Equity Research Report Ways2Capital 01 May 2017
Added: (Mon May 01 2017)
Pressbox (Press Release) -
Last week Equity benchmark Nifty traded volatile As the Index Nifty heavy weight stocks Announced it’s Quarter 4 Results, The Index opened at 9135 in positive note on Monday trading session and made a high of 9225 and closed 9217 after making the low of 9130 levels. The benchmark Index Nifty 50 closed in positive territory after 5 days of continuous negative close. Nifty 50 traded on a positive note on Tuesday trading session and made a all time high of 9309 on the back of Upbeat Global Cues After Favourable Election Outcome In France & Hopes For A Renewed Tax Cut Plan By Trump. On the day of expiry i. e. 27th April, benchmark Index Nifty 50 opened at 9359 and traded in a narrow rage of 44 point throughout the day. The Index made a high of 9367 and closed at 9342 after making a low of 9323. As of now Market is also keeping great hopes on earnings recovery, an Effective Non - Performing Assets resolution policy, a Smooth Implementation of Goods and Services Tax and a near normal monsoon this year despite an impending threat of El-Nino (50%). Q4FY17 report cards are so far termed as mixed, but not great in comparison to the stretched valuation multiple. Time and Price Action Suggest that the Nifty has to Sustain over 9255 area for Further rally towards 9378-9425, On the Flip side Sustaining below 9250 will drag the Index toward 9280-9140 in near term.
BANK NIFTY : - Bank Nifty last week made new record high of 21947 and closed at 21551 and low of 21386. Index opened in a positive note on Monday trading session up by 40 points at 21591 levels. The Banking Shares index Bank Nifty made new record high of 22380 in last week trading sessions and the Index made a low of 21567. The Index made new record high and traded in bullish trend. With TTM PE of Bank Nifty around 30.65. Bank Nifty is really in the bubble zone on the hopes of Public Sector Bank’s earning recovery & resolution of the NPA mess, Bank Nifty traded on a positive trend throughout the week boosted by optimism about an effective Non-Performing Asset policy, when FM hinted that Govt is in the process to pass a “prevention under corruption act-PCA” legislation in the forthcoming monsoon session of Parliament, aiming to safeguard the banking industry for any loan, which may have gone wrong & turned into a NPA for a pure failure of commercial decision. Nifty Bank took support of its 2 week low of around 21370. Bank Nifty made an all time high of 22381 and closed at 22326. Time and Price action Suggest that Index has to Sustain over 22300 area for further rally toward 22431-22504. On the Flip side Sustaining below 22300 area, bank Nifty may fall toward 22235-22112 in near term. .
NSE - WEEKLY NEWS LETTERS
✍ TOP NEWS OF THE WEEK
GST will not bring major hike in tax burden: Official - : Prices will not increase due to higher incidence of tax and, instead, are likely to come down under the Goods and Services Tax regime, the central Government said on Tuesday. Almost 60 per cent of the income of the Centre and states comes from items that attract 14 per cent value added tax and 12.5 per cent excise duty. There will be a likely decrease in the tax on each of these items under GST," Revenue Secretary Hasmukh Adhia told at a GST conclave here. Adhia said that though most services will be taxed at 18 per cent under the GST regime, as against the current 15 per cent service tax, a majority of these will get input tax credit on purchases and the overall tax incidence will remain the same. About 18 per cent will become equivalent to 15 percent. There will not be much of an increase in service tax. There could be a marginal increase of tax for some services," he said.
Upside risks to inflation exist, may deter RBI from rate cut: D&B - Upside risks to inflation persist despite prediction of a good monsoon and might deter the Reserve Bank from going in for a rate cut in the near future, says a report. According to the report, rise in global commodity prices, possibility of El Nino, increase in house rent allowance under 7th Pay Commission and the initial impact on prices due to GST will add to the upside risks to inflation. El Nino refers to warming of equatorial waters of the Pacific that affects monsoon pattern in India. Moreover, core inflation -- without food and fuel - has remained sticky for a protracted period despite weak demand. D&B expects the Consumer Price Index inflation to be in the range of 3.5- 3.7 per cent and WPI inflation to be 5.4-5.6 per cent during April this year. According to official data, retail prices jumped to a 5- month high of 3.81 per cent in March while Wholesale Price Index-based inflation slipped to 5.70 per cent in March.
