If you have invested Rs.10 Lakh and started withdrawing Rs.10,000/- Per month, check that your total value is Rs.17,20,587/-.. -The Total Investment & Insurance Solutions

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17^Th  June  2017

UTI  BAF (The Total Investment & Insurance Solutions)

Nifty, Sensex to move sideways – Weekly closing report-The Total Investment & Insurance Solutions

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16 June 2017

I had mentioned in last week’s closing report that Nifty, Sensex were showing no signs of tiring. The major indices of the Indian stock markets suffered a minor correction during the week and closed with small losses over last Friday’s close. The trends of the major indices in the course of the week’s trading are given in the table below: The Total Investment & Insurance Solutions

Weekly Indices (The Total Investment & Insurance Solutions)

Weak global cues and caution ahead of major domestic macro-data release pulled the Indian equity markets lower during the mid-afternoon trade session on Monday. According to market observers, investors were cautious ahead of the meeting between Finance Minister Arun Jaitley and top executives of public sector banks on the sector's non-performing assets (NPAs) issue, as well as the release of Index of Industrial Production (IIP) and Consumer Price Index (CPI) data later in the evening. On the NSE, there were 482 advances, 987 declines and 51 unchanged. The Total Investment & Insurance Solutions

India's steel exports jumped by 69% in May to 0.641 million tonnes (mt) over the same month last year while imports were up by 2.4%, according to a Steel Ministry report. "Export of total finished steel was up by 102% in April-May 2017 to 1.387 mt over same period last year. Overall export in May at 0.641 mt was down by 14.1% over April 2017 but was up by 69% over May 2016," said the Joint Plant Committee report. India's consumption of total finished steel at 13.785 mt saw a growth of 4.2% in the first two months of the current fiscal over year-ago period, under the influence of rising production for sale. In the last month, overall consumption stood at 7.491 mt, up by 1% over corresponding month last year. In May, production for sale of total finished steel at 9.066 mt, registered a growth of 4.4% over the corresponding month last year. The production was, however, up by 7% over April 2017. Shares of Steel Authority closed at Rs57.20, down 0.61% on the BSE. Shares of Tata Steel closed at Rs507.35, up 0.21% on the BSE.

Shrugging off the previous day's losses, the Indian equity markets on Tuesday traded in the green on the back of firm global cues, broadly positive domestic macro-economic data and healthy buying in capital goods, banking and consumer durables stocks. According to the data released by the Central Statistics Office (CSO) after-market hours on Monday, India's annual retail inflation (Consumer Price Index) eased to a record low of 2.18% in May 2017, and the factory output growth (Index of Industrial Production) marginally slowed to 3.1% in April 2017. This, according to market analysts, provided a boost to the key equity indices. On the NSE, there were 698 advances, 700 declines and 47 unchanged. The Total Investment & Insurance Solutions

Drug major Sun Pharmaceutical Industries on Tuesday announced that one of its wholly owned subsidiaries has received final approval from the US Food and Drug Administration (USFDA) for its generic version of ezetimibe tablets. According to Sun Pharma, the generic ezetimibe tablets -- used to reduce higher levels of cholesterol -- are therapeutic equivalents of Merck's Zetia tablets. "As per IMS, ezetimibe tablets had annual sales of approximately $2.7 billion in the US for the 12 months (which) ended April 2017," the drug major said in a regulatory filing to the BSE. The company’s shares closed at Rs536.45, up 0.62% on the BSE.

Lending major State Bank of India (SBI) said that its paid-up capital has increased to Rs863.20 crore after its recent share placement through QIP. "Pursuant to the allotment of equity shares in the issue, the paid-up equity share capital of the bank increased from Rs810,98,57,182 to Rs863,20,50,393 comprising 863,20,50,363 equity shares of face value of Re1 each," the company informed the BSE in a regulatory filing. Last week, the lending major had allotted more than 52 crore shares of face value of Re1 each at a price of Rs287.25 per equity share aggregating to Rs14,999 crore to 61 "successful eligible investors". SBI shares closed at Rs283.80, down 0.44% on the BSE. The Total Investment & Insurance Solutions

