Nifty, Sensex still range-bound – Wednesday closing report-The Total Investment & Insurance Solutions

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3 May 2017

I had mentioned in Tuesday’s closing report that Nifty, Sensex were directionless. The major indices of the Indian stock exchanges were range-bound on Wednesday and closed with marginal losses over Tuesday’s close. 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)

Negative global cues and heavy selling pressure in healthcare, oil and gas, and banking stocks led the Indian equity markets to close on flat-to-negative note on Wednesday. Market observers said investors were cautious ahead of the outcome of the two-day US Federal Open Market Committee (FOMC) meet, due later in the evening. The BSE market breadth favoured a bearish mood -- with 1,488 declines and 1,357 advances. On the NSE, there were 679 advances, 849 declines and 67 unchanged on Wednesday.

The country's two bourses National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have given their consent for the independent listing of Reliance Home Finance, Reliance Capital Ltd, part of Anil Ambani-led Reliance Group, said on Wednesday. In a statement here, Reliance Capital said it has received the requisite "No-Objection" from both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) to the scheme filed, facilitating the independent listing of Reliance Home Finance on the bourses. "The company is proceeding with filing the scheme of demerger with the National Company Law Tribunal for approval, and Reliance Home Finance is on track to be independently listed on stock exchanges during the next few months," the statement said. As part of the listing proposal, nearly one million shareholders of Reliance Capital will be allotted one share free of cost in Reliance Home Finance for every one share held in Reliance Capital. Reliance Home Finance has already announced strong financial results for the year ended March 31, 2017. The Total Investment & Insurance Solutions

Net profit of Shriram City Union Finance declined 73.33% to Rs16.31 crore in the quarter ended March 2017 as against Rs 61.16 crore during the previous quarter ended March 2016. Sales rose 15.16% to Rs 1177.96 crore in the quarter ended March 2017 as against Rs 1022.90 crore during the previous quarter ended March 2016. For the full year, net profit rose 4.71% to Rs 578.08 crore in the year ended March 2017 as against Rs 552.07 crore during the previous year ended March 2016. Sales rose 17.64% to Rs4703.59 crore in the year ended March 2017 as against Rs 3998.19 crore during the previous year ended March 2016. The company’s shares closed at Rs2,138.25, down 2.02% on the BSE. The Total Investment & Insurance Solutions

Net profit of JM Financial rose 32.63% to Rs 150.85 crore in the quarter ended March 2017 as against Rs 113.74 crore during the previous quarter ended March 2016. Sales rose 58.98% to Rs 670.94 crore in the quarter ended March 2017 as against Rs 422.03 crore during the previous quarter ended March 2016. For the full year, net profit rose 17.41% to Rs 470.20 crore in the year ended March 2017 as against Rs 400.46 crore during the previous year ended March 2016. Sales rose 43.98% to Rs 2152.24 crore in the year ended March 2017 as against Rs 1494.84 crore during the previous year ended March 2016. The company’s shares closed at Rs120.65, up 2.86% on the BSE. The Total Investment & Insurance Solutions

Real estate company Godrej Properties informed bourses that it has sold over 1,000 apartments across three new project launches - Godrej Origins at The Trees in Mumbai, The Suites at Godrej Golf Links in Greater Noida and Godrej 24 at Hinjawadi, Pune since March 2017. The company’s shares closed at Rs544.20, up 7.74% on the BSE.

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)

NSE, BSE give 'No Objection' to listing of Reliance Home Finance-The Total Investment & Insurance Solutions

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3 May 2017

The country's two bourses National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have given their consent for the independent listing of Reliance Home Finance, Reliance Capital Ltd, part of Anil Ambani-led Reliance Group, said on Wednesday.

In a statement here, Reliance Capital said it has received the requisite "No-Objection" from both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) to the scheme filed, facilitating the independent listing of Reliance Home Finance on the bourses.

"The company is proceeding with filing the scheme of demerger with the National Company Law Tribunal for approval, and Reliance Home Finance is on track to be independently listed on stock exchanges during the next few months," the statement said.

As part of the listing proposal, nearly one million shareholders of Reliance Capital will be allotted one share free of cost in Reliance Home Finance for every one share held in Reliance Capital. The Total Investment & Insurance Solutions

Reliance Home Finance has already announced strong financial results for the year ended March 31, 2017. The Total Investment & Insurance Solutions

For the year ended March 31, Reliance Home Finance posted a total income of Rs 1,145 crore and a net profit of Rs 173 crore.

The company closed last year with assets under management of Rs 11,174 crore.

