Equity Research Report Ways2Capital 9 January 2017

Nifty gave euphoric buying of 3.94% from its low of 7896 in last 4 days of trading session for the year 2016.

Nifty gave euphoric buying of 3.94% from its low of 7896 in last 4 days of trading session for the year 2016. Indian benchmark index Nifty is opened unchanged at 8175 and with major global markets closed for the day. The Equity benchmark Nifty opened in a Positive note on Monday up by 25 points or 0.30 per cent at 8210. Nifty 50 trend already tested 8212 on Tuesday and it has recovered from 7896 dated 26/12/2016 and gained 315 points from its lower end after fall which initiated from 8723 dated 24/10/2016. The defined estimated decline of 7683 has not been achieved till date and we may witness further down trend towards 7400-7200 because the fundamental of Nifty Index are still in bearish mode due to high P/E of their own and its Derivatives. The Nifty current P/E are trading on higher sides i.e. 21.93 and 20.88. India’s PMI data contracted as data came to its one year low of 49.60. Cash market showed good buying, with most of the stocks up by more than 10%. Some stocks even hit the upper circuit of 20% on Tuesday trading Session. Nifty has come near its weekly target of 8294, NSE Small Cap Index has come to its one month high 5933 above which next target is 6208. FII's are not Participating in the buy rally which is not triggering a buy breakout in the market. The Nifty has given strong close on Thursday, reaching its weekly target of 8294, the Index is opening at 8318 above its weekly breakout level. If market does not show any profit booking then it may head towards its next target of 8460 on next week trading sessions. Nifty has to give a breakout of 8294 above which next weekly target is 8614. The crucial levels for Nifty is 8250-8130 is Down side and 8330-8420 is Up side.
BANK NIFTY : - The Bank Nifty has opened in a positive note on Monday trading Session up by 65 points or 0.35 at 18242. Year’s Eve day calling for transmission of rate cuts by the banks and working for the interests & the benefits of “poor & middle class people” was negative for banks. Banks were under pressure as transmission of rate cuts may be negative for overall Net Interest Margin to the extent of around 0.60%, if credit demand does not pick up as expected in the coming days; on the other side, operating costs may have also increased after demonetization and Net Performing Assets may also surge further. Some reports that RBI may not be obliged to cut rate in Feb may hurt the sentiment for the banks & the rate sensitive sectors. banks may be the biggest loser after demonetization, despite surge in CASA/demonetized bank deposits having lower cost of funds. Bank Nifty is struggling to trade with positive momentum. Banks may follow suit after State Bank of India cut its benchmark lending rate by 90 basis points to 8% .Major support for Bank Nifty is at 17606. The merger of five associate banks with will be pushed to the next quarter as Governmet approval is pending, according to SBI Chairman. Bank Nifty has to trade above 18250 to support the overall rally in the Indian Markets. Bank Nifty has to sustain over 18250 area for any further rally towards 18400-18575 & 18650-18800 zone for the next trading week. On the other side, sustaining below 18200 zone, Bank Nifty may further fall towards 18000-17800 area. The important levels for Bank Nifty is 18337-18441 is Up side and 18173-18083 is Down side.




NSE - WEEKLY NEWS LETTERS
? TOP NEWS OF THE WEEK

Slowdown in new investments post demonetisation: CMIE - Investments have fallen sharply post demonetisation, slipping to their lowest under the current Narendra Modi-led NDA government, data released by the Centre for Monitoring Indian Economy showed. In the quarter to December, new investment proposals worth Rs. 1.25 lakh crore were observed, CMIE said, contrasting it with the average Rs. 2.36 lakh crore worth of new investments per quarter in the preceding nine quarters of the Modi government. "Data suggests that demonetisation has hit the pace of announcement of new investment proposals during the quarter ended December," Mahesh Vyas, managing director and CEO of CMIE said.

