Nifty, Sensex has more room to rise - Thursday closing report-The Total Investment & Insurance Solutions

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12 January 2017

Anticipation of healthy quarterly earnings results and budgetary sops, coupled with a strengthened rupee, buoyed the Indian equities markets on Thursday. Both the key indices provisionally closed in the green, as healthy buying was witnessed in capital goods, IT and TECK (technology, media and entertainment) stocks. The Total Investment & Insurance Solutions

However, negative European indices and caution ahead of the release of the Index of Industrial Production (IIP) and Consumer Price Index (CPI) data for December capped gains. 

The trends of the major indices in the course of Thursday’s trading are given in the table below:

 

Major Indices (The Total Investment & Insurance Solutions)

The wider 51-scrip Nifty of the National Stock Exchange (NSE) rose by 26.55 points or 0.32% to 8,407.20 points. The Sensex touched a high of 27,278.93 points and a low of 27,166.69 points during the intra-day trade. The Total Investment & Insurance Solutions

The BSE market breadth was tilted in favour of the bears - with 1,556 declines and 1,208 advances. On Wednesday, the benchmark indices surged on the back of positive global cues and higher crude oil prices. The broader market underperformed the headline indices with BSE Midcap gaining 0.16% and BSE Smallcap down 0.15%. 

IT Index rose around 2% on BSE with Infosys gaining 3.5% in today’s trade ahead of its Q3 earnings tomorrow. The Total Investment & Insurance Solutions

Pharma index pared earlier losses but still settled the day 0.60% lower. The index was down after Trump said yesterday pharmaceutical companies are "getting away with murder". Lupin, Dr Reddy’s and Sun Pharma fell between 0.6%-2%. The Total Investment & Insurance Solutions

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

 

Top Gainer (The Total Investment & Insurance Solutions)

The U.S. dollar nursed widespread losses on Thursday after President-elect Donald Trump's long-awaited news briefing provided scant clarity on future fiscal policies, disappointing bulls wagering on major stimulus. European shares fell, bucking gains in Asia and Wall Street overnight and weighed down by a 2 percent slump in healthcare stocks after Trump said pharmaceutical firms had been "getting away with murder" with their prices.

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)

Bulls back in saddle - Wednesday closing report-The Total Investment & Insurance Solutions

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11 January 2017

Positive global cues, coupled with healthy third quarter (Q3) results pushed the Indian equities markets higher on Wednesday. Besides, higher global crude oil prices and anticipation of sops to be announced during the Union Budget enhanced investors' risk-taking appetite. Healthy buying was witnessed in banking, metal and capital goods stocks. The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged up by 92.05 points or 1.11 per cent to 8,380.65 points. The Sensex touched a high of 27,174.87 points and a low of 26,978.44 points during the intra-day trade. The Total Investment & Insurance Solutions

The trends of the major indices in the course of Wednesday’s trading are given in the table below: The Total Investment & Insurance Solutions

 

Major Indices (The Total Investment & Insurance Solutions)

The BSE market breadth was tilted in favour of the bulls - with 1,726 advances and 1,079 declines. On Tuesday, the Indian equities markets surged on the back of expectations on more spending support from the upcoming Union Budget and a strengthened rupee. 

In the broader market, BSE Midcap index (up 1.4%) outperformed the headline indices. BSE Smallcap index gained 0.9%. The Total Investment & Insurance Solutions

Metal index rose on account of rise in international coking coal prices and China’s expected cut down of steel output in the next fiscal. Tata Steel sizzled as reports on Chinese steel companies reducing its steep output surfaced in markets in the early hours of the trading session. BSE Metal settled the day 4.4% higher, led by gains in Jindal Steel (up 9.2%), Hindalco (up 6.4%), SAIL (up 6.3%), Nalco (up 6%), and Coal India (up 5.6%).

IndusInd Bank rallied more than 6%. Lupin shares gained more than 2% on account of approval from US Food and Drug Administration for Desoximetasone cream that is used for relief of the inflammatory and pruritic manifestations of corticosteroid-responsive dermatoses.

