Nifty, Sensex will make an attempt to rally – Tuesday closing report-The Total Investment & Insurance Solutions

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27 February  2018

I had mentioned in Monday’s closing report that Nifty, Sensex would register more gains. The major indices of the Indian stock markets went up in the intial period of the sesssion and closed with small losses over Monday’s close. On the NSE, there were 614 advances, 1,120 declines and 288 unchanged. The trends of the major indices in the course of Tuesday’s trading are given in the table below:

 

Major Indices (The Total Investment & Insurance Solutions)

According to market observers, the key indices made gains on the back of an exponential rise in the US and Asian stock exchanges, however, further disclosure from Punjab National Bank (PNB), subdued investors' sentiments. Subsequently, selling pressure was witnessed in banking, capital goods and metals stocks. The benchmark indices opened higher, following global cues but gave up all gains after PNB revealed that the amount of fraudulent transactions could be Rs1,300 crore more than the current estimate of about Rs11,400 crore, observed market analysts. The volatility index, India Vix closed at 13.9225, up 1.66% on the NSE. The Total Investment & Insurance Solutions

Following a late night regulatory filing by Punjab National Bank (PNB) that upped the fraudulent amount involved in the Nirav Modi-engineered scam to Rs12,600 crore, the bank's shares nosedived in the bourses on Tuesday. PNB shares closed at Rs98.35, down 12.11% on the BSE.

The Income Tax Department said that it has filed six cases for the prosecution of Rotomac owner Vikram Kothari in connection with the Rs3,695 crore bank loan default case involving Bank of Baroda. Bank of Baroda shares closed at Rs141.45, down 1.43% on the NSE.

In a bid to get more Indians online, Google and telecom services provider Bharti Airtel on Tuesday announced they were collaborating to introduce low-cost smartphones powered by Android Oreo (Go Edition) in the domestic market. With this, India will become one of the first countries to commercially roll-out smartphones running on Android Oreo (Go) Operating System (OS). 'This partnership is a major milestone for the 'Mera Pehla Smartphone' initiative. We are excited to collaborate with Google and our device partners to work towards bringing smartphones within the reach of more people," Vani Venkatesh, Chief Marketing Officer, Bharti Airtel, said in a statement.  Entry-level 4G smartphones under Airtel's "Mera Pehla Smartphone" programme will be shipped with Android Oreo (Go) OS starting March 2018. Bharti Airtel shares closed at Rs431.95, up 2.08% on the NSE. The Total Investment & Insurance Solutions

The Andhra Pradesh government signed MoUs worth Rs4,39,765 crore at the CII Partnership Summit 2018 which concluded at Visakhapatnam. Chief Minister N. Chandrababu Naidu announced that the government signed 734 MoUs with various companies. The investment is expected to create 11,02,125 jobs. During the first two days, agreements worth nearly Rs3 lakh crore of investments were signed while on the last day, more companies came forward to sign the documents expressing their willingness to invest over Rs1 lakh crore. Auto, pharma and healthcare, aerospace and defence, construction, logistics and food processing are the key sectors which attracted investments. On the last day, Vedanta Group signed three MoUs to invest Rs21,500 crore. Vedanta Group's Hindustan Zinc Ltd, Sterlite Power and Sterlite Tech exchanged the MoUs. These agreements are likely to assist in a long term bullish trend in the Indian stock markets. The Total Investment & Insurance Solutions

Shares of both ACC Ltd and Ambuja Cements Ltd slipped on Tuesday after they announced that “there are currently some constraints to implement a merger”. Analysts said calling off of the merger between ACC and Ambuja Cements will weigh on investor sentiments. In May 2017, Ambuja and ACC had announced the possibility of a full merger between both the companies. However, the board instead approved the sale and purchase of materials and services between Ambuja and ACC. ACC shares closed at Rs1,632.80, down 1.82% on the NSE. Ambuja Cements shares closed at Rs252.00, down 4.16% on the NSE.

