India Morning Report: Will 6800 mark a heartbreak for the rally?

The markets are evenly poised again after a quick Monday morning move to 6800. Indices like the Banknifty however went thru a minor break in the week past and recovered only on Friday to 12850. SBI for example is the key to many hidden not so good fundamentals stories the markets wanted to slide past older marks in a no holds barred rally and will likely continue to cede marks even as Bajaj Auto remains positive during earnings month and joins bets like Bharti Airtel and LIC Housing ( upgraded on date by Nomura) to keep the positive momentum of the markets even a san extended wait to counting day keeps investors on edge. China is back in the Investors rangefinders as they look to snipe gains backed by the new stimulus engaged by China. India remains second to Taiwan in FII inflow charts and investors are already on hold with hot money purveyors and lower quality FII relationships proving key as Participatory notes become the order of the day again.

Power NBFCs look like having crossed major hurdles on price charts with REC ahead at 250 and LIC Housing seems to be looking a t good earnings again. The Good earnings stories will slowly crowd out the market favorites again this week and markets will likely use the time to exit bad stories like SBI that are unlikely to make a comeback or IT and Pharma as they top out with the Rupee stabilizing at 60 levels again, without threat. It is good to see the Domestic Institution turn buyers before the FIIs leave and it is also good to see a burst in market volatility that seems to have favored positive moves in the market overall in the last two weeks in what would be a unique advantage for India markets

Reliance seems to have been at the wrong end of the new deal again as Investors hope for a back braking laden quarter from the old bellwether as investors remain hocked and look to make up for interest payouts from the stock move, leaving it actually stranded at 860 levels(result day, 960 on Friday) as it reported moves in its INR 330 Bln Telecom and the INR 150 Bln retail investments. ITC on the other hand could join YES Bank and IDFC again in moving up positively throughout the week even as HDFC’s Foreign status hits HDFC Bank’s move to increase FII Limits and IDFC goes about setting up the NOHFC/New Bank structure and pares FII holding to 49% at 120 levels on the stock.

HDFC Bank is up for rerating of its weight in the MSCI index from 5.78% in May by two thirds based on the Free float calculation for the FIF factor. HDFC remains FII owned to 73%

The Global deals seem to be more than clouding the markets again even as the Diageo offer for INR 120 Bln for United Spirits makes the USL investors good with a 10% rise on open. A similar move in AstraZeneca in the call auction looked a trifle premature unless markets know of any more firm moves by the global parent for the Indian listing. Pfizer bid a $102 Bln for AstraZeneca and that would be a wrong story to back in the markets given the tangential impact on Emerging market and India plans from the deal. A good market practice would be to be a little more circumspect about blue sky deals and announcements in the global markets, like the Hero move to invest in Latam which is likely to be cash negative for time to come and the way we have subjected Bharti Airtel to strict checks and balances thru its buys in Africa four years ago.

Tata Global looks unlikely to score again as it flirts with old 155 levels barely out of the zone at 158 and SBI seems to have recovered investor faith till news of a bad result push them away for a brief time at 2050 levels

India’s Forex Billions (Reserves) hit a new $309 Bln high on Friday.

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