The Banking and Strategy Initiative

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What’s happening in Asia – India Morning Report: Markets hope for the right optimistic notes in expiry week

The Rupee could not make a great start on Monday after recovering to 59.27 on Fridaybut the currency depreciation alone is soon going to trigger downgrades on india Inc, its banks and India’s growth and CAD concerns and Rupee targets have gone up to 65 at Bhanu Baweja’s UBS related to India’s equities having stored up nearly half the $39 billion since June 2012. The $39 B mark is gross of all inflows to emerging markets including ETFs, Hedge funds and apparently debt markets as well. On the whole, India is already attracting inflows again. Equities outflows may be limited along the lines of trading capital only leaving. The opportunity cost of missing the move up by India inc even as India’s sovereign growth suffers from stunted public spending and a globally deleterious , non existent investment cycle to back the amelioration in savings still leaves India head and shoulders above other candidates for future funds inflow

June straddles will close out without your exiting the markets esp if your bull targets were switched out to 5500 levels. But inactivity suggested in holding actually engenders an easy run on th fort by bears and thus bottoms not envisaged by bulls holding may be reached faster in the next two weeks. The markets may even pull back to 5700 for the expiry on Thursday but on fnzied buying and not on holdig. pairs trades we suggested in banks can be refined now that moves have been clarifying the chasm between poor public candidates and heavyweights or private banksand even as Banknifty because of its public components stays not so tough ,it works as the buy leg of the trade and if you want to be especially safe you can take the buy trade in ICICI Bank , SBI or PNB and even HDFC Bank while the sell leg has to be more carefully chosen from UCO Banks and Centrl and Union banks /United Banks and not some others. We would have chosen Vijaya and Canara on the short side and not Dena Bank

One still thinks 5600 itself could provide the bottom to the market but no one can advise you to enter the Rupee or euities at this time. Eerging market debt has failed most hard stops but will likely keep some parts of its global asset weights as Indian debt more than makes up for the negative sentiment and may continue to outperform not just latAm or Russian debt but closer to other performers is also outperforming Turkey and Thailand while Malaysia may sooner follow Indonesia into a rate increase cycle to counter their bleeding outflows

Some good news from this cycle may emerge if India CDS coms into global market favor and gains relative liquidity required to make it a benchmark in the region


This entry was posted on June 23, 2013 by in Financial Markets.


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