Equity Research Report Ways2Capital 06 March 2017

The Equity benchmark Index Nifty opened on a flat basis on Monday up by 4 points at 8943 levels. Last week the Benchmark Index

NIFTY FIFTY : - The Equity benchmark Index Nifty opened on a flat basis on Monday up by 4 points at 8943 levels. Last week the Benchmark Index Nifty closed at 8940 after making high of 8982 the Index has given breakout of its 5 month high of 8969. last week Nifty closed in positive territory by gaining 1.34%. Telecom Sector has given a major movement last week. Indian Benchmark Index Nifty opened at 8944 and made a high of 8952. Profit booking in the last hour of trading led Benchmark index to make a low of 8889 and fillanlly closed at 8897 which is 43 points down from its previous day close. GDP Quarterly (Y-O-Y) for Q3 reported on 28th Feb 2017 IST showed a considerable difference in the street estimates of 6.4% v/s the actual GDP Growth reported 7.0%. The Nifty traded strong throughout the day and have closed at its highest level in six months. On the Global market Trump’s speech just concluded has nothing new, which market does not know and USD bond yields & Global market seems to be not convinced about lack of any specific details. But Trump also called for a $ 1 trillion infrastructure fund approval from US congress in PPP mode and that somehow supported the market sentiment right now. On Friday trading session the index Nifty opened near its recent high of 8982 and made a high of 8992. Market showed weakness despite good strong global market scenario. Nifty Index fell 46 points and closed at 8897. Nifty is still below 8900 levels and traders can still continue short until Nifty closes above 8968 levels. Market would continue to see huge volatility until UP Election outcome. initiate long positions only if Nifty closes above 8962 levels and until then hold short. The Crucial levels for Nifty is 8940-9030 is Up side and 8840-8750 is down side.
BANK NIFTY : - The Indian Baking index Bank Nifty opened in a Negative note down by 79 points or 0.42 per cent at 18616. The Reserve Bank has directed banks to keep record of new bank notes in view of seizures by Income Tax Department and other law enforcement agencies of large quantities of high denomination notes. It has been felt necessary to put in place an appropriate reporting system to keep track of issuance of these bank notes by the currency chests. Nifty Bank is still in positive zone. Bank Nifty would enter into negative zone once it closes below 18255 levels. Market may see some short covering but for now, Bank Nifty looks weak and traders can go short at every positive rally in the Market. Bank Nifty would soon enter into negative zone once it closes below 18255 levels and we could see some sharp downfall in the market in days to come. The Bank Nifty is expected to trade in bullish trend for next trading week. The Significance Levels for Bank Nifty is 18833-19759 is Upside and 17907-16981 is down side.

Enhanced budget allocation to infra will boost order inflow' - Enhanced budgetary allocation of Rs 3.96 lakh crore to the infrastructure sector would boost order inflows and is positive for companies in the segment, ratings agency Icra said today. "Budget focus on infrastructure sees increase in allocation to most schemes; high execution targets is credit positive. It said the Central government has retained its focus on infrastructure development by increasing allocation towards the sector with focus on key segments like roads, railways, metro and irrigation. "This, along with, promotion of affordable housing segment by granting the infrastructure status to such projects, will help the construction sector in further enhancing order inflows," it said. It said allocation of Rs 3.96 lakh crore to infrastructure sector in FY18, an increase of 13.5 per cent from FY17 budgetary allocation, will have a positive impact on infrastructure and construction companies. There is a significant increase in allocation towards Pradhan Mantri Awas Yojna , which was enhanced 45 per cent, it said.

India's forex reserves remain flat for the last week of February - India's foreign exchange reserves rose marginally by $ 63.7 million to reach $ 362.8 billion as on February 24 said the Reserve Bank of India today. According to data released by the central bank, banks have also shown a mere 4.8% rise in credit for the year 2017 against last year, therefore the entire credit forwarded by the banking sector stood at Rs 3.4 lakh crore as against Rs 7.2 lakh crore last year. At the same time deposits have shown a growth of around 12.8% against 10.4% that was seen last year, standing at Rs 11.8 lakh crore against Rs 8.7 lakh crore last year. According to data from NSDL the amount of money put in by foreign investors in the Indian markets for the month of March stood at Rs 12967 crore till the first week of March.