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)

Recovery to pick up pace in Q3 FY2018, GDP growth expected at 6.9%: HDFC Bank-The Total Investment & Insurance Solutions

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27 February  2018

 

GDP(The Total Investment & Insurance Solutions)

India's economic recovery would pick up pace during third quarter (Q3) of financial year (FY) 2018 with gross domestic product (GDP) marginally below that previous quarter, says HDFC Bank in a research note, ahead of the release of India's economic growth for the third quarter. 

In the report, HDFC Bank says, "We expect economic recovery that started in Q2 to continue its upward climb in the third quarter to 6.9% (Real GDP) slightly lower than 7.0% registered in the corresponding period of last year but significantly higher than 6.3% clocked in Q2 of the current fiscal. For the year as a whole, we expect GDP growth to be around 6.5% with possible upside, implying a residual of 7.2% for the fourth quarter." The Total Investment & Insurance Solutions

According to the Bank, a slowdown mainly in the agricultural sector is likely to be compensated by a higher growth rate expected in industrial sector and services. It says, "An expected strong rebound in the industrial sector, particularly manufacturing, as the transient effects of GST fades away, corroborates well with improvement in corporate earnings and other fast moving indicators such as IIP and PMI for the third quarter. While service sector will be benefitted from a favourable base impact, sequential recovery in most of the lead indicators for the sector such as bank deposit & credit, cargo handled at major ports, passengers carried by domestic airlines and foreign tourist arrivals and government expenditure bode well for our expectations."

Commenting on the agriculture sector, HDFC Bank says, based on a 2.8% dip expected in Kharif crop output in 2017-18, as per the first Advance estimates, a continued lag in area under Rabi cultivation (642.88 lakh hectares as against 648.2 covered in the corresponding period last year) and an unfavourable base effect, it expects growth in the agricultural sector to remain tepid in the third quarter as well. The Total Investment & Insurance Solutions

         

For FY2019, the report expects GDP growth to pick up to 7.3% from 6.5% in FY18 on the back of an improvement in private consumption demand, increase in capacity utilization rates and revival of the private capex cycle. Push from government spending is likely to continue in FY19 with its share in GDP likely to rise to 11.7% from 11.2% in FY18, it added.

It says, "On the supply side, assuming a normal monsoon and a favorable base effect, agriculture growth is expected to grow by 3-4% in FY19. Rising farm output, coupled with higher MSPs announced by the government are likely to improve farm incomes and rural consumption. In the non-Agri sector, we expect manufacturing growth to continue its upward climb, benefitting not just from rising domestic demand but also the improving global environment. We expect export growth to pick up to 5% from 4.4% in FY18. That said, higher import growth (expect a rise not just in oil imports but also non-oil non-gold imports) is likely to keep the net exports contribution to GDP subdued." 

"Overall, we are optimistic about the growth outlook in FY19 as the economic recovery gains momentum and the effects of the demonetisation (DeMo) shock and goods and services tax (GST) related disruptions fade away. A statistical base effect will be favourable at least in the first half of FY19," the report concluded.The Total Investment & Insurance Solutions

Cement demand growth likely to increase by 4-5% in FY2019: ICRA-The Total Investment & Insurance Solutions

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27 February  2018

 

Cement (The Total Investment & Insurance Solutions)

Domestic Cement production in 9M FY2018 at 216.5 million MT is higher by 2.7%, compared to 210.8 million MT in 9M FY2017. According to an ICRA note, the cement off-take continued to be weak in 8M FY2018 and showed only a marginal increase of 0.5% in November 2017 on an M-o-M basis at 24.1 million MT. However, in December, 2017, production increased by 8.4% on an M-o-M basis to 26.3 million MT. Based on current trends, ICRA expects demand growth of around 3% in FY2018. This demand growth is expected to improve to 4-5% in FY2019. The Total Investment & Insurance Solutions

Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA said, “This demand growth is bolstered by a pick-up in the housing segment – primarily affordable housing, rural housing and higher infrastructure spend. Improved rural incomes, higher rural credit and increased allocation for rural, agricultural and allied sector are likely to boost rural housing demand. Further, PMAY continues to be a major driver for cement demand with around 50 lakh houses targeted in the rural areas and 37 lakh houses in the urban areas in FY2019. Also, the demand is likely to be supported by the higher outlay on urban housing and the increased thrust on infrastructure as reflected in 21% higher allocation.” The Total Investment & Insurance Solutions

In Q1 FY2018, cement production declined by 3.3% to 75.7 million MT on a Y-o-Y basis. This was primarily due to the various local issues across regions such as sand shortage, implementation of the Real Estate Regulatory Authority (RERA) Bill and drought. In Q2 FY2018, the GST transitional issues, the monsoons and continued sand unavailability were the factors which impacted demand. Cement production reported a decline of 0.4% in Q2 FY2018 to 68.8 million MT on a Y-o-Y basis. In Q3 FY2018, production increased by 11.6% to 75.6 million MT supported by demand in AP, Telangana, the eastern (except Bihar) and western markets. Also, production was lower in Q3 FY2017 on account of demonetisation. Rural housing has witnessed a pick-up, post monsoons, due to the improvement in rural economy.

In the western and eastern markets, prices are higher by Rs. 40/bag and Rs. 20-25/bag respectively in 10M FY2018 compared to 10M FY2017. While the prices continue to remain almost at similar levels in 10M FY2018 compared to 10M FY2017 in the northern markets, they were lower by Rs. 10/bag in the southern markets. The Total Investment & Insurance Solutions

“While the cement prices in most markets are higher or at previous year’s level in 10M FY2018, the cost-side pressures on account of higher power and fuel and freight costs are likely to weigh negatively on the profitability of the cement companies during Q4 FY2018,” Majumdar added.The Total Investment & Insurance Solutions

Govt has directed PSU Banks to examine above Rs50cr NPAs for fraud -The Total Investment & Insurance Solutions

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27 February  2018

Bank (The Total Investment & Insurance Solutions)

The government has asked public sector banks to examine non-performing assets worth more than Rs50cr for frauds. Any newly identified NPA for fraud would propel the bank to make higher provisions in the coming period, which would dent PSU bank’s profitability. The PSU Bank stocks are expected to react negatively to this news tomorrow.The Total Investment & Insurance Solutions

Further, banks have also been asked to promptly identify frauds and take action within prescribed deadlines. Earlier today, the government had given public sector banks 15 days to identify weaknesses and take pre-emptive action against rising operational and technological risks. PSU Banks have been given 15-day deadline to take pre-emptive action and identify gap/weakness to gear up for rising operational and technical risks.

These measures come in the wake of a massive fraud recently detected at Punjab National Bank, the size of which could swell to as much as $2bn. On February 14, PNB told that it had unearthed a $1.77bn fraud at a branch in Mumbai. The fraud involved issuance of unauthorised letters of undertaking that were used by companies led by diamond traders Nirav Modi and his uncle Mehul Choksi. The state-owned bank said the quantum of reported unauthorized transactions could rise to ~Rs1,300cr.The Total Investment & Insurance Solutions

Markets Tread Water As They Await Powell Testimony-The Total Investment & Insurance Solutions

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27 February  2018

South korea financial markets (The Total Investment & Insurance Solutions)

Global stock markets were little changed Tuesday ahead of the new Federal Reserve chair's testimony to Congress later. Given that Jerome Powell has yet to chair a policymaking meeting, anything he says on the U.S. economic outlook and the likely path of U.S. interest rate could stir markets out of their current torpor. The Total Investment & Insurance Solutions

KEEPING SCORE: In Europe, Britain's FTSE 100 was flat at added 0.1 percent to 7,288 while France's CAC 40 fell 0.1 percent to 5,342. Germany's DAX underperformed its peers, trading 0.3 percent lower at 12,484. Wall Street was poised for modest losses at the open with Dow futures and the broader S&P 500 futures down 0.1 percent. The Total Investment & Insurance Solutions