The Indian equity markets on Wednesday closed on a flat-to-positive note on the back of healthy wholesale price index (WPI) data and buying in capital goods, oil and gas as well as energy stocks. Official data released during market hours showed that India's annual rate of inflation based on wholesale prices decelerated in May to 2.17% from 3.85% in April as food prices eased. However, investors remained cautious ahead of the outcome of two-day US Federal Reserve's rate-setting meet later in the evening. On the NSE, there were 662 advances, 793 declines and 64 unchanged. The Total Investment & Insurance Solutions

Telecom major Reliance Communications (RCom) Chairman Anil Ambani voluntarily decided to forego his salary and commission from the company during the current financial year as part of its "strategic transformation programme", RCom announced on Wednesday. Reliance Group Chairman Anil D. Ambani voluntarily decided to draw no salary or commission from RCom in the current financial year. The decision was part of the company promoters' commitment to the Strategic Transformation Program, the RCom release said. The company’s shares closed at Rs18.30, up 1.39% on the BSE.

Following their global peers, the Indian equity markets fell during the mid-afternoon session on Thursday, a day after the US Federal Reserve hiked its benchmark rates. The rate-hike assumes significance as it is expected to lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India, and is also expected to dent business margins as access to capital from the US will become expensive. Consequent to the late-night US rate hike, the Asian markets traded broadly in the red and eroded Indian investors' confidence in the highly expensive conditions in the domestic stock markets. Selling pressure was witnessed in banking, oil and gas and capital goods stocks. On the NSE, there were 837 advances, 805 declines and 311 unchanged.

The US Federal Reserve raised its benchmark interest rates for the third time since December and unveiled plans to start trimming its balance sheet, even as news of the Fed's relatively hawkish stance provoked caution in early trading in the Indian equity markets, which were trading flat on Thursday morning. "In view of realised and expected labour market conditions and inflation, the FOMC (Federal Open Market Committee) decided to raise the target range for the federal funds rate to 1% to 1.25%," the American central bank said in a statement after concluding its two-day monetary policy meeting. This rate was a 25 basis points increase over the current one of 0.91%. The Total Investment & Insurance Solutions

The Indian equity markets traded on a flat-to-positive note during the mid-afternoon session on Friday, with buying witnessed in consumer durables, FMCG (fast moving consumer goods) and banking stocks. According to market observers, weak global cues and selling in healthcare stocks eroded investors' risk-taking appetite. At the close of trading, the major indices ended flat over Thursday’s close. Bank Nifty closed with small gains over Thursday’s close.The Total Investment & Insurance Solutions

RIL, BP to invest Rs40,000 crore in energy projects in India -The Total Investment & Insurance Solutions

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16 June 2017

Reliance Industries (RIL) and British energy major BP on Thursday annnouced the creation of a joint venture energy vertical to work across the entire value chain, involving investment of $6 billion, or Rs 40,000 crore.

This would also develop their existing deep water gas fields in India's eastern offshore to bring to fresh production 1 billion cubic feet per day of natural gas by 2022. The Total Investment & Insurance Solutions

"We will invest Rs 40,000 crore over many years as new investment to bring in 30-35 million cubic metres of gas in next three-to-five years and sustain it over seven-to-eight years," Reliance Industries Chairman Mukesh Ambani said at a press briefing here. The Total Investment & Insurance Solutions

The "solid relationship between our two companies is a great example of what can be achieved while working together at scale", he added. The Total Investment & Insurance Solutions

Ambani said RIL was investing together with its eastern offshore KG basin gas fields' consortium partner BP after a gap of 6 years. The Total Investment & Insurance Solutions

The first project of the tie-up is to develop already discovered R-series gas fields in Block KGD6, approximately 70 km off India's east coast. A dry gas development project in water-depths of more than 2,000 metres, the project is expected to produce up to 12 million cubic metres of gas a day after going on-stream in 2020.

