Nifty, Sensex Await Government Action on Forex Front – Tuesday closing report-The Total Investment & Insurance Solutions

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18 September 2018

I had mentioned in Monday’s closing report that Nifty, Sensex were trying to find a bottom for a short-term bounce. The major indices of the Indian stock markets suffered a sharp correction on Tuesday and closed with losses over Monday’s close. On the NSE, there were 472 advances, 1,267 declines and 328 unchanged. The trends of the major indices in the course of Tuesday’s trading are given in the table below:

The key Indian equity indices closed in the negative territory for the second successive day on Tuesday, with the S&P BSE Sensex losing close to 300 points.

The NSE Nifty50 also dropped nearly 100 points to end below the 11,300 mark, after global markets fell on the announcement of fresh US tariffs on Chinese imports. Sector-wise, selling pressure was witnessed in banking, auto and capital goods counters.

The State Bank of India (SBI) has put eight non-performing assets (NPAs), or bad loan accounts, on sale to recover over Rs3,900 crore with the e-bidding auction process slated for later this month. In a notification last week, SBI asked interested asset reconstruction companies (ARCs) and financial institutions to conduct the due diligence of the listed accounts which cumulatively owe the bank over Rs3,900 crore. The NPA accounts up for sale include Rohit Ferro Tech with the highest outstanding loan of Rs1,320.37 crore, Indian Steel Corporation (Rs928.97 crore), Jai Balaji Industries (Rs 859.33 crore), Mahalaxmi TMT (Rs409.78 crore) and Impex Ferro Tech (Rs200.67 crore).  The other defaulters' assets up for sale are Kohinoor Steel (Rs110.17 crore), Modern India Concast (Rs71.16 crore) and Ballarpur Industries (Rs47.17 crore). State Bank of India shares closed at Rs273.60, down 4.10% on the NSE.
 

Following up on government announcement on Monday about the proposed amalgamation of Bank of Baroda (BoB), Vijaya Bank and Dena Bank into the country's third-largest bank, BoB Managing Director P.S. Jayakumar said it may happen in four to six months. "Going by past practices, the merger may take four to six months. It can be speeded up also...it depends," Jayakumar told reporters. The envisaged amalgamation will be the first-ever three-way consolidation of banks in India, with a combined business of Rs14.82 lakh crore. The combined entity will have a net NPA ratio at 5.71%, better than public sector banks (PSB)'s average of 12.13%. "With the benefit of scale working in, with greater distribution and more opportunities for products for costumers etc., a reasonable assumption is that there will be good opportunity to come but it is something that will happen in due course," he said. The boards of the three state-run banks are expected to meet shortly and consider the government's proposal and decide the merger ratio and other details of the scheme of amalgamation. The government's shareholding will be as per the merger ratio. Bank of Baroda shares closed at Rs112.20, down 17.04% on the NSE.

Reliance Communications (RCOM) Chairman Anil Ambani on Tuesday said the company's subsidiary Reliance Realty would develop Dhirubhai Ambani Knowledge City (DAKC) to create 30 million square feet of commercial space. Reliance Realty owns and operates DAKC, a 133-acre registered IT park in Navi Mumbai. Reliance Communication shares closed at Rs16.10, down 6.12% on the NSE.

Strides Shasun’s formulations facility in Bangalore recently underwent pre-approval product inspection by the US FDA (US Food and Drug Administration) which ended on August 25, 2018. It has been issued a Form 483 with 3 observations. Strides Pharma Science Limited closed at Rs500.50, down 1.60% on the NSE.

Indian Hume Pipe has received Letter of Acceptance worth Rs221.72 crore from Madhya Pradesh Jal Nigam Maryadit for an EPC and O&M project of Indwar-I Multi Village Rural Water Supply Scheme on 'Turn-key job basis' for a period of 10 years. Indian Hume Pipe Company closed at Rs276.95. up 2.40% on the NSE.

Aurobindo Pharma has received approval from the South African Health Products Regulatory Authority (SAHPRA) for its Dolutegravir, Lamivudine and Tenofovir Disoproxil Fumarate (DLT) tablets, the first-line preferred regimen for HIV patients as per latest WHO guidelines. Aurobindo Pharma shares closed at Rs779.00, down 1.32% on the NSE.