FED WATCH: How U.S. stock markets perform could hinge on what Powell says in his testimony to the House Financial Services Committee. In December, the Fed forecast that it would raise rates three times in 2018, but many think it may accelerate that pace. Investors will also want to know whether Powell is becoming convinced that the Fed is finally on the verge of achieving its 2 percent inflation target and if so, whether it might soon feel the need to speed up its rate increases. The Total Investment & Insurance Solutions

ANALYST TAKE: "the feeling so far is that Powell is unlikely to diverge from the current path which would imply three rate hikes this year but with the economy strengthening and tax reform potentially providing additional stimulus, a fourth hike may be warranted this year and along with additional increases further down the road," said Craig Erlam, senior market analyst at OANDA. "The market seems quite well positioned on this at the moment which may reduce the likelihood of significant shocks, although we've seen how vulnerable markets have shown themselves to be in recent weeks." The Total Investment & Insurance Solutions

SKY HIGH: The big corporate news Tuesday came in London where Comcast, the owner of NBC and Universal Pictures, launched a bid for British pay TV broadcaster Sky that threatens to thwart the takeover ambitions of media mogul Rupert Murdoch. The firm is offering 22.1 billion pounds ($29.50 billion) for Sky. The proposed cash offer values each Sky share at 12.50 pounds, which represents a 16 percent premium to the bid made by Murdoch's 21st Century Fox. Sky's shares rallied 21 percent. The Total Investment & Insurance Solutions

THE QUOTE: "The stock has soared to its highest level since 2000 in response although the hefty premium that it currently trades above the proposed offer shows that the market is expecting higher bids in the future," said David Cheetham, chief market analyst at XTB.

ASIA'S DAY: Japan outperformed the region, with its benchmark Nikkei 225 jumping 1.1 percent to 22,389.86. South Korea's Kospi finished 0.1 percent lower at 2,456.14. Hong Kong's Hang Seng index dropped 0.7 percent to 31,268.66, while China's Shanghai Composite Index slumped 1.1 percent to 3,292.07. Australia's S&P/ASX 200 gained 0.2 percent to 6,056.90.

OIL: Benchmark U.S. crude fell 19 cents to $63.72 per barrel on the New York Mercantile Exchange while. Brent crude, the international standard, declined 3 cents to $67.26 per barrel. The Total Investment & Insurance Solutions

CURRENCIES: The euro was flat at $1.2319 while the dollar rose 0.1 percent to 108.04 yen.The Total Investment & Insurance Solutions

Nifty, Sensex To Register More Gains – Monday closing report-The Total Investment & Insurance Solutions

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26 February  2018

I  had mentioned in Friday’s closing report that Nifty, Sensex were heading for gains next week. The major indices of the Indian stock markets rallied on Monday and closed with significant gains over Friday’s close. On the NSE, there were 1,031 advances, 720 declines and 284 unchanged. The trends of the major indices in the course of Monday’s trading are given in the table below: The Total Investment & Insurance Solutions

Major Indices (The Total Investment & Insurance Solutions)

Positive global cues pushed the key indices of the Indian equity market higher on Monday. According to market observers, positive Asian markets, along with buying in automobiles, banks, capital goods, oil and gas and metals stocks led to the rise. The Total Investment & Insurance Solutions

Reliance Infrastructure Ltd on Monday announced it has won an arbitration award of Rs292 crore in a case against the Goa government heard by a Joint Electricity Regulatory Commission-constituted tribunal. In an order earlier this month, the tribunal also ordered payment of annual interest at 15% on the award amount if the state government fails to pay it by the deadline of April 15, 2018, a company statement here said. "The need for arbitration arose due to prolonged non-payment of dues by the Goa government towards supply of electricity by Reliance Infrastructure from its 48 MW Goa power plant in Sancoale," it said. "The total outstanding dues along with interest as on October 31, 2017, amount to Rs278 crore. The Tribunal has also awarded Reliance Infrastructure interest from October 2017 till the date of the award, which amounts to Rs14 crore." The company’s shares closed at Rs467.65, up 2.45% on the NSE.

