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Friday 1 February 2019
Nifty, Sensex May Head Higher – Weekly closing report -The Total Investment & Insurance Solutions
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01
February 2019
I had mentioned in last week’s closing report
that Nifty, Sensex were looking weak. The major indices of the Indian stock
markets staged a small rally over the week and closed with 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:
Selling
pressure in banking, automobile, healthcare and consumer durables stocks pulled
the Indian equity market lower by around 1% on Monday. However, global cues
such as positive Asian markets aided in arresting the downward spiral.
Tata
Steel said its step-down subsidiary, T.S. Global Holdings Pte Ltd (TSGH), has
signed definitive agreements with China's HBIS Group to divest a majority stake
in its South East Asia (SEA) business. Tata Steel also said the consideration
received from such sale would be "$327 million and equity stake of 30% in
the entity held by HBIS Group and TSGH on 70-30 basis". The Chinese group
was established on June 30, 2008, by the merger of Tangshan Iron and Steel
Group and Handan Iron and Steel Group of Hebei province.
Larsen
and Toubro (L&T) on Friday reported a 33.8% increase in its standalone net
profit for the October-December quarter of the financial year 2018-19. Its
standalone net profit stood at Rs1,634.78 crore, up from Rs1,221.95 crore
reported during the third quarter of the last financial year, the company said
in a regulatory filing to the BSE. The company's total income during the period
under review was Rs23,229.98 crore, 27.9% higher than Rs18,164.29 crore earned
during the corresponding period of FY18.
Sensex
and Nifty traded lower following the Asian stocks on Tuesday. The financials,
IT (information technology) and metal sectors on the BSE were in the red while
the telecom and metal stocks gained. The laggards were Yes Bank, Reliance Industries,
Power Grid, Infosys and HDFC declining up to 2%.
State-owned
lender Bank of India's net loss widened during the quarter ended December 31,
2018 due to higher provisioning for non-performing assets (NPAs). According to
the state-run lender, its net loss in the three months through December 2018
widened to Rs4,738 crore from a net loss of Rs2,341 crore reported for the same
period of the last fiscal year. However, the lender's net interest income
increased by 33.23% to Rs3,332 crore in the quarter under review from Rs2,501
crore in Q3FY18. The bank made provision worth Rs9,179.48 crore for NPAs during
the quarter under review from Rs4,373.06 crore made during the previous
corresponding quarter of 2017-18.
Diversified
conglomerate Piramal Enterprises Ltd (PEL) reported a rise of 23% in its
consolidated net profit during the third quarter of 2018-19. According to the
company, its net profit during the quarter under review rose to Rs603 crore, up
from Rs490 crore reported for the corresponding quarter of the previous fiscal.
Besides, the total income shot up 23% from Rs2,922 crore in the
year-ago-quarter to Rs3,592 crore in the third quarter of this fiscal.
Sensex
gained on Wednesday, while the Nifty was marginally higher with gains made by
the financial stocks. FMCG (fast moving consumer goods), oil and gas and realty
stocks slipped in the red but the key finance and banking stocks gained.
Yes
Bank said its two promoter groups -- Madhu Kapur Group and Rana Kapoor Group --
have agreed to nominate one representative director each on the Bank's Board.
The bank, in a regulatory filing also said that it has sought the Reserve Bank
of India's approval to appoint a temporary MD and CEO from February 1, 2019,
till Ravneet Singh Gill takes over as the next full-time MD and CEO on March
1.
Drug
maker Strides Pharma Science Ltd said its Canadian subsidiary acquired 80%
equity stake in Canada-based generics frim Pharamapar for $3 million (Rs21
crore). "The acquisition will enable us to build our operations, as the
pharmaceutical market in Canada is estimated to be $21 billion with a major
share of generics through retail pharmacies," said the city-based Strides
in a statement here. The two-decade old $8-million Pharmapar specialises in
generic medication to insured individuals in Canada. It is also a leading
partner to Quebec pharmacies and covers about 1,000 pharmacies with access to
12 banners and 100 products. Quebec accounts for 25% of the Canadian generics
market and is private.