Total disbursements were at Rs 7,333 crore -- including Rs 1,102 crore disbursed towards affordable housing with an average ticket size of Rs 11 lakh -- and gross non-performing assets (on 90 days past due-dpd basis) improved to 0.8 per cent from 1.1 per cent (as on December 2016).The Total Investment & Insurance Solutions

Jet terminates contract of foreign pilot found guilty of assault -The Total Investment & Insurance Solutions

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3 May 2017

Jet Airways has terminated the services of a foreign pilot who assaulted an examiner during a training session, sources said on Tuesday. The Total Investment & Insurance Solutions

According to sources, the foreign pilot who operated a Boeing 777 aircraft was found to have assaulted a designated examiner last month during a training session in Bengaluru.

"The service contract of the pilot has been terminated after an internal investigation found him to be guilty of assault. The thorough investigation was initiated after the trainer reported the assault incident," a source said. The Total Investment & Insurance Solutions

Subsequently, Jet Airways' pilots union demanded that the airline removes all foreign pilots. The pilots' union -- National Aviator's Guild (NAG) -- had asked its members not to operate flights with foreign pilots from May 1. The Total Investment & Insurance Solutions

However, the NAG later deferred its decision and is soon expected to meet the company's management over the issue. The Total Investment & Insurance Solutions

The airline currently employs around 60 foreign pilots, while the union has more than 1,000 Indian nationals.The Total Investment & Insurance Solutions

CBI arrests Mumbai IT Commissioner, five others for graft -The Total Investment & Insurance Solutions

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3 May 2017

The CBI arrested an Income Tax Commissioner and five other senior officials here on Wednesday morning, official sources said. The Total Investment & Insurance Solutions

Among the arrested on the charges of graft was IT Commissioner (Appeals) B.B. Rajendra Prasad.

The Central Bureau of Investigation team also recovered huge cash stash reportedly amounting to around Rs 15 million, investment details and other incriminating documents from the residences of the arrested in south Mumbai and other places, the sources added.

The accused were likely to be presented before a court later.

The CBI action commenced late on Tuesday night and continued till Wednesday morning.The Total Investment & Insurance Solutions

Global Stocks Decline Amid Fed Meeting, European Data-The Total Investment & Insurance Solutions

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3 May 2017

Global (The Total Investment & Insurance Solutions)

Global stocks declined Wednesday ahead of a meeting of U.S. Federal Reserve policymakers and as investors digested solid growth figures from the eurozone. Markets in Japan and Hong Kong were closed for a holiday. The Total Investment & Insurance Solutions

KEEPING SCORE: London's FTSE 100 retreated 0.3 percent to 7,231 and France's CAC 40 lost 0.3 percent to 5,290. Germany's DAX shed 0.1 percent to 12,493. On Wall Street, the futures for the Standard & Poor's 500 index were down 0.1 percent and those for the Dow Jones industrial average shed 0.1 percent. The Total Investment & Insurance Solutions

FED WATCH: Investors expect the Fed to keep the benchmark U.S. interest rate on hold this month but are looking to a post-meeting statement for signs of when the next increase might come. Markets indicate a 66 percent chance of a hike in June, experts say.

ANALYST'S TAKE: Chris Weston of IG said in a report that economic indicators for the U.S. have been underwhelming of late, so that leaves open the risk that the Fed may look to lower expectations of a hike in June. "Keep in mind the interest rate markets are pricing a 60 percent chance of a hike from the Fed in June, so this probability will move depending on the tone of the statement."

EUROPEAN DATA: The economy of the 19-country eurozone grew by a quarterly rate of 0.5 percent in the first quarter — a solid figure that outpaces the U.S. but which likely disappointed some investors hoping for an even stronger result. The growth comes despite uncertainty over a series of elections in Europe and is expected to have continued into the spring.

ASIA'S DAY: Sydney's S&P-ASX 200 fell 1 percent to 5,892.30 and the Shanghai Composite Index declined 0.3 percent to 3,135.35. India's Sensex was unchanged at 29,909.31. Benchmarks in Singapore and Bangkok advanced while New Zealand, Jakarta and Manila declined. South Korean markets also were closed for a holiday. The Total Investment & Insurance Solutions

CURRENCY: The dollar edged up to 112.12 yen from Tuesday's 111.99 yen. The euro declined to $1.0919 from $1.0929. The Total Investment & Insurance Solutions

ENERGY: U.S. benchmark crude gained 21 cents to $47.87 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $1.18 on Tuesday. Brent crude, used to price international oils, rose 28 cents to $50.74 in London. It lost $1.06 the previous session.The Total Investment & Insurance Solutions

