States to get Rs 22,700 crore windfall from rupee plunge, crude spike -The Total Investment & Insurance Solutions

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11 September 2018

 

INR (The Total Investment & Insurance Solutions)

The continuing plunge in the rupee, coupled with the rising crude prices, will give the states a windfall in tax revenues to the tune of Rs 22,700 crore over and above the budget estimates for the current fiscal, says a report. 

The rupee plumbed a new life-time low of 72.73 to a dollar, falling 28 paise Tuesday on strengthening American currency as crude prices went past the USD 78 a barrel mark. This also pulled down the markets with the benchmark Sensex crashing by over 509 points or 1.34 per cent, to close at 37,413.13. 

The rupee opened on a positive note by inching 20 paise higher at 72.25 against the US dollar amid increased selling by banks and exporters. 

"This increase in petrol and diesel prices is likely to give the states a windfall gain of around Rs 22,700 crore over and above the budget estimates for current fiscal," SBI Research said in a note. 

An increase of USD 1 a barrel in crude price translates to Rs 1,513 crore revenue gain on an average to all the major 19 states, the report noted. It added the largest gain will be in Maharashtra to the tune of Rs 3,389 crore followed by Gujarat at Rs 2,842 crore. 

Since March, petrol and diesel prices have increased by Rs 5.60 and Rs 6.31, respectively in Delhi. Petrol price has now crossed Rs 89 litre in Maharashtra, which is the highest among all the states as Maharashtra charges the highest VAT at 39.12 per cent on a litre of petrol, while Goa charges just 16.66 per cent per litre which is the lowest. 

This windfall gain may push down the states fiscal deficit by 15-20 bps, if other things remain unchanged, the report said. 

"We also estimate that since the states are having an incremental revenue over the budgeted one, they could cut on an average petrol prices by Rs 3.20/litre and diesel by Rs 2.30/litre, without affecting their revenue arithmetic," the report said, adding Maharashtra, MP, Punjab, TN, Andhra Pradesh, Rajasthan and Karnataka can fiscal headroom to lower petrol prices by at least Rs 3 and Rs 2.5 on diesel. 

If the states impose VAT on base price (crude, transportation cost and commission), then diesel prices can drop by as much as Rs 3.75 and Rs 5.75 for petrol. However, this will result in a revenue loss of states of around Rs 12,000 crore (net of Rs 34,627 crore loss and Rs 22,700 crore gain from oil bonanza). 

The calculation is based on the assumption that for FY19, crude averages at USD 75 a barrel and the exchange rate at Rs 72, SBI Research said. The Total Investment & Insurance Solutions

Global Stocks Mostly Lower As Investors Await US Tariff Hike-The Total Investment & Insurance Solutions

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11 September 2018

Financial Markets (The Total Investment & Insurance Solutions)

Major global stock markets were mostly lower Tuesday as investors waited for a new U.S. tariff hike in a trade battle with China.

KEEPING SCORE: In Europe, Germany's DAX lost 0.7 percent to 11,906 and London's FTSE 100 fell 0.7 percent to 7,229. France's CAC 40 shed 0.4 percent to 5,250. On Wall Street, futures for the Standard & Poor's 500 index were down 0.3 percent and those for the Dow Jones industrial average were 0.4 percent lower.

ASIA'S DAY: The Shanghai Composite Index retreated 0.2 percent to 2,664.80 and Hong Kong's Hang Seng lost 0.7 percent to 26,422.55. Tokyo's Nikkei 225 advanced 1.3 percent to 22,664.69 while Seoul's Kospi declined 0.2 percent to 2,283.20. Sydney's S&P-ASX 200 added 0.6 percent to 6,179.70 and India's Sensex shed 0.4 percent to 37,764.80. Benchmarks in Taiwan and New Zealand gained while Southeast Asian markets declined.

