Nifty, Sensex May Stage a Rally if Today’s Lows Hold – Wednesday closing report-The Total Investment & Insurance Solutions

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7 February  2018

I had mentioned in Tuesday’s closing report that Nifty, Sensex might try to stage a rally. The major indices of the Indian stock markets opened higher but gave up all the gains closed with small losses over Tuesday’s close. On the NSE, there were 1,209 advances, 323 declines and 55 unchanged. 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)

Key Indian equity indices on Wednesday traded on a flat note during the afternoon session after the Reserve Bank of India (RBI) kept its key lending rate unchanged. The Total Investment & Insurance Solutions

The Reserve Bank of India (RBI) kept its key interest rate unchanged at 6% for the fourth time in succession at its final bi-monthly monetary policy review of the fiscal, citing concerns about the inflationary push by rising global crude oil prices. Announcing the policy review, the RBI said its decision is consistent with the neutral stance of the central bank aimed at achieving its median inflation target of 4%. The continuing rise in food and fuel prices pushed India's annual retail inflation rate over the 5% mark in December 2017 to 5.21%, from 4.88% in November 2017. The Total Investment & Insurance Solutions

Fixation of Minimum Support Price (MSP) for agriculture commodities over the production cost will have minimal impact on inflation, said a report of SBI's Economic Research Department (ERD). With little change in aggregate demand in the Indian economy, this is likely to help in the long term bullish trends of the Indian stock markets. The Total Investment & Insurance Solutions

Two-wheeler manufacturer Hero MotoCorp reported a 4.32% year-on-year rise in its standalone net profit for the quarter ended December 31, 2017. According to the company, its net profit during the period under review increased to Rs805.43 crore from Rs772.05 crore reported in Q3 2016-17. The company's total income during Q3 2017-18 rose by 5.47% to Rs7,415.51 crore from Rs7,030.57 crore earned during the corresponding period of 2016-17. The shares of the company closed at Rs3,566.40, up 0.57% on the NSE.

The Indian Income Tax Department receives 15-25 lakh permanent account number (PAN) applications per week, Parliament was informed. In a written reply to the Lok Sabha, Minister of State for Finance Shiv Pratap Shukla said these applications take from a few hours to two weeks to process for allotting the assessee a PAN number. A physical PAN card or an e-PAN card is issued to the applicant thereafter. As on January 28, 2018, a total of 20,73,434 applications were under process or pending for allotment of PAN and issuance of PAN card, the Minister said. The Total Investment & Insurance Solutions

Telecom service provider Idea Cellular on Wednesday said it has suspended interconnect services with Aircel due to non-payment of dues. "Despite several reminders for releasing the dues since November 2017, the operator has failed to meet its payment commitments forcing Idea to suspend interconnect services, as per the terms of interconnect agreement between both parties," Idea said in a statement. According to the telecom service provider, interconnect services will be restored immediately upon Aircel making the payment towards the outstanding dues. Idea Cellular shares closed at Rs84.30, down 0.59% on the NSE. The Total Investment & Insurance Solutions

IT (information technology) major Tech Mahindra and Cloud major VMware announced a collaboration to jointly develop, market, and deliver solutions to accelerate network transformation for Communication Service Providers (CSPs). 

The United Forum of Bank Unions (UFBU), an umbrella body of nine unions in the Indian banking sector, on Tuesday decided to strike work on March 15 to press for early finalisation of wage revision in banks, said a union leader. " The wage revision was due in November 2017. The unions have also charted out other protest programmes," All India Bank Employees' Association General Secretary C.H.Venkatachalam told IANS.  He said a decision to this effect was taken at the meeting of UFBU held in Mumbai on Tuesday.  The S & P BSE Bankex closed at 29,072.19, down 0.43% on the BSE. 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 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)

RBI keeps key interest rate unchanged at 6% with neutral stance-The Total Investment & Insurance Solutions

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7 February  2018

 

RBI (The Total Investment & Insurance Solutions)

The Reserve Bank of India (RBI) kept its key interest rate unchanged at 6 per cent for the fourth time in succession at its final bi-monthly monetary policy review of the fiscal, citing concerns about the inflationary push by rising global crude oil prices. The Total Investment & Insurance Solutions