Forex reserves fall by $ 935.2 mn to $ 359.671 billion - India's foreign exchange reserves declined by USD 935.2 million to USD 359.671 billion in the week to December 23 on account of fall in foreign currency assets, the Reserve Bank said today. In the previous week, the reserves had fallen by USD 2.380 billion to USD 360.606 billion. They had touched a life-time high of USD 371.99 billion in the week to September 30, 2016. Foreign currency assets , a major component of the overall reserves, dipped by USD 933.2 million to USD 335.970 billion in the reporting week. FCAs, expressed in US dollar terms, include the effects of appreciation/depreciation of non-US currencies such as the euro, pound and the yen held in the reserves. Gold reserves remained steady at USD 19.982 billion in the reporting week, the RBI said.
India's end-Sept external debt rises to $ 484 billion - India's external debt decreased by USD 0.8 billion from the end-March 2016 level to USD 484 billion at end-September 2016, the government said. "India's external debt at end-September 2016 stood at USD 484.3 billion, recording a decline of USD 0.8 billion (0.2 per cent) over level at end-March 2016." the Ministry of Finance said in a note. However, on a sequential basis, total external debt at end-September 2016 increased by USD 4,768 million from the end-June 2016 level," it added. The Ministry said that at end-September 2016, long-term external debt accounted for 83.2 per cent of India's total external debt, while 16.8 per cent was short-term external debt. Maturity pattern of India's external debt indicates dominance of long-term borrowings. While short-term external debt witnessed a decline of 2.6 per cent and stood at USD 81.2 billion at end-September 2016, long-term debt at end-September 2016 was placed at USD 403.1 billion, showing an increase of USD 1.4 billion (0.4 per cent) over level at end-March 2016.

India, Singapore DTAA amendment to modify capital gains tax exemption on cards - India and Singapore would hold key dialogue here on Thursday and Friday to conclude protocol to amend bilateral Double Taxation Avoidance Agreement or DTAA which will modify capital gains tax exemption. India-Singapore DTAA came into force in 1994 and, with two amending protocols in 2005 and 2011, has been at the centre of focus because Singapore-based companies could take advantage of capital gains tax provision and avoid capital gains tax, since Singapore does not have capital gains tax. It was linked to the DTAA with Mauritius and was clear that if the agreement with Mauritius was modified, the one with Singapore would also have to change, too.

Demonetisation takes toll on manufacturing, PMI falls below 50 - India’s manufacturing contracted in December 2016 as cash crunch due to demonetisation hurt demand as well as output in the first month of ban on old high denomination notes, a private survey showed on Monday. The Nikkei India Manufacturing Purchasing Managers’ Index fell to 49.6 in December from November's 52.3, marking the first contraction in the last 12 months. A reading above 50 indicates economic expansion, while reading below 50 shows contraction. "Having held its ground in November following the unexpected withdrawal of Rs 500 and Rs 1,000 bank notes from circulation, India’s manufacturing industry slid into contraction at the end of 2016," said Pollyanna De Lima, economist at IHS Markit and author of the report

Government keeps inflation pressure at bay in 2016, but hiccups loom - In spite of a smooth transition to a new inflation-targeting mechanism, crude price rearing its ugly head is a grim reminder that it will be a tough job ahead to keep retail price increase at the 2016 level of around 5 per cent. One of the landmark achievements of 2016 was adoption of the inflation-targeting framework and moving to collective interest rate decision-making. Under the new mechanism, the government has mandated RBI to bring down inflation to below 6 per cent by January 2016 and then target a level of 4 per cent by March next year. This will bring predictability while the effectiveness of its monetary tools would increase because inflation targeting will take into account future -- rather than past -- price trends. Through 2016, the government has been able to contain retail as well as wholesale inflation within manageable limits, seasonal variations notwithstanding

Finmin clears 29 investment proposals worth of Rs 2.11 lakh crore - Expenditure Finance Commission under Ministry of Finance cleared 29 proposals of various ministries involving expenditure of about Rs 2.11 lakh crore during the last year. Besides, Public Investment Board headed by Expenditure Secretary cleared 12 proposals involving expenditure of Rs 28,673 crore. Of these, three proposals of Ministry of Power worth Rs. 8,612 crore were cleared by the board during calender year 2016. Proposals of Ministry of External Affairs and Ministry of Road, Transport and Highway involving investment of Rs. 7,291 crore and Rs. 6,461 crore, respectively, were also cleared, Department of Expenditure under Ministry of Finance said in its year-end review for 2016. "During the period from January 1 to November 30, 2016, the EFC chaired by Expenditure Secretary recommended 29 investment proposals or schemes of various ministries and departments costing Rs. 2,11,049 crore," it said


