A ‘mother of bull run’ is being predicted for the Indian stock markets, which will start early next year and last till 2024-25.
Phillip Capital said in a report that one can expect the mother of bull run to start tentatively by early 2021 (H1CY21).
A similar trend was seen in 2009 when the Nifty50 index traded in an uptrend after making a low at 2,539 levels. “Although the rally was not one-sided with index forming its own peaks and troughs, the general trend continued to be bullish,” the report said.
Phillip Capital said the Covid candle (of March quarter) was re-traced in three candles. This indicated the strength of the bulls in the market and the bullish trend that is expected to continue. The mid-caps and small-caps have also started to outperform the large-caps, which is a strong pre-requisite for any bull run.
The broader markets have outperformed the benchmarks in terms of returns.
Philip Capital said that the mother of bull run will start with Nifty50 levels at 13,200-13,500. Tentatively, this could take place early CY21 and will last till 2024-25. “One can keep a conservative scenario at 17,000-17,500 Nifty levels, and the best-case scenario at 22,000-24,000,” the report said.
Despite recent news on vaccine development, Powell cautioned that significant downside risks for the economy remain, as widespread vaccination is still months away even in the best case…reports Asian Lite News
US Federal Reserve Chairman Jerome Powell renewed his call for Congress to roll out more fiscal support, as the country faces a challenging economic outlook amid surging COVID-19 cases.
Fiscal policy, which includes taxing and spending, can provide “direct, targeted income support” for groups that really need it, Powell said on Tuesday at the virtually held Bay Area Council Business Hall of Fame awards ceremony, Xinhua news agency reported on Wednesday.
“There hasn’t been a bigger need for it in a long time,” said the Fed chief, adding that it’s “essential” for Congress to pass another coronavirus relief package as soon as possible.
Despite recent news on vaccine development, Powell cautioned that significant downside risks for the economy remain, as widespread vaccination is still months away even in the best case.
“The vaccine news is certainly good news, particularly in the medium term,” Powell said, while noting that in the near term, “there are significant challenges and uncertainty.”
Confirmed COVID-19 cases are skyrocketing across the United States, with over 1 million new cases reported in the last seven days, according to data updated Tuesday by the Centers for Disease Control and Prevention (CDC). The total number of cases in the country surpassed 11 million.
At least 45 states have reported more new infections last week compared with the previous week, according to the Johns Hopkins University tally. In response to surging infections, governors across the country have reinstated restrictive measures to curb the spread of the virus.
Meanwhile, Democratic and Republican lawmakers have been deadlocked for months over the size and scope of the next round of fiscal support.
The Democrats-controlled House of Representatives in early October passed a US $2.2 trillion relief bill. Some Senate Republicans, however, insisted on a relief package below US $1 trillion, and want to advance a US $500 billion bill.
US Democratic leaders on Tuesday asked Senate Majority Leader Mitch McConnell to restart negotiations on a new COVID-19 relief package this week as confirmed cases are surging across the country.
“The COVID-19 pandemic and economic recession will not end without our help. It is essential that this bill have sufficient funding and delivers meaningful relief to the many Americans who are suffering,” House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer wrote in a letter to McConnell.
McConnel said earlier Tuesday that Senate Republicans still want to pass more coronavirus relief for the American people, while denouncing Democrats’ relief proposal as “unrealistic and poorly-targeted.”
A. Sakthivel, Apparel Export Promotion Council (AEPC) Chairman
Apparel Export Promotion Council (AEPC) Chairman A. Sakthivel, has urged the government to strike a pre-FTA preferential trade deal to remove the tariff disadvantage faced by Indian apparels in the UK.
In a letter to Commerce and Industry Minister Piyush Goyal, the APEC Chairman wrote: “It has been learnt that after the implementation of Brexit in January 2021, 47 Least Developed Countries (LDCs), including Bangladesh will continue to enjoy preferential trade benefits after the UK’s departure from the EU. This will be a continuation of the disadvantage to Indian apparels in the important and potential market of the UK.”
Noting that India has been losing out to its competitors in the UK, the industry body has requested the government to initiate discussions for an early trade pact for apparels in the run-up to FTA.
The AEPC had earlier requested to fast-track the negotiations to enter into a Free Trade Agreement (FTA) with the UK to boost apparel exports.
