SIP Mantra, Start Early, Invest Regularly, Stay Invested-The Total Investment & Insurance Solutions

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19^Th January 2019

SIP (The Total Investment & Insurance Solutions)

Nifty, Sensex Directionless – Weekly closing report-The Total Investment & Insurance Solutions

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18 January 2019

I had mentioned in last week’s closing report that Nifty, Sensex might be under pressure. The major indices of the Indian stock markets were range-bound during the week and closed with minor gains on Friday 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 major indices were range-bound on Monday and closed with small losses over Friday’s close. On the NSE, there were 660 advances, 1,081 declines and 344 unchanged. The Nifty50 on the National Stock Exchange also slumped and was around the 10,700-mark level during the afternoon session. Weakness in the Asian markets and depreciation in the Indian rupee dampened the domestic market sentiments, analysts said. 

The rupee was trading around 70.80 (1.32 p.m.) against the previous close of 70.49 per dollar. Except IT (information technology) and Teck (technology, media and entertainment) stocks, all the sectoral indices declined during the day, led by selling pressure in banking, capital goods and auto stocks.

Private lender Yes Bank has appointed former bureaucrat Brahm Dutt as its non-executive part-time Chairman till July 4, 2020. According to the company, Dutt has been on the Board of Yes Bank since July 2013 as an 'Independent Director', and has contributed to almost all the sub-committees of the Board during this period. He is currently the Chair of the 'Nomination and Remuneration Committee'. The company said the bank now has eight members on its Board which includes Rana Kapoor, T.S. Vijayan, Uttam Prakash Agarwal, Pratima Sheorey, Ajai Kumar, Subhash Kalia and Mukesh Sabharwal.

The market indices rallied on Tuesday and closed with gains over Monday’s close. On the NSE, there were 1,081 advances, 611 declines and 369 unchanged. Markets surged as lower inflation figures gave way to expectations of an ease in the monetary policy by the central bank. The Reserve Bank of India (RBI) is set to meet in February to decide on the policy rate. Lower fuel prices eased India's retail inflation in December to 2.19%, a 18-month low, from the annual rate of 2.33% in November, data showed after the markets closed on Monday. Except for the telecom counters on BSE, all the other sectors gained, led by IT (information technology), energy and oil and gas stocks.

Troubled Jet Airways' scrip shot up by more than 16% amidst reports that a rescue deal has been sealed between the cash-strapped airline and its partner, Etihad Airways. At present, UAE's Etihad Airways has a 24% stake in the beleaguered Jet Airways. 

Broadly negative global cues, especially owing to the political uncertainty in the UK, subdued the Indian equity market on Wednesday. Globally, investors reacted with caution after the incumbent British government lost the Brexit vote triggering a no-confidence motion. However, positive macro-trade data kept the benchmark Sensex and Nifty in the green for most part of the day's session. On the NSE, there were 828 advances, 861 declines and 374 unchanged.

Etihad offered to invest in Jet Airways at 50% discount of Jet’s 15 January closing price. Jet Airways has now gone through three consecutive quarters of over Rs 1,000 crore in losses. Earlier reports suggested the airline's lessors and MRO (maintenance, repair, overhaul) partners are losing patience over non-payment of dues. And its lenders are now wary of a Kingfisher-like situation after Jet Airways defaulted on loan repayments in December. Jet Airways owes over Rs 8,000 crore to SBI-led consortium and its account. As a part of restructuring, Etihad, which holds a 24% stake in the Naresh Goyal-led company, said it would invest in Jet only at a price of Rs150 apiece, which is nearly half of Tuesday's closing price of Rs294.40.  

Amid mixed global markets and the ongoing corporate earning session, Indian equities ended mixed on Thursday. Ahead of the release of quarterly results by index heavyweights, the Nifty ended above 10,900. According to market participants, investors were cautious ahead of the third quarter results by Reliance Industries and Hindustan Unilever, to be announced later in the day. 

