Sep. 19, 2014, 3:25 PM
- The Sensex edged higher this week, bringing its 6-week move to a gain of 7%, and its YTD advance to 28%. The big gain this week came amid a rare visit from China's premier and the pledging of $20B in investments in India over the next five years.
- Credit Suisse this week says India's banks - despite maybe being the most richly valued in Asia - have upside. They trade at 3x trailing book value, but that's inline with their 10-year average. What they have going for them now is improved governance, an accelerating economy, and interest rate hikes now in the rearview mirror. The team's favorite plays (trading in the States): ICICI Bank (IBN -1.8%), HDFC Bank (HDB -0.8%).
- ETFs: EPI, SCIF, INDY, PIN, INDL, INP, INXX, INDA, SCIN, SMIN, INCO
Sep. 18, 2014, 10:49 AM
- India's largest trade deficit with any single country is with China, and Chinese President Xi Jinping - visiting PM Modi in New Delhi - pledged to invest $20B over five years to help narrow the difference.
- China is India's largest trade partner, with the two doing $68.5B of business last year, and India posting a trade shortfall of $34.4B. Xi's visit follows one from Japanese PM Shinzo Abe at which he pledged more than $30B in Indian infrastructure investments.
- The Sensex gained 1.8% overnight. EPI +3.1%, PIN +2.5%.
- ICICI Bank (IBN +3.1%), HDFC Bank (HDB +1.3%), Tata Motors (TTM +1.6%)
May. 16, 2014, 9:57 AM
- A volatile session in India saw the Sensex close up 0.9% to an all-time high following the election victory by the opposition Bharatiya Janata Party and its prime minster candidate Narendra Modi. Stocks initially rose more than 6% as results came in, but "sell the news" action took over, given the Sensex's already big run in the weeks leading up to the election.
- In ETF action action in the States, EPI +4.6%, PIN +3.5%.
- Banks: ICICI Bank (IBN +6.7%), HDFC Bank (HDB +3.3%).
- ETFs: EPI, INDY, SCIF, PIN, INP, INDL, INDA, INXX, SCIN, INCO, SMIN
May. 16, 2014, 9:17 AM
May. 9, 2014, 9:27 AM
- Investors are placing bets ahead of next week's election results which are expected to show a win for the opposition party's Narendra Modi and the worst-ever defeat for the ruling Congress Party amid a wave of graft scandals, rising inflation, and slowing growth.
- The Sensex - up 2.9% last night - is ahead by 17% since the opposition BJP party named Modi as its PM candidate last September.
- Leading last night's advance was ICICI Bank (IBN +5.2% premarket). HDFC Bank (HDB +2.9% premarket)
- ETFs: EPI, INDY, SCIF, PIN, INP, INDL, INDA, INXX, SCIN, INCO, SMIN
May. 9, 2014, 9:17 AM
Apr. 11, 2014, 5:37 PM
Apr. 2, 2014, 3:44 PM
- The Reserve Bank of India approved the applications of infrastructure finance company IDFC and microlender Bandhan Financial Services to begin banking operations. The two were among 25 vying for licenses being offered for the first time in several years.
- "RBI's approach in this round of bank licenses could well be categorized as conservative," says the central bank. "At a time when there is public concern about governance, and when it comes to licenses for entities that are intimately trusted by the Indian public, this may well be the most appropriate stance." The most recent census data in 2011 showed only 59% of Indian households had access to banking services.
- A couple of current players: ICICI Bank (IBN +0.2%) and HDFC Bank (HDB +0.5%).
- ETFs: EPI, INDY, SCIF, PIN, INP, INDL, INDA, INXX, SCIN, SMIN
Mar. 31, 2014, 12:27 PM
- Absent reforms, another financial crisis is likely to leave taxpayers on the hook for hundreds of billions, warns the IMF, estimating the world's biggest banks receive up to $590B in implicit public subsidies because of their TBTF status.
- Said subsidies include bankers who still have a "heads I win, tails you lose" attitude, and investors who lend at lower cost to banks than they might otherwise. The IMF calculated the size of the subsidies by comparing the CDS prices and credit ratings across larger and smaller banks. While the amount has fallen since the crisis, it still remains sizable. "All in all ... the expected probability that systemically important banks will be bailed out remains high in all regions."
- Subsidies for the biggest players are "like insurance for which banks don't need to pay a premium," says senior IMF analyst Gaston Gelos.
