Dalal Street

Despite deteriorating fundamentals of the Indian Economy amidst CBI raids on Industrialists, the Indian StockMarket is Rising and is inches away from the all time high. A simple analysis of the performance of stocks and the contribution to the market movement over the past 14 months (ever since the Paralysed Government started its reforms program) shows that the bulk of the market’s performance has been driven by stocks that have very little to do with India. In fact, the sharp Rupee depreciation (9.8% over this period) is one of the prime drivers of the performance of companies with overseas or US Dollar revenues and earnings; these stocks have largely contributed to the strong market performance.

After a brief period of out performance in the immediate months after the (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…)