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Topic :- Share Market Closing Note

Sensex ends 141 pts higher, Nifty settles at 10,397 levels; IT stocks rise:

The benchmark indices ended firm on Wednesday ahead of  the expiry of derivative contracts for February series on Thursday.

The S&P BSE Sensex ended at 33,845, up 141 points while the broader Nifty50 index settled at 10,397, up 37 points.

IT stocks ended 2.3% higher led by a over 4% rise in shares of HCL Technologies and Mindtree Ltd.

Stocks of pharmaceutical companies ended came under pressure, with the Nifty Pharma index settling nearly 2 per cent lower. Sun Pharma was the biggest loser of the day among the pharmaceutical companies, shedding 6.4% to settle at 523.90.

In global markets, Asian stocks gained on Wednesday, while the dollar advanced as traders near-term focus shifted to the minutes of the Federal Reserves last policy meeting for hints on the future pace of US monetary tightening. The Japanese Nikkei 225 ended at 21,971, up 0.2 per cent from the previous close.

MSCIs broadest index of Asia-Pacific shares outside Japan rose 0.7 per cent after slipping earlier in the session following the US market losses, which snapped a six-session winning streak..

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Topic :- Time:3.15 PM

Nirav Modi sacks employees across verticals, to shut shop

Nirav Modi has sacked employees across all verticals. Nirav Modi has also asked employees to collect relieving letters by February end as the firm will be shutting down all shops across the country. 

Nirav Modi has told his colleagues that near future seems a little uncertain and that he is concerned about the fairness of the processes that are being followed.

He has said also said that he is concerned at the speed at with which events are moving.

He has also told employees that he is taking this moment to acknowledge your immense support in building this company, adding that the organisation is suffering due to recent allegations filed by Punjab National Bank (PNB).

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Topic :- Time:3.10 PM

Nifty spot if closes above 10400 level then some pull back is expected in next few trading sessions and if it closes below above mentioned level then some sluggish movement will further be witnessed. Avoid open positions for tomorrow.

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Topic :- Time:2.30 PM

COPPER Trading View:

COPPER is trading at 453.60. If it breaks and trade below 453 level then expect some profit booking in it and if it manages to trade and sustain above 455.20 level then some upmove can be seen in COPPER.

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Topic :- Time:2.20 PM

Though nifty is still trading in small range but is turning volatile now. Nifty spot if trades and holds above 10400 level then quick upmove is expected and below 10350 level some selling pressure can again be build. Nifty is still in Sell on rise mode.

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Topic :- Time:2.00 PM

Just In:

India has lowest 4G LTE Speed in the world at 6 Mbps only.

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Topic :- Time:1.40 PM

GOLD Trading View:

GOLD is traiding at 30400. If it holds below 30480 level then expect it to fall till 30280 level quite soon and if it manages to trade and sustain above 30480 level then some pull back can be seen in it. Sell on every rise till it holds below 30480 is recommended in it.

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Topic :- Time:1.00 PM

Nifty is trading in a very small range. NIfty spot if breaks and trade below 10340 level then expect some further decline in the market and if it manages to trade and sustain above 10375 level then some pull back can be seen.

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Topic :- Time:12.10 PM

Nifty is still trading in small range. Nifty spot if breaks and trade below 10360 level then some softness can be seen and above 10410-10420 levels good upmove can follow in the Nifty.

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Topic :- Time:11.45 AM

PNB fraud: Payoffs, late night parties; corruption has seeped into very core of Indias public sector banks:

Late night parties at plush farmhouses and hefty kickbacks to top bank officials are two compulsory requirements for scamsters to access the loans from public sector banks that they fully know would turn into Non-Performing Assets (NPAs).

A Firstpost investigation into the Punjab National Bank-Nirav Modi fraud case shows that corruption has gone into the very bone and marrow of state-owned banks and this is not just a one-off for several banks, including PNB and others like UCO and Canara, which have encountered exposure in the Modi-Mehul Choksi scam.

Firstpost has exclusively accessed a confidential report of the Income Tax department and a statement of a director of Sterling Biotech, owned by Nitin and Chetan Sandesara, who had taken a loan to the tune of Rs 5,000 crore from various banks including PNB, Union Bank of India, UCO, Andhra bank and others which had turned into non-performing assets.