TRADE TENSIONS: The Trump administration is due to announce a decision shortly on whether to go ahead with 25 percent tariffs on $200 billion of Chinese imports in a dispute over Beijing's technology policy. The two sides already have raised duties on $50 billion of each other's goods. Trump said Friday that he was considering extending penalties to extending penalties to nearly all Chinese imports to the United States by raising duties on an additional $267 billion of goods.

ANALYST'S TAKE: "The protracted expectation for more bad news to set in with the looming tariffs remains the most important factor weighing on markets currently," Jinyi Pan of IG said in a report.

ENERGY: Benchmark U.S. crude gained 12 cents to $67.66 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 21 cents on Monday to close at $67.54. Brent crude, used to price international oils, advanced 49 cents to $77.86 in London. It rose 54 cents the previous session to $77.37.

CURRENCY: The dollar gained to 111.35 yen from Monday's 111.12. The euro edged down to $1.1572 from $1.1595.The Total Investment & Insurance Solutions

Nifty, Sensex under Pressure – Monday closing report-The Total Investment & Insurance Solutions

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10 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 595 advances, 1,161 declines and 323 unchanged. The major trends in the course of Monday’s trading are given in the table below:

The key Indian equity indices traded on a negative note on Monday afternoon owing to weak rupee and negative global cues, with the benchmark Sensex losing nearly 400 point so far. Both the S&P BSE Sensex and the NSE Nifty50 fell around 1% so far. The Indian rupee touched a new low of 72.67 on Monday, depreciating by almost a rupee from its previous close of 71.73 per US dollar, which dampened the domestic investor sentiment. Globally, markets sentiments were subdued on concerns that the US might impose further tariffs on Chinese imports. Among the sectoral indices, selling activity was witnessed in banking, auto and oil and gas counters.

Budget passenger carrier SpiceJet launched a dedicated air cargo service. The airline inducted its first freighter aircraft here. Another three freighter aircraft are expected to join its fleet in 2018-19. Currently, the country has only five freighter aircraft. The separate division within the company has been christened "SpiceXpress". The company plans to operate the first freighter aircraft between Delhi and Bengaluru. Amongst cargo, the airline has planned to provide services to the automobile and pharmaceutical sector and also ferry perishable goods. SpiceJet shares closed at Rs79.40, down 0.87% on the BSE.

Interpol has issued a red corner notice (RCN) against Purvi Deepak Modi, sister of fugitive diamantaire Nirav Modi who is wanted in the Rs13,500 crore Punjab National Bank (PNB) fraud case, officials said on Monday. According to the Enforcement Directorate (ED) the Interpol issued the RCN against Purvi Modi on the charge of money laundering, as requested by it. In August, a special court in Mumbai had issued public summons to Nirav Modi's sister Purvi and brother Neeshal, who are Belgian citizens, to appear before it on September 25. The court also said that if they fail to appear then their properties would be confiscated under the newly enacted fugitive offenders act. According to ED officials, Purvi Modi and other family members of Nirav Modi were the recipients of the proceeds of the crime. Punjab National Bank shares closed at Rs82.70, down 2.01% on the NSE.

The Indian rupee opened at a fresh record low of Rs72.18 on Monday, against the previous close of 71.73 per US dollar. Around 9.25 a.m., it traded at 72.14 per greenback. The Indian currency has been weakening for the past few weeks in line with fall in the global currencies against the dollar and amid continued trade tensions between the US and China. The rupee had hit the Rs72 per dollar mark for the first time on September 6.

Leading passenger-cum-freight transport vehicle maker Tata Motors launched its compact SUV Nexon in Bangladesh. According to the company, Nexon will be available in "XZA+" variant at a price of BDT (Bangladeshi Taka) 24.90 lakh for petrol and BDT 25.90 lakh for diesel. "With the introduction of this model, we aim to tap a larger market and increase our market share in not only compact SUV segment but also in overall brand-new passenger vehicles segment," Sujan Roy, Head - International Business, Passenger Vehicle Business Unit, Tata Motors, was quoted as saying in a statement. Tata Motors shares closed at Rs274.80, down 1.08% on the NSE.