Announcing the policy review, the RBI said its decision is consistent with the neutral stance of the central bank aimed at achieving its median inflation target of 4 per cent. The Total Investment & Insurance Solutions

The continuing rise in food and fuel prices pushed India's annual retail inflation rate over the five per cent mark in December 2017 to 5.21 per cent, from 4.88 per cent in November 2017.The Total Investment & Insurance Solutions

See FY18 GVA growth at 6.6%: RBI-The Total Investment & Insurance Solutions

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7 February  2018

 

RBI (The Total Investment & Insurance Solutions)

GVA growth for 2017-18 is projected at 6.6%. Beyond the current year, the growth outlook will be influenced by several factors, according to the RBI.

It cited many reasons for the same such as GST implementation is stabilising, which augurs well for economic activity. Further, there are early signs of revival in investment activity as reflected in improving credit offtake, large resource mobilisation from the primary capital market, and improving capital goods production and imports. The Total Investment & Insurance Solutions

The process of recapitalisation of public sector banks has got underway. Large distressed borrowers are being referenced for resolution under the Insolvency and Bankruptcy Code (IBC). This should improve credit flows further and create demand for fresh investment. The Total Investment & Insurance Solutions

Although export growth is expected to improve further on account of improving global demand, elevated commodity prices, especially of oil, may act as a drag on aggregate demand. The Total Investment & Insurance Solutions

Taking into consideration the above factors, GVA growth for 2018-19 is projected at 7.2% overall in the range of 7.3-7.4% in H1 and 7.1-7.2% in H2 – with risks evenly balanced.The Total Investment & Insurance Solutions

Eicher Motors' Q3 consolidated net rises 24.5%-The Total Investment & Insurance Solutions

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7 February  2018

 

Eicher (The Total Investment & Insurance Solutions)

Automobile manufacturer Eicher Motors on Wednesday reported a 24.46 per cent rise in its consolidated net profit to Rs 520.50 crore during the third quarter (Q3) of 2017-18. The Total Investment & Insurance Solutions

The company's net profit in Q3 of 2016-17 stood at Rs 418.19 crore, it said.

During the period under review, total income of the automobile maker stood at Rs 2,316.49 crore -- up 8.73 per cent -- from Rs 2,130.41 crore earned during Q3 FY17, the company said in a regulatory filing to the BSE.The Total Investment & Insurance Solutions

Volatile Market A Good Time To Brush Up On Financial Terms-The Total Investment & Insurance Solutions

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7 February  2018

Wall street financial markets (The Total Investment & Insurance Solutions)

With global stock markets suddenly volatile again, investors might need a refresher on some of the terms being thrown around.

First off, the markets didn't crash. While the 1,175 point drop Monday in the Dow Jones industrial average might sound like a collapse, the decline was less than 5 percent. It was nowhere near as severe as the Dow's most well-known, one-day drop of 508 points, or 22.6 percent, on Oct. 19, 1987. Crashes generally unfold over a longer period, with a succession of sharp declines.

The fact is, even with the recent selling, the market didn't even suffer a "correction." The Total Investment & Insurance Solutions

A correction happens when a stock, bond, commodity or index declines 10 percent from a recent peak. In early trading Tuesday, the Dow Jones industrial average briefly fell 10 percent below its most recent record of 26,616.71 set on Jan. 26. However, most market watchers wait until the market has closed for the day before declaring that an index or other measure has officially entered a correction. The Dow ended the day higher by 567 points.

So far, the Dow, Standard & Poor's 500 and Nasdaq have not fallen enough to be in a correction. The Total Investment & Insurance Solutions

Corrections are common during bull markets. The most recent correction ended in February 2016, according to S&P Dow Jones Indices. Two years is an unusually long time for the market to go without one.

A bull market is generally defined as an increase of 20 percent or more in broad stock indexes such as the Standard & Poor's 500. Experts date the current bull market to early March 2009. That's when stocks began climbing back from their steepest declines of the financial crisis. The S&P 500 has more than tripled in that time. The Total Investment & Insurance Solutions

A bear market happens when stocks decline over a prolonged period, with the same 20 percent threshold. The last bear market stretched from October 2007 to March 2009, after the housing bubble burst.