Oil and gas and finance scrips led the gains on the Sensex. The index pivotal, banking stocks erased early losses to end flat while the healthcare stocks declined 0.90%. Stock-wise, Axis Bank, HCL, HDFC, TCS and Kotak Mahindra gained in the range of 1% to 2%.

Sun Pharma lost over 5% followed by Yes Bank which declined over 3%. State Bank of India, Bajaj Finance, Hindustan Unilever declined between 1% to 2%. Globally, markets traded on a mixed note amid political uncertainty in the UK over Brexit and the longest-ever partial shutdown of the US government. However, British Prime Minister Theresa May won a confidence vote in the House of Commons on Wednesday, averting any immediate risk of an early general election.

Mixed global cues, weakness in the Indian currency and selling in the healthcare and finance stocks dragged the key equity indices on Friday, with Sensex and Nifty ending flat with a positive bias. BSE Healthcare index tanked 2%, while telecom scrips also witnessed selling pressure, losing over 3%.

Non-banking finance company (NBFC) India Infoline Finance Ltd (IIFL Finance) will shortly open a bond's public issue on January 22 to raise up to Rs2,000 crore for funding business growth and expansion, its parent firm IIFL Holdings said on Friday. 

Telecom major Reliance Jio Infocomm reported a 65% increase in its standalone net profit for the October-December 2018 period. Its standalone net profit stood at Rs831 crore in the third quarter of the financial year 2018-19, against Rs504 crore reported in October-December 2017-18, the company said in a statement. Reliance Jio's operating revenue during the period under review stood at Rs10,383 crore, 50.9% higher than the Rs6,879 crore earned during the corresponding period of the last financial year. Its subscriber base as on December 31, 2018 was 280.01 million.The Total Investment & Insurance Solutions

Major Indices (The Total Investment & Insurance Solutions)

India aims 'Top 50' rank next year in ease of doing business: PM Narendra Modi -The Total Investment & Insurance Solutions

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18 January 2019

ease of doing business (The Total Investment & Insurance Solutions)

Prime Minister Narendra Modion Friday said that the implementation of GST and other measures of simplification of taxes have reduced transaction costs and made processes efficient. Delivering his inaugural address to the ninth edition of biennial Vibrant Gujarat Global Investors Summit, which went underway at Mahatma Mandir in Gandhinagar, Modi maintained that "India is now ready for business as never before.”

“In the last 4 years, we have jumped 65 places in the Global Ranking of World Bank’s Doing Business Report,” he pointed out adding that “but we are still not satisfied. I have asked my team to work harder so that India is in the top 50 next year.” The Prime Minister claimed that doing business in India has become cheaper and faster through GST and other tax reforms as well as through digital processes and single point interfaces.

 “From the start of business to its operation and closure, we have paid attention in building new institutions, processes and procedures,” he said adding that “all this is important, not just for doing business but also for ease of life of our people”. “At 7.3%, the average GDP growth over the entire term of our Government, has been the highest for any Indian Government since 1991,” Modi said.

 “At the same time, the average rate of inflation at 4.6% is the lowest for any Indian Government since 1991,” he added. “We have worked hard to promote manufacturing to create jobs for our youth. Investments through our 'Make in India' initiative, have been well supported by programmes like ‘Digital India’ and ‘Skill India’,” he added further.

Dealing upon the challenges facing India, Modi said that In India the challenge is to grow horizontally & vertically. “Horizontally we have to spread benefits of development to regions & communities that have lagged behind,” he said. “Vertically we have to meet enhanced expectations in terms of quality of life & quality of infrastructure,” he added. Speaking earlier, Mukesh Ambani, Chairman & Managing Director, Reliance Industries NSE 4.40 % Limited lauded the prime minister as a “Man of Action.” Remembering Mahtama Gandhi on the year of his 150th birth anniversary, Ambani said that while Gandhiji led India’s movement against political colonisation.”Today, we have to collectively launch a new movement against data colonisation.”