The Alembic Pharma Board has approved issue of NCDs (non-convertible debentures) worth Rs300 crore on Private Placement basis. The company’s shares closed at Rs630.20, down 1.39% on the NSE.

Infosys has signed a 3-year partnership with the Australian Open as the Official Digital Innovation Partner. Infosys would leverage its expertise in emerging technologies like Big Data & Analytics, AI as well as VR & AR, to provide unique, innovative and engaging experiences for fans. Infosys shares closed at Rs733.40, up 0.08% on the NSE.

Glenmark Pharma has secured marketing authorization in Germany for Fluticasone/ Salmeterol dry powder inhaler (DPI), a generic of GSK’s Seretide Accuhaler. It is a combination product used for the treatment of asthma and COPD. Approx. annual Europe sales are US$ 844 Mn (March 2018).  The company’s shares closed at Rs686.10, up 0.14% on the NSE.

The US FDA (Food and Drug Administration) has conducted an inspection at the Caplin Point’s Sterile Injectable Site located at Gummudipoondi from August 30 to September 06, 2018. This was a scheduled inspection and at the end of the inspection, there were ZERO 483s.

Credit Access Grameen has received an upgrade in Credit rating by ICRA. Bank facilities, NCDs & Debt (3,409 Cr) have been upgraded to [ICRA]A+(Stable) from [ICRA]A(Positive). Factors include Comfortable capitalisation levels, Comfortable profitability indicators, Adequate liquidity position, funding lines. The company’s shares closed at Rs376.05, down 2.39% 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)

Sustained rupee falling credit-negative for Indian companies: Moody's-The Total Investment & Insurance Solutions

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10 September 2018

 

The Moody's (The Total Investment & Insurance Solutions)

The ongoing free fall of the rupee against the US dollar is credit negative for Indian companies, especially for those that generate revenue in rupees but rely on dollar debt to fund their operations and have substantial dollar-based expenses, Moody's Investors Service said on Monday.

The American credit rating agency's report on the weakening rupee was published on the day the Indian currency touched a new low of 72.67 on Monday, depreciating by almost a rupee from its previous close of 71.73 per US dollar. The rupee has depreciated 13 per cent so far this year against the dollar. 

"A sustained "weakening of the rupee would be credit negative for its rated Indian companies, particularly those that generate revenue in rupees but rely on the US dollar debt to fund their operations and have significant dollar-based costs, including capital expenses," Moody's said."

However, of the 24 Moody's-rated India-based corporates across the high-yield and investment-grade categories, 12 generate most of their revenue in US dollars or have contracts priced in the greenback, providing a natural hedge, and thus limiting the effect a weakening in the rupee could have on their cash flows, it said.

"Nevertheless, most rated India-based corporates have protections in place, including natural hedges, some US dollar revenues and financial hedges, to limit the negative credit implications of a potential further 10 per cent weakening of the rupee to the US dollar from Thursday's (September 6) rate," Moody's Vice President Annalisa D'Chiara said in the report. 

"Furthermore, the impact of the rupee's weakening will be diverse and will also depend on issues such as a particular corporate's reliance on exports, its cost base, and its exposure to pricing on international markets," she added.

The 24 corporates rated by Moody's include those in the IT, oil and gas, chemicals, automobiles, commodities, steel and real estate sectors.

According to the US agency, weaker credit metrics under a scenario of a further 10 per cent drop in the value of the rupee, from the rate on September 6, can be accommodated in the companies' current rating levels.

"Furthermore, refinancing risk associated with the companies' US dollar debt maturing over the next 12 months is manageable," it said. 

The Moody's report follows its annual survey of the US dollar debt exposures of South and Southeast Asian high-yield companies, published in June 2018, which considered the effects of the rupee weakening to around Rs 78 to the US dollar.The Total Investment & Insurance Solutions

India's economic growth to slow in second half of this fiscal: UBS -The Total Investment & Insurance Solutions

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10 September 2018

 

India's economic growth (The Total Investment & Insurance Solutions)

India's economic growth is expected to moderate in the second half of this financial year after a strong first quarter, owing to tighter financial conditions, high oil prices and slowing global growth, says a UBS report.

