Equity Research Report Ways2Capital 14 Aug 2017

Last Week Nifty Index made fresh all time high of 10138 and closed above a psychological level of 10000.

Last Week Nifty Index made fresh all time high of 10138 and closed above a psychological level of 10000. However this rally did not sustain As Nifty trades below 9700 levels. The Benchmark Index Nifty on 7th August opened at 10075 closed at 10057 after making a low of 10046.The Index ended 9 points down from its previous close of 10066. Tyre stocks rose after reports suggested that the Directorate General of Anti-Dumping and Allied Duties is in talks with the Finance Ministry for the imposition of anti-dumping duty on truck and bus radial tyres imports from China. The authority has submitted a report to the Finance Ministry which will take the final decision soon. The Market fell on Tuesday due to an unexpected regulatory order imposing trading restrictions on 331 listed entities identified as shell companies raised concerns about a wider probe into others. On Tuesday trading session, Nifty was down by 78 points and the market took support at 20 DMA around 9970 in the daily chart. The market fell for the third consecutive session on Wednesday. Nifty was down by 70 points and in the daily time frame, the 20 DMA or mid Bollinger support placed around 9974 got broke and faced strong resistance 9970. Nifty opened gap down, pulled back and after making an intraday high of 9969, slipped about 75 points subsequently. The Securities and Exchange Board of India has directed stock exchanges to initiate action against 331 listed entities suspected to be shell companies. These companies will not be allowed to trade this month, according to a Sebi circular sent to exchanges on 7 August. These 331 shares will be kept in stage four of the so-called Graded Surveillance Mechanism with immediate effect. Market fell for the fourth consecutive session on Thursday with a gap down. After Yesterday’s close below 200 hourly Moving average, market breached another important support of 34 DMA 9840 levels. However, market bounced in the last one hour from vicinity of 50 DMA Support around 9778 levels. The Benchmark Index Nifty on 10th August experienced a forth day consecutive sell off and closed at 9820 after making a low of 9776. If Index sustain below its 3 week low of 9792 We might see Nifty to further fall at 9646 levels in near Term. The Significance levels for Nifty is 9930-9983 is Up side or 9750-9634 is Down side.
BANK NIFTY : - BankNifty opened at 24854 and closed at 24906 afetr making a low of 24844. The Index was up by 79 points from its previous close of 24827. Bank Nifty also made all time high in last week trading session of 25199 but closed below its psychological level of 25000 at 24827. Bank Nifty opened at 24942 and closed at 24600 after making a low of 24534 on Tuesday trading Session. The Index was down by 306 points from its previous close of 24906. Bank Nifty Wednesday corrected 225 points from its previous day’s closing and closed at 24375 after making a low of 24328.Federal Bank down by 3.56%, Axis Bank by 2.5%, ICICI Bank by 1.66% and Yes Bank by 1.25% were among the major losers in the Banking Index. Last week Lok Sabha has passed the Banking Regulation (Amendment) Bill, 2017 introduced last month to replace the existing ordinance promulgated in May this year to empower the Reserve Bank of India to deal with stressed assets. Reserve Bank of India cut the key interest rate by a quarter points to 6% as expected without changing its stance, saying that it would remain on guard as price pressures may return in the wake of a house rent allowance payout and the July 1 rollout of the goods and services tax. Time and Price Action Suggest that Bank Nifty need to Sustain over 24000 levels 24050 level for Any strength towards 24177-24309 levels, On the Other Side Sustaining below 24050 may drag the Index towards 23786-23578 in near Term.