Bharti Airtel on Monday said it has joined the 'Seamless Alliance', which would empower mobile operators and airlines to extend their services into airline cabins, a company statement said here. The formation of 'Seamless Alliance' was announced on Monday in Barcelona. Through this alliance, the member operators, including Airtel, would be able to continuously provide their customers - via satellite technology - the same high speed, low latency connectivity from ground, to air and back again.  It would also significantly reduce costs for everyone involved while creating a smooth, positive user-experience. Other founding members include OneWeb, Airbus, Delta and Sprint. The global alliance - which aims to attract additional industry operators beyond the five founding members - would eliminate the immense costs and hurdles commonly associated with acquisition, installation, and operation of data access infrastructure by streamlining system integration and certification, providing open specifications for interoperability, increasing accessibility for passengers and enabling simple and integrated billing. The company’s shares closed at Rs423.15, down 0.60% on the NSE. The Total Investment & Insurance Solutions

The passports of absconding Indian businessman Nirav Modi and his uncle Mehul Choksi, involved in the $1.8 billion Punjab National Bank (PNB) fraud, have been revoked, sources said on Saturday. The CBI on Saturday questioned Punjab National Bank (PNB) Managing Director-cum-CEO Sunil Mehta and Executive Director K.V. Brahmaji Rao in connection with the Rs11,300 crore/$1.8 billion bank fraud case, while the ED kept on its seizure of fraud accused diamantire Nirav Modi's assets. PNB shares closed at Rs112.00, down 1.37% on the NSE.

Close on the heels of a massive Rs11,300 crore PNB scam, three fresh financial frauds have come to light including the alleged involvement of a Delhi-based jeweller, who has been accused of defrauding the Oriental Bank of Commerce (OBC) to the tune of about Rs390 crore through Letters of Credit. OBC shares closed at Rs95.05, down 11.22% on the NSE.

Release of key domestic macro-economic data, combined with global market volatility and movement of funds, are expected to dictate the direction of the Indian equity markets during the week, say market analysts. Apart from other developments on the domestic front, the Indian equity markets would seek direction from global markets as the results (earnings) season is almost over, pointed out market analysts. Also, the movement of funds and crude oil prices are expected to influence the market sentiment this week. Provisional figures from the stock exchanges showed that last week foreign institutional investors (FIIs) sold scrips worth Rs5,781.98 crore, while domestic institutional investors (DIIs) purchased scrips worth Rs5,972.69 crore.

US stocks traded higher as investors digested the central bank's newly-released monetary policy report. The Dow Jones Industrial Average on Friday gained 347.51 points, or 1.39 per cent, to 25,309.99. The S&P 500 increased 43.34 points, or 1.60%, to 2,747.30. The Nasdaq Composite Index was up 127.31 points, or 1.77%, to 7,337.39. The Fed is expected to continue gradual interest rate hikes this year on the expectation of stronger economic outlook. "The (Federal Open Market) Committee expects that the ongoing strength in the economy will warrant further gradual increases in the federal funds rate," said the semi-annual Monetary Policy Report to the Congress. The report was released before new Fed Chair Jerome Powell's first Congress testimony which was scheduled on February 27. The Total Investment & Insurance Solutions

The top gainers and top losers of the major indices are given in the table below: The Total Investment & Insurance Solutions

 

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

70% IGST refunds stuck due to flawed claims furnished by exporters: CBEC-The Total Investment & Insurance Solutions

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26 February  2018

GST (The Total Investment & Insurance Solutions)

