Equity Research Report Ways2Capital 27 March 2017

The BJP Government’s Euphoric win in UP elections has added fuel to the positive sentiment in the Indian stock market. Market Gave Huge Up Move On Euphoric BJP win

The BJP Government’s Euphoric win in UP elections has added fuel to the positive sentiment in the Indian stock market. Market Gave Huge Up Move On Euphoric BJP win. The Indian Benchmark Index Nifty hits new record high of 9218 on last Friday trading session. The Index opened at 9208, or 54 points up from its Previous day’s close of 9154. The Index showed profit booking and closed at 9160 after making low of 9148. Although Nifty opened flat note on Monday trading session up by 6 points at 9166 and traded in a very short range of 51 points for the whole day by making a high of 9167 and low of 9116, Yet underlying sentiment remained supported somewhat after the Union Cabinet approved for GST draft Bills, which will now be tabled at Parliament’s ongoing budget session. FII’s continuous inflows are supporting Indian Stock Market and would continue to keep Market bullish in March 2017. The Finance Minister has announced that GST council decides tentatively for roll out of the GST from 1st July. Although the statement may be itself not 100% sure of a GST roll out from July. Market sentiment have boosted suddenly and Nifty broke the barrier of 9105 briefly and closed around that. As of now some consolidation may be seen before further positive rally but overall market would remain bullish until Nifty holds 9100 levels on closing basis. We may witness some sharp correction in upcoming week’s due to high valuations and corporate earnings. The overall market is bullish and the recently bearish is just a correction that may end once the gap filled up. Strong selling would be only seen after Nifty closes below 8900 levels. The Significance levels for Nifty is 9150-9239 is Up side and 9050-8993 is Down side.
BANK NIFTY : -The banking shares Index Bank Nifty made a New life time high of 21336 on last week and closed at 21175. The ICICI Bank remained top performer as the stock rose around 3.71%. For Market area of concern is Indian banking space, specially the Public Sector Banks and some old private banks. Apart from the ongoing concern about farm loan waiver rhetoric by BJP in UP, analysts are also worried about their tepid loan growth, which in turn may affect earnings of PSB adversely in the coming quarters. The banks may not be able to grow at Perpetual 25-30% CAGR years after years and there may be stagnation in the face of growing competition and lack of sufficient eligible and quality retail borrowers. The Bank Nifty traded volatile on the last day of its weekly expiry, the Index opened at 20849 and made a low of 20775 and closed at 20895, after making a high of 20935. There were also some reports that Indian Govt. may allow banks to drain the excess demo liquidity using standing deposit facility without any SLR requirement and that may be positive for the banks & Baking shares index Bank Nifty as banks don’t have to buy bonds for incremental requirement of SLR. Technically , Bank Nifty is still in Positive Territory we may witness the up side movement in the Index. Once the Bank Nifty closes above 21050 levels, then we may witness Upward movement in the Index. The Bank Nifty has rallied almost 21% from its low of 17606, made on 23rd Dec 2016, post demonetization and is currently trading at 21105. It made a record high of 21336 on 17th March 2017. The Significance levels for Bank Nifty is 21320-21456 is up side and 20960 20840-is Down side..




NSE - WEEKLY NEWS LETTERS
? TOP NEWS OF THE WEEK

Centre to infuse Rs 8,586 crore capital in 10 weak banks - Contrary to its earlier stand of infusing fresh capital in strong banks, the central government has decided to infuse fresh capital totalling Rs. 8,586 crore into 10 weak banks subject to commitment to quarterly milestones by bank boards, management, employees and unions, said a top leader of All India Bank Employees' Union. He also said SBI Caps will draw a bank wise action plan based on which a tripartite agreement between the government, bank management and employee unions will be signed committing themselves towards certain milestones. "The central government has written to the heads of 10 banks indicating the amount of fresh capital it would infuse during FY2017. But the infusion is subject to a tripartite agreement between the central government, banks and the unions for a time bound turn around programme," C.H. Venkatachalam, General Secretary of AIBEA, told on Sunday.

Government expects to raise Rs 2,82,212 crore from cess in 2017-18 - An estimated Rs. 2,82,212 crore revenue will be generated through cess and surcharge in 2017-18, Finance Minister Arun Jaitley said. He said in Lok Sabha that the total revenue generated through cess and surcharge during 2014-15 was Rs. 1,19,276.65 crore, which increased to Rs. 2,65,661.61 crore in 2016-17. The estimated revenue likely to be generated through cess and surcharge in the financial year 2017-18 is Rs. 2,82,211.98 crore," he said during Question Hour. The Minister said under the Income Declaration Scheme 2016, a surcharge under the name of Krishi Kalyana Cess was levied at the rate of 25 per cent of the tax, that is at the rate of 7.5 per cent of the undisclosed income declared under the scheme.

