IndUS Business Journal

Uncertainty over Karnataka government formation subdues equities

May 16, 2018 0

Mumbai– Uncertainty over the Karnataka government formation, along with high crude oil prices and outflow of foreign funds dragged the key Indian equity indices in the red on Wednesday.

On Tuesday, none of the major political parties were able to achieve a clear majority in the Karnataka assembly elections, leading to political uncertainty.

According to market analysts, heavy selling pressure was witnessed in banking, oil and gas and automobile stocks.

Index-wise, the wider 50-scrip Nifty of the National Stock Exchange (NSE) closed at 10,741.10 points — down 60.75 points or 0.56 per cent from the previous close of 10,801.85 points.

The barometer Sensex of the BSE, which had opened at 35,452.35 points, closed at 35,387.88 points — lower by 156.06 points or 0.44 per cent — from the previous day’s close at 35,543.94 points.

The Sensex touched a high of 35,543.89 points and a low of 35,241.63 points during the intra-day trade.

The BSE market breadth was bearish with 1,645 declines and 993 advances.

“It was the second consecutive negative closing for the Nifty due to political uncertainty in Karnataka and subdued Asian markets,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

“Broad market indices like the BSE mid-cap lost less, thereby outperforming the main indices.”

The S&P BSE mid-cap fell by 0.27 per cent, whereas the S&P BSE small-cap ended a tad higher, by 0.06 points from its previous close.

Besides domestic cues, Abhijeet Dey, Senior Fund Manager, Equities at BNP Paribas Mutual Fund said that stock markets in India were impacted by weak US and Asian shares.

Additionally, a hung assembly in Karnataka kept the mood of the markets indecisive and spurred a risk-off sentiment in the market, Dey added.

On the currency front, the Indian rupee strengthened by 72 paise against the US dollar to 67.80, from its previous close at 68.08 per greenback.

In terms of investments, provisional data with the exchanges showed that foreign institutional investors sold scrips worth Rs 699.22 crore, while the domestic institutional investors bought stocks worth Rs 229.06 crore.

Sector-wise, the S&P BSE FMCG index rose by 184.11 points, the realty index edged higher by 45.42 points and the IT index ended 23.88 points higher.

On the other hand, the S&P BSE auto index plunged 349 points, followed by the oil and gas index, which declined by 232.75 points and the auto index that ended 76.14 points lower.

Scrip-wise, fraud hit Punjab National Bank’s (PNB) stocks slumped around 14 per cent (intra-day) on Wednesday, a day after the bank reported a loss of over Rs 13,000 crore for the fourth quarter of 2017-18.

The stock closed at Rs 75.55 — down Rs 10.45 or 12.15 per cent — from the previous close of Rs 86 per share.

The major gainers on the Sensex were Hindustan Unilever, up 3.84 per cent at Rs 1,574.20; ITC, up 1.47 per cent at Rs 285.95; Wipro, up 1.44 per cent at Rs 274.30; Tata Motors (DVR), up 1.33 per cent at Rs 183.50; and Yes Bank, up 1.11 per cent at Rs 349.50 per share.

The top losers were ICICI Bank, down 3.28 per cent at Rs 297.90; Reliance Industries, down 2.34 per cent at Rs 956.45; State Bank of India, down 2.19 per cent at Rs 243.15; Hero MotoCorp, down 2.10 per cent at Rs 3,576.40; and Adani Ports, down 1.19 per cent at Rs 403.90 per share. (IANS)

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ITC net profit up 10% in Q4

May 16, 2018 0

Kolkata– Cigarette-to-FMCG major ITC Ltd on Wednesday reported a close to 10 per cent increase in net profit to Rs 2,932.71 crore in the quarter ended on March 31, compared with Rs 2,669.47 crore in the year-ago period.

On a comparable basis, gross sales during the quarter stood at Rs 17,933.48 crore, representing a growth of 3.6 per cent, over Rs 17,315.75 crore in the corresponding period of 2016-17.

“Gross sales value excluding agri business grew by 5.7 per cent driven by FMCG others and hotels. Agri business growth was impacted on account of a high base (imported wheat trading), limited trading opportunities in agri commodities such as wheat, soya, coffee and lower leaf exports during the quarter,” the company said in a statement.

Revenue from cigarettes during the March quarter fell by almost 45 per cent to Rs 4,936.45 crore over Rs 8,954.94 crore in same period of previous fiscal. Its cigarette revenue during the year ended March 31, also decreased by 32 per cent to Rs 22,894.01 crore.