Economy poised for good growth in quarters ahead: Industry captains - Indian economy is steadily getting back on its feet and poised for good growth in the quarters ahead after a tumultous period post abrupt demonetisation of high-value currency notes in November, corporate leaders, bankers and experts said. Digital payments are clearly the way forward for the economy, but India’s banking system needs to seize the opportunity to expand its operations among the weaker sections, panelists said at a discussion organised by Times Network, which has launched a nationwide initiative to “Remonetise India”. Minister for Power, Coal, Renewable Energy and Mines Piyush Goyal endorsed the initiative of Times Network, part of India’s top media conglomerate, The Times Group. “I urge the citizens of our country and various stakeholders to join this movement and support the government in its future endeavours,” the minister said

? TOP ECONOMY NEWS
Reserve Bank of India ups daily ATM withdrawal cap to 4,500 rupees; weekly cap unchanged.

Prime Minister Narendra Modi says situation post demonetisation has largely normalised.

India, Singapore sign revised double taxation avoidance pact.

India Apr-Nov fiscal deficit 4.58 trillion rupees, 85.8% of FY17 aim.

Jet fuel price hiked by 8.6%, subsidized LPG Rs. 2 per cylinder.

April – November deficit hits 86% of budget estimate.

The Nikkei Markit India Manufacturing Purchasing Managers’ Index - an indicator of manufacturing activity - fell to 49.6, down from 52.3 in November.

Aided by better show in coal and electricity generation performance, the eight core industries' output grew 4.9% in November 2016.

India's foreign exchange reserves declined by USD 935.2 million to USD 359.67 billion in the week to December 23 on account of fall in foreign currency assets.

Petrol price was hiked by Rs. 1.29/l - the third increase in a month, and diesel rate was raised by 97p/ litre - the second hike in a fortnight.

The government has garnered over Rs. 214.32 billion or USD 3 billion through selling its stake in central public sector entreprises during the first eight months of the current fiscal, representing nearly 60% of the union budget's target.

The prospects of a rollout of the Goods & Services Tax regime from April 1, 2017 appeared to recede further after representatives of States expressed concern about the timeline at a meeting of the GST Council.

Global private equity players made good a sudden jump in valuation of their investments in 2016 and chose to pull out a record USD 10.3 billion from domestic markets.

Government announced safety audit for all 418 mines in the country in the wake of one of the worst open cast mine disaster under Rajmahal, killing at least 18 people.

The Nikkei India Services Business Activity Index registered 46.8 in December, showing little change from November's reading of 46.7 and indicating a further contraction in output.

Indian companies have raised close to Rs. 270 billion by issuing non-convertible debentures to retail investors so far in the current fiscal to meet their business needs.

Expenditure Finance Commission under Ministry of Finance cleared 29 proposals of various ministries involving expenditure of about Rs. 2.11 trillion during the last year.

Mergers and acquisitions deals in the country hit a record 5-year high at $ 61.44 billion or about Rs. 4 trillion in 2016.

The 12 states that have signed up for Ujwal Discom Assurance Yojana have issued bonds totalling Rs. 1.83 trillion. The bonds issued have helped service 83% of the cumulative debt of the state-owned discoms.

Indian companies garnered close to Rs. 6 trillion through private placement of corporate bonds in 2016, a surge of 25%, to fund business expansion plans.

Cracking down on secret profit sharing agreements between private equity funds and promoters of listed firms, Sebi has barred them from entering into any such pact without prior approval of the board and public shareholders.


? TOP CORPORATE NEWS -
Demonetisation drive hits December car sales; Maruti Suzuki volume down 4.4%.

India Oil Corporation, HPCL and BPCL hikes petrol price hiked by Rs. 1.29 rupees a litre and diesel by Rs. 0.97.

US FDA to audit Dr. Reddy's Laboratories Limited 3 plants after Jan 3rd week.

Lakshmi Vilas Bank raises 1.68 billion rupees via QIP.

Godrej Properties to develop project in Pune.

Maruti Suzuki India Limited, Hyundai may hike car prices by 2,500-100,000 rupees from Jan.

GE Power, formerly known as Alstom India bags an order for Rs. 2.71 billion from BHEL in Tamil Nadu.

Government says toll in Coal India Limited Jharkhand mine collapse rises to 10.

IDBI Bank cuts most retail term deposit rates by 25 bps.

Merck gets demand notice from NPPA for overcharging.

Home loans cheapest in 6 years as State Bank of India slashes rate 50 bps.

Lupin Limited has received final approval from the US health regulator to market cevimeline hydrochloride capsules, used for treatment of symptoms of dry mouth in patients with Sjogren’s syndrome, in the US market.

