SBI Index declines below 50 in April 2017 indicating slowdown-The Total Investment & Insurance Solutions

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25 April 2017

 

S.B.I (The Total Investment & Insurance Solutions)

The yearly State Bank of India (SBI) Composite Index, an indicator for tracking India’s manufacturing activity, has slipped below 50 in April 2017 of 49.3 (low decline), compared to last month’s revised index of 50.3 (low growth). The Total Investment & Insurance Solutions

 

S.B.I 1 (The Total Investment & Insurance Solutions)

According to the researchers at SBI, the Index of Industrial Production (IIP) may be in the positive territory in April 2017, mainly due to base effect. 

 

S.B.I (The Total Investment & Insurance Solutions)

"Even as Index numbers are showing gradual traction, the corporate results outlook for fourth quarter of FY2017 is expected to exhibit improvement in topline and bottomline, unlike in the recent past, where improvement in bottomline was positive while topline growth was either tepid or negative. We expect topline growth ranging from 10-12% while bottomline may surpass topline growth," SBI says in a report. The Total Investment & Insurance Solutions

According to the report, performance is expected to be varying for different sectors with FMCG expected to do better. It says, "Banks are expected to do better on net earnings levels but with low credit off take, the year is going to be a challenge on the margin front. The credit growth has been anaemic and was at 4.36% for the fortnight ended 24 March 2017, the lowest in many years. With banks flushed with funds, we expect to see the spreads coming under pressure. With further tightening of stressed assets provisions as per new norms from Reserve Bank of India (RB) we see the post proviso profit numbers a challenge. Automobile, Capital Goods, Metals, Oil and Gas are expected to declare double-digit revenue growth. In terms of profit after tax we may see sectors such as pharma, metals, capital goods come out with double digit growth."

Some of the best performers from the results announced so far include Hindustan Zinc (topline growth) as can be seen from the alongside table. Goa Carbon was the best performer in the bottomline. HDFC Bank, Yes Bank and IndusInd Bank also exhibited better performance. Overall, the report says, some of the well governed corporates have weathered the demonetisation storm. These companies have been the first to declare the results while some of them may yet assess the impact of demonetization.

"With the capacity utilization of the Indian industry still hovering in the seventies, we believe with Government push for Infrastructure, Housing etc. and better capacity utilization, Corporate earnings may set for better numbers in FY18," the report from SBI concluded.The Total Investment & Insurance Solutions

RBI governor suggests merging public sector banks-The Total Investment & Insurance Solutions

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25 April 2017

Reserve Bank Governor Urjit Patel says that merging public sector banks and having fewer of them would be better for the sector and also help deal with problem of non-performing assets (NPA). The Total Investment & Insurance Solutions

Do we need so many public sector banks, he asked while delivering the Kotak Family Distinguished Lecture at Columbia University here on Monday. It is better to consolidate them into fewer banks, he said. The Total Investment & Insurance Solutions

Some of these banks can be merged in return for government assistance in taking care of the NPA problem and this would also make them more efficient, he said.

There was already a trend in that direction, according to him.

"The weaker banks are losing market share (and) that is a good thing," Patel said. "The stronger banks are gaining market share, which is a good thing, particularly the private sector banks. In a way it is working; those who need to shrink are shrinking."

"Lenders who are stronger are gaining more market share," he added. "I think there is a nice shift happening and we need to work with that to resolve this."

The merger of banks would lead to savings through consolidation of bank branches and operations, he said. The Total Investment & Insurance Solutions

Some of the employees could be offered buyouts, he said adding that younger, digital-savvy personnel can be hired to further expand digital banking operations.

Patel also said that divestment in public sector banks would have a positive role for the sector.

"Divestment measures would improve overall banking sector health," he said. 

Improved market valuations would create an opportune time for the government to divest some of the ownership in the restructured banks and this would reduce the overall amount that the government needs to inject into them to deal with the NPA problem, he added.The Total Investment & Insurance Solutions

SC asks Unitech to pay interest to flat buyers or face attachment-The Total Investment & Insurance Solutions

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25 April 2017

The Supreme Court on Monday asked real estate major Unitech to deposit interest on the money paid by flat buyers at its project at Gurugram by May 8, cautioning it that failure to deposit the interest may invite attachment of its property.

Refusing more time to the realtor, the bench of Justice Dipak Misra and Justice A.M. Khanwilkar said: "Let these matters be listed for May 8 by which time amount as directed on earlier occasions shall be deposited failing which this court may think of attaching the property of the appellant company." The Total Investment & Insurance Solutions

The top court by its February 20 order had directed Unitech to pay interest at the rate of 14 per cent to 39 flat buyers at its Vistas project but who later chose to withdraw and sought both payment of their principal amount and interest thereon. These flat buyers had paid Rs 16.55 crore to the builder and had sought both the principal amount and the interest thereon after builder did not handover the possession of the flats as promised by 2012.