Investors await the key quarterly corporate results from software services firm TCS and Infosys. The IT giants will report their December quarter earnings on Thursday and Friday, respectively. Stocks of both firms ended flat today. The Total Investment & Insurance Solutions

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

 

Top Gainer (The Total Investment & Insurance Solutions)

The Asian markets was trading on a two-month high as investors were on the edge watching for President-elect Donald Trump's news conference later in the day for any clues to his policies on tax, fiscal spending, international trade and currencies. 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)

World Bank cuts Indian GDP growth for fiscal to 7%-The Total Investment & Insurance Solutions

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11 January 2017

In its first projection on India post-demonetisation, the World Bank has lowered the country's GDP growth estimate for this fiscal to 7 per cent, from its earlier estimate of 7.6 per cent made in June last year. The Total Investment & Insurance Solutions

"Growth in India is estimated to reach 7 per cent in financial year (FY) 2017...reflecting a modest downgrade to India's expansion," the multilateral lender said in its Global Economic Prospects report released here on Tuesday. The Total Investment & Insurance Solutions

"Unexpected demonetisation - the phasing out of large denomination currency notes - weighed on growth in the third quarter of FY 2017," it said.

"Weak industrial production and manufacturing and services purchasing managers' indexes further suggest a setback to activity in the fourth quarter of FY 2017," it added.

Last week, India's official statistician in New Delhi also lowered the country's gross domestic product growth estimates for 2016-17 to 7.1 per cent, compared with the 7.6 per cent growth in 2015-16. The Total Investment & Insurance Solutions

While announcing its monetary policy review last month, the Reserve Bank of India acknowledged the demonetisation factor and lowered their gross value added (GVA) growth estimates for the current fiscal to 7.1 per cent from the 7.6 per cent forecast earlier.

On November 8, Prime Minister Narendra Modi announced the demonetisation of Rs 1,000 and Rs 500 notes, saying the move was aimed to eliminate black money, counterfeit currency and terror financing.The Total Investment & Insurance Solutions

Lending rates cut leads to balance transfers in home loan market: ICRA-The Total Investment & Insurance Solutions

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11 January 2017

The lending rates cut, which effectively set off a price war in the Rs 13 trillion home loan market, could lead to increased competition and balance transfers in the highly competitive housing loan market, rating agency ICRA said in its report. The Total Investment & Insurance Solutions

With a bulk infusion of fresh liquidity arising out from the demonetisation, State Bank of India reduced the lending rates for home loans by 50 bps to 8.6 percent (for floating rate loans), various lenders followed suit. The Total Investment & Insurance Solutions

Key lenders that together account for over 65 percent of the home loan market, now offer interest rates in the range of 8.5-8.7 percent after the reduction, compared with their earlier rates of 9.1-9.3 percent, the agency said. The Total Investment & Insurance Solutions

"While the reduced rates are applicable for new loans and loans linked to Marginal Cost of Funds based Lending Rate (MCLR), this could lead to increased competition and balance transfers in the highly competitive Indian housing loan market, especially the prime salaried segment," the report said. The Total Investment & Insurance Solutions

Loans linked to MCLR for banks were less than 15 percent of the overall home loan book, it said. The Total Investment & Insurance Solutions

The report said lenders might also try to retain borrowers by giving them the option to shift to a lower interest rate by paying a fee. The Total Investment & Insurance Solutions

Housing finance companies (HFCs) would also benefit from the reduction in MCLR by various banks and should be able to re-price a portion of their liabilities.

However, the report said the smaller HFCs are likely to get impacted more on account of their relatively higher operating cost ratios. The Total Investment & Insurance Solutions

"Given that only a few HFCs would be able to match the interest rates being offered by banks , this could lead to some balance transfers from HFCs to banks and hence an increase in banking sector market share," the report added.The Total Investment & Insurance Solutions

Urjit Patel calls for unified financial regulator for Gujarat's GIFT City-The Total Investment & Insurance Solutions

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11 January 2017

Reserve Bank of India (RBI) Governor Urjit patel called for a unified regulator for the successful execution at India's first International Financial Services Centre (IFSC) coming up at Gujarat International Finance Tec-City (GIFT). The Total Investment & Insurance Solutions

"A unified financial regulatory framework providing for a single regulator for GIFT City could contribute to better regulation and supervision of the financial entities," Patel said here at the ongoing Vibrant Gujarat Global Summit 2017. The Total Investment & Insurance Solutions