Larsen & Toubro Limited has bagged another smart city project by being identified as implementation partner to convert Pune into a smart city.

State Bank of India slashed interest rates to the lowest in about a decade.

Bharti Airtel Limited is in talks with Telenor for buying its India business for USD 350 million.

Insecticides India Limited has tied up with Japan’s Nihon Nohyaku Co Ltd for launching new generation insecticides for different crops under the brand name SUZUKA.

IL&FS Engineering and Construction Company Limited has received a Letter of Acceptance for a road contract from Ministry of Road Transport & Highways through CE PWD, Government of Karnataka for a total value of Rs. 2.43 billion.

Natco Pharma Limited announced the launch of the first generic version of Sofosbuvir 400mg/Velpatasvir 100mg fixed dose combination in Nepal.

Bank of Baroda has entered into a partnership with CNX Corporation with an objective to provide collateral management services towards the loans against warehouse receipt sanctioned to the farmers through the network of the bank's branches across the country.

Oil and Natural Gas Corporation plans to spin off its difficult fields into a separate division that includes Gujarat State Petroleum Corporation's Deen Dayal Upadhyaya discovery in the Krishna Godavari basin.

Larsen & Toubro Limited has bagged two more contracts from Saudi Arabia’s biggest oil company Saudi Aramco.

Tata Motors limited launched its new pick-up vehicle Tata Xenon Yodha with price starting at Rs. 0.605 million.

Panacea Biotec Limited has increased the availability of life saving drug Cilamin 250 capsules for treatment of Wilson’s disease — a genetic disorder in which copper builds up in the body — in India.

Suven Life Sciences Limited has been granted a patent each by Eurasia and Norway for a drug used in the treatment of neuro-degenerative diseases.

Balrampur Chini Mills Limited announced a buyback of equity shares worth Rs. 1.75 billion through a tender offer.

ONGC Videsh Limited, the overseas arm of Oil and Natural Gas Corporation Limited, has won rights to bid for oil and gas development projects in Iran.

Ahead of the Budget, ONGC and Cairn India have asked the government to cut cess on crude oil saying the switchover from fixed to ad valorem rates had turned things from bad to worse.

Bharti Airtel Limited announced a special offer under which, it will offer free data for 12 months, worth up to Rs. 9000, to customers who switch to Airtel 4G.

US Food and Drug Administration has issued a warning letter to Wockhardt Limited Ankleshwar plant for data integrity issues, destruction of records and other violation of good manufacturing practices.

Godrej Properties Limited has sold more than 300 apartments within two months of launch at its project Godrej Greens in Pune. This represents more than 75% of the 400 apartments that were opened for sale.

Jubilant Life Sciences Limited subsidiary has signed long-term contracts in the US for the supply of some of its diagnostic and therapeutic products.

IndiGo and SpiceJet have raised "security" concerns over the government's decision to allow 100% foreign ownership by non-airline players in the Indian carriers.

BGR Energy Systems Limited has recently won two contracts worth Rs. 6.50 billion for setting up water treatment plants.

Premier Explosives Limited has received an order from ISRO (Indian Space Research Organisation) for production of developmental motor for use in the Polar Satellite Launch Vehicle.

Reliance Jio and Tata Tele-services Limited opposed in the Delhi High Court the pleas filed by Bharti Airtel and Vodafone challenging Trai's interconnect usage charges regulations fixing termination charges for the landline to wireless as zero paise and wireless to wireless at 14p/min.

HCL Technologies Limited has completed its USD 85 million acquisition of Butler America Aerospace.

Maruti Suzuki India Limited opened online booking for its premium hatchback ' Ignis ' that it plans to launch next week.

Online automobile marketplace Droom as tied up with Axis Bank Limited to provide quick sanction of loans on both new as well as used cars.

Sun Pharma announced successful Phase 3 confirmatory clinical trial results for Seciera for the treatment of dry eye disease.

JK Tyre & Industries has sought shareholders’ approval through postal ballot to raise up to Rs10bn by issuing securities.

NHPC Limited has signed a power purchase agreement with the government of Mizoram for the upcoming hydroelectric projects Tawang-I and Tawang-II in Arunachal Pradesh. The agreement is for a period of 35 years.

Tata Elxsi Limited inked a pact with Irdeto to provide secure in-car display systems for auto mobiles.

