India Morning Report: So what is it, you are bought in but 7500 is on the way?

As classic sell side advice used to be in another day in “ordinary ‘ markets, You should stay in, Hold on to your positions, a strategy never admitted to being out of Fashion, but that has not needed being said in the last 7-8 hectic years for equities looking to volatile markets for the daily

Also the rally in Cement in the monsoons should warn you as the sectoral uptick in performance is more a temporary function of inventories than a ‘residing’ upward change in Demand and the sector has to make up for a lot of underperformance during the down cycle

A great quarter for Auto sales, SLR release (HTM) in Policy, when exactly will lending rates come down? There is a new 10 year bond on the way and 10 year yields will again start down from 8.5% , but that just means a month of hectic buying in Indian public and private debt.

Results have not been so great for Auto companies, with Maruti sort of capping expectations on a profitable quarter and Hero reporting its gargantuan marketing spend behind the increased festival yield. As we mentioned in the Bank Policy Tuesday piece yesterday, the markets have however been capped at 7800 and are likely to start down first to 7500 levels from the 7750 mark achieved yesterday.

Banks will be unduly under a cloud today, a great opportunity to buy all cyclicals as markets assess the individual losses on selling SLR securities into the broader market. The uptick in IT today is a great sign for shorts , though the sector could ride out the cuts on the indices too ( unlikely , just a 1 in 3 chance ) as Defensives given the even performance from the sector. Meanwhile the speculative breakdown in Oil trading means the Oil prices could drift even lower from here esp with the Brent finally testing long term lows near 103-104 levels. Energy companies are thus unlikely to get a reprieve

In unlisted business, Samsung has been beat by local competition in both India and China, Xiaomi matching Micromax’ feat in India as Micromax shrugged off the challenge to a 16% Market share in smartphones.

In the broader market, some bulls could get tired and shift to lower Put ranges, while the DIIs come out stronger to buy in the remaining week as Economic data has built up quite a scenario

 

 

 

 

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