Tag: Turkey

India Morning Report: Here it is, the day of the bounce back

Of course, we are still correcting to a lower range and I would even think the market could now top out at 5850 which would be dangerous as that would probably break the market uptrend for good.

While some of the unsure network analysts playing safe including Mitesh Thakkar on ET have opted for upticks in Wipro and Lupin, I would rather the markets are indicating secular break from the vote down mid week and banking and autos would lead the comebacks.

English: To Munsiyari on a Maruti, Uttarakhand.
English: To Munsiyari on a Maruti, Uttarakhand. (Photo credit: Wikipedia)

For the markets to sustain on its strengths now that India inc has discounted the political storms as no more than the morning cuppa, it should retrace higher than 5950 and thus the afternoon session or midweek next week could again see this morning session being negated to start from a better ground but around the 5600 mark only.

The bull picks in M&M, Bajaj Auto (Sukhani, TV18) and Maruti would be the big winners and ITC IDFC and ICICI Bank continue as bedrocks of the long portfolio. HDFC Bank seems to be still battling issues of Foreign limit being exhausted but is up in this mini trend while the short on DLF (Sukhani, TV18) is a great pick as the markets finally do not want to take a directional trend in the remaining series and battle overvaluation in the remaining scrips.

There is no solution for India’s daily challenges but it is to a degree, the sustainability that comes from middle class and bureaucratic institutions and cultural mores that keep it going and keep business and pleasure immune from political and social pain.

Financially, forcing RBI to cut rates would only keep the fixed income markets moving higher on yield especially as there is a fracture between the higher floating yield curve’s tough love and the macroeconomic indicators actually pointing to growth that remain bereft of real investment support while neighbours and not so young markets like Thailand and Turkey stay with carefully worked out long only bets sweetening the long only trajectory of economic perspicuity that was associated with India for some time.

The short bets in the March series should have been closed in yesterdays pre closing session and no new shorts in options could yield much as the time value of decay takes prominence this week. However, though it is non intuitive, a sell in 5600 puts is likely to be the strategy gaining coin the rest of today and Monday, esp if you are willing to wait out expiry on March 28. Selling calls would build up above 5750 only.

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A hike up the yield curve is back on the agenda

I'm not entirely sure what the umpire is signa...
Image via Wikipedia

..with so many idle hands on deck, exemplified not just by mid senior unemployment but also by a cash reserve of INR 4.7 Tln as studied by ET and a 200% rise over 2010 there is a lot of going back on the threatening tones adopted with RBI last month. With inflation at 10% levels consistently, the longer yields have already responded, and with monetary easing in fashion inculcated by the US Fed, the market is likely to take a steep hike in yields on the long end till the effects of the easing are finally dispersed and interest rates clampdown can have an effect.

If you see other nations reducing rates, Brazil is the example which should be valid only as it has too high a watermark even at the current 11.5% and at least 2 rate hikes are required before it reaches the levels envisaged by india at the peak. I would stoutly defend RBI till our rates reach 9.5% to 10% as inflation refuses to climb down and expect many more to defend RBI hikes in the coming weeks.

Also, maruti and Reliance performance could be used as an example of how things have gone wrong with India inc and at that time, easing rates may not be good policy for us just to be in line with Brazil , Turkey and indonesia. Israel’s behaviour is always more in line with developed market estimates and growth is a challenge where Indonesia is just trying to blind side investors and policymakers alike with its eagerness to follow first into rate cuts. Neither china nor India should respond to these measures or even treat these as pressure as interest rates in Indonesia (6.75%) or Turkey. Turkey did get a positive response from reduction of rates around the 6% level itself but one must understand its response wis likely 5 times that in India given its nearness to Frontier markets or its newness in FDI regimes and the geo political overhaul committed there in the last one year and India cannot really follow into that policy regardless of the heartburn it has caused to Walmart or Starbucks and other remaining FDI candidates unable to enter indian markets in the middle of the festive season

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