India Morning Report: 6859..6900..7000..Markets celebrate the Democratic ritual

F&O bets have moved on to sold 6900 Puts along with a bigger stable midpoint at the 6800 puts, with calls making the market top range at 7500 no longer looking really out of the money as they were probably intended without any euphoria in sight yet, making it possible the rally will , cautiously from here, last the four days till counting, when internecine bets made by punters translate into hostile volatility on Saturday if there is a special session indeed.

Some such confused plays not backed by fundamentals, now exclude PSE banks as the better ones like PNB are clear to watch for and back along with Canara Bank, but include plays on Maruti which posted its lowest monthly sales in April, much below even subdued analyst expectations. IN PSU Banks Central Bank and United Bank  definitely remain the worst of the worst and thus rerating of the index components will continue in favor of Private sector banks led by Yes Bank which may be near a laybye soon at 460 levels or below 500 before the next surge as big caps HDFC Bank and ICICI Bank (lower but improving spreads) come out after some long months of rumination on their price charts range bound till now at 700 and 1300 respectively. Axis Bank and BOB cannot be ignored and the weakness of the bull candle will be underlined by excessive moves in such good but unproven stocks with their results far behind other banks.

Results from Torrent on Cymbalta Sales and a better guidance just about stayed abreast with competitive results from Glenmark, still paying dearly for a local acquisition gone wrong. PSE banks cemented the feeling of punters holding back, that the worst is over as they focussed on Modi coming in and making a new stable government. The Rupee will likely repeat its Friday moves below 60 except that the CPI and IIP data due today are largely expected to be above 8% and negative growth in poroduction respectively esp after IIP’s earlier year series was revised upward by 7-8%. Yields are likely to continue tracking down from 8.75% already down perceptibly without any recovery showing in the macro data series except the usual jump in utilities (electricity) and the dulling of food and fuel inflation

This move however cannot be confused as a rally as most market volumes stabilised in late April itself and there is no reason for investors and traders to add or book early profits before the counting gets underway. The chances of a profit booking, I would reassert have not increased in this move, helped by the fact that it happened on a weekend close, allowing operators who have dug in their heels to last the week with the bull trade.

The Sensex is ready to move up from newly gained 23000 levels while Shanghai in the meantime is at barelly 2018 levels after morning trades even as Japan’s subdued trade data is more supportive of Japanese moves to get into a domestic market growth phase led by the depreciation of the currency with long term yields at 0.6%

Power NBFCs led by REC are seeing good accumulation of interest, likely to show up as a big bull move if the rally sustains after the anouncement of results, wence Infra stocks like IDFC should also be back with a bang and the fundamental dozen we identified earlier will take over from speculative heavies fueling this comeback push that will underline the new baseline for Indian markets

USL and Sun Pharma continue to trade deal news and more may be around the corner as USL celebrates an Empreador deal for the not so successful Whyte & Mackay acquisition. Bharti and ITC are at tempting levels. The call auction (preopen) markets have opened with the Rupee under 60 despite the impending Economic data as the move is apparently finally ready to disregard opaque clues as most CPI and IIP pronouncements have turned out in the last 5 years.

India however is finally in the eyes of global media again and this promise to NDA to rule for ten years (likely) is going to be a good period for India to finally catch up with the Infra and the business growth that has made it look puny to China which digs in its heels to get into a domestic consumption mode and rural growth , parameters on which we are qualitatively ahead of the big brother ( though we will never catch up in real or PPP terms to China per se)

6859..6900..7000..Markets celebrate the Democratic ritual (the hidden trader’s mind)

What ensues today is a Modern day India ritual, involving corrupt politicians and a lot of cash exchanging hands, to be sure. However, the Morning report celebrates the stock markets, that have indeed achieved good strength in the final rushes as the Public Sector Banks join the big thrust on Monday. Even Andhra Bank was not so bad as last quarter and comes with a promise of a good new quarter till June.

In front of everything, however close, is the fact that banks will lead this rally continuing froma record breaking friday which would put most analysts on caution for a coming fall, equally steep, but the fear is a bit mislaid this time as the roller coaster climbs up the sharp wall of stifled expectations , with the markets, for whatever political reason, laying in wait since 2004 for the time to breakout on continued new baselining of earnings by more than double digits year on year, disregarding a long period of slow growth

Banks will improve further building on the big gains on Friday led by PNB and ICICI Bank.  Also, the networks , to be fair to them, seem to have the handle on the market today – SS got it exactly on tv18 as more than one analyst nodded to banks across networks and lets face it even traders and fundamental investors were horrendously shocked when the index spike happened on Friday afternoon. However, the markets are not wating for a 300 tally for Modi nor will they wait for that mark next week to resume a rally as long as the government formation process is quick and painless. Banknifty will likely move to 14300 levels early before a small sanity check comes in. One does not expect this market to break thru lower than 6700 levels unless NDA performs poorly in the 200-220 seat range

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