In a
related development, the company's board has approved sale of its Australian
business Strides Pharma Global to the Arrow-Apotex merged entity for Australian
dollar 394 million ($281 million or Rs20 crore). "We will enter into a
10-year preferred supply agreement with the merged entity to result in
potential annual Ebitda of Australian $15-20 million," said the company in
a release.
Sensex
and Nifty logged strong gains on Thursday amid a surge in global markets as the
US Federal Reserve decided to keep the interest rates unchanged. Shares of IT
(information technology) companies led the gains as BSE IT index rose close to
2%. Key sectors banking, finance as well as oil and gas stocks also surged over
1%. US Fed's decision to keep the interest rates unchanged is good for the
emerging markets. Investors are also upbeat owing to the Q3 results by large
caps, according to market analysts. Also, the short covering ahead of the
F&O expiry due later in the day gave a push to the markets.
Stocks
of Dewan Housing Finance Corp (DHFL) plunged further after reports emerged that
the Ministry of Corporate Affairs (MCA) may probe allegation of a Rs31,000
crore scam. Stock exchanges have also sought clarification from the company
over reports of the likely probe. Around 10.20 a.m., the share price of DHFL on
the National Stock Exchange slumped nearly 20% to touch an intra-day low of
Rs129.50. On Tuesday, the investigative media organisation Cobrapost alleged
that DHFL promoters routed around Rs31,000 crore through dubious companies and
parked it outside India to acquire assets. The company on Tuesday rejected the
allegations. DHFL said it had met all its obligations to its lenders by paying
them back over Rs17,000 crore in the last three months.
The
major indices of the Indian stock markets were volatile and closed higher on
Friday. Interim Budget announcements of higher tax exemption limit and key
measures for the rural economy and SME sector buoyed the Indian equity market
on Friday. However, Sensex and NSE Nifty50 ceded some of the day's gains as key
finance and banking stocks ended lower. Auto stocks gained over 2% while the
metal stocks lost 3%. Index-wise, the Sensex closed 212.74 points or 0.59%
higher at 36,469.43 points after hitting a high of 36,778.14, while the Nifty
ended the Budget day's trade at 10,893.65, up 62.70 points.
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| Weekly Indices (The Total
Investment & Insurance Solutions) |
Budget 2019: Government steps up farm support, gives tax relief in pre-election budget-The Total Investment & Insurance Solutions
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01
February 2019
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Budget
(The Total Investment & Insurance Solutions)
India’s government pledged
750 billion rupees ($10.56 billion) to support poor farmers and reduced the tax
burden for the middle class on Friday, as it looked to rally support from
voters with the final budget before a general election.
Heading
into polls that must be held by May, Prime Minister Narendra Modi is facing
discontent over depressed farm incomes and doubts over whether his policies are
creating enough jobs.
And
with opinion polls suggesting that the ruling Bharatiya Janata Party (BJP)
could lose its parliamentary majority, the government delivered a budget to
shore up support in the countryside, where two-thirds of Indians live, and
among the urban, salary-earning middle class.
The
interim budget for 2019/2020 offered direct cash support of 6,000 rupees to 120
million poor farmers and allocated more funds for a rural jobs guarantee scheme
and rural development, like building roads and homes.
Vying
with an opposition that has also trumpeted budget-straining populist measures
to support from poorer voters, the government said it would launch a pension
scheme for workers in the unorganised sector, which employs some 420 million
people.
The
budget proposals also reduced the burden for the lower middle class, by
exempting people earning up to 500,000 rupees from income tax from an earlier
cap of 250,000 rupees.
Still,
the measures announced on Friday were aimed at putting money into pockets
quickly.
“This
is not just an interim budget, this is a vehicle for the developmental
transformation of the nation,” Acting Finance Minister Piyush Goyal told the lower
house of parliament, as BJP lawmakers thumped their desks and chanted “Modi,
Modi”.
“India
is solidly back on track and marching towards growth and prosperity,” said
Goyal, who delivered the budget in place of Finance Minister Arun Jaitley, who
was in the United States for medical treatment.
India
was expected to expand 7.2 percent this fiscal year, Goyal said, keeping its
slot as one of the world’s fastest growing major economies.