 “In this new world, data is the new oil. And data is the new wealth”, he said adding that India’s data must be controlled and owned by Indian people - and not by corporates, especially global corporations. “For India to succeed in this data-driven revolution, we will have to migrate the control and ownership of Indian data back to India - in other words, Indian wealth back to every Indian.” he added further and urged the Prime Minister to make this “one of the principal goals” of his Digital India NSE 0.00 % mission. The Total Investment & Insurance Solutions

India gold demand lags on price surge; all eyes on Lunar New Year-The Total Investment & Insurance Solutions

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18 January 2019

 

Gold (The Total Investment & Insurance Solutions)

Gold demand turned fragile this week in India as local prices jumped to their highest level in 2-1/2-years, while traders in major buying centres in Asia pinned hopes on purchases ahead of the approaching Lunar New Year.

A salesman shows gold necklaces to a customer at a jewellery showroom during Dhanteras, a Hindu festival associated with Lakshmi, the goddess of wealth, in Kolkata, India November 5, 2018. REUTERS/Rupak De Chowdhuri/File Photo

Local gold prices in India, world’s second-largest gold consumer, touched their highest since July 2016 this week.

“Prices are just moving higher and higher. Buyers are waiting for a correction in prices and the annual budget as there is speculation of a duty cut,” said a Mumbai-based dealer with a bullion importing bank.

Prime Minister Narendra Modi’s government will present the budget on Feb. 1.

The bullion industry has been urging a tax reduction to combat smuggling, which has increased since India raised the import duty to 10 percent in August 2013, to narrow its current account deficit.

The industry speculates about the duty cut every year before the budget but the government hasn’t made any change in the tax structure in last six years, the dealer quoted earlier said.

Dealers in India were offering a discount of up to $7 an ounce over official domestic prices this week, up from last week’s discount of $6. The domestic price includes a 10 percent import tax.

“Supplies are limited in the market due to lower imports in last few weeks,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

India’s gold imports in December fell 24.3 percent from a year ago to $2.57 billion, trade ministry data showed earlier this week.

Premiums in top consumer China stood mostly unchanged from last week at $6 to $9 an ounce.

Buying has been drying up a bit, said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.

“Firstly, some restocking (by jewellers for Lunar New Year) has already been done, and secondly, the appreciation of the yuan has kept the Chinese gold price stable without much volatility.”

Traders expected demand to pick up ahead of the Lunar New Year, which falls during the first week of February, since gold is considered a popular gift during this period.

In Singapore, premiums firmed slightly to 80 cents to $1.50 from last week’s 60 cents-$1.50 range, while Hong Kong premiums were unchanged from last week at 60 cents-$1.30.The Total Investment & Insurance Solutions

Niti Aayog bats for direct benefit transfer to farmers -The Total Investment & Insurance Solutions

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18 January 2019

 

Farmer (The Total Investment & Insurance Solutions)

Farmers could get annual income support of Rs 15,000 per hectare if the Niti Aayog’s proposal for an upfront subsidy through direct benefit transfer is accepted, said people with knowledge of the matter. The Aayog has suggested that all subsidies for agriculture, including fertiliser, electricity, crop insurance, irrigation and interest subvention be replaced by income transfer. Telangana and Odisha have adopted income support to help alleviate agrarian distress as opposed to loan waivers that have been announced by other, mostly Congress-ruled, states. The Centre has said that such debt forgiveness doesn’t address the root cause. The agriculture sector gets input subsidies worth over Rs 2 lakh crore every year. Based on the total cultivable area in the country, it amounts to Rs 15,000 per hectare. Some experts and policy makers contend that subsidies are not equitable or efficiently disbursed. In some cases, they have an adverse effect on natural resources and sustainability of agricultural production, they say.