The construction arm of Larsen & Toubro has won orders worth Rs2,048 crore across two business segments. The Power T&D business has secured Rs1,633 crore. The Water & Effluent business has won an order worth Rs415 crore from Tamil Nadu Water Supply & Drainage Board. Larsen & Toubro shares closed at Rs1,330.00, down 1.10% on the NSE.

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

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

Major Indices (The Total Investment & Insurance Solutions)

States set to miss 20% debt-to-GDP ratio target by FY23 -The Total Investment & Insurance Solutions

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18 September 2018

 

Debt-to-GDP ratio (The Total Investment & Insurance Solutions)

Though the Centre may manage to achieve the debt-to-GDP ratio target of 40 per cent by FY23, the states achieving the 20 per cent target looks difficult as most of them have not budgeted so far, warned a report. 

The states' aggregate debt-to-GDP ratio for FY19 has been budgeted at 24.3 per cent and according to their FY19 budgets, only 10 of the 20 states will have debt-to-GSDP ratio of under 25 per cent in FY19, noted the report by India Ratings' chief economist, DK Pant. 

The NK Singh committee, which is reviewing the Fiscal Responsibility and Budget Management Act of 2003, has suggested that the fiscal policy try to reduce the debt-to-GDP ratio to 60 per cent by FY23, with the Centre's at 40 per cent and the states' combined at 20 per cent, instead of improving the revenue to fiscal deficit ratio. 

Eight states namely Himachal, Jammu & Kashmir, Kerala, Manipur, Meghalaya, Nagaland, Punjab and Rajasthan had debt-to-GSDP ratios in excess of 30 per cent in FY18, suggesting that the aggregate debt-to-GDP ratio needs to be corrected by 8.92 percentage points between FY18 and FY23, Pant noted. 

Although there have been instances of debt-to-GDP ratio declining by over three percentage points in a single year and by over 11 per cent for six years at a go, all these periods were characterised by an average minimum nominal GDP growth of about 14 per cent per annum and average aggregate revenue receipt-to-GDP ratio of around 20 per cent, according to him. 

Though the aggregate revenue receipt-to-GDP ratio has been budgeted at 22 per cent for FY19, Pant said achieving a nominal GDP growth of about 14 per cent looks difficult. 

Sustainability of debt-to-GDP ratio relies on the primary balance-to-GDP and the rate spread (excess of nominal growth over average interest rate on debt). 

India Ratings said during FY90-FY18, the country's debt-to-GDP ratio witnessed five phases: During FY90-FY92, it rose to 72.89 per cent from 70.06; while during FY93-FY97, it declined to 64.37 per cent from 72.01; to rise again to 83.23 per cent from 66.29 during FY98-FY04. During the past five years, while revenue-to-GDP, interest-to-revenue, debt-to-revenue and positive rate spread trends were favourable for debt sustainability, rising interest payment/GDP, continuous primary deficit/GDP proved to be a negative, the note said. 

From a global perspective, the country remains an outlier in terms of both consolidated debt-to-GDP and debt-to-revenue ratios. 

While the median value of the consolidated debt-to-GDP 'BBB' countries was 37.8 per cent in 2017, for India it was a high 69 per cent. But European countries like Italy had a higher ratio at 131.8 per cent and Portugal's stood at 125.7 per cent, according to the rating agency. 

India Ratings attributed the low revenue base as the major factor for India having the highest debt-to-revenue ratio of 327.1 per cent amongst the median of the 'BBB' countries in 2017 at 165.4 per cent. 

"Higher debt and low revenue levels make India an outlier even in terms of interest-to-revenue ratio, which was 23.7 per cent as against 'BBB' median of 6.3 per cent in 2017. Clearly, the way forward is to expand our revenue base, and GST is a big step in this direction," said Pant. The Total Investment & Insurance Solutions

India sets record farm output target for 2018-19 -The Total Investment & Insurance Solutions

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18 September 2018

crop (The Total Investment & Insurance Solutions)

The government has set a target of producing a record 285.2 million tonnes of food grains in crop year 2018-19 beginning July, despite monsoon rainfall has been 9% below normal so far this year. 

The target is 0.53% higher than the initial forecast made in April, the agriculture ministry said on Tuesday. 