Government may table 4 GST bills in Parliament today: Arjun Ram Meghwal - The government may table four GST supplementary legislations in Parliament today, a union minister said. "We can do it today as well. A meeting on GST will be chaired by Finance Minister Arun Jaitley today," Minister of State for Finance Arjun Ram Meghwal said when asked about tabling of the four GST bills in the Lok Sabha. He was speaking to reporters on the sidelines of an infrastructure event here. The Cabinet on Monday cleared the four GST related bills to enable roll out of the Goods and Services Tax from July 1. The four bills are: the Central Goods and Services Tax Bill 2017, the Integrated Goods and Services Tax Bill 2017, the Union Territory Goods and Services Tax Bill 2017 and the Goods and Services Tax Compensation to the States Bill 2017.

Consumer loan demand is back and credit quality too is good: Transunion Cibil - Consumer credit demand is back after post demonetisation hiccups. Good news that credit quality too is stable, a report by Transunion Cibil notes. After posting almost zero percent growth in November’16 year-on-year demand or inquiries for consumer or retail loans went up to 25% in January, a research by credit bureau Transunion Cibil showed. With bank loan growth reaching multi-decade lows, only segment that is showing perceptible growth us retail loans. Even these had taken a hit by sudden announcement of a ban on Rs. 500 and Rs. 1000 notes. While an analysis by credit bureau of the delinquency trends 90 days or more past due in December 2016 shows relatively stable performance overall. While delinquencies in auto loan and credit card dipped 92 basis points one bps is 0.01% and 14 bps respectively, delinquency rates in two wheeler and housing loans rose marginally by 11bps and 32 bps respectively.

GST impact on inflation to be less than 20 bps: Nomura - The implementation of Goods and Services Tax is likely to be fiscally neutral and its impact on inflation is expected to be less than 20 basis points, says a Nomura report. According to the Japanese financial services major, the GST council is making steady progress and is expected to be implemented in the July-September quarter this year. Though the impact of GST is likely to be minimal, growth numbers are expected to get affected in the run up to its implementation. "In the near term, we expect the GST to be fiscally neutral, the resulting inflation impact to be minimal at less than 20 basis points and the impact on growth to be marginally negative in the run up to its implementation," Nomura said in a research note.

RBI recasts norms on currency hedging for MNCs - The RBI today changed norms to provide operational flexibility to multinational entities and their Indian subsidiaries exposed to currency risks arising out of current account transactions in the country. The extant hedging guidelines have been amended to provide operational flexibility for booking derivative contracts to hedge the currency risk arising out of current account transactions of Indian subsidiaries of multi-national companies. As per the guidelines, the transactions under the facility will be covered under a tripartite agreement involving the Indian subsidiary, its non-resident parent / treasury and the bank. This agreement will include the exact relationship of the Indian subsidiary or entity with its overseas related entity, relative roles and responsibilities of the parties and the procedure for the transactions, including settlement," it said.


Cabinet clears abolition of cesses for GST rollout, government to incur Rs 65,000-crore loss - The Union Cabinet has approved amendments in the Customs and Excise Act relating to abolition of cesses and surcharges on various goods and services to facilitate implementation of GST. Following this, the Centre will abolish 16 cesses and surcharges on union excise and service tax as it lays down the path for rolling out Goods and Services Tax from July. The amendments in the Customs Act, 1962, allow furnishing of information relating to import or export of goods by specified persons to enable analysis and detection of cases of under or over-valuation in imports and exports. Cesses to be abolished include Krishi Kalyan and Swachh Bharat. This would lead to a loss of about Rs 65,000 crore by the exchequer. To make up for this dent, the government would have to find resources from the budget. "Amendments or repeal of various provisions of other Acts which will no longer be relevant consequent on rollout of GST will result in cleansing of the irrelevant portions from the Statute Book and reduce multiplicity of taxes," an official release said after the Cabinet meeting chaired by Prime Minister Narendra Modi.