India a bright spot despite disruptive reforms: Survey - India continues to remain an economic bright spot despite some bold but disruptive reforms, according to a recent survey. The FICCI-PwC India Manufacturing Barometer survey stated that about 63 per cent of respondents were "somewhat optimistic" about the prospects of the Indian economy for the coming year, representing a significant jump over last year's 58 per cent. There is greater optimism about the Indian economy compared to last year. The manufacturing industry is looking to focus on new products/services, IT, and expanding its facilities in select sectors," Nilesh Narwekar, Partner, PwC strategy said. Lack of digital culture and talent is a key internal challenge. As the industry prepares for immediate changes like GST implementation, the key expectation from the government continues to be the creation of a clear, stable policy environment that can facilitate long-term business and investment planning, he added.
Private asset reconstruction company will tackle Non Performing Assets better: Arvind Panagariya - NITI Aayog Vice-Chairman Arvind Panagariya today made a case against the idea of Bad Bank, saying it will be a difficult proposition and a Private Asset Reconstruction Company private asset reconstruction company could do a better job. A bad bank is a difficult thing to do. Public-owned Asset Reconstruction Company is often called the bad bank. Private-owned ARC ultimately can be more effective," Panagariya said here in a press conference. Recently, Chief Economic Advisor Arvind Subramanian had said the idea of setting up a state-owned asset reconstruction company or bad bank to deal with mounting NPAs is gaining traction and it needed to be created quickly. To address the festering twin balance sheet problems -- corporate debt and bad loans -- the Economic Survey for 2016- 17 had suggested creation of state-owned ARC called Public Sector Asset Rehabilitation Agency. The two issues were taking a heavy toll on health of public sector banks, the survey had noted.
Arun Jaitley says 7-8 per cent growth 'absolute normal' for India - Finance Minister Arun Jaitley said India will continue to grow at 7-8 per cent rate, an 'absolute normal' for the nation under the current global environment. Jaitley said as far as the economy is concerned, all the decisions taken by the Modi-Government are consistently in one direction. The aspirational class in India has become very large and therefore, through the decision making of the government there is a popular support. Election results have indicated that. Most important decisions as a result of this pressure of public opinion are also finally resulting in decisions with larger political support," said the minister.
Economy to grow over 3-fold to $ 7.25 trillion by 2030: Arvind Panagariya - The Indian economy will see an over three-fold expansion at USD 7.25 trillion by 2030 and clock an average growth rate of 8 per cent over the next 15 years, Niti Aayog vice chairman Arvind Panagariya said.
In a presentation made at its Governing Council meeting - chaired by Prime Minister Narendra Modi and attended by 28 state chief ministers - The Government think-tank projected the size of the Indian economy. "Our base GDP is large. If we grow at an 8 per cent average rate for the next 15 years, our GDP will be Rs. 469 lakh crore by 2030 around USD 7.25 trillion," Panagariya told to reporters here.
Retail loans soar 17.7 per cent in 2016, NPAs also move up: Report - Retail loans grew at a healthy 17.7 per cent in 2016, but there was an increase in dud loans in the segment which has become a focus area for the lenders amid difficulties to grow corporate books, says a report. Consumer lending remains robust with originations and portfolio growing at 17.7 per cent in 2016 over 2015. Secured products, mainly property and gold loans, are growing the fastest," Shahid Charania, credit information company Equifax managing director for emerging markets said in a report today. The overall retail loans increased 17.7 per cent to Rs 40.25 trillion as of end December 2016. Delinquency rates in the segment, which was labelled as a safe-haven amid asset quality woes in the corporate lending segment, grew to 2.10 per cent in 2016 from 1.52 per cent in 2015. But the report noted a 0.06 per cent fall in the dud loan ratio in the last quarter of the year.
✍ TOP ECONOMY NEWS
India's foreign exchange reserves rose by USD 889.4 million to USD 369.887 billion during the week ended April 14, helped by increase in foreign currency assets, the Reserve Bank said.
Corporates are likely to log in healthier set of numbers in the March quarter clocking up to 12 per cent growth on the back of an improvement in manufacturing, says a report.
In another bold and confident move by the market regulator, Securities and Exchange Board of India on Wednesday blocked Non-Resident Indians as well as residents to invest in offshore derivative instruments which are also called as participatory notes. The Money launders in the Country were using these instruments to convert their black holdings to white money. The resident Indians were using the Concept called as round tripping for disposing of their black money.
The demonetisation drive was supposed to put an end to the black money in the country, but recent studies by leading research houses regarding the real estate industry signal that after six months since demonetisation, black money is likely to come back into the sector. The luxury market in real estate market has witnessed re-entry of black Money.