But
a report in the Business Standard daily the previous day belied the government
bullishness over the economy. It said that the government has been withholding
an official survey that showed India’s unemployment rate at its highest in
decades.
Garima
Kapoor, an economist at Elara Capital investment bank in Mumbai, said the budget
favoured farmers, older voters, workers in the unorganised sector, small and
medium sized businesses and middle class families.
“The
budget is clearly farm-focused, with the elections in mind,” Kapoor said.
The
interim budget for 2019/20 allocated 600 billion rupees for a rural jobs
programme and 190 billion for building of roads in the countryside.
The
big giveaways resulted in fiscal slippage, for a government that has been
seeking to drag down its deficit.
The
budget would put the fiscal deficit for the year ending on March 31 at 3.4
percent of gross domestic product (GDP), slightly higher than the targeted 3.3
percent.
Goyal
set a deficit target of 3.4 percent for 2019/20, instead of the earlier target
of 3.1 percent, but he went onto project the deficit would come down to 3
percent in both of the following two years.
“Overall,
the government presented an expansionary budget and prioritised populism over
fiscal prudence,” analysts at investment bank Nomura said in a note, calling it
an election budget.
India’s
fiscal slippage also drew a warning from credit rating agency Moody’s Investors
Service.
“Taken
together, it doesn’t really bode well for their medium-term fiscal
consolidation targets,” said Gene Fang, associate managing director at Moody’s
sovereign risk group. “From that perspective we would say, on balance, it’s
credit negative.”
But
Fang said the budget announcements did not change the rating agency’s stance on
India. Moody’s rates India at “Baa2” with a “stable” outlook.
Analysts
were skeptical about the government’s ability to even meet its upwardly revised
fiscal deficit targets for the ongoing and upcoming fiscal year, noting that
the government’s revenue projections, especially from the goods and services
tax (GST) seem optimistic.
“Their
revenue estimates seem to be optimistic, particularly on the GST front, which
the government is budgeting at about 18 percent growth rate,” said Shashank
Mendiratta an economist with IBM in New Delhi, adding that forecast looked “very
aggressive.”
India’s
bond yields spiked amid worries over the fiscal slippage and the government’s
borrowing plans. The benchmark 10-year bond yield rose 14 basis points to 7.62
percent, while the rupee traded at 71.26 against the U.S. dollar, about 17 paisa
weaker than its close on Thursday.
The
country’s stock markets gained, however, on expectations that the budget would
boost consumption. The broader NSE index closed up 0.6 percent at 10893.65.The
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01
February 2019
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Direct tax collection (The Total Investment & Insurance Solutions)
Direct tax collection for current fiscal
exceeded the budgeted target by Rs 50,000 crore to Rs 12 lakh crore, while FY20
fiscal the mop-up has been pegged at Rs 13.80 lakh crore.
The government had originally budgeted to
collect Rs 11.50 lakh crore in current financial year from direct taxes, which
include corporate tax and personal income tax (PIT). As per the 2019-20 Budget
estimates, out of the Rs 13.80 lakh crore direct taxes, the Government aims to
raise Rs 7.60 lakh crore from corporate tax and Rs 6.20 lakh crore.
This is higher than Rs 6.71 lakh crore
estimated to be collected from corporate tax and Rs 5.29 lakh crore from PIT in
the current fiscal ending March 2019. On the indirect tax front, customs
collection in the current fiscal too surpassed the budgeted estimate of Rs 1.12
lakh crore to touch Rs 1.30 lakh crore. In 2019-20, mop up from customs are
expected to be higher at Rs 1.45 lakh crore.
Excise duty collections in 2019-20 is
budgeted at similar levels for 2018-19 at Rs 2.59 lakh crore. GST collections,
however, is expected to rise to Rs 7.61 lakh crore in next fiscal. In the
current fiscal, GST collections is pegged at Rs 6.43 lakh crore , which is
lower than the targeted Rs 7.43 lakh crore. The Total Investment & Insurance Solutions
SBI expects asset quality to improve further after quarterly profit beats estimates-The Total Investment & Insurance Solutions
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01
February 2019
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State Bank of India (The
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State Bank of India (SBI) on
Friday said it expects non-performing asset levels to come down in the short
term after it beat expectations with its highest quarterly profit in nearly
seven years.