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Topic :- Time:11.30 AM

News Wrap Up:

1. Indices pare morning gains, turn flat; Nifty below 10400 mark

2. PNB Rs 114 bn fraud: Nirav Modis seized assets may only fetch a fraction

3. PSBs lose Rs 1 trn; PNB scam erodes investor interest spurred by recap plan

4. Hospitals making profits up to 1,700% on drugs, consumables

5. RIL to acquire 5% stake in Eros international for Rs 10 bn to produce films

6. Oil marketing companies trade weak; Indian Oil hits 52-week low

7. Gitanjali Gems hits all-time low; stock tanks 56% in six trading days

8. Domestic insurers play contra as mutual funds lap up shares

9. 5,000 plus Aircel employees told to brace for difficult times ahead

10. CBI begins questioning Vikram Kothari

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Topic :- Time:11.00 AM

Nifty is still trading in a small range. Avoid big trades and trade with strict levels.

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Topic :- Time:10.30 AM

After positive opening nifty is trading flat now. Nifty spot if breaks and trade below 10340 level then expect further decline and if it manages to trade and sustain above 10380 level then some pull back can be seen in the market.

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Topic :- Nifty Opening Note

Indian Stock Market Trading View For 21 Feb,2018:

Indian stock market to turn volatile and is expected to follow global cues.

Nifty spot if breaks and trade below 10340 level then expect some profit booking in the market however 10300 spot to act as immediate support below 10300 sharp fall is expected and if it manages to trade and sustain above 10380 level then some upmove can be seen in the market.

Please note this is just opening view and should not be considered as the view for the whole day.

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The I-T Department has written to its counterparts in Jersey, Bahamas, Cyprus, Singapore and Mauritius. The details sought are on the transactions linked to the alleged shell companies overseas which were used to send funds.

Modi is believed to be a settler and beneficiary of a trust, Monte Cristo, in Jersey. The underlying company of this trust, Monte Cristo Ventures Ltd, was incorporated in the Bahamas with UBS AG, Singapore. The entities cited were used to transfer funds to Indian firms.

Along with this, Firestar International - the jeweller's group company - received funds from Mauritius-based entities Jade Bridge Holdings and Forcom Worldwide in the form of share capital and high share premiums.

The authorities believe that the money may have been round-tripped to tax havens through trusts and other entities. "We have sought more details, information... Fresh references have been sent out," a senior income tax department official told the paper.

The transactions are not disclosed under the Undisclosed Foreign Income and Assets and Imposition of Tax Act, 2015.

Firestar hasl received funds from another Singapore-based company, Islington International Holding Pte Ltd, the beneficial owner of which was Modi's sister Purvi Mehta, according to data, reports and the CBI FIR. Modi received Rs 284 crore in March 2013 and April 2014 from Mauritius-based companies and Rs 271 crore from a Singapore-based entity.

A notice has already been issued against Modi under the black money law for nondisclosure of assets.

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Imports of rough diamonds have increased by 11.11 per cent to USD 15.53 billion during the April-January period of the current fiscal, according to Gems and Jewellery Export Promotion Council (GJEPC).

The imports had aggregated to USD 13.97 billion in the 10-month period of last fiscal, 2016-17. The inbound shipments of gold bars also rose by 18.2 per cent to USD 4.37 billion during the April-January period of 2017-18.

However, imports of cut and polished diamonds dipped by 12.91 per cent to USD 1.88 billion during the period under review as compared to USD 2.16 billion a year ago.

The GJEPC data further showed that exports of gems and jewellery declined by 4.71 per cent to USD 27.5 billion during the period under review due to demand slowdown in major markets, including the US.

The labour-intensive sector contributes about 14 per cent to the country's overall exports. The drop in shipments is mainly due to negative growth in the export of gold medallions and coins.

The industry has asked for support in terms of increasing incentives under the Merchandise Exports from India Scheme (MEIS) to boost the shipments. As per the data, gold jewellery shipments during April-January, 2017-18 increased by about 3 per cent to USD 7.74 billion.