The Chairman said that the apparel exports to the UK, which is India’s third largest export destination after the US and the UAE, have been facing a tariff disadvantage of 9.6 per cent as against countries like Bangladesh due to the EU’s Generalised Scheme of Preferences (GSP), which the UK plans to continue offering to the 47 LDCs.
“It’s not a matter of LDCs. The point is that Bangladesh is equally competitive now and their exports have grown at 11.7 per cent CAGR during 2009-18, when our exports stagnated at 0.5 per cent,” he said.
Sakthivel added that Bangladesh exported apparels worth $40.4 billion whereas India exported apparels worth $16.5 billion in 2019.
“It’s a labour intensive sector and we need to ask for a special consideration in our bilateral relations with the UK.”
According to the exporters’ body, India’s readymade garments exports to the UK fell 0.8 per cent to $1,606 million in 2019 from $1,619 million in 2018, reducing the UK’s share in India’s exports to 9.7 per cent from 10.3 per cent.
The shareholders of the 94-year-old Lakshmi Vilas Bank (LVB) may not be getting anything as per the Reserve Bank of India’s (RBI) draft scheme for its amalgamation with DBS Bank India.
The draft scheme also states the employees of the LVB will become the employees of the DBS Bank and the latter can discontinue the services of key managerial personnel of the former following due procedure after the appointed date.
On Tuesday, the RBI announced its decision to amalgamate the LVB with the DBS Bank India.
It also placed the LVB on moratorium for 30 days and superseded its Board, owing to serious deterioration in the lender’s financial position. T.N. Manoharan, a former Non-Executive Chairman of Canara Bank, has been appointed as the Administrator of the bank.
As per the draft amalgamation scheme, the RBI has said on and from the appointed date, the entire amount of the paid-up share capital and reserves and surplus, including the balances in the share/securities premium account of the transferor bank (LVB), shall stand written off.
On and from the appointed date, the transferor bank shall cease to exist by operation of the scheme, and its shares or debentures listed in any stock exchange shall stand delisted without any further action from the transferor bank, transferee bank (DBS Bank India) or order from any authority.
As regards LVB employees, they will continue in service and be deemed to have been appointed in the DBS Bank India at the same remuneration and on the same terms and conditions of service, as were applicable to such employees immediately before the close of business on November 17.
However, the RBI scheme also provides for DBS Bank India to discontinue the services of key managerial personnel of LVB after following the due procedure at any time, after the appointed date, as it deems necessary and providing them compensation as per the terms of their employment.
Similarly, DBS Bank India shall have the option of merging LVB branches according to its convenience and may close down or shift the existing branches as per the extant instructions issued by the RBI. It was following an application submitted by the Reserve Bank of India (RBI), the Central government on Tuesday brought Lakshmi Vilas Bank under moratorium for 30 days, restricting withdrawals to Rs 25,000.
The Centre issued the moratorium notification under Section 45 (2) of the Banking Regulation Act, 1949. The moratorium came into effect from 6 p.m. on Tuesday and will be in place up to December 16, 2020.
The bad loan scenario in Indian banks has improved as the net non-performing loans (NPL) are at a six-year-low.
According to a report by Kotak Institutional Equities, net NPLs for banks are now closer to FY2014 levels.
“Impairment ratios showed further improvement with gross NPLs declining 40 bps qoq to 6.7 per cent (30 bps decline qoq to 8.5 per cent for public banks and 40 bps decline qoq to 3.9 per cent for private banks). Net NPLs declined 36 per cent yoy and 15 per cent qoq to 2 per cent of loans with most of the decline seen for public banks,” it said.
It further said that the improvement is less relevant in the context of the Supreme Court ruling, which has prevented banks from recognizing fresh bad loans leading to negligible slippages while there was improvement in recovery and higher write-offs.
It said that banks under its coverage delivered 75 per cent yoy earnings growth with modest revenue growth (7 per cent yoy) but aided by flat provisions. Revenue growth had tailwinds from decline in cost of funds (NII up 16 per cent yoy).
“Sequentially, we saw a sharp recovery in business activity reflected by better fee income trends and reversal in operating expenses. Unlike the previous few quarters, Covid provisions were restricted to a few banks,” the report said.
It also said that NBFCs surprised with better-than-expected core earnings reflecting an unprecedented combination of high moratorium, improving disbursements, decline in cost of funds and strong expense management.
“Significantly improving collection efficiency data has excited the Street even as this will be put to test over the next two quarters. In the interim, strong new business momentum, high ECL buffer and access to funding provide comfort,” it said.
