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Sunday, January 26, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


A former banker could be the turnaround man Ratan Tata Trusts

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Mumbai: Pramit Jhaveri, the former Citi India boss, is being considered as a trustee in one of the main Tata Trusts, two people close to the development said.The proposal to enlist the former banker, who was Citi's longest serving India CEO from 2010 to 2019, is significant. The timing of the possible appointment comes as Tata Trusts are trying to secure their legacy even as they face a legal wrangle with the income tax department besides the battle over Cyrus Mistry's ouster in 2016. The latter's family is the largest individual shareholder in Tata Sons, the holding company of the $100 billion Tata Group.Jhaveri declined to comment. Sources in the know say he's likely to be appointed as a trustee in the Sir Dorabji Tata Trust, one of the two main trusts that holds a significant stake in Tata Sons. The appointment is likely to be formalised soon, one of the two sources said.The banker is reputed for turning around and expanding Citi India after taking charge in 2010 when the foreign lender was in bad shape.In a separate development, the Trusts have also been mulling the appointment of a CEO. N Srinath, a Tata Group executive, is said to be the candidate chosen for the post, according to reports.Some for Tata Family MemberThe new post of CEO was created to fill a crucial vacancy caused by the resignation of managing trustee R Venkataramanan from the Tata Trusts in March 2019. The appointment of the CEO is, however, yet to formalised by the Trust authorities.In the interim, a committee of trustees was set up to oversee operations and to select a chief executive for the Tata Trusts. The committee led by Ratan Tata also included retired bureaucrat Vijay Singh and the TVS Group's Venu Srinivasan. The latter two are also vice chairmen of the Tata Trusts.Members of the Parsi community and people close to the Tata Group have been clamouring for a Tata family member to be installed on the board of Tata Trusts. ET had reported on January 9 last year that Ratan Tata loyalist NA Soonawala was among those keen to have Noel Tata on the board of Tata Trusts as was the broader Parsi community. This was seen as a way of ensuring that a member of the Tata family would continue to be associated with the group and possibly take his turn at the helm.While Noel Tata has been inducted into the Sir Ratan Tata Trust, he's yet to be appointed on the board of the other Tata Trusts, including the Sir Dorabji Tata Trust. Ratan Tata — chairman of the Sir Dorabji Tata Trust and Allied Trusts and the Sir Ratan Tata and Allied Trusts — is 83 years, while half-brother Noel is 63. The Sir Dorabji Tata Trust owns about 28% of Tata Sons, while the Sir Ratan Tata Trust owns about 23%. Together, the Tata Trusts control a 66% stake in Tata Sons.