India harvested a record 284.8 million tonnes of food grains in 2017-18. 

For the current crop year, the government targets higher production of rice, wheat, oilseeds and cotton, while production of pulses, coarse cereals and sugarcane is expected to be lower than last year. 

Kharif production this year is expected to be better to last year’s owing to excellent crop condition, ministry officials said. 

They, however, did not explain the reasons for buoyant forecast for a year when rainfall has been below average and some parts of the country have been ravaged by floods. 

Parshottam Rupala, minister of state for agriculture, said rains have been less than normal in some parts of the country, and more than normal in some places. “Despite that we expect higher production in kharif,” he said. “Due to water availability in reservoirs, even the rabi planting will be very good.” 

The agriculture ministry has set kharif production target at 141.20 million tonnes, which is 0.71% higher than the target set in April. 

The ministry also said it expects rabi planting — which begins by mid-October — to be higher than last year since there were good soil moisture and higher water levels in reservoirs. 

The food grain target for 2018-19 — announced by agriculture commissioner SK Malhotra during a two-day national conference on planting strategy for the upcoming rabi (winter) season — is 0.14 % higher than the fourth advance estimate for 2017-18 production at 285.2 million tonnes. 

Agriculture secretary Shobhana K Pattanayak said various schemes of the government such as Pradhan Mantri Krishi Sinchai Yojana, Pradhan Mantri Fasal Bima Yojana, Soil Health Card scheme, and e-NAM were expected to increase farm output and farmers’ income. “So far, crop conditions are excellent and we expect a good production in kharif,” he said. 

For 2018-19, the agriculture ministry has fixed the production target for rice at 113 million tonnes, against 112.9 million tonne last year. Wheat production target has been set at 100 million tonnes against 99.7 million tonnes last year. 

The target for pulses has been kept at 25 million tonne, slightly less than last year’s 25.2 million tonnes. In case of coarse cereals, too, the target has been lowered slightly to 46.7 million tonnes against 46.9 million tonnes in 2017-18. 

 .. 
Target oilseed production for 2018-19 has been fixed at 36 million tonnes, up from 31.2 million tonnes last year, while cotton output is targeted to be raised to 35.5 million bales of 170 kg each from 34.89 million bales. 

Sugarcane production target for 2018-19 is fixed at 355 million tonnes, down from 376.91 million tonnes last year. 

Officials said the agriculture ministry is confident that the new procurement policy announced by the government last week will ensure farmers get remunerative prices. 

“States and private players have an important role to play in the new scheme while the FCI and cooperative NAFED would continue to procure food grains,” Pattanayak said. Niti Aayog was working with states on the modalities of having private players in procurement of food grains, he said. 

States should ensure that farmers take insurance covers for all natural calamity under the Pradhan Mantri Fasal Bima Yojana to protect their farmers, Pattanayak said. He pointed out that Kerala did not take insurance cover for flood, and took it only for drought. The Total Investment & Insurance Solutions

Global trade tensions dent rupee; closes at 72.98-The Total Investment & Insurance Solutions

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18 September 2018

 

Rupee (The Total Investment & Insurance Solutions)

The latest global trade protectionist measures, along with high crude oil prices, dragged the Indian rupee to a fresh low of 72.98 per US dollar on Tuesday.

At 5 p.m., the rupee closed at 72.98 per greenback from its previous close of 72.51 per dollar. 

It had opened at 72.60 per US dollar at the Inter-Bank Foreign Exchange Market and remained range bound. 

However, the Indian currency's slide commenced from 4.45 p.m. onwards as it touched 72.96 breaching its previous intra-day record low of 72.91 made on September 12.

According to analysts, concerns over a rise in inflation rate, growing protectionism in global trade and an outflow of foreign funds from the country's equity market have had an adverse impact on the Indian currency.The Total Investment & Insurance Solutions

Global Stocks Shrug Off Trump's Latest Tariffs On China-The Total Investment & Insurance Solutions

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18 September 2018 

financial markets (The Total Investment & Insurance Solutions)

 Global stock markets, particularly those in Asia, shrugged off the widely anticipated announcement of further U.S. tariffs on Chinese goods.