"Let the money come", the bench said as counsel for the real estate major sought more time to deposit the interest amount as directed by the court by its February 20 order.

The court had said that interest would be calculated from January 1, 2010 till Unitech deposited the principal amount with the top court registry. The court had on February 20 said that 90 per cent of the interest amount that would be deposited with its registry would be disbursed to the 39 buyers who have opted out. The Total Investment & Insurance Solutions

The court while directing the builder to deposit the interest has kept the question of rate of interest and compensation to be paid open. The Total Investment & Insurance Solutions

US Home Prices Rose At The Fastest Pace In Nearly 3 Years-The Total Investment & Insurance Solutions

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25 April 2017

U.S.Homes (The Total Investment & Insurance Solutions)

U.S. home prices rose steadily upward in February as more homebuyers chased fewer available properties, a trend that many analysts say may not be sustainable.

The Standard & Poor's CoreLogic Case-Shiller national home price index, released Tuesday , increased 5.8 percent in February, the most in 32 months. Such strong price gains and slightly higher mortgage rates may eventually cool off demand. The Total Investment & Insurance Solutions

But for now, sales of new and existing homes are robust. Last month, sales of existing homes reached their highest level in a decade. The strong demand, however, hasn't enticed more Americans to sell their homes. The number of houses for sale has dropped to its lowest level in nearly 20 years, which makes finding an available home the toughest challenge awaiting potential buyers in the spring home buying season. The Total Investment & Insurance Solutions

Many homeowners have benefited from the sharp price gains of recent years, but those increases have also made it harder for them to "trade up" to a bigger house, discouraging them from selling. Others have very low mortgage rates and may be reluctant to sell if doing so would force them to take on higher borrowing costs. The Total Investment & Insurance Solutions

The cities with the biggest annual price gains in February were Seattle; Portland, Oregon; and Dallas.

Still, some relief may be on the horizon, though it's not clear when. Average rents are leveling off, which could keep many people in apartments and dampen demand for homes.

Mortgage rates are also up from last year's record lows. Those two trends "could put a dent in home-buyer demand and overall price growth," said Svenja Gudell, chief economist at real estate data provider Zillow. "Those changes won't necessarily be unwelcome, especially in some rapidly growing coastal markets in which buyers, sellers and renters could all use a breather."

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The February figures are the latest available. The Total Investment & Insurance Solutions

Home builders are ramping up construction to meet the healthy demand, which may provide buyers some relief. Ground breakings on new homes rose 8.1 percent in the first three months of this year compared with 2016. The Total Investment & Insurance Solutions

And the supply of new homes available for sale in February climbed to a seven-year higher of 266,000.The Total Investment & Insurance Solutions

Nifty, Sensex may rally further - Monday closing report-The Total Investment & Insurance Solutions

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24 April 2017

I mentioned in Friday’s closing report that Nifty, Sensex may rise a bit. The major indices of the Indian stock market ended started the week with good gains. 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)

Trading for the week began on a strong note as domestic stocks rallied in tandem with global markets; S&P BSE Sensex jumped 290.54 points or 0.99% to settle at 29,655.84. The Nifty 50 index rose 96.55 points or 1.06% to settle at 9,215.95. Both the Sensex and the Nifty settled at almost two-week high. The Total Investment & Insurance Solutions

HCL Technologies announced an agreement to acquire 100% stake in US based Urban Fulfillment Services, a provider of mortgage business process & fulfilment services. It employs over 350 highly skilled professions, operating out of its 3 centres in the US. This acquisition would immediately bolster HCL's presence into the mortgage business process outsourcing (BPO) market. The acquisition is likely to be completed in June 2017. The total cash consideration for 100% stake in UFS is up to $30 million, including contingent payments subject to certain financial milestones. The Total Investment & Insurance Solutions

UltraTech Cement rose 4.42%. The company's consolidated net profit declined 11.24% to Rs 726 crore on 2.59% growth in net sales to Rs 6922 crore in Q4 March 2017 over Q4 March 2016. The result was announced during market hours today, 24 April 2017. The company's consolidated profit before interest, depreciation and tax (PBIDT) fell 1.74% to Rs 1577 crore in Q4 March 2017 over Q4 March 2016. UltraTech said that work on setting up the 3.5 million tonnes per annum (MTPA) integrated cement plant at Dhar, Madhya Pradesh is on track. Commercial production is expected to commence from Q4 of FY 2019. With this expansion and the acquisition of the cement plants of Jaiprakash Associates, the company's cement capacity will stand augmented to 95.4 MTPA, including its overseas operations.