The sell-off in U.S. stocks this week spread to markets in Asia and Europe, reviving use of the term "contagion," which was widely used during the European debt crisis early this decade. The Total Investment & Insurance Solutions

When financial analysts talk about contagion, they mean when market disturbances spread from one economy or region to affect others.

Some of the sudden plunge in the U.S. markets on Monday was pinned on algorithmic trading, which is when computers are programmed to follow specific instructions to place trades. The computers can make the trades faster and more frequently than human traders can. During a 15-minute stretch, the Dow plunged 850 points and then recovered almost all of it.The Total Investment & Insurance Solutions

Markets continue to remain weak on global cues and worries about LTCG tax impact – Monday closing report-The Total Investment & Insurance Solutions

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5 February  2018

I The major Indian stock indices continued their slide on Monday losing just one percent (0.85%) over Friday’s closing. 

The government was quick to deny that the fall has anything to do with the budget and Finance Minister Arun Jaitley attributed it to “weak global cues”. There is some merit in this, although investors continue to chafe at the 10% Long Term Capital Gains (LTCG) tax that was reimposed through the Union Budget on February 1. The fact is that a combination of factors including, weak global cues, the LTCG tax effect, increase in fiscal deficit and selling pressure in capital goods, banking and finance stocks led to the continued decline in stock indices. 

On the NSE, there were 530 advances, 869 declines and 21 unchanged. The trends of the major indices in the course of Monday’s trading are given in the table below: The Total Investment & Insurance Solutions

 

Major Indices (The Total Investment & Insurance Solutions)

On the positive side, the global credit rating major, Moody’s echoed Finance Minister Arun Jaitley's description of the widening fiscal deficit in budget 2018-19 as combining fiscal prudence with growth needs.  Moody's on Monday said the "slight" slippage in fiscal deficit would have no overall material impact on the country's fiscal strength and is in line with its expectations.

Mr Jaitley had revised the fiscal deficit target for 2017-18 upward to 3.5% of the GDP, or the equivalent of Rs5.95 lakh crore as against the target of 3.2% -- or Rs5.46 lakh crore -- for the current fiscal that had been announced earlier.  

"This slippage has no material impact on India's overall fiscal strength although some measures such as the rise in Minimum Support Prices (MSPs) and ambitious GST revenue targets could result in some further slippage," Moody's Investor Service said in a statement. 

Healthy demand conditions pushed Indian services sector's output higher during January 2018, key macro-economic data showed on Monday. Accordingly, the seasonally adjusted Nikkei India Services PMI Business Activity Index registered an overall increase from 51.7 in January to 50.9 in December, as the "Information & Communication" sub-sector continued to drive overall growth. An index reading of above 50 indicates an overall increase in economic activity and below 50 an overall decrease. However, higher Services PMI figure was unable to arrest the fall in the overall private sector's output during January, as manufacturing production growth eased. Consequently, the seasonally adjusted Nikkei India Composite PMI Output Index declined to 52.5 in January from 53 in December. While commenting on the Indian Services PMI survey data, Aashna Dodhia, Economist at IHS Markit, and author of the report said: "The recovery across India's service sector continued during January, with growth in output picking up to the joint-strongest since June 2017 as underlying demand conditions improved." "Meanwhile, job creation accelerated to the second strongest in over six-and-a-half years, but, as firms struggled in receiving timely payments, the Goods and Services Tax (GST) continued to be a key constraint to businesses and the service sector remained a laggard relative to its manufacturing counterpart." The Total Investment & Insurance Solutions

Eicher Trucks and Buses on Monday launched its first electric bus "Skyline Pro E". According to the company, the new electric bus model is powered by an indigenously developed "Revolvo" electrification technology. "The Smart Electric Skyline Pro E buses are certified to ply on Indian roads and we are confident they will bring great value to commuters, city transportation corporations and other organizations in this ecosystem," Vinod Aggarwal, MD and CEO, VE Commercial Vehicles said. The company said that the bus has been manufactured at the Indore manufacturing facility of VE Commercial Vehicles. Eicher Motors shares closed at Rs27,537.95, down 0.50% on the NSE.