"India holds great promise for future," BP CEO Bob Dudley said, adding that tie-up was an important step for BP in India. The Total Investment & Insurance Solutions

"Reliance and BP are now able to develop these major deep water gas resources offshore India efficiently and economically. It is testament to our commitment to working in partnership with Reliance and with the government to produce more energy in India, for India," he said. The Total Investment & Insurance Solutions

BP plans to submit development plans for the next two projects for government approval before the end of 2017. Development of the three projects is expected to bring a total 30-35 million cubic metres of gas a day onstream, phased over 2020-2022. The Total Investment & Insurance Solutions

India consumes over 5 billion cubic feet (141.5 million cubic metres) a day of natural gas.

Earlier, Dudley met Prime Minister Narendra Modi.

Apart from the three projects, the two companies have also agreed for strategic cooperation, under which they will jointly explore options to develop differentiated fuels, mobility and advanced low carbon energy businesses in India, Ambani said. The Total Investment & Insurance Solutions

BP had entered into a partnership with RIL in 2011 with a 30 per cent stake in multiple oil and gas blocks operated by RIL in India, including KGD6. Since then, the two companies have invested over Rs 10,000 crore ($1.6 billion) in deepwater exploration and production up to May 2017, according to information given by RIL.

Queried multiple times about their ongoing arbitration disputes with the Indian government, the consortium said that it were the change in policies made by the current NDA government that had guided this investment decision designed to meet the energy needs of the Indian consumer, which effort would then be upscaled at a global level.

"We still have some pending arbitrations and we hope to follow this legal process to conclude these within the framework of the law," Ambani said, referring to the arbitrations cases on shortfall in KG-D6 targeted gas output and on alleged seepage of gas from contiguous fields of state-run ONGC. The Total Investment & Insurance Solutions

"We're pretty sure of a fair outcome of these proceedings, and which will not come in the way of future investments. Because you have arbitration, you don't stop all businesses," he added.

Dudley pointed out that a lot of such arbitration issues crop up around the world, which are then resolved. He said the change in government policies over the last few years had chiefly guided this major investment decision and also expressed satisfaction over the pricing policy for domestic natural gas for producing from difficult deep sea areas.The Total Investment & Insurance Solutions

No plan to issue next list of defaulters any time soon: RBI -The Total Investment & Insurance Solutions

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16 June 2017

Following the Reserve Bank of India (RBI) identifying 12 accounts that are responsible for 25 per cent of non-performing assets (NPAs), the central bank on Friday said it has no plans to come out with a next list any time soon.

"If you look at it (NPAs), RBI had a detailed circular. Twelve cases have been referred for resolution by Insolvency and Bankruptcy Code (IBC). Other (bad loan) cases, banks are encouraged to resolve in six months' time," RBI Deputy Governor S.S. Mundra said. The Total Investment & Insurance Solutions

"Where is the question of quickly coming out with the second list," he said.

Mundra was speaking on the sidelines of the 3rd national summit -- Bankers Borrowers Business Meet 2017 -- organised here by the Associated Chambers of Commerce and Industry of India (Assocham).The Total Investment & Insurance Solutions

Amazon Buying Whole Foods, Making Strong Move Into Groceries-The Total Investment & Insurance Solutions

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16 June 2017

 Online juggernaut Amazon is buying Whole Foods in a deal valued at about $13.7 billion, a strong move to expand its growing reach into groceries. The Total Investment & Insurance Solutions

Amazon.com Inc. will pay $42 per share for Whole Foods Market Inc., including debt. That marks an 18 percent premium to Whole Foods' closing price on Thursday. The Total Investment & Insurance Solutions

The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales. The grocery store operator was also under pressure from activist investor Jana Partners.

The grocery chain, known for its organic options, had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe's.

Amazon, meanwhile, has been expanding its reach in goods, services, and entertainment.