NSE - WEEKLY NEWS LETTERS
? TOP NEWS OF THE WEEK

Government spending rises 27% to Rs 6.5 lakh crore in Q1 FY18: FM Arun Jaitley - The government's expenditure went up 27 per cent in April-June of the current fiscal to over Rs 6.50 lakh crore as a result of Budget advancement by a month, Finance Minister Arun Jaitley said today. In a written reply in the Rajya Sabha, he said the advancement of the Budget by a month to February 1 was intended to utilise the full working season, including the first quarter (April-June of 2017-18), to step up expenditure. Previously when the budget got approved in mid-May, the spending would start only in the second quarter. This year, the Budget was presented on February 1 and Parliament approved it before the start of the fiscal year on April 1. The total expenditure of the Union government during the first quarter is Rs 6,50,731 crore, which is 30.3 per cent of the amount budgeted for 2017-18 (Budget Estimate or BE) as against Rs 5,11,833 crore (25.9 per cent of BE 2016-17) for the corresponding period of the previous year, Jaitley said. The government had brought forward the Budget presentation to provide allocation to the departments from the first day of the new financial year, he said.

India is on right track, growth rate reflects it: Goldman CEO - Having deployed almost $3.5 billion over the last decade in the country, Goldman Sachs Group Inc will continue to grow its local franchise as an trusted advisor, financier and investor of India Inc, said Lloyd Blankfein. If you are willing to commit your own money, which we are, you command attention and it is helpful to attract other people’s money. It is one thing to recommend, but when your clients see you doing it, that is the sincerest form of advice you can give," the 62 year old chairman and chief executive of the Wall Street investment banking bell weather told ET during an exclusive interview that touched upon a wide swathe of topics ranging from Fed rates and outlook on global markets and commodities; the Trump administration, being on twitter and the need to review the stringent financial regulations in US to the growth pillars for India and its other emerging market contemporaries, especially from the BRICS nations. Sitting with his leg propped up on a coffee table in his 41st floor office, overlooking the Hudson River and Jersey City, Blankfien said he does not think India is an outlier any more. "If you told me five years ago that India was going to be outgrowing China consistently for a period of time, I would say that would have been a surprise to me then and less of a surprise to me now because I have seen it evolve that way," he said.


IMD forecasts heavy rainfall in southern India - India Meteorological Department forecasts heavy rainfall for the next two weeks in the rainfall deficient southern India, according to its recently posted press release dated August 3, 2017. Rainfall forecast for next two weeks: Due to north-south trough from Sub-Himalayan West Bengal to northeast Bay of Bengal at lower levels and likely formation of upper air cyclonic circulation over north Bay of Bengal and its west-north-westwards movement, fairly widespread to widespread rainfall activity likely to occur over Northeast and East India, Chhattisgarh, Uttar Pradesh, Uttarakhand and Himachal Pradesh during first week (03rd to 09th August) with heavy to very heavy falls on isolated places on many days of the first week. West Coast of India is also likely to receive fairly widespread to widespread rainfall activity during first week with isolated heavy rainfall on many days of the week over Coastal Karnataka and Kerala during the first week. Scattered to fairly widespread rainfall activity likely to occur over Madhya Pradesh and East Rajasthan during first half of the first week and increase in intensity during its second half. Light isolated to scattered rainfall activity likely to occur over rest parts of northwest India and south Peninsula during the first week. Detail of rainfall activity during first week. During second week (10 to 16 August), rainfall activity is likely to above normal over north-eastern states, Bihar and south Peninsular India and below normal over remaining parts of the country.

Reserve Bank of India dividend to government halves to Rs 30,659 crore - The demonetisation exercise has come with a cost to the government. The Reserve Bank of India will be transferring to the government only Rs 30,659 crore, less than half the amount- Rs 65876 crore it transferred to last year, implying lesser non-tax revenues to the government this year. The reduction in the transfer of surplus to the government could be due to a number of factors including higher cost of printing new currency notes and cost of managing excess liquidity generated from phasing out of Rs 500 and Rs 1000 notes, though it is difficult to identify exact reasons at this stage. Operational expenses in cost of printing new currency and the associated logistics of collecting old notes is likely to have gone up ” said Saugata Bhattacharya, chief economist at Axis Bank. ” The cost of sterilising the excess liquidity through MSS and reverse repos would also be significant. ( During the year) foreign currency reserves of RBI were fetching less returns because most of the foreign countries were giving negative returns or very low returns. Also, throughout the year the reverse repo has been high that means that RBI has to pay to banks. The whole of last year there was surplus liquidity and RBI had to pay more interest to the banks” said former RBI deputy governor R Gandhi.