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Yogi Adityanath government today presented its Rs 4,28,384.52-crore budget for 2018-19 which is 11.4 percent higher than the last fiscal.

Presenting the budget in the Assembly, Finance Minister Rajesh Agarwal said, "The budget size for 2018-19 is Rs 4,28,384,52 crore, which is 11.4 percent higher than the last fiscal".

The budget earmarks Rs 650 crore for Bundelkhand expressway project, Rs 550 crore Gorkahpur link expressway project, Rs 1,000 crore for Purvanchal expressway, Rs 500 crore Agra-Lucknow expressway. Budgetary provisions of Rs 30 crore have been made for e-office system in all government offices and a start up fund of Rs 250 crore has been created.

For power sector schemes, Rs 29,883 crore has been allocated while Rs 1,500 crore has been kept for Kumbh Mela-2019 in Allahabad and Rs 98.5 lakh for Kanha Gau-shala and Besahara Pashu Ashray yojna.

For basic education department, Rs 18,167 crore has been earmarked for Sarv Siksha Abhiyan, Rs 76 crore and Rs 40 crore respectively for providing free books and uniforms for all students of class 1-8th.

For mid-day meal Rs 2,048 crore and Rs 167 crore for distributing fruits to students have been allocated in the budget. The government earmarked Rs 500 crore for furniture, potable water and boundary walls of schools run by Basic education department.

In a bid to improve secondary education, Rs 480 crore has been allotted while Rs 26 crore for operating Deen Dayal Upadhyay government model schools.

After the presentation of the budget, Chief Minister Yogi Adityanath described it as progress-oriented and asserted that his government was committed to the development of the state.

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Near midnight on Monday when the country was asleep the Reserve Bank woke up Indian borrowers to a new world of disciplined repayment, and the Indian banker to a stricter regime of bad loan classification and resolution. The question bankers and borrowers are now asking; is the RBI trying to achieve Utopia in a day?

The new bad loan resolution rules are by far the best in class. In the first place they do away with the myriad resolution plans such as Corporate Debt Restructuring (CDR), Strategic Debt Restructuring (SDR) and Stressed Asset Structuring (S4A). This step was inevitable. All those restructuring gimmicks were needed in an India where there was no Bankruptcy Code. Now with the code in place and the bankruptcy courts (or NCLTs) up and running, these schemes needed to go.

The new rules also require banks to report defaults over Rs 5 crore on a weekly basis to the RBI’s centralized database called CRILC.  All banks, thus know who are the stressed borrowers almost instantly and thus, have enough time and information on the borrower to regularize his repayment ability.

The new rules also ensure a sunset to the ongoing restructuring schemes under CDR, SDR and S4A. At least some were invoked to get a standstill on their getting classified as NPA. Many of the restructurings aren’t working out. For loans over Rs 2,000 crore RBI has given six months from February 12, to get implemented fully. Else they go to the bankruptcy courts. In future as well, loans of over Rs 2,000 crore get 6 months from date of first default to be resolved. Else they go to the bankruptcy courts.

Most impressive is the way in which RBI has calibrated the flow of cases to the bankruptcy courts. First 12 marquee cases sent in June 2017, then 28 cases sent six months later, and now, nine months later all the cases over Rs 2,000 crore have been referred. By then the tribunals, the resolution professionals, and committee of creditors may be more seasoned to resolve cases faster.

The new rules also ensure restructurings are no eyewash.  For loans over Rs 100 crore a rating agency shall rate the restructured loan as investment grade. For loans over Rs 500 crore, the revamped loan will require investment rating from two rating agencies.

All told, the new rules are exactly how the rules should have been from the start. Timely payment of interest by borrowers, or the system punishes you; and appropriate classification and provisioning by banks, so the mess doesn’t accumulate.

That said, let us tiptoe to reality.  Most bankers believe the new rules will lead to a spurt in loan defaults in the next few quarters. Here’s why:

Firstly, a resolution plan has to be okayed by all banks. Bankers worry the approval from 75 percent or even 51 percent of the lenders has been a problem. This requirement of approval from all bankers for a resolution to become applicable will mean more failures and more cases going to the bankruptcy courts.