A senior government official told ETthat the idea is to move to a mechanism that addresses agrarian distress, prevents the misuse of subsidised urea and power and gives economic freedom to farmers. It will also stop massive leakages such as subsidised fertiliser being diverted to other industries. “The government is of the view that this is the only way forward to supplement the farm income,” the official said. “Besides, giving money directly to farmers would give them freedom to choose the best crop and not go only for subsidised items, be it fertiliser or free power.” The Total Investment & Insurance Solutions

Minister Narendra Modi had said in 2015 that the government wants to double farm income by 2022- 23. This needs an annual growth rate of over 10% but farm output has been lagging, resulting in declining agricultural income. It is estimated that the income from agriculture won’t be enough to keep as many as 53% of farm households out of poverty since they operate on small holdings, some less than a hectare. However, the Centre will need to convince states to participate in such a programme. Half the agricultural subsidies are contributed by states in the form of discounted power and canal irrigation, among others. The fertiliser subsidy comes from the Centre and that on seeds is shared between the two.

Global Stocks Rise On Hopes For US Trade Progress-The Total Investment & Insurance Solutions

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18 January 2019

Financial Markets (The Total Investment & Insurance Solutions)

Global stocks rose Friday after investors saw signs of possible progress toward a resolution of the U.S.-Chinese tariff war.

KEEPING SCORE: In Europe, London's FTSE 100 gained 1.4 percent to 6,932 and Germany's DAX advanced 1.5 percent to 11,079. France's CAC 40 rose 1.6 percent to 4,872. On Wall Street, the future for the Dow Jones Industrial Average rose 0.7 percent and that for the Standard & Poor's 500 index was up 0.5 percent.

ASIA'S DAY: The Shanghai Composite Index advanced 1.4 percent to 2,596.01 and Hong Kong's Hang Seng gained 1.2 percent to 27,082.01. Tokyo's Nikkei 225 rose 1.3 percent to 20,666.07 and Seoul's Kospi added 0.8 percent to 2,124.28. Sydney's S&P-ASX 200 was 0.5 percent higher at 5,879.60 while India's Sensex shed 0.1 percent to 36,319.31. Benchmarks in Taiwan, New Zealand and Southeast Asia also advanced.

US-CHINA TRADE: China said that its economy czar, Vice Premier Liu He, will visit Washington for talks on Jan. 30-31 aimed at ending the tariff war sparked by U.S. complaints about Beijing's technology ambitions. Business groups and economists were looking for Liu and his American counterpart, U.S. Trade Representative Robert Lighthizer, to take part in talks as a sign lower-level negotiations earlier in Beijing made progress. The Wall Street Journal reported Treasury Secretary Steven Mnuchin was willing to roll back U.S. tariff hikes on Chinese goods, though it said Lighthizer and other officials opposed that idea.

ANALYST'S COMMENT: Markets have welcomed "the latest indication of further interest from the U.S. to resolve the U.S.-China trade uncertainty," said Jingyi Pan of IG in a report. "While skepticism may well persist, and worries build ahead of Chinese growth figures next week, the driving force for intraday market action belongs to trade."

TESLA CUTS: Shares in Tesla were down almost 7 percent in pre-market electronic trading in New York after the company said it would cut 7 percent of its workforce. CEO Elon Musk said the cuts are meant to reduce costs as the company lowers the price for its cars. He said in a note to staff that the road ahead is "very difficult."

ENERGY: Benchmark U.S. crude gained 78 cents to $52.85 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 24 cents on Thursday to close at $52.07. Brent crude, used to price international oils, added 83 cents to $62.01 per barrel in London. It lost 14 cents the previous session to $61.18.

CURRENCY: The dollar advanced to 109.51 yen from Thursday's 109.24 yen. The euro gained to $1.1404 from $1.1388.The Total Investment & Insurance Solutions

Nifty, Sensex Indecisive – Thursday closing report-The Total Investment & Insurance Solutions

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17 January 2019

I had mentioned in Wednesday’s closing report that Nifty, Sensex had paused for breath. The major indices of the Indian stock markets were range-bound on Thursday and closed with small gains over Wednesday’s close. On the NSE, there 655 advances, 1,034 declines and 375 unchanged. The major trends of the Indian stock markets on Thursday are given in the table below:

Amid mixed global markets and the ongoing corporate earning session, Indian equities ended mixed on Thursday. Ahead of the release of quarterly results by index heavyweights, the Nifty ended above 10,900. According to market participants, investors were cautious ahead of the third quarter results by Reliance Industries and Hindustan Unilever, to be announced later in the day. 

