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Wednesday, August 01, 2018

Wall St gains

The escalating trade dispute between the two countries, with the United States and China imposing tariffs on $34 billion of each other's goods earlier this month, has weighed heavily on the equity markets. The likelihood of a respite in the tensions boosted the markets on Tuesday, with nine of the 11 major S&P sectors higher 

US stocks rose on Tuesday as technology stocks rebounded and a report said the United States and China were trying to restart negotiations to defuse a trade war between world's two largest economies. 
The S&P index recorded nine new 52-week highs and one new low, while the Nasdaq recorded 13 new highs and 36 new lows

Thursday, March 08, 2018

Celebrate Women's day with McDonald's

In the history of McDonald's, its the first time the company has flipped its 'golden arches' logo to show a 'W' in honor of International Women's Day.
Wendy Lewis, the company's global chief  diversity officer said that The move was intended to honor the extraordinary accomplishments of women everywhere and especially in there own restaurants.
More than 62 percent of McDonalds employees are women and six out of ten are restaurant managers.

Wednesday, January 10, 2018

Some throwback to equity market... Yesteryear

Equity Market Update

After a flattish 2016, Indian equity markets were up 28% and closed on a record high in 2017. Global equity markets also fared well in 2017. Successful implementation of GST, recapitalization of PSU banks, Moody’s upgrade of India’s sovereign rating to Baa2 from Baa3 were key events. Globally, geopolitical tensions, rising commodity prices especially crude, US rate hike thrice in a year etc. made news.

A summary of key developments of 2017 is as follows:
  • Successful implementation of GST
  • Moody’s upgrade of India’s sovereign rating to Baa2 from Baa3
  • India’s ranking moving up 30 notches to 100 in the World Bank’s ease of doing business survey for 2018
  • Bounce back of real GDP growth to 6.3% in 2QFY18 after falling to 5.7% in 1QFY18 post demonetization
  • Progress on cases referred to National Company Law Tribunal (NCLT) on track. Steel, that accounts for 20-25% of Gross Non-Performing Assets (GNPA), has high interest from bidders under NCLT process
  • Real Estate (Regulation and Development) Act, 2016 (RERA) implemented
  • Announcement of recapitalization of PSU banks
  • Announcement of Bharatmala scheme, Saubhagya scheme etc
  • US Federal Reserve raised the federal funds rate thrice in 2017
Key Highlights of markets:
  • Flows remained strong with FIIs and DIIs investing US$7.7 bn and US$13.9 bn in CY2017 respectively
  • Record money raised through IPOs, QIPs, rights issue, etc
  • Emerging markets outperformed most developed markets
During the year 2017, key commodities moved upwards. Crude was up ~14% and steel, zinc aluminum, copper, lead were up 15-35%.

Economic & Equity market outlook – Growth should accelerate, earnings outlook to improve
  • Most economic indicators are healthy and economy is in good shape
  • Capex in roads, railways, power T&D has seen material improvement
  • Capex in Housing, urban infrastructure and defence should now improve
  • Industrial capex is likely to recover within a year led by metals, fertilizers etc
  • Economic growth should improve from current levels as impact of demonetisation and GST is behind
  • Earnings outlook is improving with improvement in operating margins, lower interest rates, peaking NPAs and higher metal prices
  • Steel that accounts for 20-25% of GNPA has high interest from bidders under NCLT process; Conclusion of this process would positively impact banks, private capex and steel
Equity markets have lagged nominal GDP growth and are consequently at attractive market cap to GDP ratio. In P/E terms too, markets are trading near 17.5x CY18 (e) and 14.5x CY19 (e) (Source: Bloomberg Consensus), which are reasonable, especially given the low interest rates.

Debt Market Update

The calendar year 2017 has been a difficult year for the Indian debt market. The key macroeconomic events during the year were implementation of GST (goods & services tax), Rs 2.11 lac crores recapitalization plan for public sector banks, 25bps rate cut by the RBI, upgrade of sovereign credit rating by Moody’s, and three rate hikes by the US Fed.

The yield on 10-year benchmark ended the year at 7.33%, up by 88 bps for the calendar year 2017. The yield on 10-year AAA-rated Corporate Bonds ended the year at 7.86% as against 7.46% at the end of 2016. Thus, corporate bond spreads ended the year at 40 bps as against 91 bps at the beginning of the year.

The huge surplus of liquidity built up post demonetization reduced substantially during the year 2017. As against ~Rs2.25 lac crs of surplus liquidity absorbed by RBI at the beginning of the year 2017, about Rs.25 thousand crs of liquidity was injected by RBI at the end of year 2017. The overnight rate ended the year at 6.20% as against 6.25% as at end of 2016.

INR appreciated by ~ 6% during the calendar year 2017 to close at 63.87 versus the USD in Dec’17 as against 67.92 in December 2016. FIIs have purchased close to US$ 30.61 billion in Indian debt and equity markets in calendar year 2017 as compared to outflow of ~US$ -3.19 billion during calendar year 2016.