With the annual retail inflation rate breaching the 5% mark in December and going over the RBI's median level of 4%, the central bank is widely expected of keep its key interest rate on hold for the fourth time in succession at its final bi-monthly monetary policy review of 2017-18 on Wednesday. But there are also concerns that RBI could also opt for a rate hike given the inflationary push due to higher minimum support prices for farmers announced in the union budget. ASSOCHAM, an industry mouth piece has already put out a statement asking the central bank not to “over-react to the high yield pressures of the bond market” and announce a hike in benchmark lending rates. 

Bharti Airtel on Monday announced that Singapore Telecommunications Limited would invest Rs2,649 crore in Bharti Telecom, the promoter company of Airtel through preferential allotment of shares. With this investment, Singtel's total stake (along with its affiliates) in Bharti Telecom would increase to 48.90%. Singtel currently holds 47.17% stake in Bharti Telecom. Bharti Enterprises continues to hold over 50% stake in Bharti Telecom. The transaction is subject to the shareholders' approval of Bharti Telecom. The funds raised would be used towards debt reduction, the company statement said here. "Airtel shares a nearly two decade-long relationship with Singtel, which has only become stronger over the years. Bharti Airtel shares closed at Rs440.20, up 4.98% on the NSE.

Meanwhile, Union Bank of India reported a net loss of Rs1,250 crore for the third quarter of 2017-18, against a net profit of Rs104 crore in the corresponding period of 2016-17. "Net loss for October-December 2017 stood at Rs1,250 crore. This includes investment depreciation of Rs700 crore and Rs991 crore of additional provision for 18 accounts referred to National Company Law Tribunal (NCLT), as per RBI list-II," the company said in a BSE filing. "The bank has provided entire amount of additional provision for NCLT accounts up front which was to be spread till March 2018." Further, the company's net interest income for October-December 2017 quarter increased to Rs2,548 crore from Rs2,136 crore earned during the year ago period. The bank’s shares closed at Rs126.65, down 0.59% on the NSE. The Total Investment & Insurance Solutions

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

 

Top Gainer (The Total Investment & Insurance Solutions)

The closing values of the major Asian indices are given in the table below: The Total Investment & Insurance Solutions

Asian Indices (The Total Investment & Insurance Solutions)

India Services PMI rises to 51.7 in January from Dec 50.9-The Total Investment & Insurance Solutions

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5 February  2018

 

PMI (The Total Investment & Insurance Solutions)

The Indian service sector remained in expansion mode in January, driven by a renewed increase in new business. The seasonally adjusted Nikkei Services Business Activity Index remained above the neutral mark of 50 in January, signaling a further increase in activity at the start of 2018.

The latest figure of 51.7, up from 50.9 in December, signaled a faster expansion albeit one that remained below the long run survey average.

The Information & Communication sub sector continued to drive overall growth in the latest period. As manufacturing production growth eased from December’s 60 month high, the Nikkei Composite Output Index fell to 52.5 in January from 53. The Total Investment & Insurance Solutions

Overall, this was consistent with a modest improvement in operating conditions across the private sector as a whole. Having been unchanged in December, the volume of new business received by Indian service sector companies rose in January. The Total Investment & Insurance Solutions

The pace of expansion was the sharpest since last June, but below the trend level since the series began in December 2005. Meanwhile, new orders rose for the third consecutive month at manufacturing companies. The rate of growth was solid despite easing from January’s 14-month high.

The latest survey data signaled that capacity constraints remained evident across both the manufacturing and service sector, as the volume of outstanding business rose for the twentieth successive month.

Higher backlogs partly reflected delayed customer payments for orders. Indian service providers addressed new business inflows and rising backlogs by expanding workforces for the fifth month running in January. Moreover, the rate of job creation was the fastest since last September. Reflecting improved demand conditions, manufacturers raised their payroll numbers for the sixth consecutive during January. The Total Investment & Insurance Solutions

Job creation slowed to the weakest since last October, but remained above the series trend. Service sector input price inflation stabilized at a moderate pace in January, remaining below the long run survey average. That said, costs rose sufficiently to generate another increase in prices charged by service providers, with those in the Information & Communication sector registering the strongest inflation of charges. The Total Investment & Insurance Solutions

Indian manufacturers registered a further marked increase in their average cost burdens during January. Subsequently, manufacturing companies reportedly raised their output charges to pass on higher input costs to consumers.