Oil and gas and finance scrips led the gains on the Sensex. The index pivotal, banking stocks erased early losses to end flat while the healthcare stocks declined 0.90%. Stock-wise, Axis Bank, HCL, HDFC, TCS and Kotak Mahindra gained in the range of 1% to 2%.

Sun Pharma lost over 5% followed by Yes Bank which declined over 3%. State Bank of India, Bajaj Finance, Hindustan Unilever declined between 1% to 2%. Globally, markets traded on a mixed note amid political uncertainty in the UK over Brexit and the longest-ever partial shutdown of the US government. However, British Prime Minister Theresa May won a confidence vote in the House of Commons on Wednesday, averting any immediate risk of an early general election.

The State Bank of India (SBI) on Thursday said that lenders to the financially stressed Jet Airways are in talks for a restructuring plan to ensure long term viability of the airline. The state owned bank is part of the group of lenders to the airline and its statement comes after the airline on Wednesday said that a resolution plan to infuse capital and reduce debt was under active consideration. 

Fortis Healthcare said that it has completed the acquisition of the entire portfolio of RHT Health Trust's Indian assets worth approximately Rs4,666 crore. "With the completion of the aforesaid, International Hospital Limited (IHL), Fortis Health Management Limited (FHML), Escorts Heart and Super Speciality Hospital Limited (EHSSHL), Hospitalia Eastern Private Limited (HEPL) and Fortis Hospotel Limited (FHTL) have become wholly-owned subsidiaries (direct or indirect) of the company," the company said in a statement. "The subsidiary companies combined, own the entire portfolio of India assets held by RHT - comprising 12 clinical establishments, 2 operating hospitals, 1 clinical establishment under construction as well as 4 greenfield clinical establishments." According to Fortis Healthcare, the transaction is "beneficial and will be value accretive" for the company and its shareholders as it would save significant clinical establishment fees. "As a result, the aforesaid transaction is expected to result in significant improvement in the company's operating profitability i.e. EBITDA and cash flows," the statement said. Fortis Healthcare shares closed at Rs136.50, down 1.02% of the NSE.

In a surprise move, State Bank of India (SBI) put its entire loan exposure of Rs15,431.44 crore in bankrupt Essar Steel on sale even though the prolonged insolvency case had neared resolution last October. The bank, as per a notice on its auction website, said it plans to sell the account to asset reconstruction companies (ARCs), banks, non-banking financial companies (NBFCs) or financial institutions (FIs). It has set the minimum reserve price for the loan at Rs9,587.64 crore. The price is set on the basis of the net present value (NPV) of the minimum recovery discounted at 18 per cent with a time factor of one year. And, the minimum recovery to SBI as per the approved resolution plan of ArcelorMittal subsidiary ArcelorMittal India Private Ltd (AMIPL) is Rs11,313.42 crore. ArcelorMittal's proposal of Rs42,000 crore to the lenders and additional Rs8,000 crore towards capital expenditure in Essar Steel was approved by the Committee of Creditors (CoC) to Essar Steel on October 25, 2018. However, a group of creditors including the promoters of Essar Steel have challenged the decision of the CoC. Earlier this month, the National Company Law Appellate Tribunal (NCLAT) ordered its Ahmedabad bench to expedite the resolution process. The CoC, led by SBI, has also filed an application at NCLAT requesting for a speedier disposal of the case within the next three weeks. Essar Steel was admitted for insolvency proceedings in August 2017 and the resolution has taken more than 500 days instead of the mandatory 270 days. The notice put out by the country's largest lender, however, has asked for a claw-back option from the buyer if the amount is realised prior to one year. State Bank of India shares closed at Rs297.40, down 1.90% on the NSE.