The strong results highlight a recovery at
the country’s biggest lender by assets, where results have been depressed over
the past year by higher provisioning after the central bank tightened rules to
tackle record levels of bad debt.
SBI, which accounts for more than a fifth of
India’s banking assets, saw its gross bad loans as a percentage of total loans
ease to 8.71 percent at end-December, from 9.95 percent in the previous quarter
and 10.35 percent in the year-ago period.
For an interactive graphic on the bad loans
ratio at some Indian public-sector lenders,In absolute terms, its gross bad loans eased
from the previous quarter to 1.88 trillion rupees, helped by a slowdown in
slippages.
“We are working in the direction of bringing
down the net NPA, and with some luck we should be below 3 percent by the end of
March 2019,” said SBI Chairman Rajnish Kumar.
As of the end of December, net NPA was at
3.95 percent, down from 4.84 percent in the previous quarter.
Net profit came in at 39.55 billion rupees
($556 million) for the third quarter ended Dec. 31, versus a loss of 24.16
billion rupees a year ago, and far ahead of analysts’ expectations for a profit
of 32.08 billion rupees, according to Refinitiv data.
The results were helped by a 21.3 percent
drop in bad loan provisions, a write-back on provisions made for mark-to-market
losses, and higher net interest income on the back of healthy growth in loans.
This is the bank’s biggest quarterly profit
since it reported 40.50 billion rupees in the March quarter of 2012.
Kumar also said the resolution of eight accounts,
which is in the “very advanced stage”, could generate 340 billion rupees.
“If all these 8 cases get resolved and reach
final conclusion within the next two months, then we are looking at a situation
where the gross NPA percentage may come down below 7 and net NPA percentage may
come down below 3 percent.”
SBI shares, which rose 3.1 percent after the
results, reversed course to close 3.2 percent lower as bond yields gained after
the government unveiled its budget. The
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($1 = 71.1200 rupees)
World Stocks Edge Down Ahead Of US Jobs Report-The Total Investment & Insurance Solutions
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01 February 2019
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Financial Markets (The Total Investment & Insurance Solutions)
World markets edged lower on Friday ahead of the monthly U.S. jobs
report and after the U.S.-China trade talks yielded few immediate results.
KEEPING SCORE: Germany's DAX fell 0.2 percent to 11,153 and France's CAC
40 fell almost 0.1 percent to 4,991. Britain's FTSE 100 advanced 0.1 percent to
6,978. Wall Street was set for a quiet open. The future contract for the Dow
Jones Industrial Average was flat while the S&P 500 futures shed 0.1
percent.
THE DAY IN ASIA: Hong Kong's Hang Seng index was flat at 27,930.74 while
the Shanghai Composite index jumped 1.3 percent to 2,618.23. Japan's Nikkei 225
index rose less than 0.1 percent to 20,788.39 after the country's unemployment
rate unexpectedly fell to 2.4 percent in December from 2.5 percent the month
before. South Korea's Kospi was down 0.1 percent at 2,203.46. Australia's
S&P ASX 200 edged 0.1 percent lower to 5,862.80. Shares rose in the
Philippines and Thailand but fell in Singapore. Markets in Taiwan were closed.
CHINA-U.S. TALKS: American and Chinese negotiators wrapped up two days
of talks Thursday without a deal but with an upbeat outlook. Presidents Donald
Trump said China has agreed to buy more American soybeans, but he expects to
meet President Xi Jinping to seek agreement on other contentious issues.
"There are some points we don't agree to, but we will agree," Trump
said. "I think when Xi and I meet, every point will be agreed to." A
tariffs cease-fire between the U.S. and China is set to end on March 2, and the
U.S. is expected to raise import taxes from 10 percent to 25 percent for $200
billion in Chinese goods.
MANUFACTURING DATA: A private survey suggested manufacturing in China
slowed in January. China's Caixin Manufacturing PMI was 48.3 points in January,
down from 49.7 in December. This was its lowest reading since February 2016.
