Thursday, April 18, 2013

Those tiring cycles!

So from start of the year people were bearish after being supremely bullish at fag end of 2012. I mean, so bearish, nothing could change their view. Reasons validated their view - CAD being totally shot, sticky inflation, anemic private capex, all time low corporate earnings run rate and so on. So what changed now?

Well, for one, crude has cooled off considerably and Gold has shed ~20% in a matter of days. These are primary deficit drivers for our CAD. Hence, the print can be pretty good next time around. Inflation numbers have cooled off quite a bit, which could mean more aggressive rate cuts - favourable for banks and also the general economy.

So now the read through is going back to the same positive triggers which I have been re iterating for a while - all time low corporate earnings means a revival post some macro enablers like cooling commodities and inflation. Valuations have hit decent lows. So some down side support there. Are we through the woods? Not totally. Again sticking with a quality bias and sticking with winners here. The usual suspects like ICICI Bank, HDFC Bank, Yes, Maruti, M&M, Cairn, Cipla, DRL, Adani Ports, V Guard etc.

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