The Reserve Bank of India (RBI) has appointed Infosys co-founder Senapathy (Kris) Gopalakrishnan as Chairperson of the RBI Innovation Hub (RBIH).
The RBI in its Monetary Policy Statement on Development and Regulatory Policies dated August 6, 2020, had announced that it will set up the RBIH to promote innovation across the financial sector by leveraging on technology and creating an environment which would facilitate and foster innovation.
In a statement, RBI said that innovation hub would be guided and managed by a Governing Council (GC) led by a Chairperson.
“The Reserve Bank has appointed Senapathy (Kris) Gopalakrishnan, co-founder and former co-Chairman of Infosys, as the first Chairperson of the RBIH.”
Gopalakrishnan is currently the Chief Mentor of Start-up Village, an incubation hub for start-ups.
The other members of the Governing Council include Ashok Jhunjhunwala, Institute Professor, IIT, Madras; H Krishnamurthy, Principal Research Scientist, IISc, Bengaluru; Gopal Srinivasan, CMD, TVS Capital Funds; and AP Hota, former CEO, National Payments Corporation of India.
The CEO of the innovation hub has not been appointed yet.
The RBIH shall create an eco-system that would focus on promoting access to financial services and products. This would also promote financial inclusion, as per the announcement.
The hub will collaborate with financial sector institutions, technology industry and academic institutions and coordinate efforts for exchange of ideas and development of prototypes related to financial innovations.
It would develop internal infrastructure to promote fintech research and facilitate engagement with innovators and start-ups.
India’s Department for Promotion of Industry and Internal Trade, DPIIT, has notified the opening up in more sectors for foreign direct investment. These sectors are single-brand retail trading, contract manufacturing and coal mining.
The DPIIT also stated that 26 per cent foreign direct investment will be allowed in digital media. Such investment in print media is already capped at 26 per cent and in TV news at 49 per cent. All these decisions are aimed at increasing economic growth, which has been affected by the COVID-19 pandemic.
Foreign entities can now invest up to 100 per cent in the coal industry for mining and sale of coal under the automatic route. They will also be entitled to carry out processing infrastructure operations such as coal washery, crushing, coal handling, and separation of magnetic and non-magnetic coal.
Full 100 per cent foreign direct investment is henceforth permitted for contract manufacturing, a DPIIT notification said.
Foreign entities intending to engage in single brand retail trading in India may do so through e-commerce prior to opening of their own stores, provided the company opens brick and mortar stores within two years from date of starting such online retail.
Shares of the state-run petroleum major Bharat Petroleum Corp. Ltd. (BPCL) fell nearly five per cent a day after the deadline for submitting bids for the strategic sale of the company ended.
Investor sentiments dampened as major energy giants including Reliance Industries, Saudi Aramco, BP gave the bidding process a miss and did not submit Expressions of Interest for the 52.98 per cent of the stake on sale.
Shares of BPCL on the BSE plunged 4.9 per cent to touch an intra-day low of Rs 392.35 per share.
At 10.54 a.m., it was at Rs 397.70, lower by 3.63 per cent from its previous close.
The government on Monday said that multiple EoIs have been received for divestment of Centre’s stake in the company.
Sources, however, said that several global players did not pitch in for the stake sale. Total and Russia’s Rosneft also did not bid for the stake sale.
The lack of interest among the major players comes on the back of the poor oil demand globally amid the pandemic and low oil prices.
The transaction will now move to the second stage after scrutiny by the transaction adviser, said a tweet from the Twitter handle of the Secretary of the Department of Investment and Public Asset Management (DIPAM).
“For strategic disinvestment of BPCL, multiple expressions of interest have been received by the Transaction Advisor. The Transaction will move to the second stage after scrutiny by TA,” it said.
Finance Minister Nirmala Sitharaman also said that the BPCL disinvestment process is making progress.
“Strategic disinvestment of BPCL progresses: Now moves to the second stage after multiple expressions of interest have been received,” she said in a tweet.
Sources said that 3-4 four bids have come in for the oil giant.
As the deadline for submitting the EoIs for privatisation of BPCL closed on Monday and there has so far been a buzz of mixed interest amongst the bidders.
RIL and Abu Dhabi National Oil Company (ADNOC) were anticipated to submit their bids. While RIL has not put in a bid as per sources, it could not be ascertained whether ADNOC has gone ahead with a bid.
ADNOC already has footprint in India as it is the only overseas company that has crude stored in Indian caverns.
