India Equity Strategy : Inflation is always a M1 phenomenon ::JPMorgan,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


 Special Focus: Growth in narrow money supply (M1) has slowed down
substantially over the 12 months – from over 20% to just 4% now. Broad
money supply – M3 – is still growing at a relatively healthy 16% though. The
slowdown in M1 growth could be attributed to shifting of Demand deposits
into Time deposits, given the surge in term deposit rates.
 Inflation and Money supply growth. Our analysis suggests that in the
Indian context, inflation is more closely influenced by M1 rather than M3.
Over the last 15 years, slowing growth in M1 has typically been a lead
indicator of easing inflation. We believe that the current sharp decline in M1
merits watching and could augur well for Inflation moderating over the next
1-2 quarters.
 Investor sentiment remained uncertain. Trading values and volumes were
sedate and outstanding positions in the F&O segment remained subdued. FIIs
were marginal buyers, while DIIs showed more conviction. Our money flow
monitor suggests inflows into Utilities while Financials and Consumer
Discretionary saw outflows.
 Insider transactions. Insider buying picked up smartly over the month. The
breadth was positive too.
Net Buy: Suzlon, Jindal Steel & Power, Tata Steel, HDFC, Bajaj Auto,
DLF, HDIL, Hindalco, Dr. Deddy’s Lab, GMR, Indusind Bank
Net Sell: Adani Entreprises, ITC, M&M, Kotak Mahindra Bank, HDFC
Bank, Axis Bank, Lupin, Ambuja Cement