The company said the punitive and discriminatory taxation and the regulatory regime continues to exert severe pressure on the domestic legal cigarette industry even as illegal cigarette trade has been growing unabated.

“The legal cigarette industry, already reeling under the cumulative impact of a steep increase in taxation over the last five years and intense regulatory pressures, was further impacted by the sharp upward revision in GST Compensation Cess announced in July 2017,” the company said.

In the segment–FMCG-Others–its revenue rose to Rs 3,051.82 crore during the quarter as against Rs 2,885.76 crore in the corresponding period of previous year.

Despite the challenging conditions prevailing during the year, the company’s FMCG-Others businesses Segment Revenue at Rs 11,329 crore recorded an increase of 11.3 per cent (on a comparable basis) on a relatively firm base.

Its board of directors recommended a dividend of Rs 5.15 per ordinary share of Re 1 each for the financial year ended on March 31, 2018.

The company posted a standalone net profit of Rs 11,223.25 crore in 2017-18 (FY18), up by 10 per cent from Rs 10,200.90 crore in the previous financial year.

On a comparable basis, gross sales value (net of rebates/discounts) stood at Rs 67,081.92 crore in FY18, representing a growth of 4.5 per cent driven mainly by the branded packaged foods, personal care and the education and stationery products businesses offset by the decline in agri business revenue, the company said.

“Gross sales value and post-tax profit for the year up by 4.5 per cent and 10 per cent respectively, amidst a sharp slowdown in the economy, steep increase in tax incidence on cigarettes, subdued demand conditions in the FMCG industry, shortage of tobacco crop in Andhra Pradesh and lack of trading opportunities in the agri business,” it said in a statement.

On its revenue from hotels business, the company said the growth in segment revenue during the year was subdued at 5.6 per cent reflecting inter alia the overhang of excess room inventory and the impact of highway liquor ban.

“Improvement in room rates and operating leverage aided the faster growth of 26 per cent in segment results, notwithstanding the gestation costs of ITC Grand Bharat and the recently commissioned WelcomHotel Coimbatore,” it added. (IANS)

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PNB shares plunge 14% after Q4 loss, Jefferies suggests bailout

May 16, 2018 0

Mumbai– Shares of multi-crore fraud hit Punjab National Bank (PNB) slumped around 14 per cent (intra-day) on Wednesday, a day after the bank reported a loss of over Rs 13,000 crore for the fourth quarter of 2017-18.

Looking at the bank’s Q4 earnings, financial services company Jeferries said in a report that “the need for a bailout by the government is immediate.”

The public sector major on Tuesday had reported a net loss, after closing hours of the stock markets, of Rs 13,417 crore for quarter ended March, against a net profit of Rs 262 crore for the corresponding quarter in 2016-17.

The gross non-performing assets (NPA) of the company stood at 18.38 per cent for the fourth quarter of 2017-18 compared to 12.53 per cent during the corresponding quarter in 2016-17.

On Wednesday, the share price of the bank on the BSE settled at Rs 75.55 — down Rs 10.45 or 12.15 per cent — from the previous close of Rs 86 per share.

PNB shares may take support around Rs 69 per share in the near term, said Deepak Jasani, Head of Retail Research, HDFC Securities.

“We will keep seeing intermittent bounces in the PSU banking stocks based on emerging newsflow,” Jasani told IANS.

He was of the opinion that “till there are no major corporate governance change in the whole PSU banking space, a sustained rise in these (PSB) stocks seems unlikely.”

He said that if few large IBC (Insolvency and Bankruptcy Code) resolutions happen, then probably PSU banks may witness an upward correction.

“PNB may also be restricted to conduct normal business. Two of its Executive Directors have also been divested of their functional powers. PNB will likely face significant operational challenges in the near term,” Jefferies said in its report.

The CBI on Monday filed a chargesheet against Allahabad Bank MD and CEO Usha Ananthasubramanian and 21 others, including 11 bank officials, in the over Rs 13,000 crore Punjab National Bank fraud case in which diamantaire Nirav Modi and his uncle Mehul Choksi were allegedly involved. Ananthasubramanian was earlier with PNB.

The agency also named PNB Executive Directors K.V. Brahmaji Rao and Sanjiv Sharan, and General Managers Nehal Ahad (who dealt in international operations) and Rajesh Jindal in its chargesheet filed in a special CBI court here.

