India Morning Report: More disillusionment in the old Economy and IT segments

Cement stocks and IT remain weak and good for the short trade even as the unlikely Energy short caught everyone by surprise. Oil PSUs ONGC and OIL and the OMCs will probably instead switch into their usual positions in investor portfolios , ONG remaining long because of the weakness in Brent prices and as the realisation dawns on the non impact in the Indian crude basket pricing, the gains could and should now shift to IOC and BPCL who are able to cut petrol prices at the pump and in a year or two demand for petrol vehicles could be back to 2010 levels. ONGC divestment target is apparently closer to $3 Bln and a downdraft is likely to remain on the stock til that demand is shown to be int he available set in the next few weeks and is not used to create a bad ipo pricing decision for the company

I would pick up opportunities in GAIL and private LNG/CNG/other Gas storage and distribution companies in this probable last resting place for the markets as the markets continue to wean out old economy laggards. The gains in Pharma were heartening and there is a lot of steam left in the sector

Banking data was not so week, any double digit credit growth not really divergent from the industry trend at 11% and investments also grew to over INR 20 T as Deposits continued outpacing existing credit and create a healthy capacity for the upcycle at 76% Advances to Deposits while SLR has continued increasing in the reported week, before the policy announcement to create the increasing investment stock above. 

In unlisted business even as the NDF market gives in and Rupee has stabilised at 60.50 levels for the quarter, the e-commerce players continue to create a lot of good undercurrent creating hopes of early 2016-17 exits for PE players in Flipkart ( merged with Myntra) and other

JP Morgan brokerage is making a mistake returning to Buys ion the EMtals and minerals area and SEsa Sterlite and Tata Steel will likely take some time getting a supernormal edge from the recovery though the latter posted a great comeback in Q1 last month

Markets however start the day at the bottom of the new range at 7890 nifty and 26300 Sensex levels but up moves are limited with continuing targeting of ‘disillusionment’ shorts revaluing old favorites down and out of the rally mainstream. THE Automobile industry is set to create 25 million employment opportunities in the ecosystem with industry players eyeing export led expansion in the next three years with the Banking sector closely tailing it and will likely create another 5 million direct jobs in the coming three years ( 2 million estimated by FRPT Industry research)

China has slumped again and global equities will probably be unable to whether the storm after a buoyant first three days of the week. Flash PMI reports for Mfg in August are looking at the 50 border again and will likely cause predictions to drastically change over the next week in US on the return of pessimistic scenarios to US and Europe but that is probably another reason for Indian markets to brealk away on the up side and for the fairly small group of knowing FIIs to farm the global arbitrage and capture the score on the Global revival comprehensively. 

 

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