Country's current account deficit widens as services exports and remittances slow down - Current account deficit moderated during the quarter ended December 2016 despite lower trade deficit as both services exports on account of demonetisation and remittances by global Indians also dipped due to global slowdown. As capital flows too slowed down, the overall balance of payments ended in a moderate deficit of $ 1.2 billion in the latest quarter. Current account deficit, the excess of India's imports of goods and services over exports in its external sector balance sheet, expanded to $ 7.9 during October-December, the quarter in which the historic decision to ban high value Rs 500 and Rs 1000 notes, according to preliminary estimates released by the Reserve Bank of India. This is marginally higher than the CAD of the same period last years- October-December'15, when the deficit was $7.1 billion. But as a percentage of GDP, the ratio is same in both periods at 1.4 % of GDP.

India notifies amended tax treaty with Singapore - The government today notified the amended India-Singapore tax treaty under which capital gains tax will be levied at source of investments with effect from April 1. India had amended the tax treaty with Singapore on December 30, 2016, under which for two years beginning April 1, 2017, capital gains tax will be imposed at 50 per cent of the prevailing domestic rate. Full rate will apply from April 1, 2019. The revision of tax treaty will help curb revenue loss, prevent double Non-taxation and streamline the flow of investments, a finance ministry said, adding that the amended tax treaty has been notified. "In order to provide certainty to investors, investments in shares made before April 1, 2017, have been grandfathered subject to fulfillment of conditions in Limitation of Benefits clause as per 2005 Protocol," they added.


? TOP ECONOMY NEWS
Indian firms have raised a whopping $ 2.23 billion in February 2017 from overseas market as disclosed by RBI's data. Last year in February month, through External Commercial Borrowings Indian companies have raised $1.35 billion.

Arun Jaitley moved the Finance Bill, 2017 for consideration and passage in Lok Sabha. He said that since it provides for electoral bonds, it required consideration as a Money Bill, which can only be debated in the lower house. A Finance Bill is ordinarily introduced to empower the financial proposals of the government for the coming financial year.

The interest cost of the states part of the UDAY scheme has come down by around Rs. 11,989 crore for April-December of 2016-17 over the year-ago period. "As per the information available, the interest cost of states participating in UDAY has reduced by Rs. 11,989 crore, approximately for the first nine months of the current financial year compared to the financial year 2015-16," Power Minister Piyush Goyal said.

Even as the world economy struggles and many developed countries are trying to alter their consumption through austerity drive, India could end up as the third largest consumer economy by 2025 according to a report. Consumption in India is set to triple to $ 4 trillion by 2025 as rising affluence drives changes in consumer behaviors and spending patterns that have big implications for companies, Report by Boston Consulting Group.

Finance Minister Arun Jaitley said on Wednesday that the government was hoping to implement the Goods and Services Tax by July 1 after the enabling Bills get Parliament's nod in the current budget session. GST is the biggest reform in India. Hopefully, GST will be implemented by July 1. GST Bills will hopefully be cleared in Parliament," Jaitley said.

The government has asked tax authorities to reduce backlog of tax disputes as far as possible especially before the rollout of the goods and services tax , people in the know said. According to the government data there are about 2.5 lakh pending cases at commissioner of income tax and about 90,000 pending cases with the ITAT.

Even as the government pushes ahead with implementing goods and services tax there could be an unintended implication: increase in the income tax collections, say industry experts. Industry trackers say that since the GST data will capture the tax paid by all the companies, it could also be compared with the income tax data of the owners, promoters or beneficiaries of the companies.

The government has stepped up its strategic divestment drive, with premier think tank Niti Aayog recommending immediate stake sales in 12 central public sector enterprises. Companies identified in the second round include National Textile Corporation, Fertilisers and Chemicals Travancore , Hindustan Antibiotics, Scooters India and Hindustan Fluorocarbons. A senior government official said.

Action will "definitely" be taken against 9.29 lakh entities who have not responded to the I-T department's queries over cash deposited by them which did not match their income profile, the government asserted.

With the passage of the Finance Bill, the Lok Sabha today completed the Budgetary exercise for 2017-18. Amidst walkout by the members of the Congress and the BJD, the Finance Bill with 40 amendments was passed by the House by voice vote. The amendments to the Finance Bill include a provision to cap legal cash transactions at Rs. 2 lakh from April 1 got approval. The bill had originally proposed the cap at Rs. 3 lakh. Besides, amendments to the Companies Act, the Employees Provident Fund Act, Smuggling and Foreign Exchange Act, TRAI Act and Information Technology Act were passed.