- Full report (starting on pg. 34)
- Among the usual suspects: BBVA, BBD, BAC, BCS, BK, BNS, C, CS, DB, GS, HSBC, IBN, ING, JPM, LYG, MS, NBG, RY, STT, TD, UBS, WFC, WBK.
Dec. 19, 2013, 9:23 AM
- India had a relief rally on Wednesday after the RBi surprised by not hiking rates, but fell anew last night - dropping 0.7% for its 7th decline in 8 sessions.
- Leading among the blue chips were the rate-sensitive stocks, with ICICI (IBN) Bank off 3% and HDFC (HDB) Bank down 2.1%.
- "One of the big questions post Fed's move is whether liquidity will continue flowing to emerging markets like India or not. If rates go up in U.S. then it will be risk for EMs," says Aneesh Srivastava, CIO at IDBI Federal Life Insurance.
- IBN -5.4%, HDB -5.6% premarket
- India ETFs: EPI, INDY, SCIF, INP, PIN, INDL, ICN, INR, INXX, INDA, SCIN, INCO, SMIN
Dec. 19, 2013, 9:12 AM
Oct. 7, 2013, 12:22 PM
- Indian banks get a lift after the central bank moves to roll back at least one emergency move taken to halt the sliding currency - cutting the marginal standing facility rate 50 basis points to 9%. The benchmark repurchase rate is held at 7.5%.
- The rupee is up about 11% vs. the greenback after hitting a record low in late August, but weakened somewhat today.
- ICICI Bank (IBN +2.4%), HDFC Bank (HDB +1.1%).
- Indian ETFs: INDY, EPI, PIN, INP, INDA, INXX, SCIF, SCIN, INDL, SMIN.
- Rupee ETFs: ICN, INR.
Sep. 23, 2013, 9:57 AM
- Extrapolating the Fed's more dovish stance to emerging markets, JPMorgan upgrades Turkey (TUR) and Peru (EPU) to overweight, where they'll join Mexico (EWM), Thailand (THD, TTF, TF), The Philippines (EPHE), and Taiwan (EWT).
- "Turkey feels like the tapering trade," says the team. "The suffering this summer turns to euphoria as the Fed returns to dovishness and retreats from tapering."
- Taiwan and Mexico rate an overweight because of their exposure to developed world growth, but what about Korea (EWY, FKO, KORU, KORZ)? Typically, the country belongs in this group, but JPMorgan is cautious on high-end tech and thus on Samsung. Taiwan, on the other hand, should benefit from the growth in low-priced smartphones.
- Moved to underweight are Russia (RSX, ERUS, RBL, RSXJ, RUDR) and Colombia (GXG, COLX, ICOL).
- Top 10 individual stock picks include ICICI Bank (IBN), Southern Copper (SCCO), and Cemex (CX).
Sep. 20, 2013, 12:32 PM
- ICICI Bank (IBN -3.9%) and HDFC Bank (HDB -4.4%) tumble after India's new central bank head unexpectedly hikes the benchmark rate to 7.5% from 7.25%, citing the need to bring inflation down. It's the first boost to rates in two years.
- Amid that tightening in policy, however, the bank also eased other restrictive measures put in place over the summer to try and stem the rupee's decline (it's up 8% vs. the dollar in September).
- The Sensex closed down 1.9%.
Sep. 6, 2013, 9:10 AM
Sep. 5, 2013, 12:49 PM
- For a second straight day, Indian stocks rise sharply — Sensex +2.2% — with banks leading the way, as new RBI governor Raghuram Rajan has apparently managed to instill some confidence in the market. (previous)
- In addition to the creation of inflation indexed savings certificates and the issuance of long-awaited new banking licenses, Rajan will open FX swap lines between banks and the RBI (see diagram) a move BofA says may boost the country's flagging reserves by $10B.
- "This is exactly what the market wanted to hear," one Mumbai-based banker says. Apparently so — shares of India's largest lender HDFC Bank (HDB +7.1%) rose 8% Thursday, fueling what Bloomberg says was the largest rally in the S&P BSE India Bankex index in four years.
- The WisdomTree India Earnings Fund (EPI +1.8%), ICICI Bank (IBN +12.3%), The WisdomTree Indian Rupee Fund (ICN +0.3%).
- Other ETFs: INDY, EPI, PIN, INP, INDA, INXX, SCIF, SCIN, INDL, SMIN, INR.
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