Auto asset-backed loans stabilise in January: Moody's - Moody's Investors Service today said the performance of auto asset-backed securities levelled off in January after deterioration due to the currency crunch post demonetisation. The performance of rated Indian auto asset-backed securities is not expected to deteriorate beyond March 2017 as the economy recovers and oil prices remain range-bound and budget policy initiatives provide support, Moody's said in a statement. The signs of stabilisation appeared in January 2017, with collection efficiency rising half a percentage point to 93 per cent from December 2016, but was still 1.9 percentage points lower than the average in the three months to October 2016, it said. "In January 2017, all transactions collected more funds than the amount they needed to pay interest and principal to investors. Signs of stabilisation appeared in January 2017," Moody's said.

States' fiscal deficit will rise to 3.3% in 2017-18: India Ratings - Even as the centre has managed to contain its fiscal deficit, state governments still remain profligate. A report by ratings firm India Ratings and Research estimates that aggregate fiscal deficit of Indian states will increase marginally to 3.3% of gross domestic product in FY’18 from its forecast of 3.2% for FY;17. It expects states’ debt/GDP ratio may increase marginally to 24.3% in FY’18 from 24% forecasted for FY’17. The central government is evaluating the report of the N. K. Singh panel on Fiscal Responsibility and Budget Management, which allows the fiscal deficit of the central government to be increased by 0.5% of GDP. Ind-Ra believes that once the report is accepted, states would also make suitable changes in the fiscal deficit targets specified under their Fiscal Responsibility and Budget Management Acts. Net market borrowings of states is expected to increase to Rs 3.7lakh crore in FY’18 from its forecast of Rs 3.5lakh crore for FY’17. However, as a percentage of GDP, states’ net market borrowings is likely to moderate to 2.2% in FY’18 from its forecast of 2.3% for FY’17.

Services rebound after four months, PMI rises to 50.3 in February - India’s services activity bounced back into expansion mode for the first time in four months in February, a private business survey showed on Friday, providing further evidence that the effects of demonetisation may be fading. The Nikkei/IHS Markit Services Purchasing Managers’ Index rose to 50.3 in February from 48.7 in January, marginally above the 50-mark that separates growth from contraction. The PMI manufacturing survey released on Wednesday had showed a similar recovery. Having contracted for three months in a row, incoming new business also picked up in February. However, as was the case for output, the pace of growth in new work was marginal overall,” the survey report said. Government data released earlier this week showed the economy grew 7% in the demonetisation-hit October-December quarter, much higher than expectations, and is on course to clock 7.1% growth in FY17.

Liability linkage provision in GST to hit small traders - A provision in the model goods and services tax law to ensure the smooth flow of credit and minimise tax evasion could hit small businesses and suppliers by favouring bigger and financially stronger ones. The 'liability linkage provision' allows the buyer credit for tax paid on inputs used only if the supplier has paid the tax within a given window. The provision, to be discussed at the meeting of the GST Council on March 4-5, calls for reversal of credit to the buyer in case of noncompliance by the vendor. That is, a buyer would be penalised for the supplier's non-compliance. "This seems unfair as it penalises the buyer for someone else's fault," said Pratik Jain, indirect tax leader, PwC.

Bank consolidation takes backseat on rising NPAs - Mounting Non-performing assets have pushed the government's plan for consolidation of public sector banks on the back burner after it managed to get State Bank of India to take charge of its five subsidiaries. The government is also going slow on stake sale in IDBI Bank, where it had even discussed the possibility of reducing it to below 50%. The bank is grappling with bad debt and has been asked to accelerate plans for sale of non-core businesses, including life insurance, Sidbi and NSE shares, through which it hopes to raise Rs 5,000-6,000 crore.

The Indian Railways is working towards protecting its freight market as it has been losing share to the road transport. The railways have set a revenue target of Rs 1.89 lakh crore for FY18, of which Rs 1.18 lakh crore would come from the freight segment.

Under the Ujjwal DISCOM Assurance Yojana scheme, the government of Telangana is all set to auction bonds amounting Rs. 89.23 billion. For this purpose, the Telangana government has invited bids from various merchant bankers, as per the RBI announcement on Monday.

The Nikkei India Services purchasing managers index increased to 50.3 in February, as against 48.7 in the month of January. The index signalled growth in February, as businesses recovered from the demonetisation-related disruptions, seen in each of the previous three months.

The government is expected to ease the Foreign Direct Investment norms in the single brand retail. According to officials, the FDI norms are further eased to provide better business environment by removing barriers. Last year, the government liberalised various sectors including civil aviation, construction & development, private security agencies, etc.