KEEPING SCORE: Following big gains in Asia, such as a 1.4 percent increase in Japan's Nikkei 225 stock average, the rebound stalled in Europe. France's CAC 40 added 0.2 percent to 5,361, while the DAX in Germany rose 0.2 percent to 12,119. Britain's FTSE 100 was steady at 7,303. Wall Street was set for modest gains at the open too, with Dow futures and the S&P 500 up 0.2 percent.

MORE CHINESE TARIFFS: On Monday, Trump announced tariffs on an additional $200 billion of Chinese goods starting next week, potentially raising prices on goods ranging from handbags to bicycle tires. The tariffs will start at 10 percent, beginning Monday of next week, and then rise to 25 percent on Jan. 1. China's Commerce Ministry vowed to take "counter-measures" on Tuesday but gave no further details. Beijing has warned that it would hit an additional $60 billion in American goods if Trump ordered more tariffs. If China does retaliate, Trump has threatened to add another $267 billion in Chinese imports to the target list. That would raise the total to $517 billion — covering nearly everything China sells in the United States.

ANALYST TAKE: "It is a classic case of 'sell the rumor, buy the fact', and while an escalation in trade wars between the world's two most important economies is not an ideal development, the drip-drip nature of the conflict allows investors to spot the positives among the negatives," said Chris Beauchamp, chief market analyst at IG. "There is almost a sense of relief that the news is out in the open, and confronted by an generally positive macro and corporate backdrop there seems little alternative but to take the opportunity afforded by yesterday's sell-off to keep buying equities."

ASIA'S DAY: Japan's Nikkei 225, reopening after a national holiday, jumped 1.4 percent to 23,420.54. The Kospi in South Korea added 0.3 percent to 2,308.98. Hong Kong's Hang Seng index rose 0.6 percent to 27,084.66. The Shanghai Composite index rebounded 1.8 percent to 2,699.95. But Australia's S&P/ASX 200 shed 0.4 percent to 6,161.50.

ENERGY: Benchmark U.S. crude rose 84 cents to $69.75 a barrel on Tuesday while Brent crude, used to price international oils, advanced 92 cents to $79 a barrel.

CURRENCIES: The euro was up 0.2 percent at $1.1706 while the dollar rose 0.2 percent to 112.10 yen.The Total Investment & Insurance Solutions

Nifty, Sensex Trying to Find a Bottom for a Short-term Bounce – Monday closing report-The Total Investment & Insurance Solutions

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17 September 2018

The major indices of the Indian stock markets suffered a correction on Monday and closed with losses over Friday’s close. On the NSE, there were 796 advances, 957 declines and 324 unchanged. The trends of the major indices in the course of Monday’s trading are given in the table below:

The key Indian equity indices closed in the red on Monday, as the S&P BSE Sensex lost more than 500 points and the NSE Nifty50 slipped by around 140 points amidst negative global cues on concerns over the US-China trade war escalating. Sector-wise, selling pressure was witnessed in banking, consumer durables and auto counters.

California-based Internet of Things (IoT) company Ayla Networks on Monday announced a strategic partnership with global technology and design services provider Tata Elxsi to help communications service providers (CSPs). Tata Elxsi shares closed at Rs1,365.10, up 1.42% on the NSE.

Global technology services company Mindtree on Monday said it has entered into a partnership with the Indian Institute of Technology Madras (IIT Madras) to set up a dedicated faculty fellow position in data science and Artificial Intelligence (AI). IIT Madras has formalised a process to identify the faculty member who will be named to the Mindtree faculty fellow position, the company said in a statement. Mindtree shares closed at Rs1,155.00, up 0.93% on the NSE.

Private sector HDFC Bank has become India’s most valuable brand for the fifth year in a row with a 21% rise in its brand value to $21.7 billion over the previous year, according to a survey. According to a release here, HDFC Bank retained its top spot in the "WPP and Kantar Millward Brown's BrandZ 75 Most Valuable Indian Brands" ranking that was started in 2014 by the global communication services company. 

Lending major Yes Bank plans to issue bonds worth Rs3,042 crore. According to a BSE filing by the company, the decision was taken by Yes Bank Board's Capital Raising Committee on Friday. Yes Bank’s shares closed at Rs317.50, down 1.73% on the NSE.