CBI officials said the chargesheet names Nirav Modi and his brother Nishal in connection with the issuance of Letters of Undertaking totalling Rs 6,498.20 crore during 2011-17. (IANS)

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Services sector backbone of 21st century global economy: President

May 15, 2018 0

Mumbai– The services sector represents a vibrant and expanding component comprising employment, value addition, productivity and innovation and hence forms the backbone of the 21st century global economy, President Ram Nath Kovind said here on Tuesday.

Inaugurating the 4th Global Exhibition on Services, he said in India, the services sector contributes 61 per cent in gross value added and with a young population, large talent pool and comfort with technology, India has natural advantages in the sector and is set to become even more of a provider of services to the world.

“The pace of technology is intensifying the contribution of services in other sectors, including agriculture, infrastructure and manufacturing. The launch of 12 Champion Sectors is a bold new step that will contribute to both India’s economy as well as the global economy and create jobs,” Kovind added.

He said the early Industrial Age and traditional manufacturing economy created jobs in factories and encouraged entrepreneurship in the form of ancillary units and workshops.

“Today, we are looking at small but exciting start-ups in the services space. Technology has emerged as an enormous enabler and allowed local services companies to go national and even global.

“In India, which is the third largest centre of start-ups in the world, this has thrown up a generation of young entrepreneurs of men and women with hunger and ambition,” the President pointed out.

In this context, he said the government’s programmes like Start-up India and Mudra Yojana which has provided capital to 120 million grassroots businesses have seeded a culture of entrepreneurship, largely in services, and hoped that these would grow into giants in the near future.

Union Minister for Industry Suresh Prabhu announced the 12 Champion Services Sectors — Banking and Finance, Tourism and Hospitality, Transport and Logistics, Media and Entertainment, Healthcare, Construction Industry, Legal Services, Environment, Accounting and Finance, Education, IT and Communication and Sports.

He said these would create huge employment opportunities not only in India but all over the world through Global Supply Chain and Global Value Chain.

Saying the Indian economy was growing faster than the global economy, Chief Minister Devendra Fadnavis stressed that Maharashtra will create an ecosystem for this sector to create huge employment potential.

Around 500 delegates from 100 countries are participating in the four-day 4th GES organised by the Ministry of Commerce and Industry, the Maharashtra government, the Confederation of Indian Industry and the Services Export Promotion Council.

Present were Maharashtra Governor C.V. Rao, Commerce Secretary Rita Teaotia, CII President Rakesh Bharati Mittal and other dignitaries. Kovind released an India Services Book and a portal to mark the occasion. (IANS)

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Iceland’s WOW air to commence India operations

May 15, 2018 0

New Delhi– Iceland’s low fare transatlantic airline — WOW air — on Tuesday said that it will commence operations between New Delhi and Keflavik airport to multiple destinations in North America at fares starting from Rs 13,499 including taxes.

According to the low fare transatlantic airline, its India operations will commence from December 7, 2018 with five direct flights a week between New Delhi and Keflavik airport “subject to final completion of regulatory formalities”.

The airline’s Chief Executive and Founder Skúli Mogensen disclosed to IANS that the airline expects to have around 90 per cent load factor or capacity utilisation for its transatlantic flights from New Delhi via Keflavik airport.

Mogensen said that the airline has studied potential new destinations in India and will reveal its future plans to connect them to Iceland and North America within the next 12 months.

Besides, the airline said that it will offer 4 fare options — WOW basic, WOW plus, WOW comfy and WOW premium.

A one-way ticket to Iceland, US, Canada and London in the economy category –WOW basic — will start from Rs 13,499, including taxes, while the business class fares on — WOW premium — will be priced from Rs 46,599 onwards including taxes. (IANS)

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Karnataka poll result slumps equity indices, rupee

May 15, 2018 0

Mumbai– The Indian equity indices ceded their initial gains to close Tuesday’s trade session on a negative note, as uncertainty loomed over government formation in Karnataka.

According to analysts, panic selling erupted after the poll results showed that no single political party had reached the half-way mark for government formation, despite the fact that early trends had indicated a clear majority for the Bharatiya Janata Party (BJP).

The party, however, fell a few seats short of the clear majority mark. Election trends earlier in the day had led the barometer Sensex of the BSE to gain over 400 points.

Even the broadly subdued Asian indices and the disappointing macro-economic inflation data points released on Monday dented investor sentiments.

Index-wise, the S&P BSE Sensex, which had opened at 35,537.85 points, closed at 35,543.94 points, lower by 12.77 points or 0.04 per cent from the previous day’s close at 35,556.71 points.