The global financial services major expects real GDP growth to slow to 7-7.3 per cent in the second half of this fiscal from 8.2 per cent in June 2018 quarter.

"We believe headwinds, including tighter financial conditions, high oil prices, slowing global growth and a still muted private corporate capex recovery on legacy issues of high debt and weakened balance sheets will weigh on India's growth momentum," UBS Securities India's Economist Tanvee Gupta Jain and Strategist Rohit Arora said in a research note.

According to official data, the Indian economy grew at a two-year high of 8.2 per cent in the April-June quarter of current fiscal on good show by manufacturing and farm sectors.

On the monetary policy front, the report said that the Monetary Policy Committee (MPC) of the Reserve Bank is expected to take a breather in the near-term amid rising global uncertainties like trade wars and oil prices.

"In a scenario where trade wars drag global growth and push commodity prices lower, India might benefit as a disinflationary environment lowers external stability risks. Rates will likely be kept on hold in this case," the report said. 

However, "in an alternative scenario where India continues to be affected by the headwinds of rising oil prices, capital outflows, populist spending and political uncertainty leading to financial stability concerns, a 50 bps hike is likely for the rest of this fiscal," it noted. The Total Investment & Insurance Solutions

World Stocks Mostly Fall On Possible US-China Tariffs-The Total Investment & Insurance Solutions

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10 September 2018

financial markets (The Total Investment & Insurance Solutions)

Global stock markets mostly fell on Friday as traders mulled over the effects of possible U.S. tariffs on $200 billion in Chinese goods and looked ahead to U.S. jobs data.

KEEPING SCORE: In Europe, France's CAC 40 fell 0.3 percent to 5,230, while the FTSE 100 index of leading British shares gave up 1 percent to 7,249. Germany's DAX fell 0.3 percent to 11,927, after the country's trade surplus dipped to four-year low. U.S. indexes are set for a subdued open. Dow futures dropped 0.2 percent and the broader S&P 500's futures shed 0.1 percent.

ASIA'S DAY: Japan's benchmark Nikkei 225 fell 0.8 percent to 22,307.06 and the Kospi in South Korea dropped 0.3 percent to 2,281.58. Hong Kong's Hang Seng index, which has dropped 18 percent since its peak in late January, was almost flat at 26,973.47. The Shanghai Composite index was 0.4 percent higher at 2,702.30. Australia's S&P/ASX 200 shed 0.3 percent to 6,143.80. Shares were lower in Taiwan and most of Southeast Asia.

US-CHINA TENSIONS: The Trump administration may impose tariffs of up to 25 percent on an additional $200 billion in Chinese goods, after a public comment period ended Thursday. The imports are equal to nearly 40 percent of all the goods China sold the U.S. last year. Doing so would escalate a confrontation between the world's two biggest economies and likely squeeze U.S. companies that import everything from handbags to bicycle tires. China has said that it is ready to retaliate with "necessary countermeasures" if President Donald Trump goes ahead with the tariff hike. Commerce Ministry spokesman Gao Feng said Thursday that the country is confident it can maintain "steady and healthy" economic growth. It has announced a $60 billion list of American products targeted for retaliation. The Chinese government has said it would help local and even foreign businesses in the country mitigate the effects of the trade dispute.

ANALYST'S TAKE: "The market is risk-off and pricing in the effects of new tariffs. It's a done deal as far as investors are concerned," said Francis Tan, investment strategist at UOB Private Bank. "I don't think that China will retaliate with a full-fletched devaluation of the yuan. They will turn to other non-tariff measures," he added.

DATA OUTLOOK: Investors are expecting a string of U.S. releases on Friday, such as the latest unemployment rate. Economists have forecast that employers added 189,000 jobs in August and that the unemployment rate dipped from an already-low 3.9 percent to 3.8 percent. In the coming week, the markets will also be looking out for Chinese data, including the country's year-on-year foreign direct investment and industrial output. Next week's Bank of England and European Central Bank meetings could also affect sentiment.