BGR Energy Systems Limited, and engineering procurement and construction company, has announced it entry into large size water treatment business after securing contracts worth Rs. 6.50 billion.

The promoters of Sona Group have acquired the shares held by Mahindra & Mahindra Limited in a joint venture company for Rs. 1.20 billion.

Sanofi India Limited has sued Glenmark and Torrent Pharmaceuticals in a US court over their plans to launch a generic version of its multiple sclerosis drug, Aubagio.

Wockhardt Limited said German regulator has issued European Union Good Manufacturing Practice certificate to the company's Ankaleshwar facility in Gujarat.

Within a month since the Road Ministry launched a scheme to revive the construction business, two projects of IRB Infrastructure Developers Limited have got relief.

Tata Motors and Castrol inked a three-year agreement under which the lubricants maker would supply commercial vehicle oils to the home-grown auto major in over 50 markets, including SAARC and ASEAN region, West Asia, Africa, Russia and Latin America.

As many as 10 international offshore drilling contractors including Transocean Inc have offered best-in-class deepsea drilling rigs to Oil and Natural Gas Corporation for its KG-D5 gas field developme


? TOP BANKING AND FINANCIAL NEWS OF THE WEEK
Public sector lender Dena bank today slashed its benchmark lending rate by 0.75 per cent, in the footsteps of bigger lenders like State Bank of India and Punjab National Bank.

Other banks may follow suit after State Bank of India cut its benchmark lending rate by 90 basis points to 8%, said CLSA in a note. CLSA said State Bank of India MCLR cut comes on the back of significant inflow of CASA deposits following demonetisation and is aimed to stimulate growth.

It is more noise than action when it comes to recovery of bad loans. When banks claimed that they were accelerating loan recovery, on the ground it actually slowed — to Rs. 22,678 crore at the end of fiscal year 2016 from Rs. 30,792 crore a year earlier, according to central bank data. Public sector banks continued to lag behind private lenders in loan recoveries even as they were burdened with a high proportion of Non-performing assets, the Reserve Bank of India said in its latest Financial Stability Report. PSU banks could only recover Rs. 19,757 crore last fiscal year against Rs. 27,849 crore in fiscal 2015.

Banks may have to take bigger haircuts on their loans gone sour, as the government pushes state-run companies to take over their stressed assets. A meeting will be held between banks, state-run firms and their administrative ministries to work out the issues, said a senior government official aware of the deliberations. "It was decided that banks and central public sector enterprises will sit jointly and assess some of these cases. There has been some reluctance on the part of CPSEs. They have also said that banks need to be more realistic on the valuations," he said.

Housing, auto and corporate loans are all set to become cheaper with half a dozen PSU and private banks today steeply reducing benchmark lending rate by up to 1.48 per cent after spurt in deposits following demonetisation. Taking a cue from State Bank of India, other lenders including largest private sector lender ICICI Bank and state-owned Oriental Bank of Commerce and Andhra Bank announced cut in marginal cost of funds based lending rate.

Facing pressure from tax and enforcement authorities, banks are not taking any chances in reporting "suspicious transactions" with some of the private players reporting an increase of up to 10 times. Sources said that a private bank, which used to report around 275-300 transactions a month, saw the number for Suspicious Transaction Reports filings with the Financial Intelligence Unit rise to almost 3,000 during December. Another large bank said that it had seen a seven to eight-fold jump in STRs which were typically made for cash deposits of over Rs 1 crore.

The sharpest rate cut by banks in more than seven years is likely to benefit big corporates more than retail borrowers. Companies can renegotiate contracts immediately, taking advantage of reductions of as much as 90 basis points, while more than 60 % of retail borrowers are stuck in the earlier base rate regime where the drop has been a much narrower 5-10 basis points, experts said.

The country's largest lender State Bank of India will take the lead among state-run lenders to launch branch less banking called SBI Digi Bank, something similar to what Citi or DBS have done elsewhere in the world. The Digi Bank will have a financial superstore, a market place, and end-to-end digitisation for all products and services.

Growth of bank credit fell to a multi-decade low of 5.1% for the fortnight ended December 23, as drying up of demand in the last two months of the year saw businesses cutting down on borrowing. Data released by RBI showed that as of December 23, bank lending to businesses individuals and the farm sector stood at Rs 73.48 lakh crore, an increase of 5.1% over the same period of last year.







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