Chillin' out till it needs to be funded
The only island of yet positive GDP growth with near 0 domestic investment, India could have easily ignored Fed pronouncements overnight but instead as the currency fails to find any buyers fell through at least two credit buckets in a single sweep with the Indian Rupee progressively targeting a 60 mark twice in this week and Oil imports continuing to drag the CAD warnings to future quarters with General Elections admittedly not recognised yet by the market as the proverbial ‘blinders’ to any further cognitive thinking and not many options left on the straight and narrow
The FII investments year to date are unfortunately a never before $15 Billion and the debt market continues to see withdrawals. Yields hit a circuit breaker as the old 10-Y bond was trading at 7.57% and the tracked 10-year yields have hit 7.37% and will be moving north to track the new Oil bill expenses from here
Though markets would like to believe LIC is standing buying against a whirlwind of sales in equities as well, the situation is much easier in equities with the 5750 breach in the morning probably still the last move of the index south if indeed tomorrow markets recognise that it is much the status quo for India Inc prospects in the entire schema developed by liquidity flows and Europe’s demise in the last few years
Deep cuts in Foreign ownership rich stocks target private banks with ICICI holding together a motley crew of foreign investors and telcos barely surviving with the new FDI proposals lifting the cap to 100% by ordinance. the SS (S2 Analytics), Angel Broking and Ashwini Gujral comebacks today were effective I in particular paying attention to the Coal India short by SS that should yield Coal India to 260 levels Also BOB may breach 600 but may not have further downside and Cipla and Lupin shorts should be ineffective as also further shorts on Banks despite the new market levels prognosticated to 5100-5300 levels by the Bears who finally caught a break after paying hefty carryover and I am still buying the banks, IDFC and Bharti and ITC for the bang on the upside. Jet Airways is also running the thin rope easily almost on predetermined lines to switch agreements on the Control issue allowing etihad powers commensurate with its 15% holdings.
Also despite the FDI in retail, one suspects most of the domestic investment has already been predated in the new bout as Walmart was already a back end partner and many others arrangements also have not sported fresh investment and thus this marks the deeply worrying sign tallying with the bears that indeed Fresh Domestic investments and thus fixed Capital Formation has yet to find any viable grounds or sources. However, in our final analysis this has all been discounted and equities will not see any money leaving after today’s cut making anything like 5600 impossible for the markets to fall to and even if indices fall to those levels it would not be linked to actual investment withdrawals of note and scrips already selected on the long side will not be impacted.
India Morning Report: 5750 is here and it’s Friday (awardz.wordpress.com)
India Morning Report: As we said it, so did the market bid it (awardz.wordpress.com)