ENERGY: Benchmark U.S. crude added 12 cents to $67.89 a barrel. The contract dropped 1.4 percent to settle at $67.77 a barrel in New York. Brent crude, used to price international oils, gained 19 cents to $76.69 a barrel. It lost 1 percent to $76.50 a barrel in London on Thursday.

CURRENCIES: The dollar edged up to 110.85 yen from 110.83 yen. The euro strengthened to $1.1611 from $1.1625.The Total Investment & Insurance Solutions

SIP, showing seeds for a better tomorrow-The Total Investment & Insurance Solutions

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08 September  2018

ABSL SIP(The Total Investment & Insurance Solutions)

Nifty, Sensex May Try to Push Higher – Weekly closing report-The Total Investment & Insurance Solutions

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07 September 2018

I had mentioned in last week’s closing report that GDP growth might propel Nifty, Sensex higher. The major indices of the Indian stock markets closed on Friday with losses over previous Friday’s close. The trends in the course of the week’s trading are given in the table below:

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 853 advances, 925 declines and 313 unchanged, after opening sharply higher on the back of healthy April-June GDP.

The indices trimmed the major gains made earlier in the day, due to weak Asian markets. Globally, Asian markets traded in the negative territory on concerns of escalations in the US-China trade war. According to analysts, buying was witnessed in consumer durables, healthcare and IT (information technology) stocks.

Global software major Wipro said it had won a USD1.5 billion (10,500 crore) 10-year deal from the US-based technology firm, Alight Solutions LLC. "We have won a 10-year engagement to provide a suite of solutions and services to the Illinois-based Alight Solutions, a leader in technology-enabled health, wealth, human resources and finance solutions," said the Bangalore-based IT major in a statement. Claiming the deal to be its largest win so far, the company said it would generate $1.5-1.6-billion revenues over the tenure.

The construction arm of L&T has won orders worth Rs2,654 crore across its businesses. The Transportation Infra business wins Rs2,095 crore order from MSRDC for 10th package of Nagpur-Mumbai Expressway. The Heavy Civil Infra business bags Rs559 crore order from MSRDC. 

Graphite India's subsidiary Graphite International BV has signed a definitive Agreement for investment of upto US$ 18.59 million in cash in General Graphene Corporation, a US-based unlisted company located in Knoxville, Tennessee, for a 46%  stake (approx.) in the company. 

The major indices of the Indian stock markets suffered a correction on Tuesday and closed with losses over Monday’s close. On the NSE, there were 414 advances, 1,351 declines and 305 unchanged.

The Reliance Infrastructure Ltd-Astaldi S.p.A.(Italy) consortium has bagged the project for the northern extension of the Rajiv Gandhi Bandra Worli Sea Link from Bandra to Versova, an official said here on Tuesday. The MSRDC had floated the tenders for the construction of the second sea link on an EPC-basis to build the Versova-Bandra Sea Link, 17.17 km-long, or three times the existing 5.6 km-long RGBWSL. RInfra EPC CEO Arun Gupta said the mega-project will further propel the company as a premier EPC company in India.

Lupin's Tarapur API manufacturing facility has completed cGMP inspection carried out by the US FDA. The inspection closed with one observation of procedural type. The inspection focused on cGMP compliance and also on the safety of Lupin's Valsartan, Losartan and Irbesartan APIs.

Budget carriers IndiGo and GoAir offered low-fare tickets for travel during September 2018 to March 2019. Under the IndiGo offer, fares would start from Rs999 and the tickets would be available from September 3 to 6, the airline said in a statement. Persistent Systems has acquired Herald Technologies Inc., an IT (information technology) services start-up in the US, for a cash consideration of US$ 5.2 million. The acquired business will strengthen Persistent's IP led offerings in the Healthcare domain and create a number of cross-sell opportunities.