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

The closing values of the major Asian indices are given in the table below:

 

Major Indices (The Total Investment & Insurance Solutions)

GDP growth likely to be tad higher at 7.5% in FY20, says India Ratings and Research -The Total Investment & Insurance Solutions

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17 January 2019

 

GDP (The Total Investment & Insurance Solutions)

The country's economy is likely to grow a tad higher at 7.5 per cent in 2019-20 on account of steady improvement in major sectors -- industry and services, said India Ratings and Research (Ind-Ra) Thursday.

 According to the advance estimates of the Central Statistics Office (CSO), the economy may clock a growth rate of 7.2 per cent in the current financial year, up from 6.7 per cent in the previous year. Ind-Ra, a Fitch Group company, expects gross domestic product (GDP) growth to be a "tad higher" at 7.5 per cent in fiscal 2019-20.

 After demonetisation and the GST implementation, the agency had expected 2018-19 to be a year of quick recovery and, indeed, the recovery has been sharp with GDP growth coming in at 7.2 per cent, it said.

 It further said GDP growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors. "However, GDP growth in 2019-20 will be more dispersed and evenly balanced across sectors as well as demand-side growth drivers," Ind-Ra said.The Total Investment & Insurance Solutions

Over the past few years, private final consumption expenditure and government final consumption expenditure have been the primary growth drivers of Indian economic growth.

Ind-Ra said it believes that investments are slowly but steadily gaining traction, with gross fixed capital formation growing 12.2 per cent in the current fiscal and projected to clock 10.3 per cent in the next year.

 "This is certainly a comforting development, but the flip side of this development is that it is primarily driven by the government capex (capital expenditure), as incremental private corporate capex has yet to revive" it said. It further said that due to the slowdown in private corporate and household capex, GDP growth has failed to accelerate and sustain itself close to or in excess of 8 per cent

Electric mobility, drones, bulk drugs to contribute $170 bn to manufacturing by 2025-26: DIPP working group -The Total Investment & Insurance Solutions

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17 January 2019

 

India (The Total Investment & Insurance Solutions)

Biotechnology, electric mobility, unmanned aerial vehicles and bulk drugs are among the eight emerging sectors that will contribute $170 billion to India’s manufacturing gross value added by 2025- 26, a working group of the Department of Industrial Policy and Promotion (DIPP) has said.

Medical devices, robotics & automation equipment, advanced materials, and chemicals are the other emerging sectors that the group has identified to play a significant role in manufacturing. “These sectors have exponential growth potential which need to be explored. Detailed assessment of the potential of these sectors should be taken up and actionable roadmaps drawn up to harness the potential,” said the working group on making India a $5 trillion economy by 2025 in its report.

 Focus on emerging sectors is part of the three pronged strategy suggested by the group to achieve $1 trillion from manufacturing. Focus on existing high impact sectors and medium, small and micro enterprises (MSME) are the other two pillars. Another $1 trillion from is expected to come from agriculture and allied activities while contribution from the services NSE 0.32 % sector is pegged at $3 trillion. The report has suggested an e-commerce policy and regulatory framework to strengthen the country’s logistics sector and using e-commerce to facilitate access to larger markets both domestic and international.

It said in the defence sector, there is a need to identify key components and systems and encourage global leaders to set up manufacturing base in India by offering limited period incentives; and ensure incentives result in technology/process transfer. "Where applicable, leverage government purchases (Offset Policy), particularly for technology transfer; and ensure high-quality anchor investors capable of spurring growth of associated suppliers (including MSMEs) and offer limited period incentives to anchors, if required," it said.

 To boost electronics manufacturing, it said the government should consider offering additional fiscal incentives such as a limited-period tax holiday to players investing more than an identified threshold of investment. The report suggested measures to boost manufacturing in other areas including aeronautical, space, garments, organic and ayurvedic products. The Total Investment & Insurance Solutions