Happy Thursdays! Expiry Volatility continues

one week to go, rupee made an equally violent come back even as the Euro finally matched INR levels to its own performance in Europe rather than wait for its comeback with atronger levels against  the rupee on the back of depreciation against the Dollar. Dollar marched on relentless against currencies yesterday before Chines Flash PMI data again confirmed the worst and againa rally in base metals and precious metals has been nipped in the bud because China would not be importing any more in a hurry. for equities, it means the risk trade isd definitely off but the Dollar may have stoped rising giving a temporary synaptic failure between rupee depreciation and Equity crash so qequities recovery can likely continue after the rupp is back at 55 levels too, not necessairily nosediving at every pick up in the USD against our currency. Changes like china’s tick down and the crash in New zealand exposrts for example could disconnect the all markets correlation  and that would be fortunate for most FIIS too as the Risk on trade can continue while Europe implodes on itself Spanish and Greek yields continuing rising upwards and ECB unable to afford another LTRO. 

But then a lot of you should npow just be trading June futures and banks and select equities like IDFC, REC in the infra sector ( or construction if you prefer) 

Happy Thursdays! The strange india stalemate continues..

Rahul Bajaj, Chairman, Bajaj Auto and Member of Parliament, India, speaks at the opening plenary session of the World Economic Forum’s India Economic Summit 2008 in New Delhi, 16-18 November 2008. (Photo credit: Wikipedia)

 

India apparently has no bad news left that could shock markets further and yet being one of FDI’s favourite Asian destinations it is unable to get new monies flowing into the deep $2 T markets in equities while Fixed income holds at 8.5%, inflation likely to trend at 7% or below with soft conmmodity prices and Greek exit from the Euro concerning it in the very least even as the Eur INR holds almost close to 1.28 levels when the currency plans to breach 1.27 globally giving it the annual yatra trade for a round trip arbitrage with globa markets.

Japanese and Singapore GDP growth enthused the Asia economies but not India, China’s slowdown has given impetus to the maxim that India will lead the recovery but no hard cash has followed yet. Most global banks and institutions are carefully looking at India’s bank regulations and though there is no GAAR there is no impetus for investors to grow their India investments like they seem to get in China’s totalitarian regime. 

Corporates like Bajaj Auto become very poor examples of India’s independent matured markets having gone by RBI diktat, hedged 85% of their large export earnings at below Rs 50 to the USD and looking at quick EEFC redemptions again to shore up India’s 5% Fiscal and a not far behind large current deficit where again lowering commodity basket prices still do not mean any benefits accruing and now the bar has been obscured by another 10% fall int he Rupee. there is no real bad news still left though and that means probably market wants to consolidate before moving up while traders are already impatient leaving the markets open to more whipsaws in trading, 

 

Related articles

• Fixed income Report: O India! Is that how it will beeee…! (awardz.wordpress.com)
• Happy Thursdays! FIIs on hold for rollback, INR 92 bln in undisclosed income (awardz.wordpress.com)
• Happy Thursdays! Celebrating Cricket, Getting FDI to local consumption markets and growing global trade (awardz.wordpress.com)
• Indian rupee hits record low; more falls seen (dawn.com)

Happy Thursdays! Using treaties to challenge regressive legislation

The Indian government is in a bind and perhaps that would bne a reason the old bound and gagged Left would not okay Pranab Da for the President’s position so he can take another stab at the regressive Indian pullback from GAAR for Vodafone to spectrum cancelation for Uninor, that’s truly got everyone swimming for a new shore for the island that is India. Alas, as an island India continues to get the same amount of interest as a Fiji than as a large landmass of its size and the large ( and getting fed to be larger) middle class daily especially because investors know they can demand and expect such fly bys as Tax cancelations and fixed spectrum prices. Both Uninor and Vodafone present real threats as they would invoke longwinding legislation that would not only hit the government offices again for not being prepared but also wipe out  remaining FDI interest in India, telcoms and more in India for more than 3 years. it would be foolhardy to think we can live without FDI even in Telecom where we have 70% of the population holding phones let alone, mining, power and infrastructure where we have been barely able to begin. 