Whole Foods will keep operating stores under its name and John Mackey will as CEO, with headquarters in Austin, Texas. The Total Investment & Insurance Solutions

The company, founded in 1978, has struggled to differentiate itself as competitors also now offer a plethora of fresh and organic foods, and has said customers may be choosing "good enough" alternatives closer to home. In addition to other natural and organic grocers, it has cited pressure from restaurant chains, meal-delivery companies and traditional supermarkets such as Kroger. The Total Investment & Insurance Solutions

The deal is expected to close in the second half of 2017.The Total Investment & Insurance Solutions

World Stocks Rise After Greek Deal, Japan Rate Decision-The Total Investment & Insurance Solutions

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16 June 2017

World Stocks (The Total Investment & Insurance Solutions)

World stocks mostly rose Friday after Japan's central bank kept intact its ultra-lax monetary policy and Greece got a new deal to receive money and ease its debt burden. The Total Investment & Insurance Solutions

KEEPING SCORE: France's CAC 40 added 0.7 percent to 5,251 and Germany's DAX climbed 0.3 percent to 12,726. Britain's FTSE 100 gained 0.5 percent to 7,458. Wall Street was poised to open higher, with Dow and S&P 500 futures both up 0.1 percent. The Total Investment & Insurance Solutions

BANK OF JAPAN: The Bank of Japan noted signs of improvement in the world's third-largest economy and said it expected demand to accelerate, supporting a "moderate expansion." But it said inflation expectations were weakening, suggesting it sees no need to wind back its massive monetary stimulus. The central bank kept its key interest rate at minus 0.1 percent. The Total Investment & Insurance Solutions

GREENBACK STRENGTH: The dollar maintained its recent gains, helped by the BOJ's decision as well as the Federal Reserve's move this week to raise its key interest rate for the third time in half a year and trim its bond holdings on signs that the U.S. economy continues to improve. The dollar rose to 111.31 yen from 110.92 yen in late trading Thursday while the euro climbed to $1.1180 from $1.1147.

QUOTEWORTHY: "With inflation set to undershoot the bank's projections by a wide margin, the chances of policy tightening remain slim," Marcel Thieliant of Capital Economics wrote in a commentary. "It came as no surprise that the Bank of Japan decided earlier today to leave policy settings unchanged."

GREEK BAILOUT: Investors sentiment in Europe was supported by a deal between Greece and its eurozone creditors late Thursday. The agreement clears the way for the release of another 8.5 billion euros ($9.5 billion) in rescue money, which means the country won't face the risk of bankruptcy next month, when it has a big debt repayment due. Greece also secured promises that its debt repayments will be eased soon. The main Athens stock index rose 1.5 percent to a two-year high. The Total Investment & Insurance Solutions

ASIA'S DAY: Japan's Nikkei 225 stock index rose 0.6 percent to close at 19,943.26 but South Korea's Kospi finished practically unchanged at 2,361.83. Hong Kong's Hang Seng rebounded 0.2 percent to 25,626.49 after dropping more than 1 percent the day before while the Shanghai Composite lost 0.3 percent to 3,123.17. Australia's S&P/ASX 200 edged up 0.2 percent to 5,774.00. Taiwan's index rose and Southeast Asian benchmarks were mixed.

ENERGY: Oil futures bounced back after sliding to a seven-month low. Benchmark U.S. crude rose 38 cents to $44.84 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, climbed 57 cents to $47.49 a barrel in London.The Total Investment & Insurance Solutions

Nifty, Sensex may dip a bit – Thursday closing report-The Total Investment & Insurance Solutions

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15 June 2017

I had mentioned in Wednesday’s closing report that Nifty, Sensex were in no-man’s land. The major indices of the Indian stock markets suffered a minor correction on Thursday and closed with small losses over Wednesday’s close. The trends of the major indices in the course of Thursday’s trading are given in the table below: The Total Investment & Insurance Solutions

 

Major Indices (The Total Investment & Insurance Solutions)

Following their global peers, the Indian equity markets fell during the mid-afternoon session on Thursday, a day after the US Federal Reserve hiked its benchmark rates. The rate-hike assumes significance as it is expected to lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India, and is also expected to dent business margins as access to capital from the US will become expensive. Consequent to the late-night US rate hike, the Asian markets traded broadly in the red and eroded Indian investors' confidence in the highly expensive conditions in the domestic stock markets. Selling pressure was witnessed in banking, oil and gas and capital goods stocks. On the NSE, there were 837 advances, 805 declines and 311 unchanged.