V-MART Retail’s credit rating has been upgraded by ICRA. Alembic Pharma has received USFDA approval for Desvenlafaxine Extended-Release Tablets, 25 mg, an equivalent of PRISTIQ® of Wyeth Pharma Inc. The drug is indicated for the treatment of major depressive disorder (MDD). Estimated annual sales: US$ 13.3 million (ending Dec 2017). Glenmark Pharma has been granted final approval by the USFDA for its Estradiol Vaginal Inserts USP, 10 mcg, a generic version of VAGIFEM®, 10 mcg, of Novo Nordisk Inc. Approx. annual sales achieved: US$ 286.3 million (ending July 2018).

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

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

Major Indices (The Total Investment & Insurance Solutions)

Hope to cross Rs 11.5 lakh cr direct tax collection target for FY19:CBDT chief-The Total Investment & Insurance Solutions

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17 September 2018

CBDT (The Total Investment & Insurance Solutions)

CBDT Chairman Sushil Chandra Monday expressed confidence in exceeding Rs 11.5 lakh crore direct tax collection target in current fiscal. In 2018-19 budget, the government had projected a 14.3 per cent rise in direct tax collections to Rs 11.5 lakh crore. 

"We certainly hope to cross the Rs 11.5 lakh crore direct tax collection target for the current fiscal," Chandra told reporters. 

However, Controller General of Accounts data shows, the direct tax collections grew a paltry 4.2 per cent on year to Rs 1.54 lakh crore in April-June. 

Chandra said total tax refund so far in the current financial year stands at about Rs 95,000 crore. 

This year, the government conducted a special drive during June 1-30 to expeditiously clear pending direct tax refunds. 

Over 99 per cent of all refund claims pending as of June 30 had been processed and disbursed, a finance ministry statement had said earlier. 

In last fiscal (2017-18), direct tax collection increased over 18 per cent to Rs 10.03 lakh crore. 

Chandra said the government has received close to Rs 7,500 crore on account of Flipkart-Walmart deal. 

Walmart Inc had completed the acquisition of 77 per cent stake in Flipkart for about USD 16 billion in mid-August. 

Following the deal, it had to withhold taxes as per Indian laws while making payments to shareholders of Flipkart. 

Withholding tax, or retention tax, is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is withheld or deducted from the income due to the recipient. 

As per domestic tax law, long-term capital gains tax is levied at 20 per cent for shares sold by foreign investors after 24 months of purchase. 

However, the I-T law also provides for a taxpayer to pay taxes at a lower or nil rate if he is eligible to claim the benefits under the double taxation avoidance agreement between India and the country from where the investment was routed. The Total Investment & Insurance Solutions

Centre proposes merger of Dena Bank, Vijaya Bank, Bank of Baroda -The Total Investment & Insurance Solutions

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17 September 2018

Merger (The Total Investment & Insurance Solutions)

The government on Monday proposed the merger of three state-run banks - Dena Bank, Vijaya Bank and the Bank of Baroda - into an amalgamated entity and has directed their respective boards to consider the proposal, Finance Minister Arun Jaitley announced. This is the second such exercise in the last 18 months.

"The Alternative Mechanism made the decision today and it has been proposed to the individual bank boards to take a decision. Boards would meet and after consultation take appropriate action," Jaitley said.

"This will hopefully create another mega bank which will be sustainable. The amalgamated entity would increase banking operations and its ability to go for further consolidation."

In the previous such mega merger, five associate banks and the Bharatiya Mahila Bank became part of the state-run State Bank of India on April 1, 2017, making the country's largest lender among the world's top 50 banks.

Besides the Finance Minister, the Alternative Mechanism includes Defence Minister Nirmala Sitharaman and Railway Minister Piyush Goyal.

Noting that one of the banks proposed in this merger was under the Reserve Bank of India's Prompt Corrective Action (PCA) framework on account of its massive accumulated non-performing assets (NPAs), or bad loans, Jaitley said: "The consolidated entity's capacity to absordb a weaker bank guided our decision to propose this merger to the boards."

"No employee would face adverse service conditions due to the merger," he added.

According to Finance Ministry officials here, the proposed merger would lead to the creation of the country's third largest banking entity in the country.The Total Investment & Insurance Solutions

Eco-labels, sustainability can be key to new markets: UN -The Total Investment & Insurance Solutions

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17 September 2018

 

United Nations(The Total Investment & Insurance Solutions)

Eco-labels and voluntary sustainability standards that uphold not just the quality but also the sustainability of products from developing countries can be the key to unlocking new markets, a United Nations report said on Monday.