Foreign Exchange Earnings during the month of January 2017 were Rs.16,097 crore as compared to Rs 13,669 crore in January 2016 and Rs 12,100 crore in January 2015. The growth rate in FEEs in rupee terms during January 2017 over January 2016 was 17.8% as compared to the growth of 13.0% in January 2016 over January 2015.

The Nikkei India Manufacturing Purchasing Managers’ Index, or PMI, increased to 50.7 in the month of February, as against 50.4 in the month of January. A reading above 50 indicates economic expansion, while one below 50, points toward contraction. The numbers show that the manufacturing sector has grown with a healthy rate after the shock of demonetisation in November 2016, as a rebound in export demand contributed to a stronger expansion of the total orders.

The Controller General of Accounts, Archana Nigam released a report indicating a rise in Indian government’s tax collection. The numbers show that the tax collections increased by 11.8% on Y-o-Y basis to Rs. 1.056 trillion. The rise in net tax collections is mainly contributed by the increase in excise collections. The excise tax collection stood at 36.6% on Y-o-Y basis at Rs. 320 billion in the month of January.

The Q3 data as put out by Central Statistics Office comes as a positive surprise as market experts expected the growth to be closer to 6.3%. The Q3 GDP growth for the October-December quarter came out to be 7% while CSO projected that the economy is likely to grow by 7.1% in 2016-17.

The Organisation for Economic Cooperation and Development has cut the Indian growth forecast to 7% for 2016-17, today. Last year, it had projected the growth rate of the country at 7.4% for 2016-17. On the other hand, all eyes will be on Q3FY17's GDP numbers which are going to be out later in the day.

The Asian Development Bank and the Government of India signed here $ 375 million in loans and grants to develop 800-kilometer Visakhapatnam -Chennai Industrial Corridor, which is the First Phase of a planned 2,500–kilometer long East Coast Economic Corridor.

Dubai International Financial Centre, the leading financial hub in the $7.4 trillion Middle East, Africa and South Asia region has signed a Memorandum of Understanding with Gujarat International Finance Tec-City in an effort to encourage further cooperation and collaboration between the financial centres.
In its 7th meeting on the February 11, 2017 VCIC examined requests from 11 fund managers and cleared for sanction requests from 9 Funds aggregating Rs. 300 crores. It is evident that there is a significant upsurge in the fund of funds operations if seen from the number of funds supported by SIDBI during the current FY. During FY 15 and 16 sanctions were made to 11 funds (Rs. 314 crores) and 16 funds (Rs. 607 crores) respectively while the number during the current FY has already crossed Rs. 1112 crores to 30 funds.

Foreign direct investment inflow in India grew to a whopping 18% amounting to $ 46 billion as announced by Department of Industrial Policy and Promotion. Whereas India received FDI of USD 39.32 billion in 2015. Majority of the FDI came in from Singapore, Mauritius, Netherlands & Japan. As per Union Budget 2017-18, the Finance Minister will be further easing foreign investment norms and will also be phasing out the Foreign Investment Promotion Board.

Vodafone India and Idea Cellular, India’s No 2 and No 3 telecom operators, have come up with new plans with daily data benefit and free unlimited voice calls for their prepaid customers. The new plans could be seen as a step aimed at countering Reliance Jio’s data-rich prime offers that will be applicable for the Mukesh Ambani-led telco’s customers starting April 1, 2017.

Bharti Airtel Limited and Millicom International Cellular have entered into an agreement to merge their respective units in Ghana to create the second-largest mobile carrier in the African country. Under the terms of the agreement, “Airtel and Millicom will have equal ownership and governance rights in the combined entity,” both companies said in a joint statement on Friday.

Wipro Limited, India's third largest software exporter, today said it has completed the $ 70 million sale of its EcoEnergy division. In November last year, the Bengaluru-based company had said it will sell its EcoEnergy division to Chubb Alba Control Systems for $70 million in order to sharpen focus on core IT business.

Vijay Mallya, the embattled businessman said faulty engines were one of the factors for the collapse of Kingfisher Airlines. A group firm of Pratt & Whitney has been sued for supplying defective engines to Kingfisher Airlines, Mallya said amid aviation regulator DGCA ordering detailed inspection of P&W engines powering some Airbus 320 neo planes being operated in India.