Government capex to rise 25% to Rs 3.9 lakh crore in next 3 years - The total expenditure of the central government is likely to touch Rs 26 lakh crore in 2019-20, up from Rs 21.46 lakh crore estimated for the current fiscal, a finance ministry document said today. The Centre's capital expenditure is expected to rise 25 per cent to Rs 3.9 lakh crore in 2019-20, with defence outlay alone jumping 22 per cent, said the Medium-term Expenditure Framework Statement tabled in Parliament. Together with revenue expenditure, government's total spending is projected to rise from Rs 21.46 lakh crore in 2017-18 to Rs 23.4 lakh crore in the next financial year and Rs 25.95 lakh crore in 2019-20, it said. The capital expenditure is projected at Rs 3.09 lakh crore in the current fiscal and revenue expenditure at Rs 18.36 lakh crore, taking the total to Rs 21.46 lakh crore. The document, the ministry said, has set forth a three- year rolling target for the expenditure indicators with specification of underlying assumptions and risks involved. Defence, which accounts for about 30 per cent of the government's capital outlay, will see the spending rise from Rs 91,580 crore in the current fiscal to Rs 1,01,137 crore in the next one and Rs 1,11,706 crore in 2019-20.

How Asian countries are buying India's investment story - Record foreign direct investment flows into India now have a distinctly regional flavor. Seemingly drawn by Prime Minister Narendra Modi’s initiatives toward boosting local manufacturing, Asia’s richer neighborhoods have begun rivaling Anglo-American investors in building factories in the continent’s third-largest economy. The share of Asia in the total FDI has more than doubled in the past four financial years. It has averaged about 28% a year between FY14 and FY17, show data from Care Ratings. The 10 Asian countries included in the analysis are Singapore, South Korea, Hong Kong, China, Malaysia, Indonesia, Thailand, Philippines, Taiwan and Sri Lanka. This FDI is coming in to support India’s consumer demand for electronics,” said Rahul Shukla, Head of Corporate Bank, Citi South Asia. “Make in India is a big theme in electronics manufacturing today. We have a young, aspiring population that consumes electronics, and also jobs in this space are more aligned with the aspirations and capabilities of our vast talent pool. Our time has come to occupy the centre-stage globally in electronics manufacturing,” Shukla said.

Tax-GDP ratio to increase 30 bps for next two fiscals - The tax-GDP ratio will see an increase of 30 basis points each in 2018-19 and 2019-20 due to the impact of demonetisaion and the roll-out of the Goods and Services Tax , according to the Medium-Term Expenditure Framework Statement tabled in the Lok Sabha on Thursday. Going forward in the years 2018-19 and 2019-20, the gains from expansion of the tax base due to the introduction of GST and the increased surveillance post-demonetisation will ensure that tax-GDP ratio will increase by 30 bps in each of these fiscals," the report said. The tax-GDP ratios are projected to be 11.6 per cent of GDP in 2018-19 and 11.9 per cent of GDP in 2019-20. However, in the current fiscal, the tax-GDP ratio is expected to see no increase over that of 2016-17 and remain at 11.3 per cent, the report noted. "In other words, it is felt that any shocks to tax collections due to the introduction of GST will be absorbed in the current FY and, hence, the tax-GDP ratio will remain at the level of 2016-17," it said.


