The markets cottoned on to the last defensives with Titan on Monday and with construction staying away a shallow short on DLF at a pithy 239 top makes only less sense as making a fat short on the just bumped IT crowd after the expected Pharma led recovery in sentiment looking practically overshadowed by the Dollar dogs of the IT sector. Probably only a fallout of the consolidated RBI sale statistics on the Rupee among other currency moving factors, we maintain fat shorts on the entire sector, one by one adding all today or at most tomorrow. They will only fund big additions in the Q1 earnings report moves in banks, NBFCs and consumer discretionary led by ITC, Bharti and HUL, the HUL short like dlf a pretty shallow one.
The Infy/TCS balance is perhaps likely to keep positive interest in the sector up as a whole with TCS and infy in the middle of a new range at 2150 and 3080 levels. With VIX unlikely to move into the 20s, further OI increases are also likely to flatten out in the remaining week
Jet Airways saw some buying interest and for a complete wipe out of all possible reasons for shorts ont he stock the levels are indeed great for accumulation as it follows a 18 month calendar to get back to promised profits. Other stake purchases in the sector, on the anvil for Spicejet and completed in part for Indigo fuel the play on the best listed play in the sector with Tata SIA making timely PR bursts and Air Asia operating on one routre to start. However real results on Jet plays are unlikely before end 2015
Banks in the meantime remain muted despite the redone story of the SBI mega merger to 20,800 branches and INR 16 Tln in assets adding Travancore, Hyderabad, Patiala, Bikaner and Jaipur and Mysore into the fold , last adding Indore and other in 2009
Domestic Pharma ramp up in investor interest as China flattens out at 2050 levels will probably include back Cadila and Stride Arcolab with Glenmark and Divis as DRL and Sun Pharma remain candidates for shorts and the Rupee needs to get back up to 58 levels with $30 Bln in the forward sale basket on the Dollar
The best idea for longer term safer plays out there remains waiting for the Bank and Finance company plays , which are likely to stay down to set the tone for a goodish but not ebullient earnings season in Q1 as was evident in May itself. In unlisted business, Modi’a agenda had a more than salutory effect with the President reiterating key agenda items in core infrastructure and improved governance and the Economic agenda being safe already celebrated by markets during government formation. Pizazz from key wishlist items like Bullet trains and some other will likely be needed for the markets and India’s last chance at being a globally acknowledged key player while the GST and DTC rationalizations are delivered.
PM Modi also has to take care of the existing project pipeline before embarking on his new infrastructure plan focussing on the D-quadrilateral, low cost airports and agri-rail networks ( to eliminate supply bottlenecks and battle inflation) and arejuvenated agar Mala plan with DFCs along Delhi and Mumbai and other hopefully seeing more from exaples of GIFT(Gujarat International Finance Tec-City) and DSIR(Dholera)
News of the abolition of retrospective tax, was probably not new, yet key rhetoric for India to gain back a good corner of the stage. Modi meets the Chinese President in Brazil after the show in July and then meets Obama in September.
Speed. Skill. Scale.
Democracy. Demography. Demand.