Nifty, Sensex directionless – Tuesday closing report-The Total Investment & Insurance Solutions

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2 May 2017

I had mentioned in Friday’s closing report that Nifty, Sensex might retreat a bit. The major indices of the Indian stock markets were range-bound and closed with marginal gains. The trends of the major indices in the course of Tuesday’s trading are given in the table below:

 

Major Indices (The Total Investment & Insurance Solutions)

Global cues on Tuesday depressed the Indian equity markets to close on a flat-to-positive note. According to market observers, investors were cautious ahead of the two-day US Federal Open Market Committee (FOMC) meet which is scheduled to commence on late Tuesday evening. Besides, sentiments were subdued by heavy selling pressure witnessed in index heavyweights such as Reliance Industries and Bharti Airtel. The BSE market breadth was bearish -- with 1,520 declines and 1,350 advances. 

In terms of the broader markets, the S&P BSE mid-cap index closed up by 0.38%, while the small-cap index rose by 0.31%. Positive vibes from core sector and PMI (Purchasing Managers' Index) numbers should hold markets in good stead, and shall ensure that recent upside momentum is not lost amid consolidation. The Nikkei India Manufacturing Purchasing Managers' Index (PMI), which is a composite indicator of manufacturing performance during April 2017, matched the index reading of 52.5 reported in March. Power and telecom sector stocks traded down due to selling pressure. Along with IT, auto remained top performing sector on a positive side. Sector-wise, the S&P BSE consumer durables index surged by 187.28 points, the oil and gas index rose by 151.13 points and the automobile index gained 121.44 points. In contrast, the S&P BSE healthcare index fell by 116.76 points, the capital goods index was down by 99.47 points, and the metal index edged down by 64.52 points. The Total Investment & Insurance Solutions

Global software major Infosys on Tuesday said it would hire 10,000 American workers in the next two years, a move seen as a fallout of US President Donald Trump's executive order on H1-B visas a fortnight ago. The city-based IT major also said it would set up four technology and innovation hubs across North America to focus on cutting-edge technology, including artificial intelligence (AI), machine learning, user experience, emerging digital technologies, cloud and big data. 

The first hub will open in the mid-western state of Indiana in August and is expected to create 2,000 jobs by 2021 for American workers. "The hubs will have technology and innovation focused areas and serve clients in key industries such as financial services, manufacturing, healthcare, retail and energy," said the firm in a statement here. Clients in the US contribute about 60 per cent of the company's software export revenue per year. "We are committed to hiring 10,000 American technology workers over the next two years to help invent and deliver the digital futures for our clients in the US," said Infosys Chief Executive Vishal Sikka in the statement. The $10.3-billion company will hire experienced professionals as well as recent graduates from major universities and local and community colleges to create talent pools for the future. The Total Investment & Insurance Solutions

"Basically, Infosys is hiring American workers to please Trump, who passed an order recently (April 19) which will force Indian IT firms to pay more salary for high-skilled employees working in the US on H-1B visas," Head Hunters India Founder-Chairman and Managing Director K. Lakshmikanth told IANS here. Infosys Deputy Chief Operating Officer S. Ravi Kumar however said the company had been hiring in the US over the years for organic growth and create talent on campuses. "The right strategy for a company like ours is to build local talent pools and supplement them with global talent in times of shortage. The hubs will be located where we have client clusters and good local talent is available," he said. 

The decision to ramp up local hiring by Indian IT majors like Infosys, TCS and Wipro comes also in light of Trump's order to ensure that H-1B visas were awarded to the most skilled and highly-paid. "Infosys will take time to ramp up local hiring as it is very costly. It has to pay a minimum of $80,000 (Rs 52 lakh) per year to a skilled American techie. For the same amount, it can hire four software engineers in India for its offshore development work," said Lakshmikanth. Currently, an Indian IT firm pays $60,000-65,000 per year for techies working in the US on H-1B visas and they return after three years of onsite work. Infosys, which sends about 3,000-4,000 techies to the US every year, will get 50 per cent of the H1B visas under the new rules as part of the quota and the rest through the lottery system. "If Infosys hires about 500 Americans techies, it will result in loss of 2,000 jobs in India for offshore operations. Automation and AI (Artificial Intelligence) will reduce hiring by another 30-40 per cent," said Lakshmikanth. Indian IT industry representative body Nasscom, however, declined to react to Infosys' plans, saying it "doesn't comment on company specific matters".  Infosys shares closed at Rs921.00, up 0.17% 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)