Tax-GDP ratio may rise to 11.9% due to GST, closer scrutiny: Government - The government expects the goods and services tax (GST) and increased surveillance to boost tax revenues over the next two years, taking India’s tax-to-GDP ratio close to 12% by FY20. The higher revenues are projected to push up capital spend of the government, bring down fiscal deficit to sustainable 3% of GDP and lower the revenue deficit to 1.4% of GDP by FY20. The medium-term expenditure framework released by the government on Thursday shows tax-to-GDP ratio rising 30 basis points each in FY19 and FY20 to 11.6% and 11.9% respectively. The government expects any shocks to tax collections due to the introduction of GST to be absorbed in the current fiscal. It said “going forward in the years 2018-19 and 2019-20, the gains from expansion of the tax base due to the introduction of GST and the increased surveillance post demonetisation will ensure that tax-GDP ratio will increase by 30 basis points in each of the above FYs in question”. Higher taxes will allow the government to spend more on creation of capital assets. The share of capital spending in total spending of Rs 26 lakh crore in FY20 is set to rise to 15%, compared with 14.4% in FY18 in a total spending of Rs 23.4 lakh crore. Ahead of the next general elections, welfare spending is also set to get a boost from the surge in tax revenues with spending on centrally sponsored schemes set to rise 23.6% in FY20 to Rs 5.67 lakh crore from Rs 4.59 lakh crore in FY18. Education and healthcare are the gainers. Pradhan Mantri Awas Yojna will also get bigger support towards the housing for all initiative.

? TOP ECONOMY NEWS
Direct tax collections jumped 19 per cent in the first four months of the current fiscal as demonetisation of higher denomination currency brought in more number of individuals in tax net. Collections of direct taxes, which are made up of personal and corporate taxes, soared to Rs 1.90 lakh crore in April-July, an official statement said here.

Indian telecom market is expected to cross the Rs 6.6 trillion revenue mark by the year 2020, Minister of Communication Manoj Sinha said adding that by the end of 2016 the number of internet subscribers in India was 391.50 million making India globally the second highest in terms of internet users.

Indian markets are flooded with cheap products from China directly affecting the profitability of the domestic industry. The issue got highlighted when the big players in the Indian tyre industry requested Indian government to impose anti-dumping duty on import of Chinese truck and radial tyres. As a result, the government imposed anti-dumping duty on 93 products on Wednesday. "Anti-dumping duty is in force on 93 products concerning imports from China," said Commerce and Industry Minister Nirmala Sitharaman in a written reply to Rajya Sabha.



Agriculture export of India decreased to USD 33.87 billion in 2016-17 against USD 43.23 billion in 2013-14, Parliament was informed on Wednesday. The reason behind the downfall in agricultural export was the lower commodity prices in the international market, which has made the exports uncompetitive, said by Nirmala Sitharaman Commerce and Industry Minister in the Rajya Sabha.

Trading in about a dozen shell companies are may resume in a week’s time, reported a leading business daily quoting government officials. The ministry said that it has taken actions against some companies that saw a jump in trade during the demonetisation drive. Ministry Of Corporate Affairs had identified 311 entities as shell companies that were violating Income Tax rules.

India’s current account deficit stands at USD 3.4 billion (0.6% of GDP) in Q4 of 2016-17 which was higher than USD 0.3 billion (0.1% of GDP) in Q4 of 2015-16 but narrowed from USD 8.0 billion (1.4% of GDP) in the preceding quarter. For 2016-17 full year, the current account deficit narrowed down to 0.7% of GDP from 1.1% of GDP in 2015-16.

The Reserve Bank of India has said that it was unsatisfied with the MCLR as the banks are not passing on the entire benefit of its rate cuts, reported a national news agency. RBI also stated that it is considering a new market-linked benchmark to ensure a better transmission. The central bank reiterated that there was more scope for banks to lower lending rates in certain segments.

India's new Goods and Services Tax, introduced in July, has impacted the country's services sector. The Nikkei India Services Purchasing Managers' Index fell to 45.9 in July, the lowest reading since September 2013. June's figure was 53.1. Almost 23% of survey participants reported lower output, which they commonly associated with falling new orders and the introduction of the GST.