That does not mean India will keep on growing though, so one is not sure what exactly cst Adidas half the Reebok india stores and a EUR 870 mln correction in the books alongwith SS Prem’s leaving the company, Reebok seemed to be far up the path of success and if all that was an illusion we deserve to know as much as we would know in the case of alisted company

Happy Thursdays! FIIs on hold for rollback, INR 92 bln in undisclosed income

The Pranab rollback is definitely the highlightof India policy action since the last Olympics in neighbour Beijing nation. FIIs are fairly confiddent that some more will be due to them on P notes being allowed without the new treaty tax in the bid to catch undisclosed income from foreign jurisdictions

Seven boxers have made it to the Boxing event in the Olympics to start India’s medal hunt. 

The anemic 4% score on the IIP does not beget a Gayle force of investments but India ias apparently awaiting a show of fireworks by the FIIs this year along with a stong FDI score to vback the FY 2012 $30 bln score

Meanwhile Air India’s funding of INR 40 bln in equity is part of a total infusion of INR 300 bln inclconversion of INR 120 bln in debt to unsecured debentures. 7000 employees of the AI machine will be transferred to Engineering Srvcs

 

 

 

Happy Thursdays! Private Equity (Angel) suspect of evasion, Expiry suspects losing strength

Interst in India remains busy though, yet FDI is waiting on the wings, PE tired of being called hot money as new tax provisions cover FIIs and domestic Angel investors for a 30% tax/STCG which ever applies. 

Rupee has correctred sharply by almost 1% and yields are barely holding at above 8.5% but the ?month’s IIP numbers are much better with Infra growing 6.8% in Feb and 4.4% in 11 months of the Fiscal

The rally is unlikely without Infra and banking stocks but the option of buying banks is somehow adversely related to current economic reports from India

So it seems the rally will be from closer to 5000 on the index, do not be in a hurry to buy that call spread, in fact market looks 9riskily) close to staying in a range so if you go log calls and puts you might lose the premium

 

Happy Thursdays! Not so happy at 6% GDP growth are WE!

it really does not matter. The IIP showed exactly wha t the GDP showed yesterday, Agri at 2.7% in Q3 (December) and minng at -3.1% and Construction at 7.2% has to be good as also the 10% score for Financial Services

Revenue has been buoyant too so you can’t blame the equity markets for having celebrated, but the missed objective along with the lackadaisical momentum in the India story can on both sides be attributed to the veritable cornucopia of macro statistics and not enogugh structure to reach the nook s and crannies where growth happens or ewelfare spendin impacts us. conider Market research Data for example which I can sdegment the market from Macro Economic, demographic segments we rely on to enter a 85% unbranded market in most new innovations led by consumer brands.  Read previous posts on how it leads  to cultural chaos for our videsi friends who come a visiting hoping for nay adicted to a pat analysis of everything and everyone they need to know or research in India

But gDP slowdown did catch the blind spots so we have the statistics, just to travel the width and breadth even with new telemetry in education, healthcare and government it looks a little too distant to achoeve and again the budget exercise would be busy with the added subsidies and at least thankfully the lack of infrastructure. There’s only so much to go around!

Happy Thursdays! A day of expectations

..if only for the small personal things to look forward to , on the weekend even for a guy without income, running thought leadership on Finance and Economy on India and the US and biting himself to get to a place he can get out of his home parking slot and get into a economically remunerative job.

..if only for a repetition of the constraints of global oil and local inflation on the Indian Economy, a weak currency destroing the PPP power bit by bit into a decade full of political chicanery

..if only for a tired market that has seemingly achieved all it can in two months and all for less than $3 bln dollars in investments into the markets and $1 bln in FDI at a tenth the rate of neighbours and not just China anymore, elsewhere in Asia the Resource rich FDI mandates are big and furious. 

..If only for my job consultant with my new focus on Singapore and banks in GIR, if only I had an idea why they are not looking for me already..

OOh A Voltas A/c for the House and a Videocon CTV with DTH!!!

A Catch up plateau by  samsung and LG combined with a year of slow growth in durables means the twins Samsung and LG have been separated in most actegories to at least one #3 positionas Voltas and Videocoan have finally caught up with the latest mass technologies. S o till LED Displays become mandatory in the next 2-3 years don;t be surprised at people adding Videocon CTVs and Voltas A/cs. 

DTH subscribers are up to 45 mln, Dish TV having sold 20 mln of those ( and I have two wasted boxes lyng in the penthouse storage somewhere, so you now the counting) Tata Sky with 9 mln and Airtel 8.5 mln no doubt caught up by the big bang in CBS viewership and 18 prime (CNBC). 