India's manufacturing conditions improve in April: PMI-The Total Investment & Insurance Solutions

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2 May 2017

India's manufacturing conditions improved for the fourth straight month in April due to healthy domestic demand conditions and exports growth, a key macro-economic data showed on Tuesday. The Total Investment & Insurance Solutions

The Nikkei India Manufacturing Purchasing Managers' Index (PMI), which is a composite indicator of manufacturing performance during April 2017, matched the index reading of 52.5 reported in March. The Total Investment & Insurance Solutions

An index reading of above 50 indicates an overall increase in economic activity, and below 50 an overall decrease. The Total Investment & Insurance Solutions

"Buoyant domestic demand coupled with sustained growth of new orders from abroad boosted the upturn in total new business received by Indian manufacturers in April," said Pollyanna De Lima, economist at IHS Markit and author of the report.

"Having recovered at the beginning of the year from December's demonetisation-related contraction, growth of order books has gathered pace in each month since."The Total Investment & Insurance Solutions

Fitch affirms India's rating at 'BBB-', outlook stable -The Total Investment & Insurance Solutions

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2 May 2017

Global ratings agency Fitch on Tuesday affirmed India's long-term foreign and local currency ratings at 'BBB-', the lowest investment grade, but said the outlook is "stable".

Further, the rating agency said it expected India's real Gross Domestic Product to grow at 7.7 per cent during 2017-18. The Total Investment & Insurance Solutions

"India's positive GDP growth outlook stands out among peers," it said in a statement.

"Fitch forecasts India's real GDP growth to accelerate to 7.7 per cent in FY17-18, from 7.1 per cent in FY16." The Total Investment & Insurance Solutions

The agency expects structural reforms to increase growth, along with higher real disposable income. The Total Investment & Insurance Solutions

Rs 2.44 lakh crore NPAs sold to asset reconstruction firms: Study -The Total Investment & Insurance Solutions

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2 May 2017

As a crucial part of the resolution of the non-performing assets (NPAs), Rs 2.44 lakh crore worth of gross NPAs have been sold to the Asset Reconstruction Companies (ARCs) while the current stock of stress in the Indian banking system is estimated at Rs 11.80 lakh crore, a study has stated.

Seeking a level playing field with the banks in terms of conversion of loans into equity, the study said though a huge chunk of stressed assets, as much as 15 per cent of advances (9.84 per cent NPAs and 4.2 per cent restructured assets), is a matter of concern for the economy, it offers huge opportunity for the ARCs. The Total Investment & Insurance Solutions

The study was carried out jointly by industry lobby Associated Chambers of Commerce and Industry of India, Society of Insolvency Practitioners of India and Edelweiss. 

"While ARCs are an important means to help banks manage NPAs, at its heart, ARC business is a resolution business and not a recovery business. ARCs do not have any magic spell for revving a non-performing assets," Assocham Secretary General D.S. Rawat said.

He said the process of resolving a stressed asset requires "aggregation of debt outstanding to various banks, arrangement of capital, right sizing the business and bringing in a strategic partner".

"This requires a period of 3-5 years", he added.

As many as seven ARCs have largely been promoted by banks even as foreign direct investment has also been permitted into the asset reconstruction, which the study paper said should be treated as a resolution and not a recovery business. The Total Investment & Insurance Solutions

The study said there must be a level playing field along with more teeth to ARCs for dealing with the promoters of companies owing a high level of bank debt which has decayed into NPAs. 

"At least 51 per cent conversion should be allowed to ARCs while reconstructing an asset," it noted.

"The ARCs are not on par with the banking system when it comes to equity conversion. While RBI has given sweeping powers to bank in form of Strategic Debt Restructuring (SDR) and even in case of normal debt conversion, ARCs are restricted to maximum 26 per cent of equity share in a particular company," it said. The Total Investment & Insurance Solutions

The study stressed that incentive structure has to be introduced for banks where 100 per cent debt is sold to ARCs. The Total Investment & Insurance Solutions

"The banks are not following a consortium approach which is a major issue that leads to delay of 12-18 months for debt aggregation. ARCs have to resort to a time-consuming process of dealing with each bank separately, often at different commercial terms," it said.