The direct tax collections continued to register steady growth during the Current Financial Year 2017-18. Direct Tax collection during the said period, net of refunds, stood at Rs 1.90 lakh crore which is 19.1% higher than the net collections for the corresponding period of last year, said a government release on Wednesday. This collection is 19.5% of the total Budget Estimates of Direct Taxes for the Financial Year 2017-18, it noted.

? TOP CORPORATE NEWS -
NMDC's Q1FY18 standalone results for the quarter registered a beat on street estimates. Revenue for the quarter came in 6 % higher than the estimated figure of Rs. 2680 crore. EBITDA for the quarter came in 20 % higher than the estimated figure of Rs. 1246 crore. And lastly, net profit for the quarter came in 10.2 % higher than the estimated figure of Rs. 879 crore. NMDC standalone revenue for the quarter came in at Rs. 2841.5 crore, registering 65.1% yoy increase. This was primarily driven by higher revenues from iron ore segment by 6.8% to Rs.2818.

JSW Steel reported its July production data for Crude steel on Wednesday. The company’s crude steel production for the month of July came in at 12.78 lakh tonnes, a slip of 4% on YoY basis. Rolled products production stood at 9.74 lakh tonnes, a jump of 2% on YoY basis. Rolled products production stood at 2.17 lakh tonnes, a slip of 28% on YoY basis.

Crompton Greaves Consumer Electricals has offered to pay nearly Rs 1,440 crore to buy Kenstar from Videocon Group, reported a leading business daily. The deal hinges on a 'sustainable sales guarantee' clause that private equity-backed Crompton Greaves Consumer wants to include in the final agreement. This clause ensures that the sales numbers of Kenstar quoted by Videocon do not deviate drastically in the near future from what has been stated. The transaction will be a leveraged buyout.

Unichem Laboratories Ltd. reported its Q1FY18 results today. Its standalone revenue for the quarter came in at Rs. 314.1 crores, registering a 8.1 YoY decline. This was primarily driven by a decline in revenue from domestic formulations by 23%. EBITDA loss for the quarter stood at 0.23 crores vs EBITDA profit of Rs. 35.4 crore in Q1FY17. The EBITDA margin stood at -0.1%. This was due to 26% yoy increase in cost of raw material which stood at Rs. 111.5 crore. The PAT for the quarter came in at Rs. 1.5 crores, a yoy decline of 94.2%. PAT for Q1FY17 stood at Rs 25.7 crore.

Tata Steel's Q1FY18 consolidated results for the quarter came in mixed versus street estimates. Revenue for the quarter came in 7.2% higher than the estimated figure of Rs. 28902 crore. EBITDA for the quarter came in 18.4% higher than the estimated figure of Rs. 4200 crore. However, net profit for the quarter came in 16.3% lower than the estimated figure of Rs. 1100 crore. Tata Steel consolidated revenue for the quarter came in at Rs. 30973 crore, registering 19.6% yoy increase. This was primarily driven by ~40% yoy growth in Tata steel’s India business.

Zydus Cadila has received the final approval from the USFDA to market Diltiazem Hydrochloride extended-release capsules USP in strengths of 120 mg, 180 mg, 240 mg, 300 mg and 360 mg. The drug is used in the treatment of hypertension, angina and certain heart rhythm disorders. It will be produced at the group’s formulation manufacturing facility at the Pharma SEZ in Ahmedabad.

Tata Chemicals consolidated revenue for the quarter came in at Rs. 2649 crore, registering 19.6% yoy decline. This was mainly on account of substantial dip in the revenue of fertiliser segment to ~Rs. 97 crore vs Rs. 404 crore in Q1FY17. In addition, the revenue from inorganic chemicals and other agri inputs declined by 7%, and 17% yoy respectively. EBITDA for the quarter fell by 22.6% yoy to Rs. 450 crore with a corresponding margin contraction of 64 bps. EBITDA margin for the quarter stood at 17%.

Whirlpool of India standalone revenue for the quarter came in at Rs. 1618 crore, registering 15% yoy increase. EBITDA for the quarter rose by 10.8% yoy to Rs. 211 crore with a corresponding margin contraction of 50 bps. EBITDA margin for the quarter stood at 13%. The PAT for the quarter came in at Rs. 133 crore, yoy increase of 8.8%.