Secondly, getting an investment grade from the rating agencies for a resolution plan can be an uphill task. So far, these agencies have waited for the loan to perform for a year before raising their rating. Getting two rating agencies to give the required grade will be tougher. In an atmosphere where all institutions – banks, audit companies, boards,  - are facing distrust, many a resolution may fall short of the required grade and again end with the bankruptcy courts. And all these loans are being forced to the bankruptcy courts when the process, while showing promise, has yet to yield results.

Thirdly, the process to upgrade a restructured loan to standard status is more demanding. It will require the borrower to repay 20 percent of his principal before being upgraded. This means for a longer period, income from the loan can’t be recognized, and the NPA will show up in the ratios and the risk capital.

Fourthly, the loans currently under SDR or CDR or S4A have to be resolved in six months. Else more cases will end in the bankruptcy courts requiring immediate accelerated provisioning.

Net net, the widespread fear is that an immediate increase in slippages is likely, at least, from cases under the various old CDR and SDR schemes.  This will hit provisioning, and may be absorb most of the capital that came from the recap bonds leaving little for growth. The more demanding process of upgrading loans will keep incomes subdued for banks.

The bigger problem will be if IndAS is implemented starting April. IndAS requires that for every new loan, provisions have to be kept depending on the bank’s loss-given-default of the past three years. The new rules hit when the NPAs are at their highest and hence, every new loan can become too expensive. There is a good chance therefore, that credit growth may slacken for the next few quarters.

No doubt once these few quarters are lived through, the banking system will emerge vastly stronger and cleaner. But for the banks, the midnight jolt from RBI will mean nightmares first, and sunrise after a rather long night.

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Indiabulls Real Estate share price gained more than 5 percent on Friday ahead of board meeting to consider demerger of residential and commercial businesses.

The company on Thursday informed exchanges that a meeting of the board of directors, is scheduled on Wednesday, February 14, 2018, to consider the various options and recommendations of the committee constituted for reorganisation/ restructuring of the existing residential and commercial office leasing businesses, and to take appropriate decisions.

In April 2017, the company's board had considered the possibility of streamlining its existing residential, commercial and leasing businesses by segregating commercial & leasing business carried on by itself and/or through its special purpose vehicles and vesting the same into Indiabulls Commercial Assets Ltd (ICAL).

It had also considered the possibility of restructuring/reorganising its businesses by either (i) restructuring by way of placing ICAL as a separate holding company under the company to hold its assets and investments relating to commercial & leasing business segment and to undertake the business & operations of commercial & leasing business segment and/or explore opportunities to bring in strategic investments; or (ii) by reorganising its existing businesses by way of a demerger of the undertakings, business, activities & operations pertaining to its commercial & leasing business segments.

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The government has made payments of more than Rs 1 lakh crore to people through Direct Benefits Transfer (DBT) scheme in this financial year. DBT has helped the central government save close to Rs 75,000 crore since 2014.

These savings mean that Rs 75,000 crore was passed on as benefits to 63 crore people, as against 35 crore people last year. This was money handed over to the consumers without being pocketed by middlemen or duplication.

The scheme benefitted only 10 crore people when the Modi government took over in 2014.

The amount of payout through DBT was at Rs 1,00,144 crore on Wednesday, up from Rs 74,707 crore in 2016-17 and Rs 7,367 crore in 2013-14. A senior government official told that the final figure could even reach as high as Rs 1.2 lakh crore for this year. That's a 60% increase over the previous year.

The figure was opposed by the others, which includes the opposition and activists, to be an inflated sum.

Of the 142 central schemes covered under the DBT in the previous financial year, there are currently 450 programmes that exist. The government hopes to bring the rest of the schemes under the ambit of the DBT by March.

It was seen that Rs 20,610 crore was paid as LPG subsidy, Rs 10,042 crore under various scholarship schemes for education and Rs 5,831 crore through the National Social Assistance Programme The MGNREGS is seen to be the biggest beneficiary of this scheme in this financial year, which was Rs 28,623 crore, while Rs 34,917 crore was provided under other schemes.

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Mutual fund houses are perturbed at the second consecutive day of market carnage, which will impact the sustained inflows the industry had seen so far.

