India Morning Report: India GDP announcement a key market rallying number at new point

Markets have consolidated and stepped into a new range after a longish dismemberment of a Modi effect rally in two weeks since August 8. As Large caps consolidate at new levels, banks have finally started moving up again, HDFC Bank in lead but PSU banks still selectively showing signs of NPA fatigues and continue to dress down assets. Bhushan steel machinations also put a question mark on lead bank SBI’s fortunes as it navigates a INR 100 Bln exposure with new recovery approaches including an ambitious extended management participation.

However SBI is stil undervalued at 2500 levels and Maruti and Bajaj may also have flattened out at lower levels after an unreasonable advance surge ahead of the April May trough from which Sales have barely started picking up in the last two months. Falling prices of fuels greatly aid the return of consumption based GDP growqth ahead of deeper investments expected to line up in infrastructure and in the broader economy including at FMCG and Metal and mineral companies

India remains in a strong position in equities in 2014 and can find a couple of new fat pocket investors lining outside its doors as Emerging market flows remain negative for markets like Thailand, Turkey and Russia and even for Mexico which showed quiet promise for US based companies. The 8000 mark maynot be a big deterrent for markets as a GDP performance of near 6% excites markets and new FIIS take the markets to record investment levels again after the rush in 2011-12

The new investor sponsored surge in Infosys as the new CEO unveils a market blitz to create phantom growth may well be accepted by the market but is more likely to turn out empty as any aggressive strategy has been in the Outsourcing and Offshoring market”: after years of market development investment by leaders like Infosys

NBFC LAS regulations have been tightened reducing the flexibility available to them to lend to promoter investors and ultra HNWI markets that depend on the facilities. However one is unlikely to see a real reduction in LAS volumes from the tightened regulation even as some rare stories of collateral being called by banks do come to the markets ahead of high profile restructuring like USL/Kingfisher and other accounts. Prices in the real estate market on the other hand are unlikely to come down and thus improvement in demand in the sector may take its time ruling out much change for the rest of 2014

The Modi roadmap on reaching a third of the unbanked in a single year is indeed laudable and doable without much ado increasing the involvement of recruited correspondents and allowing Post offices to defacto represent their stations as correspondent. 

NSE Cash turnover has clearly grown ahead of  BSE further since 2008 when it had flatlined till 2011. Options have jettisoned 7900 completely at the top of the range while Puts move up the floor of the range to abbove 7900 and Calls take to higher levels thru the week including 8200 and higher levels bu tFII buying indicates a likely focus on Futures contracts, sign of hedging at new levels in the markets

 

In unlisted business, the new collaboration announcement of Arvbind Mills with GAP is indeed worth watching as the retail markets are poised on a good kick off point and markets have been expanded by the healthy and growing competition between E Commerce firms like Flipkart and Amazon.  A new pizza seems to be the “hotdog” in a rare direct fight between Pizza Hut and Dominos. The latter has been taking care of competition in Tier 2 cities since its IPO in 2009 but has recently flailed in growth while Pizza hut has been stop starting new investments it had outlined for India back in 2010

Energy realisations falling may not be all bad news for Oil marketing companies and upstream producers as demand returns to the market

 

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