Cement major ACC surged 7.36%. The company's consolidated net profit fell 9.05% to Rs 211 crore on 7.76% rise in sales to Rs 3108 crore in Q1 March 2017 over Q1 March 2016. The result was announced after market hours on Friday, 21 April 2017. ACC said that cement volumes rose 3.77% to 6.6 million tonnes in Q1 March 2017 over Q1 March 2016, as the impact of demonetisation declined and benefits were delivered from ongoing customer excellence initiatives and higher sales from the expanded capacity at Jamul and Sindri plant. The company in its outlook said that increased government spending on infrastructure development, housing, roads, railways, irrigation and other schemes as announced in the Union Budget are expected to reinvigorate the construction sector and boost demand for cement and concrete during 2017.

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

 

Top Gainer (The Total Investment & Insurance Solutions)

Overseas, European markets were trading sharply higher while most Asian stocks ended higher after the centrist Emmanuel Macron won the first round of the French presidential election. Centrist candidate Emmanuel Macron won the first round of the French presidential election with 23.75% of the vote, advancing to the second and final vote with far-right Marine Le Pen who took 21.53%, which will take place on 7 May 2017.

Tension on the Korean peninsula, however, concerned investors. North Korea reportedly arrested an American citizen in Pyongyang. The hermit state also indicated that it was prepared to sink a US aircraft carrier to showcase its military prowess.

The BSE market breadth was bullish with 1608 advances, 1280 decline and 187 unchanged. Similarly, on NSE, there were 985 advances, 694 declines and 95 unchanged. 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)

Consider January-December financial year, Modi urges states-The Total Investment & Insurance Solutions

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24 April 2017

Prime Minister Narendra Modi on Sunday asked the states to consider advancing the financial year to January-December, saying that in a country where agricultural income is exceedingly important, budget should be prepared immediately after its receipt for the year.

Making the observation while delivering the closing remarks at the third meeting of the Governing Council of NITI Aayog here, he said there have been suggestions to have the financial year changed to January-to-December -- in place of the existing April-to-March -- and urged the states to take the initiative in this regard. The Total Investment & Insurance Solutions

The Prime Minister said that because of poor time management, many good initiatives and schemes had failed to deliver the anticipated results. The Total Investment & Insurance Solutions

He also reiterated the idea of holding simultaneous parliamentary and state assembly elections, saying that the country had suffered from economic and political mismanagement for long now, and that a constructive discussion had already begun on the subject.

"The Prime Minister said if the elections are held simultaneously, then political parties could just focus on them once in five years and then use the rest of the period to do serious work," NITI Vice Chairman Arvind Panagariya told reporters after the meet. The Total Investment & Insurance Solutions

Modi also called upon the state governments to work with the Centre as to build "the India of the dreams of our freedom fighters" by 2022, the 75th anniversary of Independence.

He urged states, local governments and all government and non-government organisations to decide goals for 2022, and work in mission mode towards achieving them. 

He called upon the states to use the GeM (Government e-Marketplace) platform to reduce corruption and increase transparency in government procurement, adding that the use of technologies such as BHIM and Aadhaar would result in significant savings for the states. The Total Investment & Insurance Solutions

Display subsidies on food grain at PDS shops: Centre-The Total Investment & Insurance Solutions

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24 April 2017

The Centre has directed states to display information on central and state subsidies for food grain under the Targeted Public Distribution System on boards outside Fair Price Shops for public information and awareness. The Total Investment & Insurance Solutions

A letter issued by Food and Public Distribution Department of the Ministry of Consumer Affairs, Food and Public Distribution says information on the cost of wheat and rice to the central government and the price at which these are sold under the National Food Security Act (NFSA) should be given in tabular form. The Total Investment & Insurance Solutions

There should be separate columns for subsidy given by the central as well as the state governments, the letter said. The Total Investment & Insurance Solutions

For 2017-18, the Centre spent Rs 24.09 per kg on wheat and Rs 32.64 on rice. Under the NFSA, wheat is sold at Rs 2 and rice at Rs 3 per kg. Thus, the Centre bears a subsidy of Rs 22.09 per kg of wheat and Rs 29.64 on rice. The Total Investment & Insurance Solutions

Australian retailers to 'wage war' against Amazon-The Total Investment & Insurance Solutions

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24 April 2017

Australian retailers are preparing for the invasion of US giant Amazon, and have vowed to take the fight up to the online-based store when it comes to local shores.