Readings below 50 indicate contraction on the index's 100-point scale. Similar
surveys were downbeat also for Britain, where companies are suffering from the
uncertainty over Brexit, and in the eurozone.
ANALYST'S TAKE: "The terrible decline in the Caixin PMI index ...
shows just how important it is for China and the U.S. to secure a trade deal.
If nothing else, a deal should prevent the near-term imposition of higher
tariffs," Robert Carnell of ING Bank said in commentary.
U.S. JOBS DATA: Traders are awaiting the release of jobs data later
Friday. The Labor Department's monthly employment report will likely show that
U.S. employers added a good amount of jobs in January, despite a partial
shutdown of the government and concerns about global growth. According to data
provider FactSet, analysts expect 165,000 jobs to be added and the unemployment
rate to remain at a low 3.9 percent.
ENERGY: Benchmark U.S. crude dropped 2 cents to $53.77 per barrel in
electronic trading on the New York Mercantile Exchange. It lost 44 cents to
settle at $53.79 per barrel on Thursday. Brent crude, used to price
international oils, rose 25 cents to $61.90 per barrel. The contract dropped 70
cents to $60.84 per barrel in London.
CURRENCIES: The dollar strengthened slightly to 108.91 yen from 108.89
yen late Thursday. The euro rose to $1.1468 from $1.1445.The Total Investment & Insurance
Solutions
Thursday 31 January 2019
Nifty, Sensex Headed Higher Still – Thursday closing report-The Total Investment & Insurance Solutions
Contact Your Financial Adviser Money Making MC
31 January
2019
I had
mentioned in Wednesday’s closing report that Nifty, Sensex might rally a bit.
The major indices of the Indian stock markets rallied on Thursday and closed
with gains over Wednesday’s close. On the NSE, there were 998 advances, 742
declines and 318 unchanged. The trends of the major indices in the course of
Thursday’s trading are given in the table below:
Sensex
and Nifty logged strong gains on Thursday amid a surge in global markets as the
US Federal Reserve decided to keep the interest rates unchanged. Shares of IT
(information technology) companies led the gains as BSE IT index rose close to
2%. Key sectors banking, finance as well as oil and gas stocks also surged over
1%. US Fed's decision to keep the interest rates unchanged is good for the
emerging markets. Investors are also upbeat owing to the healthy Q3 results by
large caps, according to market analysts. Also, the short covering ahead of the
F&O expiry due later in the day gave a push to the markets.
Finance
Minister Piyush Goyal will present the Interim Budget in the Lok Sabha on
Friday that could virtually be a full-fledged budget of the Modi government
ahead of the Lok Sabha elections in which tax sops for the middle class and the
corporates could be expected along with a relief package to address agrarian
distress and the stressed small scale industry sector.
Stocks
of Dewan Housing Finance Corp (DHFL) plunged further on Thursday after reports
emerged that the Ministry of Corporate Affairs (MCA) may probe allegation of a
Rs31,000 crore scam. Stock exchanges have also sought clarification from the
company over reports of the likely probe. Around 10.20 a.m., the share price of
DHFL on the National Stock Exchange slumped nearly 20% to touch an intra-day
low of Rs129.50. On Tuesday, the investigative media organisation Cobrapost
alleged that DHFL promoters routed around Rs31,000 crore through dubious
companies and parked it outside India to acquire assets. The company on Tuesday
rejected the allegations. DHFL said it had met all its obligations to its
lenders by paying them back over Rs17,000 crore in the last three months. Dewan
Housing Finance Corporation Limited shares closed at Rs134.95, down 16.41% on
the NSE.
Thermax
Limited, a leading energy and environment solutions provider, on Thursday
inaugurated its new manufacturing facility in Andhra Pradesh's Sri City. The
facility will manufacture a wide range of vapour absorption machines comprising
chillers, heat pumps and heaters in its first phase, the company said in a
release. Thermax shares closed at Rs1,092.35, down 1.69% on the NSE.
US
stocks closed higher after the Federal Reserve left interest rates unchanged.
The Dow Jones Industrial Average jumped 434.90 points, or 1.77%, to 25,014.86.
