India Morning Report: The Bad GDP report passed on the previous turn

Markets will of course, still look to auto sales throughout the week esp to decide the fate of interest rate sensitives again positively till the RBI Governor brings down the house with another pass on the “rate cut” being nudged by the markets but with the Rupee likely to cross 63 in orbit within this week, bond yields can probably go on improving mid week from Thursday to lower levels just above 8% eventually before any rate cuts happen in response to pressures on inflation in 6 months from now.

The credit pick up cycle lags Foreign investor demand and other macroeconomic improvements markets keep forwarding to the Central Bank in vain hope.  Markets may well take in the news of 5.3% GDP growth and the coming Bank Rate review tomorrow in a move down to 8500 which would be well above the previous week’s starting levels.

Apparently deficit concerns have also been underplayed by the “responsible” and “effective” Government in place and that is a precursor to well timed large divestment programs till the end of the fiscal yet again. However equity markets are unlikely ruffled by such for more than the today and tomorrow sessions till after the Central Bank reports its reasons for expecting an improved policy stance from here, likely rewarding investors in tomorrow’s afternoon session. coming back to Auto sales, markets will likely penalise interest rate sensitives thoroughly in today and tomorrow to allow a fat bullish candle on expected sales data in Wednesday and Thursday

IDFC, ICICI Bank and Yes remain the top of the charts with HDFC and HDFC Bank holding one half of the down move and SBI and Axis showing up with minor corrections in the other till the bull move recovers in the latter half of the week. with consumer discretionary stocks again in the buy baskets esp. ITC and Bharti at 350 levels apiece

Nevertheless markets have moved strongly in the prior weeks to make 8750 a near probability in the new series and Crude keeps heading down to sub US producer costs at $60 levels and Indian exports may not have a good year on the other hand because of the continuing refusal to switch to newer markets to replace traditional strong markets in Europe which continues to suffer from a beat down, despite hopes of a QE later in the week on ECB policy announcements.

 

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