As about 70 per cent of GST refunds stuck due to flawed information, the CBEC has asked exporters to amend the details in the final returns of subsequent month to enable the department to process the refund claims by March.The Central Board of Excise and Customs (CBEC) has sanctioned Rs 40 billion worth refunds to exporters in 4 months since October. Still about Rs 100 billion worth claims are stuck due to discrepancies in the information furnished by exporters to GST Network (GSTN) in filing GSTR 1 or Table 6A or GSTR 3B and shipping bill filed with Customs."The analysis of data indicates that only about 32 per cent records of GSTR 1 / Table 6A have been transmitted from GSTN to Customs. In other words, a majority (about 70 per cent) of refund claims are held up either due to insufficient information or lack of due diligence on the part of exporter while filing GST returns," the CBEC said in a communication to Principal Commissioners.The analysis of claims data post-October 2017 indicates that while the quantum of error is decreasing, a large number of exporters are still filing incomplete GSTR 1 or Table 6A, where shipping bill number or date or port code are missing."These records are not processed/forwarded to Customs by GSTN. E-mails have been sent to exporters asking them to correct their records through amendment process of GSTR 1 ie through Table 9 of GSTR 1 of the following month," the CBEC said.The CBEC had in October 2017 started refunds for exporters of goods who have paid Integrated GST (IGST) and have claimed a refund based on shipping bill by filling up Table 6A. While for those businesses making zero-rated supplies or those want to claim input credit have to fill Form RFD-01A.Analysis of GSTN data shows that in a large number of cases, the refund claimed by an exporter is higher than the GST paid by him and consequently, the information filed by exporters is not forwarded to Customs by GSTN."In these cases also, e-mails have been sent to exporters asking them to correct their records through amendment process of GSTR 1 ie through Table 9 of GSTR 1 of the following month," the CBEC said.The apex indirect tax authority also said where exporters have already filed information through Table 9 of GSTR-1, the said information is being validated by GSTN. "The validated information is expected to be forwarded by GSTN to Customs by mid-March 2018 for further processing".AMRG & Associates Partner Rajat Mohan said the issue could be resolved if GST compliance structure is simplified and government programmes are designed to achieve a robust digital literacy in the long run."IGST refund to exporters are issued in a fully automatised environment, and even the smallest mismatch in invoice number results in non-issuance of refunds. The Total Investment & Insurance Solutions

Now, the government has planned to provide an alternative mechanism whereby exporters can get such errors rectified with the help of a manned interface placed at Customs department. This could address the worries of the exporters if this manned intervention is operated timely," Mohan said.The CBEC listed out the major errors that are committed by the exporters in claiming refunds. These are a mismatch of invoice number, taxable value and IGST paid in the Shipping Bill vis-a-vis the same details mentioned in GSTR 1 / Table 6A, incorrect shipping bill numbers in GSTR-1, GSTIN declared in the shipping bill does not match with the GSTIN used to file the corresponding GST returns.Besides, there are instances of non-filing or incorrect filing of electronic Export General Manifest (EGM)."Information is being made available to exporters on a real-time basis with regard to the errors status on ICEGATE website for registered users. Details of refund sanctioned is being sent through SMS on registered mobile phones," the CBEC noted.The Total Investment & Insurance Solutions

Sterlite Tech zooms 7% on bagging Rs3,500cr order from Indian Navy-The Total Investment & Insurance Solutions

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26 February  2018

 

Sterlite Technologies Ltd (The Total Investment & Insurance Solutions)

Sterlite Technologies Ltd. has won an order to design, build and manage the Indian Navy’s communications network. The order is of great significance as this is the first time that an integrated naval communications network at such a scale is being built in India. The scope requires Sterlite Tech to also manage the communications network for over a decade through its system integration capabilities. The company is of the opinion that its experience with creating an intrusion-proof communication network for the Indian Army in Jammu & Kashmir will be leveraged for the Navy’s communications network.

Out of Rs3,500cr, 75% of the order value is to build the network and 25% for maintenance of the order. The order is likely to be executed over a period of 3-4 years. The current order book of the company is ~Rs4,600cr. This order, once finalized, will boost the order book significantly to ~Rs8,100cr.

STL is a leading manufacturer of optical products and provider of system integration services. The company’s capacity expansion in optical fibre cable (OFC) to 50mn fibre kilometres (fkm) by June 2019 (30mn fkm in September 2017) would help it leverage the increasing demand for OFC from global telecos w.r.t shift towards 5G network. Also, favourable government schemes in the domestic market would aid growth. Thus, its capacity utilization is expected to increase to 85-95% by FY19. We are positive on the stock’s prospects and expect revenue and PAT CAGR of 26.4% and 41.5% respectively (FY17-20E).