Service sector companies in India remained optimistic regarding expected activity levels in 12 months’ time. Sentiment eased to a 3- month low but was solid overall. Reflecting the trends for activity and new business, Information & Communication was the most optimistic sub sector in January.

As was the case with the service sector, firms retained positive projections for output over the next 12 months, but the level of confidence remained weak by historical standards. The Total Investment & Insurance Solutions

Commenting on the Indian Services PMI survey data, Aashna Dodhia conomist at IHS Markit, and author of the report, said “The recovery across India’s service sector continued during January, with growth in output picking up to the joint-strongest since June 2017 as underlying demand conditions improved. That said, the overall performance of the service sector remained weaker than the long-run growth trend. The Total Investment & Insurance Solutions

“Input cost inflation across the service sector remained weak by historical standards, although service providers were able to pass on a greater proportion of cost burdens to customers.

“Meanwhile, job creation accelerated to the second strongest in over six-and-a-half years, but, as firms struggled in receiving timely payments, the Goods and Services Tax (GST) continued to be a key constraint to businesses and the service sector remained a laggard relative to its manufacturing counterpart.The Total Investment & Insurance Solutions

Rs 51,600 crore released to states under MGNREGA in 2017-18: Government-The Total Investment & Insurance Solutions

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5 February  2018

 

MGNREGA(The Total Investment & Insurance Solutions)

The Centre has released more than Rs 51,600 crore to states under rural employment guarantee scheme MGNREGA till January 31 in financial year 2017-18, Rajya Sabha was informed today. The Total Investment & Insurance Solutions

In written reply to a question, Minister of State for Rural Development Ram Kripal Yadav said that the release of funds to states for the implementation of various projects under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was a continuous process. 

"The central government is making funds available keeping in view the demand. The ministry has released Rs 51,616.99 crore as on January 31, 2018 to States/UTs for liquidating the pending liability of wage component and for running the programme during 2017-18," Yadav said. 

In reply to another question, he informed the house that a sum of Rs 75.89 crore has been paid as compensation towards delay in the payment of wages under MGNREGA, so far. The Total Investment & Insurance Solutions 

The delay in payment of wages are due to various implementation issues in states including inadequate staff, non-timely recording and reporting of attendance, wage list, public financial management system and others, he said. 

Under MGNREGA, wage seekers are entitled to receive compensation at the rate of 0.05 per cent of the unpaid wages per day. 

He added that various efforts were being made by the ministry to reduce the delay in the payment of wages to the workers, such as timely release of funds, payment through national electronic fund management system for direct payment of wages into workers' accounts. The Total Investment & Insurance Solutions 

He also informed that all wages under MGNREGA were not paid through Aadhaar-based payment system and those workers who do not have Aadhaar were paid electronically by transferring amount into their post office or bank  accounts. The Total Investment & Insurance Solutions

EU Says UK Must Make Its Mind Up On Future Trade Relations-The Total Investment & Insurance Solutions

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5 February  2018

Britain politics (The Total Investment & Insurance Solutions)

The European Union's Brexit negotiator warned Monday that the time has come for the U.K. to clarify what relationship it wants with the bloc once it leaves, and warned that exiting its customs union would hurt trade.

Michel Barnier shook his head as he outlined the results of a meeting with the U.K. Brexit chief David Davis. With Britain set for departure on March 29, 2019, Barnier said it was time for Britain to decide whether it wants to remain in a customs union. The Total Investment & Insurance Solutions

"The time has come to make a choice," he said.

Davis, by contrast, said the talks were constructive and negotiations on the next stage were to be started right away.

The comments come after weeks of political infighting within Prime Minister Theresa May's Conservative Party. The Total Investment & Insurance Solutions

May's party has been split between those who want a complete break from the EU and those who want to keep Britain's economy closely aligned with the bloc and its market of 500 million people. The Total Investment & Insurance Solutions

With only months before Britain is to go, tensions in May's government have been escalating as the leadership tries to determine its negotiating position. May has been under pressure to take sides in the Conservative Party's civil war over how close the new relationship with the EU should be.