Britannia Industries Ltd's Q1FY18 consolidated results for the quarter registered a beat on street estimates. Revenue for the quarter came in 2 % higher than the estimated figure of Rs. 2255 crore. EBITDA for the quarter came in 10.6 % higher than the estimated figure of Rs. 292 crore. And lastly, net profit for the quarter came in 3.4 % higher than the estimated figure of Rs. 209 crore. Britannia Industries Ltd consolidated revenue for the quarter came in at Rs. 2300.9 crore, registering 6.4% yoy increase.

For the third time in two months, The Indian Hume Pipe Company has received orders. After securing an order of Rs 183.64 crore from the Tamil Nadu supply and drainage board, Coimbatore in June & 163.5 crore order from Raipur Municipal corporation in July, it has now bagged an order of Rs 257.44 crore from Madhya Pradesh Urban Development Company for improvement of water supply in Jabalpur and Damoh district in Madhya Pradesh including operation and maintenance for the period 10 years.

Hindustan Construction Company was awarded a contract worth Rs 763.57 crore by the Indira Gandhi Centre for Atomic Research for the construction of Fast Reactor Fuel Cycle facility at Kalpakkam.

Larsen & Toubro, a multinational conglomerate, has been awarded with Rs 1,050 crore contracts for electrification of 781-km rail tracks from the Indian Railways. This is Indian Railway’s first engineering, procurement and construction contract under its Mission Electrification.

MRF LIMITED Q1FY18 standalone results for the quarter registered a miss versus consensus estimates. Revenue for the quarter came in 16.4 % higher than the estimated figure of Rs. 3412 crore. EBITDA for the quarter came in 35.8 % lower than the estimated figure of Rs. 428 crore. And lastly, net profit for the quarter came in 44.6 % lower than the estimated figure of Rs. 191.5 crore. MRF Ltd. standalone revenue for the quarter came in at Rs. 3971 crore, registering 2.3% yoy increase.

Hindustan Petroleum Corporation Limited Q1FY18 standalone results missed consensus estimates on bottom line. Revenue for the quarter came in 16.5% higher than the estimated figure of Rs. 51463 crore. EBITDA for the quarter came in 25.2% lower than the estimated figure of Rs. 2177 crore. And lastly, net profit for the quarter came in 16.8% lower than the estimated figure of Rs. 1110.9 crore. Hindustan Petroleum Corporation Limited standalone revenue for the quarter came in at Rs. 59,974.9 crore, registering 16.1% yoy increase.

Dabur India Q1FY18 consolidated results for the quarter registered a miss versus street estimates. Revenue for the quarter came in 3.6% lower than the estimated figure of Rs. 1856 crore. EBITDA for the quarter came in 6.1% lower than the estimated figure of Rs. 329 crore. However, net profit for the quarter came in 2.1% higher than the estimated figure of Rs. 271 crore.

Mahindra & Mahindra Limited Q1FY18 standalone results for the quarter were a mixed against the street estimates. Revenue for the quarter came in 10.5 % higher than the estimated figure of Rs. 11168 crore. EBITDA for the quarter came in 2.4% higher than the estimated figure of Rs. 1573 crore. However, net profit for the quarter came in 21.1 % lower than the estimated figure of Rs. 971 crore.Mahindra & Mahindra standalone revenue for the quarter came in at Rs. 12335.5 crore, registering a 3.3% yoy increase. This is due to a 13% increase in revenue from its farm equipment segment to Rs. 4321 crore.


Punj Lloyd has won an EPC railway contract of worth Rs 478 crore for 108.75 km of doubling work between Phulera- Degana in Rajasthan. The scope of work entails composite works of construction of second railway line with civil infrastructure work, track work, signalling and telecommunication work. The project site falls between Jaipur-Jodhpur section. The group’s order backlog stands at Rs 10,845 crore and it has executed orders of Rs 6,845 crore in Libya.