Ecolabelling is a voluntary method of environmental performance certification and labelling practised around the world. An ecolabel identifies products or services proven environmentally preferable overall, within a specific product or service category.

According to the United Nations Conference on Trade and Development (UNCTAD), the report was launched at the International Convention on Sustainable Trade and Standards here. The convention has been organised by the Quality Council of India (QCI) and the United Nations Forum on Sustainability Standards on September 17 ans 18.

"Today, there are almost 500 eco-labels in 199 countries and 25 industrial sectors," UNCTAD Deputy Secretary General Isabelle Durant said in a statement.

"With broad uptake, standards can move industries towards improved social, environmental and economic performance. Standards translate the broad concept of sustainability into specific and concrete measures for companies and their suppliers and influence consumption decisions of the consumers," she said.

The United Nations Forum on Sustainability Standards (UNFSS) is a knowledge-sharing and convening platform backed by UNCTAD, UN Food and Agriculture Organisation, International Trade Centre, United Nations Environment Programme and United Nations Industrial Development Organisation.

The platform is designed to analyse voluntary sustainability standards and disseminate information about them even as national multi-stakeholder platforms for VSS have been developed in different emerging economies.

India established the first national platform in 2016 with UNFSS support, with Brazil and China following suit.

"Currently, several other countries are also exploring the possibilities to develop their national platforms," the statement said.

These platforms aid dialogue between public and private stakeholders on "how to pro-actively use VSS", it added.The Total Investment & Insurance Solutions

Renewed US Tariff Fears Stalk Global Stock Markets-The Total Investment & Insurance Solutions

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17 September 2018

financial markets (The Total Investment & Insurance Solutions)

Global stock markets started the new week on a soft note as investors waited to see if the U.S. slaps tariffs on another $200 billion-worth of Chinese goods. Oil prices rose, meanwhile, as heavy storms battered both countries.

KEEPING SCORE: In Europe, France's CAC 40 was flat at 5,353 while the DAX in Germany dropped 0.3 percent to 12,087. Britain's FTSE 100 declined 0.1 percent to 7,297. Wall Street was set for a muted open with Dow futures and the broader S&P 500 futures down 0.1 percent.

TARIFF TALK: Weekend reports suggest that President Donald Trump is ready to go through with threats to slap fresh tariffs on Chinese goods. Citing unnamed people it said were familiar with the discussions, the Wall Street Journal said the tariff level will likely be set at about 10 percent, below the 25 percent announced earlier this year. At the same time, U.S. officials, led by Treasury Secretary Steven Mnuchin, are preparing to hold new talks on the tariff dispute with Beijing. Envoys met last month in Washington but reported no progress. The two governments have already imposed 25 percent tariffs on $50 billion of each other's goods. Beijing has issued a list of another $60 billion of American products for retaliation if Trump's next tariff hike goes ahead.

ANALYST TAKE: "The ongoing (trade) conflict between the U.S. and China continues to be a primary driver of market sentiment, with investors concerned about the prospect of a full blown trade war as neither side shows a willingness to blink," said Craig Erlam, senior market analyst at OANDA.

ASIA'S DAY: South Korea's Kospi fell 0.7 percent to 2,303.01 and Hong Kong's Hang Seng index tumbled 1.3 percent to 26,932.85. The Shanghai Composite index lost 1.1 percent to 2,651.79. But Australia's S&P/ASX 200 rose 0.3 percent to 6,185.00. Japanese markets were closed for a national holiday.

ENERGY: Many of the headlines at the start of the new week have centered on the pair of storms that are hitting opposite ends of the world. Florence is making its way through the U.S. while Mangkhut has moved deeper into southern China. As well as causing death and widespread destruction, they have contributed to a push higher in oil prices. Benchmark U.S. crude added 47 cents to $69.46 a barrel while Brent crude, used to price international oils, gained 45 cents to $78.54 a barrel.

CURRENCIES: The euro was up 0.4 percent at $1.1672 while the dollar was flat at 112 yen.The Total Investment & Insurance Solutions