in the changeoevr to bull scrips. CESC is definitely showing signs of having cleared all investor flags and of being a great bull pick and I’d try to follow them to discover the right bulls for them. IDea remains an important new discovery of equity only players, Kotak remains a short on saturated markets for its products and inefficient margins despite a great 5% NIMs, with Power NBFCs showing both revenue traction and extraordinary NIMs not subject to scrutiny or short term market failures. Tata Motors will make a great short, but the pair trade would be Bajaj Auto up and Maruti and Hero could pair up as a poor second, with again under normal likeluihoods of profits both charging extraordinary markets costs for being safe plays, reducing their returns frontier

In divestment jumps, BHEL and IOC projects are out of the door and their inter PSU investment sales given the ‘go’ sign

Apart from the Energy cos catching up on inherent value ignored by the markets, Media cos could also respond to a big year in advertising revenues, even ignoring an IPL exported out of India again with ENIL, TV18 and Zee providing extraordinary value.

India’s recovery in this business cycle will see Consumer investments making a definite impact even as some steps are taken by private investors to catch up on the infra juggernaut gone missing in play from India Inc’s 2030 and 2050 projections. Bharti and ITC remain the biggest non financial sector stories, followed by ICICI Bank , Yes and the Power NBFCs with the new bankers

Start shorting Oil in faster packets till 105 on the Brent or lower and patch in smaller packets of shorts on Gold and Silver till q2 end or August 2014

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