Sterlite Technologies Ltd is currently trading at Rs367.20 up by Rs23.6 or 6.87% from its previous closing of Rs343.60 on the BSE. The scrip opened at Rs354.90 and has touched a high and low of Rs378.75 and Rs352 respectively. So far 29,31,748(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs13,778.03cr.The Total Investment & Insurance Solutions

Buffett Says Tax Cuts Provide Huge Boost To US Businesses-The Total Investment & Insurance Solutions

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26 February  2018

Warren Buffett(The Total Investment & Insurance Solutions)

Billionaire Warren Buffett says American businesses are getting a significant boost from the tax overhaul, but health care costs remain a drag so he hopes a new initiative his company started with Amazon and JP Morgan Chase will deliver significant savings. The Total Investment & Insurance Solutions

Buffett appeared on CNBC Monday after releasing his annual letter to Berkshire Hathaway shareholders over the weekend. Buffett's Omaha, Nebraska, conglomerate reported a $29 billion paper gain on far-reaching changes to the U.S. tax code, and the conglomerate will benefit from a lower tax rate going forward. The Total Investment & Insurance Solutions

"It's a huge tail wind," Buffett said.

The tax gain Berkshire reported was mostly related to adjustments in the paper value of its deferred taxes and unrealized capital gains on stocks. It drove most of the increase in Berkshire's $44.9 billion profit last year, up from $24.1 billion in 2016. The Total Investment & Insurance Solutions

But Buffett says he's had a hard time finding acquisitions at reasonable prices, so he's sitting on $116 billion cash and short-term bonds.

Buffett said he expects he'll eventually find a good use for a big chunk of that cash, but he may have to wait for a downturn in the economy. If he can't find enough sizeable deals, he said Berkshire may repurchase more stock instead of initiating a dividend. The Total Investment & Insurance Solutions

Last month, Berkshire announced its new health care initiative with Amazon and JP Morgan. Buffett didn't discuss many details of the plan Monday.

But Buffett said the goal is much bigger than simply shaving 3 percent off health costs through negotiating power. The Total Investment & Insurance Solutions

"We're looking for something much bigger than that," Buffett said. "Hopefully we can find a way where perhaps better care could be delivered even at a somewhat lesser cost." The Total Investment & Insurance Solutions

Buffett said Berkshire and its partners have been inundated with offers from companies and individuals who want to help with the health cost project, but it's too early to consider those because the group is still looking to hire an executive to lead the effort. The Total Investment & Insurance Solutions

Buffett said he remains confident in Wells Fargo and Berkshire is the bank's largest stakeholder with about 10 percent of the bank's shares.

Buffett said he believes Wells Fargo CEO Tim Sloan has worked to clean up the misconduct that was reported at the bank in recent years. Regulators determined that bank employees opened millions of unauthorized accounts to meet sales quotas. The Total Investment & Insurance Solutions

"My guess is they have scrubbed and scrubbed and found all the things that were done wrong," Buffett said.

Buffett said it could take the bank a long time to work its way back into regulators' good graces again. The Total Investment & Insurance Solutions

The success Buffett has had over the years means a lot of investors watch his moves closely. He said Monday that Berkshire is unsurprisingly his favorite stock, but he pointed out that Apple is the stock Berkshire bought most last year.

Buffett said investors can get clues about what he likes best by looking at Berkshire's portfolio. Wells Fargo is the biggest holding worth about $29 billion, but Berkshire's Apple stake isn't far behind at $28 billion.

Several of Berkshire's other biggest stock holdings have been held for decades. Those include large stakes in Coca-Cola and American Express.

Beside investments, Berkshire owns more than 90 different businesses in a variety of industries, including BNSF railroad, Geico insurance and several electric utilities and manufacturing firms.The Total Investment & Insurance Solutions