It touched a high of 35,993.53 points and a low of 35,497.92 during the intra-day trade. The BSE market breadth was bearish with 1,611 declines and 1,028 advances.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) closed in the negative territory. It ended at 10,801.85 points — down 4.75 points or 0.04 per cent — from the previous close of 10,806.50 points.

“Markets ended with marginal losses after a volatile session. The index initially surged higher as trends showed BJP taking a lead in Karnataka Assembly elections,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

Anand Shah, Deputy CEO and Head of Investments at BNP Paribas Mutual Fund India said that apart from the uncertainty in Karnataka’s politics, the increase in inflation rate also caused concern among the investor community.

The election results not only dampened the equity market sentiments but also dragged the Indian rupee down by 56 paise to close at its 15-month low of 68.08 against the US dollar from its previous close at 67.52 per greenback.

In terms of investments, provisional data with the exchanges showed that foreign institutional investors sold scrips worth Rs 518.47 crore, while the domestic institutional investors bought stocks worth Rs 531.33 crore.

Sector-wise, the S&P BSE IT, metal and Teck (technology, media and entertainment) indices made gains and rose by 63.13 points, 30.12 points and 23.33 points respectively.

On the other hand, the S&P BSE auto index declined the most, by 176.56 points, followed by the healthcare index, which dropped by 60.14 points and the capital goods index that ended 51.37 points lower.

The major gainers on the Sensex were Tata Steel, up 2.29 per cent at Rs 624.05; Power Grid, up 2.27 per cent at Rs 213.80; Tata Consultancy Services, up 1.33 per cent at Rs 3,482.45; Asian Paints, up 0.89 per cent at Rs 1,310; and HDFC Bank, up 0.85 per cent at Rs 2,038.35 per share.

The top losers were Tata Motors, down 4.29 per cent at Rs 310.25; Tata Motors (DVR), down 4.27 per cent at Rs 182.75; Coal India, down 2.11 per cent at Rs 264; State Bank of India, down 1.87 per cent at Rs 248.60; and Sun Pharma, down 1.22 per cent at Rs 468.25 per share. (IANS)

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Modi to meet Putin amid US sanctions against Russia

May 15, 2018 0

New Delhi– Prime Minister Narendra Modi will visit Russia on May 21 for an informal summit with President Vladimir Putin in the summer beach resort of Sochi amid US sanctions against Moscow that might impact Russian military supplies to India, particularly an estimated Rs 40,000-crore deal to buy the sophisticated, long-range S-400 air defence system..

Modi will be travelling to Russia at Putin’s invitation, the government said on Friday.

The Prime Minister’s previously unannounced visit comes after National Security Adviser Ajit Doval and Foreign Secretary Vijay Gokhale visited Moscow last week to discuss a way out of the US sanctions on Russian firms.

The sanctions against Russian oligarchs and companies, including Rosoboronexport, the state-owned Russian weapons trading company, has raised concerns in India about a possible impact on India’s military buys from Moscow.

Rosoboronexport has long-standing significant contracts and business ties with India and other countries.

At the heart of the current India-Russia military ties is a multi-billion dollar deal for five S-400 long-range surface-to-air missile systems — billed as a game changer by the Indian military for its ability to counter ballistic missiles and stealth aircraft like those China is developing.

The two countries signed an agreement in principle for the S-400 deal in 2016.

The sanctions under the Countering America’s Adversaries Through Sanctions Act mandates similar action against those who conduct transactions with the banned Russian oligarchs and defence firms.

The sanctions aimed to punish Moscow for its meddling in Ukraine, Syria, the 2016 Presidential elections and, most recently, Russia’s alleged involvement in the poisoning of a former intelligence officer in the United Kingdom.

India’s deep military and strategic ties with Russia date back to the beginning of the Cold War even as New Delhi led a movement of “non-aligned” countries that declared their tilt with neither Washington nor Moscow. However, India always leaned toward the USSR.

India still buys over 60 per cent of its defence equipment from Russia. At present, the Indian armed forces are 70 per cent equipped with Soviet or Russian weapons.

Besides, the US decision to pull out of the Iran nuclear deal and its ramifications on India-Russia have also caused new worries in New Delhi.

An External Affairs Ministry release said Modi’s visit to Russia will be an important occasion for him and Putin to exchange views on international matters in a broad and long-term perspective in order to further strengthen the special and privileged strategic partnership.

“Both leaders will discuss their respective national developmental priorities and bilateral matters,” the statement said.

It said the informal summit was in keeping with the tradition of regular consultations between India and Russia at the highest level.