Fund managers said the sharp plunge in the market may bring down the inflows in the mutual fund industry by 50 percent.

“This fall will have an percent impact the inflows. If this kind of market fall continues then the inflows may fall by half,” said a senior equity fund manager from a private fund house on condition of anonymity.

Domestic MFs witnessed total inflows of Rs 1.69-lakh crore in 2017. The 42-player MF industry also saw its assets base jump to over Rs 22 lakh crore in 2017, adding more than Rs 5.4 lakh crore to its kitty, on strong participation from retail investors and investor awareness initiatives.

Boosted by strong participation from retail investors, the number of mutual fund folios grew by a staggering 1.37 crore in 2017, to an all-time high of 6.65 crore. Folios are numbers designated to individual investor accounts, though one investor can have multiple accounts.

Asset managers say if similar kind of market plunge continues then industry might see 50 percent fall in inflows across the industry.

Carnage on D-Street continued for the second consecutive day in a row which pushed the S&P BSE Sensex by over 1200 points in opening trade on Monday but experts feel it was long overdue as valuations were rich.

“The fall is justified as valuations were rich. It is good for investors as at this investors can use this dip to pick up good quality stocks,” said Gautam Sinha Roy, Senior Vice President and Equity Fund Manager at Motilal Oswal Mutual Fund.

Agreeing with Roy, another fund manager from a private fund house said the fall in the market was ‘anticipated’ but this is something which was long overdue and investors must utilize this fall to buy stocks which were expensive.

"If this fall continues then it may be bad for the industry as inflows might be hit significantly," the fund manager quoted above said.

Considering the fall is driven by global factors, investors should stay long in Indian markets, said experts.

The S&P BSE Sensex suffered a 1275-point drop on Feb 6 following a sharp crack on Wall Street. The index witnessed its biggest intraday fall since the year 2015.

The Nifty50 slipped below its 100-days exponential moving average (DEMA) placed at 10,400. A fall below 10,200 could stretch the decline towards 10,000 levels which is closer to its 200-DEMA.

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JM Financial Group

It is beyond doubt that the most vibrant and resilient Micro, Small and Medium Enterprises (MSME) sector shall act as a catalyst to the growth of the Indian economy. The Budget further strengthened the sector by making key structural changes, enabling ease of doing business, and providing tax benefits.

Key structural changes

One of the welcome structural changes announced was to bring on board state-owned banks and corporates on the MSME bill discounting platform and, more importantly, to link it with the GST Network. This will significantly ease cash flow challenges as the cost of working capital shall stand to reduce and MSMEs can easily access capital by discounting their trade receivables. Linking to GST will make credit assessment easier and faster.

The government has also proposed to evolve a scheme to provide a unique identity to every enterprise in India on the lines of Aadhaar, which will eventually give respite to the lender as it will be easier to access the KYC.

Both these structural changes in accessing KYC and assessing the credit shall provide greater benefits to the sector.

Enabling the ease of doing business

The budget also earmarked Rs 3 lakh crore for 2018-19 under the Pradhan Mantri Mudra Yojana. The government has assured to address the issues of non-performing assets (NPAs) and stressed accounts of MSMEs. He also referred to a group in the finance ministry that is examining the policy and institutional development measures needed for creating right environment for fintech companies to grow.

The finance minister also stated that the government shall contribute 12 percent of the wages of the new employees in the Employee Provident Fund (EPF) for select sectors over the next three years.  He also referred to the extension of the facility of fixed term employment to these sectors. This in turn will attract good talent at a lower cost.

All these measures shall spur inclusive growth and development.

Providing tax benefits

The proposal to reduce tax for smaller companies with a turnover of up to Rs 250 crore to 25 percent (from the existing turnover of up to Rs 50 crore) emphasises the importance of MSME sector in economic activity. This will unleash entrepreneurial zeal, leading to job creation. This tax respite will provide relief to the sector by increasing their cash flow.

These measures to strengthen the sector shall go a long way in building a robust economy thereby not only creating opportunities in the job sector but also fulfilling the Prime Ministers dream of 'Housing for all' by 2022 under the affordable segment.