Indian Equity Research and Investment Strategy
The Fed’s decision to continue supporting the American Economy without tapering led to a 11% rally in Indian Equities even though the BANKEX has corrected by 8% since then. HSBC is worried about India’s weak Forex Reserve, upcoming general elections and in this backdrop rates India as an UNDERWEIGHT for Equity Investors.
Indian Rupee
As Raghuram Rajan took steps to contain (more…)
The rBI Governor announced his first Monetary Policy on Friday. Here are the Reactions coming from various Chief Economists of Brokerage / Research Houses.
Ritika Mankar Mukherjee of Ambit Capital said,
RBI governor’s first monetary policy review, the RBI normalised the MSF-repo rate corridor (effectively by 100bps) and increased the repo rate by 25bps. In view of the RBI’s explicit focus on inflation, we reiterate our view that repo rate increases of another 25-50bps are likely to be administered over the rest of FY14. This is likely to be accompanied by the continued stabilisation of the MSF corridor from September to October 2013, as the next Fed meeting is scheduled for end-October 2013. There is a high probability that the next round of intervention is administered in mid-October 2013 i.e. ahead of RBI’s early-November policy review and ahead of the Fed’s end-October policy review
Citigroup Analyst Anurag Jha made the following observation, (more…)
Banking Analysts have cut cut earnings estimates for the banking sector by 12-15% over FY14-16 as they build cuts to GDP forecasts and continuity of high interest rates. Asset quality pressures will aggravate and expect some moves from the Finance ministry to protect the Banks. PSU banks are most vulnerable due to higher exposure to SME and riskier segments, pressure on staff costs and sensitive investment-book. In this backdrop, Loan growth should moderate to 12-15% over medium term and banks with stronger deposit franchise will gain share from low CASA banks and other financiers.
Corporates with unhedged forex exposure would also face (more…)
After Citigroup Analysts came and Downgraded India, everybody has jumped into the “Me Too” bandwagon. The liquidity tightening measures adopted by the RBI look set to continue for longer. Concerns about premature tapering by the Fed have led to an environment of low liquidity that seems likely to continue for the foreseeable horizon. (more…)
Dr Raghuram Rajan, world famous Economist has come to the rescue of the Indian Government as he assumed charges as the RBI Governor. The message from the Governor is straight – Progressive Reforms for India.
Highlighting the critical need for transparency and predictability in conveying and guiding monetary policy, governor Rajan appeared to draw a distinction with the frenetically paced and sometimes contradictory and counter-productive measures taken by the (more…)
Ambit Capital’s Star Analyst Saurabh Mukherjea who went on a BUY Recommendation as soon as P. Chidambram took over as the Finance Minister a year ago boldly set SENSEX Target of 23,000 by the end of FY 2014. However, things turned out to be mere Lip Service from the Government and Mr. Saurabh Mukherjea had to DOWNGRADE the BSE SENSEX Target for India from 23,000 to 21,000. The 23,000 target was premised on FY14 Sensex EPS of Rs1,350 (implied YoY growth of 14%) and a forward P/E multiple of 17.0x (in line with the six-year average). (more…)