Gujarat Gas standalone revenue for the quarter came in at Rs. 1516 crore, registering 20.3% yoy increase. EBITDA for the quarter rose by 23.4% yoy to Rs. 269 crore with a corresponding margin expansion of 44 bps. EBITDA margin for the quarter stood at 17.7%. The PAT for the quarter came in at Rs. 104 crore, yoy increase of 39%.


GAIL standalone revenue for the quarter came in at Rs. 11570 crore, registering 6.8% yoy increase. This was primarily partly aided by rise in revenues from natural gas segment by 2.2% yoy to Rs.8520 crore. EBITDA for the quarter rose by 19.2% yoy to Rs. 1899 crore with a corresponding margin expansion of 169 bps. EBITDA margin for the quarter stood at 16.4%. The PAT for the quarter came in at Rs. 1025 crore, yoy increase of 21%. This was due to lower interest expenses by 43% yoy to Rs.101 crore in Q1FY18 vs Rs.177 crore in Q1FY17. This came in after adjusting one time gain in previous year corresponding quarter.

Union Bank of India Q1FY18 results registered a miss on street estimates. The NII for the quarter came in 3.5% below the estimated figure of Rs.2323 crore. And lastly, Net profit for the quarter also came in 5.9% below the street estimates of Rs.125 crore. NII for the quarter rose by 6.7% yoy to Rs.2242 crore vs Rs.2102 crore in corresponding quarter previous year. This was largely due to 3.5% yoy increase in interest earned to Rs.8153 crore. In addition, advances for the quarter also rose moderately by 8.3% yoy.



? TOP BANKING AND FINANCIAL NEWS OF THE WEEK
Dr Y V Reddy as Reserve Bank of India governor had many run-ins with the government. One such prominent event was when he articulated the usefulness of Tobin Tax to temper overseas fund flows. In an unprecedented move, the then Finance Minister, P Chidambaram, forced the governor to recall his speech and clarify that no such proposal was on the horizon. That was January 12, 2005. The flow of US dollars fuelled asset prices across the board – from real estate, to stocks, to commodities, to precious metals. That lulled corporates into believing easy money is forever. When the tide turned those with dollar liabilities were whipsawed.


Banks with operations in India witnessed a significant rise in non-performing assets during the first half of 2017, according to a survey released today. The Ficci-IBA survey carried out for January-June revealed that NPAs in public sector banks shot up considerably, with 91 per cent respondents from public sector banks reporting an increase. Twenty public, private and foreign banks participated in the survey, which together represent 64 per cent of the banking industry, as classified by asset size. Meanwhile, 71 per cent private and 50 per cent foreign bank respondents stated that their bad loans have increased during January-June.


In what seems to be more trouble brewing for real estate developer HDIL, state-run lender Bank of India has recalled a Rs 306-crore loan given to HDILBSE 3.12 % subsidiary Privilege Power and Infrastructure. This comes after Union Bank dragged group firm Guruashish Construction to the National Company Law Tribunal (NCLT). Bank officials speaking to ET on the condition of anonymity said that while the notice has been served, they were awaiting a repayment proposal from the developer.“No offer for one-time settlement has been received,“ a Bank of India official said.


The finance ministry is expected to initiate the process of consolidation of public sector banks once the first quarter results of the current fiscal have been announced, a senior official has said. There are various things including financial performance which have to be looked at before a merger decision is taken, said the official at the ministry.


Bank of India may have just turned around and is planning to raise Rs 8,000 crore in capital to be ready to buy a bank as and when the government sets in motion the consolidation process. The bank reported a net profit for the June quarter and said its accretion of bad loans also slowed. Its chief executive Dinabandhu Mohapatra said the recovery may gather pace in coming quarters unless there is an external environment induced surprise. "Bank is poised for growth from here onwards if there are no big surprises," Mohapatra told reporters.

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