On Monday, May's office underscored that Britain will not remain in a customs union with the EU after the U.K. breaks with the 28-nation bloc

Business leaders have been pleading with May to have close alignment with the EU. Lawmaker Anna Soubry urged May to pay attention, taking to Twitter to urge her to reject the so-called "Hard Brexit" vision espoused by the European Research Group lawmakers, led by Jacob-Rees Mogg, a prominent Brexiteer.

"It's deeply unattractive that the only reason they want to leave #CustomsUnion is to chase unicorn trade deals," she tweeted.

The government position is important because being part of the customs union affects how members trade with countries outside it. Political leaders who pushed for Britain's exit pledged to strike new trade deals with the United States and others. Such deals wouldn't be possible while remaining in a customs union because the EU executive negotiates trade deals on behalf of members of the bloc. The Total Investment & Insurance Solutions

Critics had hoped the matter would be reconsidered as the negotiations move to the next phase.The Total Investment & Insurance Solutions

Global Stocks Take Another Beating On US Bond Yield Concerns-The Total Investment & Insurance Solutions

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5 February  2018

Hong kong financial markets (The Total Investment & Insurance Solutions)

Stock markets around the world took another pummeling Monday as investors continued to fret over rising U.S. bond yields.

KEEPING SCORE: In Europe, Britain's FTSE 100 lost 1.4 percent to 7,343 while France's CAC 40 slid 1.4 percent to 5,288. Germany's DAX shed 1 percent to 12,654. Wall Street was poised to open lower with Dow futures and the broader S&P 500 futures down 1 percent. The Total Investment & Insurance Solutions

WALL STREET'S LEAD: Market jitters have spread after last week's performance in U.S. stock markets, when they endured their worst week in two years amid worries over rising Treasury yields. Fears of a sharp drop have ratcheted higher after 2017's strong performance carried over into January. An upbeat U.S. jobs report showing higher than expected wage growth was the catalyst for the latest sharp sell-off on Friday, further stoking speculation the Federal Reserve will need to raise interest rates faster than expected to counter inflation. Higher bond yields make it more expensive for companies to borrow and potentially depresses the U.S. economy and earnings. They also can make bonds more attractive to investors than stocks. The Total Investment & Insurance Solutions

MARKET INSIGHT: "We've seen a sharp increase in U.S. bond yields over the last week after the Federal Reserve released a more hawkish than expected statement (on Wednesday), alongside its monetary policy decision, and the jobs data reported a significant increase in earnings," said Craig Erlam, senior market analyst at OANDA in London. "Markets now have three rate hikes this year more than 50 percent priced in and some people are even anticipating a fourth, which is unusually ahead of current Fed forecasts."

GERMAN COALITION TALKS: Also weighing on confidence was the failure of prospective partners in Germany's new government to nail down a coalition deal. It remained unclear whether they would clinch an agreement before the day is over. Chancellor Angela Merkel's conservative Union bloc and the center-left Social Democrats originally set a Sunday deadline to wrap up talks on extending their alliance of the past four years but budgeted two extra days as a precaution when formal negotiations started Jan. 26. Still on the table are two points that are important to the Social Democrats: curbing the use of temporary work contracts and trying to narrow differences between Germany's public and private health insurance systems. The Total Investment & Insurance Solutions

ASIA'S DAY: Japan's benchmark Nikkei 225 tumbled 2.6 percent to 22,682.08 and South Korea's Kospi shed 1.3 percent to 2,491.75. Hong Kong's Hang Seng index sank 1.1 percent to 32,245.22 and Australia's S&P/ASX 200 lost 1.6 percent to 6,026.20. Benchmarks in Taiwan and Southeast Asia also lost ground. Only mainland Chinese shares showed signs of life, with the Shanghai Composite reversing early losses to climb 0.7 percent to 3,487.50.

ENERGY: Oil futures extended losses. Benchmark U.S. crude slid 57 cents to $64.88 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, fell 86 cents to $67.72 a barrel in London.

CURRENCIES: The euro fell 0.2 percent to $1.2440 while the dollar was 0.3 percent lower at 109.83 yen.The Total Investment & Insurance Solutions