India’s market capitalisation is inching closer to its $ 2 trillion-mark, as benchmark,Sensex, climbed upto 30,000 milestone. In dollar terms, currently the country’s m-cap is highest ever, standing at $ 1.94 trillion, only 3% away from its elite milestone. Only eight other countries currently have a market value higher than India. In dollar terms so far in 2017, the Sensex has gained 20 %.
The Chief Economic Advisor, Arvind Subramanian has voiced his concern regarding H1-B visa programme and cautioned that any serious steps taken by the Trump Administration would be a cause of worry as a majority of the Indian exports in the services sector go to the US, mentioned. He Further said that the Government was keeping a close watch on the matter and was ready to fall in line with the step taken, as long as they were manageable.
Reserve Bank of India Governor Urjit Patel has voiced his opinion of merging public sector banks and said that fewer banks would be good for the banking sector and also help in dealing with the problem of non-performing assets, mentioned.
Government orders were the key driver for capital goods and engineering companies last year and may continue to be so in 2017-18 as the order pipeline reveals more state-funded schemes and far too few private sector projects, analysts and industry executives said.
Niti Aayog, the government's think tank, has called for reducing import duty on gold to clamp down on smuggling and make the yellow metal available for small and medium firms. Reduction in customs duty will not only reduce incentives for illegal transactions but it will also help ensure availability of gold for small and medium firms, thereby increasing share of gold jewellery produced by the sector.
India and Cyprus today expressed confidence that the recent revision in tax agreement between the two will provide a boost to investment flows.
Niti Aayog has exuded confidence that India will get back to over 8 per cent growth as it proposed a host of reforms, including reduction in corporate tax to 25 per cent and uniform import duty at 7 per cent.
✍ TOP CORPORATE NEWS -
The bio-pharmaceutical player Biocon Limited has recommended issue of bonus shares in the proportion of 2:1 i.e. 2 bonus equity shares of Rs. 5 each for every 1 fully paid up equity share, each held on record date. The record date for reckoning eligible shareholders, entitled to receive bonus shares, will be informed to the respective stock exchanges.
Ujjivan Financial Services Limited, announced that the company's board of directors in their meeting held on April 27, 2017, have recommended a dividend at the rate of 8% or Rs. 0.80 per equity share, subject to the approval of the shareholders at the ensuing Annual General Meeting.
The Kotak Mahindra Bank Limited has entered into an agreement to purchase the entire 26% equity stake held by Old Mutual plc, UK in Kotak Mahindra Old Mutual Life Insurance Limited for a consideration of Rs. 1292.7 crore After the completion of the transaction, Kotak Mahindra Group will hold 100% equity shareholding of Kotak Life. The Life insurance industry in the country is expected to grow at a healthy rate of 15%.
Tata Motors Limited has inked a pact with the Indian Armed Forces for the supply of 3192 units of the Tata Safari Storme 4x4, on Thursday. TATA Safari Storme will be provided under a new category of vehicles - GS800, reported.
Automobile manufacturer, Maruti Suzuki India Limited on Thursday in its filling to the exchanges mentioned that the board of directors in their meeting recommended a final dividend of Rs. 75 per share. The dividend payment date has been set to 11 September 2017 and is subject to the approval of the shareholders in the annual general meeting.
GIC Housing Finance Limited has registered a net profit of Rs. 46.61 crore and a total income to Rs. 266.63 crore for the year ended on 31st March 2017.
Kotak Mahindra Bank reported its Q4FY17 results. It is the fourth largest Indian private bank in terms of market capitalization. The banks results registered a beat on the street’s estimates. Net Interest Income for the quarter came in 2% higher than the estimated figure of Rs. 2115 crore. Net profit came in 8.2% above the estimated figure of Rs.909 crore.
Maruti Suzuki India Limited Q4FY17 standalone results for the quarter registered a miss versus street estimates. Revenue for the quarter came in 3.3 % lower than the estimated figure of Rs. 18621 crore. EBITDA for the quarter came in 14.9 % lower than the estimated figure of Rs. 2624 crore. And lastly, net profit for the quarter came in 1.7 % lower than the estimated figure of Rs. 1739 crore.
The National Green Tribunal in a hearing on Wednesday, April 26, 2017, in a case related to the pollution of the river Ganga, and drainage canals leading into the river Ganga, has, by way of an oral pronouncement, ordered 13 industrial units situated in Gajraula near the river Bagad to immediately cease operations, said Jubilant Industries in an official release on Thursday.