Defence sector will be the largest business area for Reliance Infra in the next few years, its chairman Anil Ambani has said, seeing opportunities worth Rs 1 lakh crore per annum in acquisitions for the armed forces. Ambani said the Group's focus will be to become a leading manufacturer and supplier of advanced weapon platforms and military hardware to meet the requirements of the Navy, Indian Air Force and the Army and also mark the company's presence across the world.

After two long years of dispute, Tata Sons and NTT Docomo Inc. have finally seem to have reached a common ground to settle the issue. Tata Sons Ltd has agreed to pay Japan's NTT DoCoMo about $ 1.17 billion in connection with the termination of a joint venture in the country, according to reports. The two companies have made a joint application in the Delhi High Court to resolve the matter. The case will be heard on 8 March.

The country's largest two-wheeler maker Hero MotoCorp on Wednesday reported a 4.75 per cent decline in total sales at 5,24,766 units in February. The company had sold 5,50,992 units in February 2016, Hero MotoCorp said in a statement.

Larsen and Toubro Hydrocarbon Engineering on Tuesday said it has signed a 5-year framework agreement with Shell for engineering, procurement and construction management services.

TVS Motor Company has posted a decline of 3.6 per cent in sales at 211,470 units in the month of February 2017 as against 219,467 units in the same month last year.

With refinancing of infrastructure projects gathering steam, L&T Infra Debt Fund , a refinancing unit, is raising about Rs 2,500 crore through debentures to provide liquidity for road and renewable energy projects.

Auto major Mahindra & Mahindra Limited on Wednesday reported 2.92 per cent decline in total sales at 42,714 units in February. The company had sold 44,002 units in the same month last year, M&M statement said.

Singaporean sovereign fund GIC and US-based private equity giant Blackstone were neck-and-neck for acquiring DLF Limited promoters’ 40% stake in their rental arm DLF Cybercity Developers . The realty major on Wednesday said it has entered into a exclusive agreement with GIC to sell the stake.it is expected to be to the tune of Rs. 12,000 crore. Bid amount not withstanding, several factors tilted the scale in favour of GIC, say a top company executive and analysts.

Adani Power Limited, part of the Adani Group, saw a 330 megawatt unit 4 at its 4620 MW Mundra thermal power plant run continuously for record 600 days, generating 4142.56 million units of electricity.

The government has bailed out state-owned oil producers Oil and Natural Gas Corporation and Oil India from a potential liability of about Rs. 22,000 crore in royalty dues to states like Gujarat and Assam.

Tata Consultancy Services Limited , which plans to buy back shares worth up to 160 billion rupees $ 2.39 billion, said on Wednesday the founder group of the company intended to participate in the proposed buyback.

Banks seeking incentive from RBI to clean bad loan is not only an atrocious idea but also against the basic ethos of banking. Just as lending and mobilising deposits have been the core functions of banks, recovery of loans from borrowers is equally significant. In fact, in absences of demand for loans and easy flow of money to banks as deposits recovery of dud loans has emerged as the core activity for a number of banks.

The government has instructed banks to link all savings accounts with mobile and Aadhaar numbers by March 31, 2017, and enable mobile banking for such customers.

Growth in bank loans, a bellwether for economic activities, has fallen to below 5%, raising doubts over quicker recovery in factory output. Reserve Bank of India data showed that bank loans for the fortnight ending February 17 grew by 4.8% year-on-year to Rs. 75 lakh crore, compared to 11.2% rise in the year ago period. This is the slowest fortnightly loan growth recorded since 2006.

The State Bank of India is expanding operations in India's immediate neighbourhood, its Chairman and Managing Director Arundhati Bhattacharya said. We are doing it within the immediate neighbourhood of India. We have just opened a new branch in Myanmar and we upgraded our branch in Seoul," Bhattacharya said here, responding to reporters' question on the bank's expansion plans.

Public sector Indian Bank has revised its interest rates in foreign currency non-resident term deposits with immediate effect. For FCNR(B) deposits, in USD terms, the revised interest rate was fixed at 2.33 per cent for deposits of one year and above, but less than two years, from the existing 2.26 per cent, a bank statement said.

As part of capital raising exercise, the Finance Ministry has advised state-owned banks to prepare a list of their non-core assets and look at disposing them at opportune time. They have been asked to move forward on the idea based on deliberations at the Gyan Sangam last year, sources said. Some of the banks have started the process while others are gearing up, the sources said, adding that the move will not only help them raise the much needed capital for growth but also sharpen their focus on the core business.

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