Sitharaman's Budget cupboard is bare

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By Omkar GoswamiEach year, as India approaches the Union Budget, one sees all manner of fiscal experts coming out of the woodwork.Everyone has an opinion of what the Budget must do and what concessions and stimulus can kick-start India. Most of them forcefully argue why their suggestions are the only sensible solutions that can pull India out of the economic morass.Unbothered with basic fiscal arithmetic, they invariably assume that the central government has some hidden kitties to fund their proposals; and, if not, that it can always garner the additional funds at little or no extra cost. Few realise that the cupboard is well & truly bare.Let's start with the basics. Without recourse to borrowing, the money for spending in the Budget comes from three heads: net tax revenue to the Centre, non-tax revenue — these comprise revenue receipts to the Centre — and money from disinvestment of central public sector enterprises, which comes under 'other' capital receipts.Spent ForceRevenue expenditure is largely made up of interest payment on past borrowing, wages, salaries and pensions of central government employees including the police, paramilitary and the army, and subsidies, especially on food, fertilisers and petroleum products. Nothing in revenue expenditure goes into producing an iota of capital to generate future income.In 2017-18, revenue expenditure exceeded revenue receipts plus disinvestment by Rs 3,43,555 crore, or an excess of 22%. According to the Revised Estimate for 2018-19, this excess was Rs 3,30,930 crore, or 18%. And, while the Budget Estimate for 2019-20 projects an excess of Rs 3,80,019 crore that is also 18%, the actual numbers will be much worse because of lower revenue receipts and a huge shortfall in disinvestment targets. In simple terms, the government earns far less than it spends even on the revenue account — of which not a rupee goes into financing investments or creating capital.Why is this so? Because despite catchy slogans like 'Minimum Government, Maximum Governance', we have built a hugely bloated bureaucracy at all levels that has no bearing with the digital age. As an example, for 2019-20, revenue expenditure less interest payments and transfer to the states — essentially wages, salaries, pensions and establishment expenditure — of the ministry of finance under Nirmala Sitharaman was pegged at Rs 2,70,119 crore. At Rs 829 crore, the cost of maintaining our Cabinet Secretariat in 2019-20 will be only 4% less than that of running Dadra and Nagar Haveli.Moreover, we have done little to rein in subsidies. For 2019-20, subsidies on account of fertilisers, food and petroleum products were estimated at Rs 3,01,694 crore, which was more than 13% higher than the Revised Estimate of the previous year.To understand the magnitude of such profligacy, consider a simple fact. According to the Budget Estimates of 2019-20, almost 74% of the central government's total spend of Rs 33,23,989 crore will be going to fund revenue expenditure.The consequence of this uncontrolled spending is that every rupee earmarked for capital outlays plus a fifth of revenue expenditure come from additional borrowing and from resources of central public sector enterprises that goes under the name of Internal and Extra-Budgetary Resources (IEBR).Keynesians Lost the KeyIn the backdrop of steadily falling GDP growth, it is hardly surprising that all manner of amateur Keynesians have popped out of the woodwork —each suggesting expenditure increases to allegedly raise consumer demand and lift the economy out of the morass. Even if one ignored the fact that the empty cupboard can no longer afford such indulgence, little thought is given on how these magical dollops of money will actually transmit through the economy.Here is an example. Suppose Ms Sitharaman were to announce yet another grandly titled central programme that will give Rs 12,000 per year to families below the poverty line. How does this money move? First, demand for grants are made by the ministry that is supposed to administer this programme. Second, these have to released by the expenditure department of the ministry of finance.Third, the money so released will have to move to coffers of 28 states and eight Union territories. Fourth, from the state and Union territory capitals, it will have to move to districts. Fifth, from the districts, it will need to flow to the tehsils or administrative blocks.Sixth, the tehsildar or the block development officer will have to identify those who are below the poverty line.After which, the seventh, these poor souls will get financial succour. How much of this does one realistically expect to be completed in a single year? Is it surprising that most grand central schemes fail?Today, the situation is bad enough to warrant serious, and hard, fiscal reforms. Starting with slashing subsidies.Unfortunately, I expect none of that to happen. Instead, we will get new programmes and schemes that shall apparently give relief to the needy; that shall raise much-needed investments; that shall lift GDP growth; all at the cost of a little slippage in fiscal deficit.A bare cupboard is akin to an empty vessel. We know what empty vessels do. So, without an iota of cynicism, on February 1 this year, I predict a lot of sound, essentially signifying nothing. Just as I predict many giving Budget 2020 no less than 9 out of 10. Plus ├ža change.…The writer is chairman, Corporate and Economic Research Group (CERG)