Stocks of pharma player, Dr. Reddy's Laboratories Limited are, as markets are moving out of early hours of trade, trading down by 0.35% at Rs. 2601 Per Share. The pharma player announced today that it has launched Ezetimibe and Simvastatin tablets 10mg/10mg, 10mg/20mg, 10mg/40mg, 10mg/80 mg, a therapeutic equivalent generic version of Vyotrin tablets in U.S. Market, being approved by USFDA.
The Bangalore-based IT service player, Mphasis Limited, has informed regarding Schedule of Activities for the buyback of upto 17,370,078 equity shares of the Company, of the face value of Rs. 10 each, at a price of Rs. 635 per equity share. The company will be dispatching a letter of offer for the buyback, to eligible shareholders of the company, holding shares as on record date i.e. March 31, 2017, on or before May 4, 2017.
Infosys Limited, a global leader in consulting, technology, outsourcing and next-generation services, today announced the launch of Infosys Nia, the next-generation Artificial Intelligence Platform building on the success of the Company’s first-generation AI platform, Infosys Mana, and its Robotic Process Automation solution, AssistEdge.
Axis Bank Limited, India's third largest private sector bank, reported its quarterly result. The Q4FY17 results registered a beat on street estimates. Net Interest Income came in 3.4% higher the estimated figure of Rs. 4575 crores. Also, net profit was significantly high 40.5% than the streets estimate of Rs. 872 crores. Axis Banks’ Q4FY17 standalone NII for the period came in at Rs. 4728 crores showing a 3.9% y-o-y increase. NIM for the quarter stood at 3.8%.
Cadila Healthcare Limited has received the final approval from the USFDA to market Cholestyramine for Oral Suspension USP, 4 gram per scoopful. It is indicated as an adjunctive therapy to the diet for the reduction of elevated serum cholesterol in patients with primary hypercholesterolemia who do not respond adequately to diet. Cholestyramine will be produces at the group’s formulations manufacturing facility at Baddi.
NTPC Limited, a state-owned power company on Wednesday said that through the issuance of rupee-denominated bonds under its $ 4 billion medium-term note programme for capital expenditure has raised Rs. 2000 crore.
Highway developer Dilip Buildcon Limited has bagged three road projects worth Rs. 3,269 crore in Maharashtra from the National Highway Authority of India.
Private lender DCB Bank has raised about Rs 378.80 crore through an issue of shares to qualified institutional investors on private placement basis.
State-owned Oil and Natural Gas Corporation made 23 oil and gas discoveries in the fiscal year ended March 31 as a record number of wells drilled helped it uncover new reserves.
Cash-rich coal, power and oil PSUs will jointly invest about Rs 30,000 crore to revive four mothballed fertiliser plants by 2020-21 to make India self- sufficient in urea production and cut imports.
Bharat Heavy Electricals Limited on Tuesday said it bagged its largest ever export order, valued at Rs. 10,000 crore for setting up a thermal power project in Bangladesh.
✍ TOP BANKING AND FINANCIAL NEWS OF THE WEEK
Private sector YES Bank Limited has decided to go on slow on lending through business correspondents, the bank's mainstay for rural business so far, as collection efficiency of its partner microfinance companies dipped following demonisation and the rising clamour for loan waiver across the country. The Rana Kapoor-led bank is instead trying to be self sufficient in originating micro loans and to improve monitoring over the existing partner firms to minimise losses on possible default.
Finance Minister Arun Jaitley has asserted that the government was giving top priority to addressing the issue of bad loans while acknowledging that the problem of Non- Performing Assets was "adversely impacting" the Indian banking system.
After plunging to an over six- decade low of 5.08 per cent in fiscal 2017, Bank Credit inched up to 5.52 per cent in the fortnight to April 14, according to the Reserve Bank data. For the fortnight to April 14, bank credit stood at Rs. 76.31 trillion, up 5.52 per cent from Rs. 72.31 trillion in the week to April 15, 2016, thus beginning the new financial year on a promising note.
Private sector YES Bank Limited has turned more vigilant while delivering micro loans through business correspondents, its mainstay for growing rural business, and is decentralising its monitoring system to eliminate future risks.
The huge load of bad loans of public sector banks is not too much of a worry line for the government and a likely solution will be worked out soon, Union minister Santosh Kumar Gangwar said today.
The Reserve Bank of India may have come up with tighter rules to protect depositors, but strict implementation of the norms will be difficult because many of the public sector banks are besieged by capital and asset quality problems. According to the so-called prompt corrective action framework released on April 13, banks will be penalised if they slip either on asset quality, profitability or leverage or capital. Penalties include restrictions on dividend distribution or remittance of profits, branch expansion, higher provisions and management compensation.
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