Amazon confirmed its rapid Australian expansion by announcing its search for a site to build its "fulfilment centre" - a large warehouse for storing and shipping goods purchased online, Xinhua news agency reported on Monday. The Total Investment & Insurance Solutions

However local retailers, mostly from electronics and homewares division, including Harvey Norman's founder Gerry Harvey, said he would make it hard for Amazon to succeed Down Under. The Total Investment & Insurance Solutions

Harvey Norman sells electronics, furniture and bedding - all markets in which Amazon hopes to hold a stake. The Total Investment & Insurance Solutions

But Harvey has said that it would happily go toe-to-toe with the American behemoth to maintain its share in the Australian market. The Total Investment & Insurance Solutions

"In America and other parts of the world, they (Amazon) have just demolished other retailers, no question about that, and they send a lot of retailers broke," Harvey told News Corp on Monday.

"There is no question they have one ambition, and like Attila the Hun, or Alexander the Great, they just want to demolish everything in front of them and then at the end of day claim to be victorious and make their own rules." The Total Investment & Insurance Solutions

"So this is a company that is extraordinary by any measure and defies every rule that has ever been written about a business." The Total Investment & Insurance Solutions

Some analysts have said that Amazon could take in as much as $three billion in sales in its first five years in Australia (around one per cent of the total $225 billion market).

However, Harvey has refuted those claims, saying that local retailers would be putting up "one hell of a fight" when Amazon launches its main retail services in Australia.

"We will be out there fighting them like no American retailer has ever fought them," he said. "Any price that they put we will beat or equal."

Meanwhile, Harvey's thoughts were backed up by those of former CEO of supermarket chain Woolworths, Roger Corbett, who said Amazon would struggle to replicate its lower wages and claims of lightning fast delivery to rural parts when it opens in Australia.

"Amazon will have an impact on the market place, but they are coming into an already very competitive market," he told News Corp.The Total Investment & Insurance Solutions

French Election Result Gives Markets A Start-Of-Week Lift -The Total Investment & Insurance Solutions

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24 April 2017

European stock markets (The Total Investment & Insurance Solutions)

European stock markets and the euro ratcheted higher Monday, particularly in France, after the first round of the country's presidential election saw centrist Emmanuel Macron emerge on top — stoking hopes that he will defeat far-right Marine Le Pen in the run-off in two weeks' time.

KEEPING SCORE: France's CAC 40 spiked 4.6 percent to nine-year highs of 5,290, while Germany's DAX advanced 3.2 percent to 12,427. The FTSE 100 index of leading British shares was 1.9 percent higher at 7,247. U.S. stocks were poised for solid gains at the open, with Dow futures and the broader S&P 500 futures up 1.2 percent. The Total Investment & Insurance Solutions

FRANCE FOCUS: Though Le Pen came second with 21.5 percent of the vote on Sunday and will contest the runoff on May 7, the favorite to be the country's next president is Macron, who came top with around 24 percent. Following Britain's vote to leave the European Union and Donald Trump's surprise victory in the U.S. presidential election, the hope in the markets is that the rise of populism around the world — and the associated potential unpredictability in policymaking — may have peaked. That hope was also evident in the performance of the euro, which was up 1.1 percent at $1.0846, having struck five-month highs overnight above $1.09. The Total Investment & Insurance Solutions

ANALYST TAKE: "In Macron, we see the strongest opponent pitted against Le Pen, in what is likely to be the final vote of confidence for the EU in what was always going to be a critical year for the future of Europe," said Joshua Mahony, market analyst at IG.

TRUMP ON TAX: Though the second run of the French election will remain in the spotlight, there's likely to be investor interest also in upcoming tax proposals from the Trump administration. However, investors aren't expecting too much from Wednesday's anticipated announcement following the recent reverse on repealing the Affordable Care Act. "Markets have received this news with a big pinch of salt," said FXTM Research Analyst Lukman Otunuga. The Total Investment & Insurance Solutions

CHINA BLUES: Benchmarks in Shanghai and Shenzhen fell by more than 1 percent in their worst losses in four months after regulators warned over the weekend of risks in the financial industry. The Chinese Insurance Regulatory Commission, in a notice carried by the state-run Xinhua News Agency, ordered insurers to improve risk controls amid a crackdown on misuse of capital.

ASIA'S DAY: Japan's benchmark Nikkei 225 rose 1.4 percent to finish at 18,875.88. Australia's S&P/ASX 200 gained 0.3 percent to 5,871.80. South Korea's Kospi added 0.4 percent to 2,173.74. Hong Kong's Hang Seng added 0.5 percent to 24,164.24. The Total Investment & Insurance Solutions

ENERGY: Benchmark U.S. crude rose 27 cents to $49.89 a barrel in New York while Brent crude, used to price international oils, rose 32 cents to $52.28 a barrel in London.

CURRENCIES: The dollar recovered to 110.11 yen from 109.09 yen late last week in Asia. The euro rose to $1.0851 from $1.0701.The Total Investment & Insurance Solutions