"While individual regulators can supervise the entities initially when the size of the business is small, a unified regulator would be necessary to pay undivided attention to the IFSC. Work on the design of such a framework should begin soon so as to be able to implement this in time," he added. The Total Investment & Insurance Solutions

He also said that the existing laws governing financial contracts in India should be reviewed and gaps addressed. The Total Investment & Insurance Solutions

"Based on the review, a world class legal framework for financial contracts in GIFT could be enabled, either by appropriately amending the existing laws governing financial contracts or enacting a fresh law," Patel said. The Total Investment & Insurance Solutions

"Either way, this should be expedited, may be by constituting a high level working group to address this gap in mission mode," he added.The Total Investment & Insurance Solutions

Fitch downgrades India's rating on 'uncertain' note ban benefits-The Total Investment & Insurance Solutions

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11 January 2017

Fitch Ratings has downgraded India's rating to 6.9 per cent for 2016-17 from the earlier 7.4 per cent due to "uncertainty" over the benefits of demonetisation. The Total Investment & Insurance Solutions

"The demonetisation of large denomination bank notes has caused short-term disruption in India's economy and led us to downgrade our growth forecasts for 2017," Fitch Ratings said in its latest bi-monthly newsletter released on Tuesday. 

"The move has some potential benefits, but the positive effects are unlikely to be strong or last long enough to make a significant difference to government finances or medium-term growth prospects. The Total Investment & Insurance Solutions

"The impact on the economy will increase the longer the disruption continues, but Fitch has already revised down its GDP growth forecast for the financial year ending March 31 to 6.9 per cent from 7.4 per cent," it said. The Total Investment & Insurance Solutions

The move has the potential to raise government revenue and encourage bank lending, but Fitch Ratings believes the positive effects were unlikely to be strong and sufficiently enduring to support credit profiles, it said. The Total Investment & Insurance Solutions

"The withdrawal of bank notes has left consumers without the cash needed to complete purchases and farmers without the funds to buy seeds and fertilizer for the sowing season. Supply chains have been disrupted and time spent queueing in banks has meant lost hours of productive work," the newsletter said. The Total Investment & Insurance Solutions

Though the intentions behind demonetisation were positive and in keeping with broader reform efforts, the short-term pain may outweigh the uncertain long-term gains, Fitch said.

Government finances may also benefit from a proportion of high-denomination notes not being traded. This potentially significant amount would be subtracted from the Reserve Bank of India's (RBI) liabilities and the authorities would have the option to transfer this windfall to the government. The Total Investment & Insurance Solutions

Fitch, however, said there were considerable uncertainties over the potential positive effects.

"Most importantly, demonetisation is a one-off event. People that operate in the informal sector will still be able to use the new high denomination bills and other options (like gold) to store their wealth. There are no new incentives for people to avoid cash transactions," it said.

"The informal sector could soon go back to business as usual," it added.

There are similar uncertainties over the impact on the banking sector. While some banks have already reported large increases in deposits since demonetisation began, a surge in low-cost funding might encourage credit growth and support the economy.

"The positive impact on funding conditions will depend on deposits remaining in banks beyond the next few months. There is nothing to prevent them being withdrawn again," the newsletter said.The Total Investment & Insurance Solutions

15% of cash-based transactions have moved to digital since demonetisation: SBI Survey -The Total Investment & Insurance Solutions

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10 January 2017

 

Cashless (The Total Investment & Insurance Solutions)

Since demonetisation, about 15% of cash-based transactions have moved to digital, reveals a primary survey conducted by State Bank of India (SBI). "This means that Rs25,000 crore of cash-based transactions have moved to digital in the last two months. If this is so, this is a good beginning," says SBI in its Ecowrap report. The Total Investment & Insurance Solutions

SBI conducted a survey in Mumbai and Pune among different formal and informal business groups to ascertain the effects of demonetisation on their daily business and whether this move has resulted in increase in digital modes of payments. A total of 175 responses were recorded and analysed, of which 40% respondents were from premier business locations of Mumbai and remaining 60% were from Pune and nearby areas. The Total Investment & Insurance Solutions

SBI found that merchants are facing certain challenges like non- or less availability of point of sales (PoS) machines and lack of training and knowledge and lack of trust. Although banks have supplied more than one lakh PoS terminals since demonetisation the supply is still low compared to high demand.