"The companies under reconstruction require working capital and often the non-fund based requirements are high. The banks selling NPAs to ARCs, cannot lend, while non-bank entities, such as private equity /Non Banking Financial Company, demand very high interest along with priority in repayment over existing debt," it added. The Total Investment & Insurance Solutions

ARCs have been doing a lot of work to ensure that the banking system is relieved from the structural NPA problem which they are currently facing, the study said.The Total Investment & Insurance Solutions

Slowing Auto Sales Weigh On US Stocks As Indexes Wobble-The Total Investment & Insurance Solutions

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2 May 2017

 U.S. stock indexes are little changed Tuesday morning as weak auto sales drag down car makers even as other companies report strong earnings. Industrial companies including engine maker Cummins and pump and valve maker Flowserve are rising after they posted their first-quarter results. Ford, General Motors and Fiat Chrysler are falling as it appears U.S. car sales are slowing down.

KEEPING SCORE: The Standard & Poor's 500 index remained at 2,387 as of 10:23 a.m. Eastern time. The Dow Jones industrial average added 14 points, or 0.1 percent, to 20,928. The Nasdaq composite lost 6 points, or 0.1 percent, to 6,086 after it set a record high Monday. The Russell 2000 index of small-company stocks sank 6 points, or 0.5 percent, to 1,400. That was a hint investors were concerned that weak auto sales are a warning sign about the U.S. economy. Those same worries hurt stocks a month ago. The Total Investment & Insurance Solutions

STOP SIGNS: Big automakers said their U.S. sales fell last month, a strong signs that demand for cars, trucks and SUVs is starting to slow after seven straight years of growth. Ford's sales were down 7 percent in April as car sales plunged and GM's sales slid 6 percent as it sold fewer pickup trucks. Toyota posted a smaller decline. Vehicle sales have set records the last few years and experts expect that streak to end this year. While sales are still strong overall, analyst are worried car companies are relying too much on discounts and incentives to boost sales.

Ford lost 45 cents, or 3.9 percent, to $10.97 and GM gave up 94 cents, or 2.8 percent, to $33.26 while Fiat Chrysler skidded 60 cents, or 5.2 percent, to $10.82. Car suppliers and rental companies like AutoNation and BorgWarner slipped as well. The Total Investment & Insurance Solutions

Some investors see car sales as an important indicator of how much consumers are willing to spend overall, and stocks struggled a month ago following a weak round of March auto sales reports.

EARNINGS POWER: Industrial companies made the biggest gains early on. Cummins reported a far bigger profit and better sales than analysts expected, and its stock climbed $8.65, or 5.7 percent, to $159.98. The company said demand from construction and mining sales grew compared to a year ago, but it said truck production in North America fell.

Flowserve, which makes pumps, valves, and other products for the oil and gas industries, beat expectation and said contract bookings improved. It added $2.09, or 4.2 percent, to $51.74. Meanwhile power management company Eaton said its sales grew for the first time in two years as hydraulics revenue jumped. The company raised its forecasts for the rest of the year and its stock gained 63 cents to $76.76. The Total Investment & Insurance Solutions

GOOD GRADE: Consumer reviews website Angie's List soared after it agreed to be bought by media company IAC/InterActive for about $505 million in cash and stock. The deal values Angie's List at $8.50 a share, below the $8.75 IAC/InterActive offered when it tried to buy Angie's List in 2015. IAC/InterActive wants to combine Angie's List with its HomeAdvisor.com business, which offers resources for home repair and improvement projects. The company will be called ANGI Homeservices. Angie's List jumped $3.30, or 56 percent, to $9.19 and IAC/InterActive rose $12.18, or 14.5 percent, to $96.37.

BONDS: Bond prices headed higher. The yield on the 10-year Treasury note fell to 2.31 percent from 2.32 percent. Banks traded slightly lower. They made a big gain Monday as bond yields and interest rates increased. Higher bond yields allow banks to charge higher interest rates on loans.

ENERGY: Benchmark U.S. crude lost 24 cents to $48.60 a barrel in New York. Brent crude, used to price international oils, shed 11 cents to $51.41 a barrel in London.

CURRENCIES: The dollar rose to 112.15 yen from 111.83 yen. The euro fell to $1.0894 from $1.0906.

OVERSEAS: In Greece the Athex composite jumped 3 percent after the country and its creditors agreed Greece should make another round of pension cuts in 2019 and commit to a budget target when its current bailout program ends next year. That deal will restart bailout loan payments to Greece, meaning it won't face default. That could have touched off another eurozone crisis. Other European stocks also headed higher. Britain's FTSE 100 index gained 0.6 percent while the CAC 40 in France added 0.4 percent. In Germany, the DAX rose 0.3 percent. The Total Investment & Insurance Solutions

The Japanese Nikkei 225 index advanced 0.7 percent and South Korea's Kospi gained 0.7 percent. The Hang Seng in Hong Kong added 0.3 percent.The Total Investment & Insurance Solutions