The Sochi meeting comes in the wake of Washington pulling out of the nuclear deal signed between Iran and six world powers (Britain, China, France, Germany, Russia and the US).

Putin is also expected to visit India later this year for the annual bilateral summit.

Russia and Japan are the only two countries with which India holds annual bilateral summits.

Modi’s visit to Russia also comes just after Putin won a fourth term in office in March this year after remaining in power for almost two decades. Modi and Putin last met in Russia last year.

Modi and Chinese President Xi Jinping held a similar informal summit in China last month. (IANS)

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TCS adds 200 new employees in US’ Arkansas

May 15, 2018 0

Mumbai/Little Rock (United States)– Tata Consultancy Services (TCS) on Tuesday said it has added more than 200 new employees in the US state of Arkansas, as part of its deal with insurer Transamerica.

The IT giant will occupy several floors of the 1400 Centerview building in downtown Little Rock, as part of the agreement with Transamerica to rapidly enhance its digital capabilities, simplify the service of more than 10 million policies into an integrated modern platform and drive growth opportunities.

“TCS is thrilled to welcome more than 200 additional Arkansans to our workforce as we continue to invest in local talent and U.S. facilities, helping American companies like Transamerica digitally transform and adapt to rapidly evolving customer demands,” said its President and Global Head – Banking, Financial Services and Insurance Platforms, Suresh Muthuswami.

The Little Rock office is a new US business centre for the global IT major, adding to its existing office in Bentonville, Arkansas, which hosts more than 150 employees.

“We look forward to partnering with city, state and local organizations to deepen our business and community impact across Arkansas,” he said.

The company has invested nearly US $3 billion in the US over the past three years and claimed that it has been among the top two IT services job creators in the US. (IANS)

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PNB posts net loss of Rs 13,417 crore for Q4

May 15, 2018 0

Mumbai– The multi-crore fraud hit Punjab National Bank posted a net loss of Rs 13,417 crore for the fourth quarter (January-March) of 2017-18, a regulatory filing by the company on the BSE stated on Tuesday.

The company had posted a net profit of Rs 262 crore for the corresponding quarter in 2016-17.

The gross non-performing assets (NPA) of the company stood at 18.38 per cent for the fourth quarter of 2017-18 compared to 12.53 per cent during the corresponding quarter in 2016-17.

The bank has made provisions and contingencies worth Rs 20,353.10 crore for the fourth quarter while it was Rs 4,466.68 crore for the October-December quarter of 2017-18.

Regarding the multi-crore fraud that came to light under the Q4, the bank said: “The fraud is under investigation by various central investigating agencies.”

The CBI on Monday filed a chargesheet against Allahabad Bank MD and CEO Usha Ananthasubramanian and 21 others, including 11 bank officials, in the over Rs 13,000 crore Punjab National Bank fraud case in which diamantaire Nirav Modi and his uncle Mehul Choksi were allegedly involved.

The agency also named PNB Executive Directors K.V. Brahmaji Rao and Sanjiv Sharan, and General Managers Nehal Ahad (who dealt in international operations) and Rajesh Jindal in its chargesheet filed in a special CBI court here.

CBI officials said the chargesheet names Nirav Modi and his brother Nishal in connection with the issuance of Letters of Undertaking totalling Rs 6,498.20 crore during 2011-17. (IANS)

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Bank unions announce 48-hour strike from May 30

May 11, 2018 0

Chennai– Over 10 lakh bankers in government and private banks will go on a 48-hour strike starting on May 30, said an All India Bank Employees Association (AIBEA) leader.

The United Forum of Bank Unions (UFBU) proposed the strike beginning 6 a.m. on May 30, till 6 a.m. on June 1, demanding early revision of wages. The wage revision has been due since November 1, 2017.

“The strike notice has been served to Indian Banks Association (IBA) representing the bank management and the Chief Labour Commissioner (Central), New Delhi,” C.H. Venkatachalam, General Secretary, AIBEA, told IANS.

The UFBU is an umbrella body of nine unions in the banking sector representing staff and officers. Wage revision talks between UFBU and IBA held in Mumbai on May 5 had ended in a failure.

Venkatachalam said the IBA offered an increase of 2 per cent over the total wage bill of the banks as on March 31, 2017.

In the last 10th Bipartite Wage Settlement that was made effective from November 1, 2012, the IBA had agreed to a hike of 15 per cent over the total wage bill.

The unions had rejected the IBA offer, Venkatachalam said.

While the government had asked the IBA to conclude the wage revision settlement before November 1, 2017, the latter has been delaying, he said. (IANS)

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