Somehow, I am wondering why this population is not going to be 90 mln when there is more people with TV knowledge than the number of mobiles floating around! Anyone get there yet? This year will be more marketing start ups with image bazaar watermarked images as that is yet an untapped market, but aren;’t one of those handhelds or tv remoters spiked . Maybe you could spike teenagers sunglasses to recover the rest what market research cannot fnd in urban or rural fand from someone who actually wins more than a mirror in popularity contests. 

 

 

Happy Thursdays! India’s Asia story a goner..

Though the Nifty hit 5400 and many of us from Global MBA schools have managed to hang on to senior jobs in Global 500 corporations, India’s own growth stroy as a leading light in Asia is much more subdued and most would say lost except that whatever one does , India will be the no. 3 Economy behind the China and the US inc. balance sheeets in GDP and in young working population, it now enjoys and advantage to grow its GDP to the 7% ‘sing song rate’ and higher on average, jumping in the boom years. 

Our banking superstructure is however hardly $2 tln, Foreign banks contributing hardly 10% in market share, Indian CDS still unlisted in globally liquid markets and India’s Iranian connection with $12 bln in purchases or 12% of our requirmement paid in rupees , still a diplomatic thorn in the side of the US after being virtually ignored on Foreign policy. Whither from here and all that, markets are good enough to get the Capital back into Capital goods and we should get about our infrastructure and welfare spending for the next 5 years, even head in the sand would not matter as we reap the “dividend” of this laid back super growth.

Also, Indonesia is catching up and we are not a major partner in Asia or Africa. . China has military intentions. We are not very social in the world of social media and in jumping opportunities on our neighbours, London’s looking like a crown of thorns, Europe lost to the world for a few years and the US has apparently realised it is not very good in global businesses, it;s Financial sector pulling out of everywhere except the US itself. just a thought..

BTW, interesting tidbits, 5 metro projects together bought insurance worth INR 700 bln for INR 3 bln in premium income for the GICs, CTS sales add to the US GDP ( and it’s good someone does that, being treated as cost for so much manpower really sucks) and Credit Suisse’ $1 Tln balance sheet is not rid of all the ooze yet, this year ending with a $670 mln loss and $3 bln in bonuses from 5, ever wonder why? 

The MCX promoter war continues with their options sold to trading members on the exchange and yet with a call option for the promoters to buy back!! USE also has 49.75% stake from trading members, rather a gentlemen’s club and the road to Asia for FIIs is still thru the ubiquitous forex trade, the kind we have almost closed off with just $300 bln inr eserves, a rising import bill at least would have been taken care off if there was the free trade in currency, but then we do not want to lose our safety and swap it for the currency volatility of the banana republics, the tiger economies and the big brother bears from Russia and Brazil..we are happy with half a dozen indonesia deals and half a dozen in Africa?

Happy Thursdays! Paying market prices for Spectrum

Telcos would now be paying $250 mln per MHz as a likely avrerage price for new spectrum, including 122 canceled licences. Even if 61 o fthose licenses are purchased at the new price of upto $2 bln on average per operator , that is $12 bln more in the government kitty and hopefully larger at $20-24 bln with all licensees buying the regional spectrum in the new dispensation. 

However that also means an expensive mobile bill as ARPUs below 100 Airtel educates us to grows back in billin grates by 60-70% to pay for the new spectrum and in the case of new telcos making older pricing plans virtually impossible to emulate even though someone with a reputable network like Uninor ( among the newbies) only has 36-40 mln customers and at a much lower ARPU. 

Chidambaram may not be arraigned by the court later this week (today/tomorrow) but uirreparable harm may have been done to the Indian Body politic with or without Sibal Prices can easily cross 4 times the bid (not bid) auction prices used in 2008

Inflation is coming back too and so are dire predictions of slow growth for India as Rupee’s best is barely below 50 against the Dollar. All in all time for banks to start the nose down from 5250 to something near 5000 to assess and predicate the course for the rest of the old fisc in waiting for the budget. 

PSE Auctions are still likely a good thing but the government receipts could close on the Spectrum deal faster. Also with the new plan period in action, Infra plays being financed by debt funds  and inviting new participation around the globe are also likely to bring the cheer back as interest rates start the climb down in 2-3 months.