"We would suggest that the Government should thus build incentives for the Banks investing in creation of card acceptance infrastructure by deploying PoS terminals and creating acceptance points. We would suggest the Government to very quickly on-board new merchants, particularly small and marginal traders, and grocery shops on digital platform by a more targeted approach. This could be incentivised and the same can be met by support funds from Government. An even better approach could be to charge the large merchants, which could be used to cross subsidize the small merchants. It could be a sustainable model, otherwise new merchants need to be convinced about the uncertainty beyond March 2017," SBI says. The Total Investment & Insurance Solutions

The results reveal a number of interesting facts post demonetisation. The survey reveals that 69% of the respondents did affirm that their business has been impacted. Even then, there is an overwhelming support about 63% of the sample, towards this move. However, the respondents were very clear that supply of only Rs2,000 denomination notes without intervening notes of Rs500 has resulted in more chaos, the report says. The Total Investment & Insurance Solutions

 

SBI Research (The Total Investment & Insurance Solutions)

It says the good thing is that prevalence of digital modes of payments in chemist shops and even in case of automobile stores has possibly resulted in only a marginal impact on their sales.

According to the primary survey, overall the decline in business is less than 50% for the majority of the businesses that were impacted. Construction sector and the informal roadside vendors seem to be the most hit with 55% and 71% respondents saying that the business got reduced by more than 50%, SBI said.

The Survey received varied responses from the textile and readymade garments sector and the fast moving consumer goods (FMCG) sector. It says, "Within the textile sector, shopkeepers dealing with retail segment have been more impacted than those in the wholesale segment. Moreover, the wedding season has been disappointing with sales dipping significantly compared to the last year wedding season sales." The Total Investment & Insurance Solutions

SBI says about 41% sellers already had PoS machines available even before 8 November 2016 but their usage has seen an increase only post demonetisation, in fact, 15% moved to electronic payments, viz. m-wallets, PoS in the ensuing weeks. The Total Investment & Insurance Solutions

"This means that Rs25,000 crore of cash based transactions has moved to digital in the last 2 months. This number could have been even higher because the behavioural shift has not happened yet and many merchants still prefer cash transactions when the transaction amount is not large. So they are mostly discouraging people to use PoS for small transaction value of say less than Rs200 or so. Also, a number of merchants are facing connectivity issue at PoS machines," SBI says.

Recently, RBI has revised the per month limits on mobile wallets spend to Rs20,000 for users and to Rs50,000 for merchant bank transfers. However, given the quantum jump in digital wallets usage in recent days, SBI feels that RBI should enhance the user limits further to make it easier for both users and merchants to shift more of their cash transactions to digital wallets.The Total Investment & Insurance Solutions

Trump ropes in son-in-law Kushner as presidential advisor -The Total Investment & Insurance Solutions

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10 January 2017

US President-elect Donald Trump has confirmed that he will add his son-in-law, Jared Kushner, to his White House team as senior advisor to the president. The Total Investment & Insurance Solutions

Kushner would be an "invaluable member of my team as I set and execute an ambitious agenda," said the President-elect in a statement acknowledging the appointment, Efe news reported on Tuesday.

According to the statement released on Monday, Kushner would work closely with Chief of Staff Reince Priebus and White House chief strategist Stephen Bannon, forming a trio.

Trump said that this trio would be an effective leadership team. 

The communique also emphasised the role that Kushner had in the election campaign that culminated in Trump's November 8 win, saying that his participation was "instrumental" in formulating and executing the winning campaign strategy. The Total Investment & Insurance Solutions

Kushner, an Orthodox Jewish real estate businessman, who is married to Ivanka Trump, the mogul's older daughter, would forego his salary as presidential advisor, the communique added.

The possibility that Trump's son-in-law would join his team was discussed for several weeks, although that would appear to pose personal challenges for Kushner because he would have to divest himself from his business activities to take on a government post. The Total Investment & Insurance Solutions

Kushner, who would turn 36 on Tuesday, is the CEO of a company focusing on New York and New Jersey real estate investments and since 2007 he has closed deals worth some $13 billion, according to data from the firm.The Total Investment & Insurance Solutions