The average retail inflation CPI during calendar year 2017 was 3.16% as against 4.94% during calendar year 2016. CPI inflation began the year at 3.17% and bottomed out in Jun’17 at 1.46%. Since then CPI has increased to 4.88% YoY in Nov’17. Core CPI (excl. transport & communication, food & fuel) ranged between 4% to 5.25% during calendar year 2017.

During the second half of the calendar year 2017, G-Sec yields moved higher due to concerns arising over fear of fiscal slippage, rising international crude oil prices, higher US bond yields and OMO (open market operation) sales by RBI.

The government announced additional borrowings of Rs73,000 crs (Rs50,000 crs through dated securities and Rs 23,000 crs of T-bills) by Mar’18 which confirmed market fears of fiscal slippage. Consequently, the 10-year benchmark yield moved up sharply and ended the month at 7.33%, higher by 27bps over the previous month end.


The forthcoming Union Budget and next credit policy review are key events to watch out for. In our view the likely firming up of inflation in the near term, uncertainty associated with GST collections, next year’s fiscal deficit target as well as the rise in crude oil prices, will keep RBI on pause mode for the remaining part of this fiscal year.

Source for various data points: Bloomberg and Reuters.

Tuesday, January 02, 2018

3% gain post strong December sales - Tata Motors

Image result for tatamotorsIn December 2017, passenger vehicles sales grew by 31 percent to 14,180 units in December 2017, against 10,827 units sold in year-ago. 

Tata Motors shares on 3 percent gain in intraday Tuesday following strong sales data across segments in last month of passing year.
"The commercial and passenger vehicles domestic sales in December 2017 was at 54,627 units as against 35,825 units in December 2016, a growth of 52 percent, due to increasing demand for vehicles across segments, new product launches and strategic customer initiatives," the company said in its filing.
Commercial vehicles domestic sales during the month increased 62 percent to 40,447 units YoY, led by steady production ramp-up of new range of BS4 vehicles. The medium & heavy commercial vehicle trucks segment registered a record 83 percent growth while light and intermediate commercial vehicles sales goes up by 78 percent, it said. In December 2017, passenger vehicles sales grew by 31 percent to 14,180 units in December 2017, against 10,827 units sold in year-ago.
Strong performance of Tiago, Tigor, Hexa and Nexon have led the growth momentum, Tata Motors said.
Commercial vehicles sales from exports increased 26 percent year-on-year to 6,044 units in December 2017.
At 12:29 hours IST, the stock price was quoting at Rs 438.00, up Rs 12.60, or 2.96 percent on the BSE.

Wednesday, November 29, 2017

Bitcoin crossed $10000

crossed $10000 on smaller exchanges such as the CEX.IO, and the crypto-currency index long before it hit the milestone on BitStamp.
Sceptics say it is a classic speculative bubble with no relation to the real financial market activity or the economy, most famously JPMorgan boss Jamie Simon who labelled it a fraud.

Friday, August 04, 2017

Canara Bank gearing up for Singapore Stock Exchange

State-run Canara Bank is in the international bond market with a $400 million issue as part of its $2 billion medium-term note programme.
Canara Bank is in the international debt market with a benchmark dollar bond issue that will have a tenor of five years. The lender is likely to raise $400 million through the bond sale issue, which will be drawn through its London branch and will be listed on the Singapore Stock Exchange,” 

Thursday, August 03, 2017

Choose Debt fund wisely

The Reserve Bank of India (RBI) had cut the repo rate by 0.25 percent, in its third bi-monthly monetary review for the financial year 2017-18, on August 2, 2017. 

The move is surely going to depress the retirees and other investors who rely heavily on the fixed income products such as bank fixed deposits. The bank FD rates are already lying low and in all probability will come down further.

The option one can opt is debt fund.
For a retiree, building up a portfolio to meet regular income needs requires careful attention. Safety, liquidity and post-tax return have to be kept in mind. Bank FD can be between 10%-15% of their portfolio for immediate liquidity requirement and debt mutual fund should be around 75%-80% of their portfolio, 
* Basic rule one needs to follow is, not to withdraw from debt mutual funds until the holding period of more than 3 years is completed in order to make it tax efficient. 

* For the income for the initial 3 years, required funds should be parked in Liquid and arbitrage funds, which are a better option compared to saving account and a systematic withdrawal plan should be setup from it. 

*Income for 4th year onwards will come from debt mutual funds through systematic withdrawal

Monday, July 24, 2017

Reliance: After Bonus just wait and watch

Reliance's past history have shown the stock to correct itself after a bonus but this time, RIL has left its investors yearning for more.
Market analyst are of the opinion that there is lot more left on RIL platter, which has gained over 46 percent since the beginning of this year.
Multiple factors that are leading to this optimism- Reliance's strong showing during the first quarter of this year led by the core segments and the fact that most of its big (profitable) investments are complete and have already started yielding results.
Its consumer business is expected to grow in importance and would mark a major shift.