Till date, 26.7 per cent of central taxpayers have migrated to Goods and Services Tax Network in the Bengal circle. "So far, 26.7 per cent of 88,201 tax payers registered with the Central Excise and Service Tax have migrated to GSTN," Central Excise chief commissioner R K Sharma said on the sidelines of a GST awareness programme.

GST holds the potential to make Indian products improve compliance, globally competitive and contribute to the expansion of the Indian Economy by at least 1% of GDP.

States and the Centre may lose their right to collect indirect taxes after September 15, so the government is in a hurry to pass the GST laws during the current session of the Parliament. Finance Minister, Arun Jaitley, stressed on the immediate rollout of the GST. He said, “government is keen to roll out GST on July 1.”

The country added USD 14.2 billion in foreign exchange reserves on the balance of payment basis during the first nine months of the outgoing financial year, which is marginally down from USD 14.6 billion accretion in the year-ago period, the Reserve Bank said.


? TOP CORPORATE NEWS -
Titan Company Limited is one of the leading prime multi-brand accessories and watches makers is planning to increase its sales revenues from 11 million loyalty customer base. Titan is using IBM Watson Customer Engagement and Cloud-based solutions, which may help Titan to absorb new customers from the market to its unique line of different products.

Blue Star Limited , Leading AC maker, expects its market share in room air conditioners to expand by nearly 9 per cent to 12.5 per cent in fiscal 2018. The Mumbai-based company currently has a market share of 11.5 per cent.

According to a top state official, The Adani group will start their operations on 1600 MW Ultra mega power project in the month of June. Recently concluded Momentum Jharkhand Investment Summit where the conglomerate has pledged an investment of Rs. 20,000 crore in several projects including 1600 MW project.

Public sector enterprise of the Ministry of Mines, Government of India, National Aluminium Company Limited, abbreviated as NALCO has declared an interim dividend of 56% aggregating to Rs. 541.22 crore for 2016-17, the highest ever by the company since its inception.

Indian government-owned financial service company, IDBI Bank’s board has approved the proposal for preferential issue of capital to Government of India and other financial institutions. The issue size aggregates up to Rs 2500 crore subject to relevant approvals from statutory or regulatory bodies.

India is in electrification overdrive, with about 30,000 new electricity connections being granted every week. The Union power ministry is mapping the progress live on a website and is also measuring changes in lifestyle in the recently electrified villages, collecting largest data of its kind. NITI Aayog, the Centre’s premier think tank, has advocated that other ministries use this data for other social welfare schemes.

State-run Power Finance Corporation on Monday said it has sanctioned Rs. 9128 crore financial assistance to power utilities of Tamil Nadu. A Loan Agreement was signed between PFC and the Power Utilities of Tamil Nadu to this effect. The company sanctioned a term loan of Rs 5474 crore to Tamil Nadu Generation and Distribution Corporation Limited.

Jubilant Life Sciences said its subsidiary Jubilant Pharma will negotiate a potential acquisition of a specialty business in the US. The Board of Directors of Jubilant Pharma Limited, a material wholly-owned subsidiary of the company in Singapore, has approved to negotiate a potential acquisition of a specialty pharma business in the United States using only internal accruals," Jubilant Life Sciences said in a Exchange filling.

Coal India Limited is considering producing petroleum oil at its Chatra coal mine in Jharkhand. Petroleum oil from coal is part of the state-run coal behemoth’s diversification plan and it will soon invite an expression of interest for it, Coal India chairman Sutirtha Bhattacharya told. The Chatra mine comes under its subsidiary Central Coalfields.

The government will sign contracts for the 31 small discovered oil and gas fields it had auctioned in the first bid round in more than six years. State-owned oil firms Indian Oil Company , BPCL and HPCL had cornered a third of the fields whose award was confirmed by the Cabinet last month. Contracts with successful bidders will be signed on March 27," a senior official said.

IL&FS is selling its 49% stake in its joint venture with China’s Chongqing Expressway Group, marking a premature end to its five year-old foray into the booming infrastructure development business in that country. The proposed sale is estimated to fetch as much as $ 170 million and has attracted interest from as many as 10 bidders comprising Chinese construction firms and toll road operators, said people directly aware of the matter.

Glenmark Pharmaceuticals USA has received approval from the United States Food and Drug Administration for Clobetasol Propionate Ointment, used for treatment of various skin conditions. "Glenmark Pharmaceuticals Inc, USA has been granted final approval by the USFDA for Clobetasol Propionate Ointment USP, 0.05 per cent.