The US Federal Reserve on Wednesday raised its benchmark interest rates for the third time since December and unveiled plans to start trimming its balance sheet, even as news of the Fed's relatively hawkish stance provoked caution in early trading in the Indian equity markets, which were trading flat on Thursday morning. "In view of realised and expected labour market conditions and inflation, the FOMC (Federal Open Market Committee) decided to raise the target range for the federal funds rate to 1% to 1.25%," the American central bank said in a statement after concluding its two-day monetary policy meeting. This rate is a 25 basis points increase over the current one of 0.91%. The Total Investment & Insurance Solutions

Expressing confidence that the US economy is recovering, the Federal Reserve said America's labour market has "continued to strengthen" and economic activity has been "rising moderately" so far this year. Employment gains have been moderate but solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and fixed investment by business has continued to expand. The statement also said inflation "has declined recently" and in the next 12 months "is expected to remain somewhat below 2% in the near term".

As per data made available, the previous rate hike by the US central bank in May had a 0.77% upward impact on the BSE Sensex, while the decision to hold rates in March was impacted by 0.64%. However, the recent US rate hike has belied fears of capital outflows from India, with foreign funds continuing to pump in huge liquidity into the stock market. Riding on ample liquidity and confidence of the global fund managers, India's market capitalisation has crossed a massive $2 trillion. In fact, such volumes have also provoked calls for caution in handling inflows. The Total Investment & Insurance Solutions

Two- and three-wheeler major Bajaj Auto on Wednesday said that it has reduced the prices of its bikes by up to Rs4,500 with immediate effect, in order to pass on the expected GST price advantage to its customers. "The savings will range up to Rs4,500 depending on the model and the state in which the motorcycle is purchased," the company said in a statement. According to the company, the post-GST benefits will vary for each state and differ across motorcycle models. "With GST implementation just around the corner, we felt that it would be appropriate to pass on this significant savings to customers," said Eric Vas, President, Motorcycle Business, Bajaj Auto. After the GST is implemented from July 1, motorcycles with more than 350 cc engines will attract a 28.84% tax, while mid-segment and high-end luxury cars will call for a tax incidence of 32.2%. The company’s shares closed at Rs2,810.00, down 0.54% on the BSE.

Taking higher haircuts is the way forward for resolving the bad loans of banks, UCO Bank MD and CEO RK Takkar said on Wednesday. "We may have to take some haircuts. The banks will be prepared for that and moving forward. I think that's the way things have to move. Most of these (non-performing assets) accounts will be having 40 per cent provisions, so the only issue that comes is for the banks to take higher haircuts," Takkar told BTVi in an interview. The Reserve Bank of India (RBI) has given banks a time frame of six months to resolve their bad loan cases, apart from the 12 identified by its Internal Advisory Committee, failing which the cases will have to be dealt with through the insolvency route. "Banks will be examining each NPA case during the six months. It is also to put pressure on the promoters," Takkar said. "It has to be done within six months. The only option left after that will be liquidation," he said. The RBI on Tuesday identified for insolvency proceedings 12 accounts totalling 25% of the non-performing assets (NPAs), or bad loans, of the banking system. The Bank Nifty closed at 23,391.75, down 0.46% on the NSE. The Total Investment & Insurance Solutions

Indians working overseas sent home $62.74 billion last year, an increase of 68.6% in the last decade, according to a UN agency. India received the most overseas remittances last year, a report by the International Fund for Agricultural Development (IFAD) issued here on Tuesday said. The money sent by Indians overseas amounted to 3.3% of India's gross domestic product, the report said. Gulf countries were the primary destination for Indian workers going abroad, with the US as a "popular destination". The data is likely to indicate stability of the Indian rupee against the US dollar and British pound sterling and ensure that there is hardly any volatility in the Indian stock markets on account of foreign institutional investors.