The major indices of the Indian stock markets were range-bound on Wednesday and closed with losses over Tuesday’s close. On the NSE, there were 625 advances, 1,125 declines and 321 unchanged.

Centrum Financial Services Ltd, the NBFC arm of the Centrum Group, signed an agreement to acquire L&T Finance's Supply Chain Finance business. The business has a loan book of approximately Rs800 crore with a combined customer base of 800 (approx).

Goldiam International has received export orders worth Rs140 crore from its International clients for manufacturing of diamond studded designed gold jewellery. The order was to be delivered within three months.

The key Indian equity market snapped its six-day losing streak after a largely volatile trading session on Thursday. According to market observers, a late recovery in the Indian rupee which breached the 72 per dollar mark for the first time aided the market to pare its earlier losses. Besides, value buying and healthy pick-up in healthcare, oil and gas and banking stocks also lifted investors' sentiments.

Weak global cues and domestic uncertainty over foreign investment norms in the equity market pulled the Indian rupee to a new record low of 71.97 per US dollar, but it later recovered. The rupee opened at 71.45 per US dollar and settled at a record closing low of 71.75, weaker by 17 paise than its previous close of 71.58 per greenback. 

L&T Technology Services has executed a definitive agreement to acquire 100% stake in Bangalore-based Graphene Semiconductor by way of an all cash deal. Graphene had revenues of Rs66.3 crore for the year ended March 31, 2018.

TCS has successfully completed a CRM-based sales transformation program at Maxim Integrated Products, a leading global manufacturer of analog & mixed-signal integrated circuit. The solution provides a streamlined and agile digital sales process to maximize Maxim's sales velocity.

The key Indian equity indices closed in the green on Friday supported by buying activity in the auto stocks and a recovery in the rupee from its previous close. The rupee traded around 71.70 per dollar (3.50 p.m.), against the previous close of 71.99 per greenback. Buying was witnessed in the auto index, which surged by 501.93 points, followed by metal and healthcare indices.

Software major Tech Mahindra said it has entered into a partnership with deep-learning software company Avaamo to develop and deliver conversational Artificial Intelligence (AI) solutions for global enterprises. Tech Mahindra said it would evangelise Avaamo's enterprise products and build solutions around platforms in areas such as the Internet of Things (IoT), AI, and Machine Learning (ML). The collaboration will help Tech Mahindra harness newer enterprise AI technologies and serve global markets in countries like the US, Britain, the Netherlands, Germany, Sweden, Malaysia, Israel, Indonesia and the Philippines, among others. Tech Mahindra shares closed at Rs770.40, down 0.30% on the BSE.

Indian software major Infosys said it has formed a joint venture (JV) with global investment firm Temasek in Singapore to service it and its clients in the digital domain. "The JV will integrate our team with that of Temasek's Singapore subsidiary Trusted Source Pte Ltd, which delivers IT services to it and its clients," said the city-based IT major in a statement here. As per an agreement signed by the partners on Thursday night, Infosys will hold 60% in the JV and Temasek 40%. Infosys shares closed at Rs733.15, up 0.71% on the BSE.

Commercial vehicles major Ashok Leyland Ltd said it has inaugurated its electric vehicle (EV) facility in its plant at Ennore here. In a statement issued here the company said it is India's first integrated facility for design, prototyping, testing, process prototyping and solutions design. "The in-house facilities include engineering, prototyping and testing for motors, battery modules and packs and a power electronics lab. Keeping in mind the rapidly evolving and changing market and technology, it has been conceived as an in-house start-up facility in order to stay flexible and fast," the statement said. "In our 70th year, we are laying the foundation for our future. The EV Centre in Ennore will give us the edge throughout the evolution of eMobility," Vinod K Dasari, Managing Director was quoted as saying in the statement. Ashok Leyland shares closed at Rs131.75, up 1.54% on the BSE.The Total Investment & Insurance Solutions

Major Indices (The Total Investment & Insurance Solutions)