The S&P 500 was up 41.05 points, or 1.55%, to 2,681.05. The Nasdaq
Composite Index increased 154.79 points, or 2.20%, to 7,183.08. The US central
bank said in a statement that the Federal Open Market Committee decided to
maintain the target range for the federal funds rate at 2.25% to 2.5% in
support of the goals to foster maximum employment and price stability. Major
indexes surged after Fed released its statement.
The
top gainers and top losers of the major indices are given in the table below:
 |
| Major Indices (The Total Investment & Insurance Solutions) |
Core sector output growth slows to 2.6% in December 2018 -The Total Investment & Insurance Solutions
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31 January
2019
 |
Economy (The Total Investment & Insurance Solutions)
Growth in the eight core sectors of the
economy dipped further 2.6% in December after hitting a 16- month low of 3.5
per cent in November.
The
decline was aided by a dip in the production of crude oil, chemical fertilisers
and sluggish performance in petroleumrefinery output. Electricity generation,
however, increased by 4.0 per cent in December 2018 over December 2017.
The combined Index of Eight Core Industries
NSE 1.32 % stood at 132.1 in December, 2018, which was 2.6 per cent higher as
compared to the index of December, 2017. Its cumulative growth during April to
December, 2018-19 was 4.8 per cent.The
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Fitch warns of fiscal slippage if government goes for populist interim budget -The Total Investment & Insurance Solutions
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31
January 2019
 |
Growth (The Total Investment & Insurance Solutions)
Ahead of BJP-led NDA government presenting
the final budget of its tenure, Fitch Ratings Thursday warned of a second
consecutive year of fiscal slippage in the event of Finance Minister Piyush
Goyal resorting to populist spending to win over lost vote base. The interim
budget to be presented Friday could give some indication of the government's
commitment to fiscal consolidation, which is one of the main sensitivities in
the sovereign ratings, Fitch said.
"Pressure for new expenditure to attract
votes, particularly among rural and small-business owner voters, has increased
as polls have shown the ruling Bharatiya Janata Party (BJP) is becoming less
assured of victory in the general elections. "The BJP has reportedly lost
votes in some recent state elections due to rural distress and public concerns
over job creation. Targeted cash programmes appear the most likely form of
support, as they would avoid downside risks of alternatives, such as the farm
loan waivers that undermined the loan repayment culture in the past," it
said.
Populist spending, it said, would aggravate
fiscal pressures, which are already building due to revenue shortfalls.
"Higher pre-election spending could risk a second consecutive year of
fiscal slippage relative to the government's targets and would further delay
plans to reduce the high general government fiscal deficit and debt
burden," it said.
Fitch said longer-term trends are more
important to the sovereign rating profile. "We believe the central
government may still be able to meet its fiscal deficit target of 3.3 per cent
of GDP for FY19, which would help support its fiscal credibility, although this
may be achieved by deferring capital expenditure and postponing bill payments
until after March," it said.
The
final budget for the fiscal year ending in March 2020 (FY20) will be presented
soon after the next government takes office following general elections, which
are due by May 2019. Revenue from the new GST is well below target, Fitch said
citing it as an reason for revenue falling short of the target so far in the
current fiscal year that ends on March 31, 2019. "Officially, the
government still aims to adhere to a debt ceiling of 60 per cent of GDP by
March 2025, as adopted under the Fiscal Responsibility and Budget Management
Act.
However, this would require significant and
politically difficult fiscal consolidation. The newly elected government's
final budget, likely to be presented around July, should provide more
meaningful guidance on the medium-term fiscal outlook," it said. Fitch's
base-case scenario is that general government debt will remain close to 70 per
cent of GDP in the next few years, and will constrain India's sovereign rating
(BBB-/Stable). Indian budgets normally offers guidance on plans for structural
reforms and tax changes
"The current government could choose in
its interim budget to signal the reform direction it would adopt in a possible
second term, but we believe it is more likely to include such plans in the final
budget...," it said.
The government's reform efforts have led to a
strong improvement in the World Bank's Ease of Doing Business ranking in recent
years, but FDI inflows have remained roughly stable as a percentage of GDP over
the past five years, as there are lingering difficulties, such as in enforcing
contracts and the functioning of the labour market.The Total Investment & Insurance Solutions
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