The top gainers and top losers of the major indices are given in the table below:

 

Top Gainer (The Total Investment & Insurance Solutions)

The closing values of the major Asian indices are given in the table below: The Total Investment & Insurance Solutions

Asian Indices (The Total Investment & Insurance Solutions)

Demonetisation could cause capital erosion for MFIs, NBFCs and SFBs in FY2018-The Total Investment & Insurance Solutions

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15 June 2017

 

Demonetisation (The Total Investment & Insurance Solutions)

Following demonetisation and political interference, microfinance institutions (MFIs), including non-banking finance companies (NBFCs) and small finance banks (SFBs) with exposure to states like Uttar Pradesh, Uttarakhand, Maharashtra and Madhya Pradesh, faced with asset quality overhang, are staring at significant credit costs and capital erosion in FY2018, says a research report. The Total Investment & Insurance Solutions

In a note, India Ratings and Research (Ind-Ra) says, "The current upheaval has validated our earlier opinion of borrower overleverage and idiosyncratic and systemic risks (due to political ecosystem) prevalent in the industry. Furthermore, borrower discipline, a key ingredient for the smooth functioning of microfinance, has severely deteriorated in certain districts of affected states and may take years to be restored. In addition, MFIs need to structurally look beyond joint liability group (JLG) loans for loan growth and product diversification by building capabilities."

 

Demonetisation (The Total Investment & Insurance Solutions)

Ind-Ra says as per its interactions with borrowers, unintentionally defaulting borrowers are unlikely to clear four or more equated monthly instalments (EMIs). "...borrower interactions over the last six months indicate that earning members have lost one-three-month wages or income due to demonetisation in FY2017. However, business almost recovered in 1QFY2018. The analysis suggests that incremental incomes of such borrowers in FY18 would be enough to repay three missed EMIs at best. However, MFIs may need to take haircuts on borrowers that have missed more than three EMIs or are intentional defaulters. The extension of loans by three months may work if default is unintentional." The Total Investment & Insurance Solutions

 

Demonetisation (The Total Investment & Insurance Solutions)

An analysis by the Fitch Group Company, indicates that aggregate collection efficiency of majority of MFIs with significant exposure to affected states on portfolio outstanding (as of December 2016) was 75%-80% higher in May 2017 compared with a low of 50%-60% in December 2016. "In case collections on portfolio as on 31 December 2016 do not increase from the current level, MFIs with significant exposure to affected states and with aggregate loans under management of Rs1,000 crore and above could incur credit costs and capital erosion and, thus, higher leverage," the ratings agency says. The Total Investment & Insurance Solutions

 

Demonetisation (The Total Investment & Insurance Solutions)

According to Ind-Ra, collection pick-up is slower than expectation. Maharashtra was one of the worst affected states, with monthly collections in some districts being in single digits, it says, adding, during the revival period after December 2016, the intensity of political interference in affected states was such that demand for loan waivers did not die down in some districts even after local elections. The Total Investment & Insurance Solutions

Ind-Ra's analysis indicates that in case collections (on portfolio as on 31 December 2016) do not increase from the current level, MFIs with significant exposure to affected states and with aggregate loans under management of Rs1,000 crore and above could incur credit costs and capital erosion and, thus, higher leverage. "At 80%, these MFIs could require equity of Rs100 -Rs300 crore, depending on loans under management, to ensure their capital levels remain over the regulatory minimum. The aggregate recovery level on the December 2016 portfolio should exceed at least 85% by 2QFY2018-3QFY2018 to prevent capital erosion beyond the regulatory minimum, without additional infusion for some MFIs. At 95% collections on portfolio at end-December 2016, MFIs are likely to witness marginal capital erosion," it added.

 

Demonetisation (The Total Investment & Insurance Solutions)

According to the ratings agency, lower-than-worse-case credit costs and equity erosions are supported by the fact that 15%-20% of assets under management of MFIs are off-balance-sheet, where credit enhancements, over-collateralisation and first loss default guarantees could range between 5% and 15% on an aggregate basis. The Total Investment & Insurance Solutions

Ind-Ra feels that MFI should now look beyond JLG. "We acknowledge that JLG loans address an important credit need and have an important role in financial inclusion. However, borrower selection and operating processes need to be reassessed. Moreover, MFIs need to develop expertise in other secured and unsecured credit products and roll them out gradually (early experience not pleasant for most MFIs). Instead of pursuing growth, they need to adopt best practices of NBFCs, minimise employee churn, and innovate lending and risk sharing mechanisms," it concluded.The Total Investment & Insurance Solutions