IL&FS Engineering and Construction Company has bagged an order worth Rs. 222.7 crore for rural electrification works from Jharkhand Bijli Vitran Nigam for Sahibganj and Pakur districts in the state, the company said in a statement Monday.

The order, which was bagged and will be executed by L&T’s subsidiary, L&T Hydrocarbon Engineering relates to ONGC’s Neelam Re-Development & B173AC projects. It entails building of one. Larsen & Toubro has bagged an offshore project order worth Rs. 1,656 crore from state-run ONGC, the engineering major said in a statement.

Bharti Infratel has stated recently that Nettle Infrastructure Investment Ltd., which is a wholly-owned subsidiary of Bharti Airtel, will obtain 21.63% stake in the company from its parent firm, Bharti Airtel. It is being expected that the deal may take place on or after March 21, Nettle will buy almost 40 crore shares of Bharti Infratel at approximated Rs 12,400 crore.


Drug firm Wockhardt Limited has received approval from the US health regulator to market generic version of Wyeth's Zosyn, used for treating bacterial infections, in the American market. The application for the product to the US Food and Drug Administration was made by the company's subsidiary Wockhardt Bio AG, the Mumbai-based company said in a regulatory filing.

Indian real estate, gaming and hospitality corporation, Delta Corp company’s board of directors approved raising of Rs. 750 core via qualified institutional payments.

Emami Group has partnered with Sheth Corp, and plans to invest Rs. 350 crore to develop a luxury residential project named ‘Montana’ in Mulund, Mumbai. Sheth Corp and Emami Group's arm, Emami Infra have formed a Limited Liability Partnership for the project.

Two-wheeler manufacturer TVS Motor is confident that the company will surpass industry growth estimated at an 8-10% clip in the forthcoming fiscal to cross the 15% market-share mark.


Global steel manufacturing giant, Tata Steel is seeking an opportunity to use the export markets to transfer an enhanced and more developed product, produced at its Kalinganagar plant which is situated in Odisha.

Bharti Infratel announced that the company’s board of directors have declared an interim dividend of Rs 12 per equity share of Rs 10 each for the financial year 2016-17.

India’s leading software service exporter, Tata Consultancy Services has no plans to cut investment in the United States, and will set up local hiring in its biggest overseas market, it reported.

India’s largest telecom service provider, Bharti Airtel Limited, announced that it has entered into a definitive agreement with Tikona Digital Networks for acquiring Tikona’s 4G business in five telecom circles.


Pharma Major Lupin Limited announced today that it has received final approval for its Tobramycin Inhalation Solution USP, 300 mg/5 ml from the United States Food and Drug Administration to market a generic version of Novartis Pharmaceuticals Corporation’s TOBI 300 mg/5 ml.


? TOP BANKING AND FINANCIAL NEWS OF THE WEEK
Bharatiya Mahila Bank will be merged with the country's largest lender State Bank of India from April 1 to ensure greater banking outreach to women. "It shall come into effect on April 1, 2017.

There were more than 9,100 wilful defaulters who together owed Rs. 91,155 crore to public sector banks at December-end, Parliament was informed. Banks declare wilful defaulters as per the norms stipulated by the Reserve Bank of India. There were 9,130 wilful defaulters who owe Rs. 91,155 crore to public sector banks, Minister of State for Finance Santosh Kumar Gangwar said.

The Reserve Bank of India has asked all prepaid payment licence holders who mostly issue mobile wallets to convert their minimum KYC wallet accounts into full KYC account by June 30 of this year. It has also laid out minimum net worth criteria for wallet issuers to Rs. 25 crore from minimum paid up capital of Rs. 5 crore earlier.

Chennai-based state lender Indian Overseas Bank will get Rs. 1,100 crore as "turnaround-linked capital" infusion from the government. The bank said it has received a communication from the Finance Ministry for a capital allocation of Rs. 1,100 crore as part of turnaround linked capital infusion plan. The government has approved the second tranche of capital infusion in public sector banks to enhance their capital base.

Benefits from the merger of five associate banks of the State Bank of India into itself, which will come into effect from April 1, will accrue only from the third quarter of 2017-18 as the initial two quarters may see some increase in costs, the country's largest lender said.

India’s fourth largest lender, Yes Bank Limited, has announced the launch of an issue of qualified institutional placement. The issue size stands at USD 650 million with an option to upsize to USD 750 million.

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