The lack of interest among major players comes on the back of the poor oil demand globally amid the pandemic and low oil prices.
The EoIs came on Monday after four extensions of the deadline for submission of bids.
The Centre has put its entre 52.98 per cent stake in the BPCL on the block.
Civil Aviation Minister Hardeep Singh Puri has exuded confidence that air travel will reach pre-Covid level by the end of current year or early next year.
Addressing the ‘Deccan Dialogue’ organised by Indian School of Business (ISB) in collaboration with the Ministry of External Affairs, he said for the civil aviation sector to reach the pre-Covid level, people required to continue to maintain safety protocol with self-discipline.
“We opened civil aviation on 25th May, a good two months and two days after we had completely locked down, with 30,000 passengers a day. Two or three days ago, just before Diwali, we carried 225,000 people,” he said.
“At a scale at which we are opening up in a calibrated manner, we have already reached 70 per cent capacity and I have asked my colleagues to look at 80 per cent. I am confident that by 31st December or soon thereafter… means a week or two thereafter, we will be back to pre-Covid levels,” he added.
Puri said he was committed to bring aviation GDP back to India. He was confident that the sector would get a boost in the next few years with the country getting 100 new airports and the fleet size reaching up to 2,000 from around 750 now.
“Our fleet size today should be around 750. I know airlines when they come across a pandemic like this, they try to curtail the size of their fleet orders. But, I can say with seven per cent penetration which means out of every 100 Indians, only seven fly and a 17 per cent rate of growth which we experienced pre-Covid at one time. We will move from 750, not to the 1,200 which everybody says, but to 2,000 aircraft. We will do it pretty quickly,” he said.
He said that there is a massive opportunity for investors across the aviation ecosystem including airports, airlines, ground-handling, maintenance, repair and overhaul.
The minister also revealed that Indian carriers get a mere 17 per cent of the value of traffic between India and the US. “The value of traffic between India and the US is roughly 7 billion dollars annually. How much do Indian carriers get out of that traffic, a mere 17 per cent. It is not as if American carriers are getting the remaining 83 per cent. I am not going to say who is getting it. But I see no reason why Indian flagship carrier and private carriers should not be earning more money flying passengers,” he said while terming this as a distorted business model.
Puri, who is also the Minister of State for Commerce and Industry, hoped that the country would be able to reposition itself as an economic player in the global supply chain before long.
He said even during the times of pandemic, global technology majors like Google, Amazon and Mubadala announced $20 billion investment in India.
He also said that the Aatmanirbhar Bharat concept and process would definitely lead to a stronger India post-Covid.
The Chairman and Members of the 15th Finance Commission presented a copy of its report for the period 2021-22 to 2025-26 to Prime Minister Narendra Modi.
The Commission had submitted its report to President Ram Nath Kovind on November 4.
Chairman N.K. Singh along with Members of the Commission, Ajay Narayan Jha, Anoop Singh, Ashok Lahiri and Ramesh Chand along with Secretary to the Commission Arvind Mehta were present at the presentation.
The Commission will present its Report to the Finance Minister Nirmala Sitharaman on Tuesday.
The report will be placed on the table of the Parliament along with ‘Explanatory Memorandum’ by way of ATR as prescribed under the Constitution.
Last year, the Commission had submitted its report consisting of recommendations for 2020-21 fiscal, which was accepted by the Union government and tabled in Parliament on January 30 this year.
As per the terms of reference (ToR), the Commission was mandated to give its recommendations for the five-year period by October 30.
It was asked to give its recommendations on many unique and wide-ranging issues. Apart from the vertical and horizontal tax devolution, local government grants, disaster management grants, the Commission was also asked to examine and recommend performance incentives for states in many areas like power sector, adoption of DBT, solid waste management etc.
The panel was also asked to examine whether a separate mechanism for funding of defence and internal security ought to be set up and, if so, how such a mechanism could be operationalised.
The Commission has sought to address all its ToRs in the latest report, organised in four volumes.
Volume I and II, as in the past, contain the main report and the accompanying annexes. Volume III is devoted to the Union government and examines key departments in greater depth, with the medium-term challenges and the road map ahead. Volume IV is entirely devoted to the states.
The Commission analysed the finances of each state in great depth and came up with state-specific considerations to address the key challenges that individual states faced.
The report entitled ‘Finance Commission in Covid Times’ uses scales on its cover to indicate the balance between the states and the Union.