The No.1 retirement mistake you can make

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By Uma ShashikantShould I have equity in my retirement portfolio? A just-retired friend wanted to know. After dismissing equity investing as gambling, he finally became convinced by the many SIP stories he heard. It was in his 50s that he started investing small amounts. Now without a pension and only his savings to rely upon, he is worried.He wants to earn an interest on the retirement corpus, while not touching it, or risking it at all. But these ideas are so yesterday.There was a time when the government was the primary borrower and paid a benevolent interest and guaranteed the safety of money invested. Retired people simply queued up at the post office. Today, we live in times when we worry if a government-owned bank will go belly up. We remain risk-averse, but around us risk is omnipresent. Bad borrowers, cheats and colluding corrupt lenders have made the lending markets too risky for the retired investor.We can throw a tantrum and demand the government assure the retired investor a sensible investment avenue. Fair point. However, that reform is miles away, because our policy makers still don't get that the only way to manage risk is diversification, or that without accountable fiduciaries we cannot manage other people's money. Thus, the largest insurance provider bails out failing companies, and the largest pension scheme runs in circles to put a robust investment process in place. We digress and rant.The positive side to the story holds three strands: One, compared to the past, retirees are wealthy. They mostly live in a house they own, have accumulated some assets and managed to save out of their incomes. Recall the times when the PF was meant for taking a loan; the first house was bought close to retirement; and incomes barely covered expenses. We are better off .Second, inflation, the biggest threat to retirees, has been tamed to a single digit. Like most macro variables, it is tough to predict. However, we can reasonably expect it to be a small single digit number. Do not remind us of the 18% of the 1980s.Third, the next generation is better off. For many, including my friend, there is no need to leave an inheritance, as the children are earning well. They can support the parent if the need arises. Being able to spend the corpus on oneself is a perk the current generation of retirees can well afford.What does all this mean to my friend? He should look beyond the traditional and take some risks, given that he has the ability or the need to do so, given all the above.What does equity do to a retirement portfolio? It offers long-term growth. Growth in portfolio value is an effective tool against inflation. It cushions risks to income when the investor becomes old. Since only a portion is being used during his lifetime, the rest of the money can grow. The portion that he will leave behind for his children can be in equity, since they are young and have a longer investing horizon.A portfolio that has one portion in equity, and one portion in fixed income instruments will serve his purpose well. Fixed income will serve routine needs; the equity will offer potential for growth. How much should be in equity?My friend tells me that 6% annual return is enough for the retired couple's yearly expenses. Should he draw it annually, and keep all the money in equity?That would be a mismatch. The need of the investor is steady income; but the portfolio is in risky growth assets. The investment won't generate income; a portion of it must be liquidated to meet the needs of the investor. The investor is drawing only a small amount, would it matter? Assume that the equity market corrects severely. The investor's money shrinks and he runs the risk of outliving his falling corpus. Most don't invest in equity for this fear.If my friend needs 6% of his corpus as income, and if the interest offered is about 6%, should we choose a 100% allocation to income assets? We will starve the corpus of growth to fight inflation, and leave a superfluous 100% to heirs. How do we decide between the extremes?We begin by exhausting all avenues of income, before depending on the retirement corpus to generate it: Rent, second career, dividends, and whatever else we can get. The comfortable retirement stories we see around us are mostly funded by pensions that do not stress the retirement corpus.Then we arrive at a small portion of the corpus that we will be willing to draw for our expenses. Assume we draw 2% of the principal for annual use. What does this do? This reduces the burden on the portfolio to generate income and frees up space for equity investing. How?Assume we have RS 100, and we need Rs 6 every year. Since Rs 2 is coming from drawdown, the income that the portfolio must generate is only Rs 4. At an assumed market interest rate of 6%, this Rs 4 can be generated by 67% of the corpus. The allocation is 67% debt and 33% equity— this is indicative of the principle and not cast in stone.The equity portion is preferably in a large cap mutual fund. Or the investment is in a balanced fund that invests primarily in debt, and the withdrawals are set up as systematic transactions. These are operational and implementation details. One can tailor whatever one is comfortable with.For my friend to invest in equity, the following are needed: One, he should see equity as enabling long term growth in his corpus. That is far better than letting it lie without any change in value. Two, he should be willing to drawdown a small portion of his corpus for his use. Keeping it small reduces the risks and enables the rest of the money to grow. Third, his ability to invest in equity grows if he has other sources of income that do not depend on his retirement corpus. Asset allocation and diversification hold more answers than we care to consider.(The writer is Chairperson, Centre for Investment Education and Learning)

Kobe Bryant, daughter die in helicopter crash

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Basketball icon Kobe Bryant died Sunday in a helicopter crash in Southern California. He was 41.TMZ first reported Bryant's death. ABC News in Los Angeles and the Los Angeles Times are among the entities that confirmed the death of the former Los Angeles Lakers superstar.TMZ reported that Bryant's 13-year-old daughter, Gianna, also died in the crash. TMZ cited a family representative as the source.Chief Daryl Osby of the Los Angeles County Fire Department said nobody survived the crash into a hill in Calabasas, which is approximately 30 miles west of Los Angeles. Los Angeles County Sheriff Alex Villanueva said nine people were on the helicopter -- a pilot and eight passengers.Villanueva declined to release identities, saying "it would be entirely inappropriate right now" before coroners go through their process.Multiple entities reported that Kobe and Gianna were on their way to a basketball tournament in nearby Thousand Oaks.The news of Bryant's death sent shockwaves through the sports world and beyond."The NBA family is devastated by the tragic passing of Kobe Bryant and his daughter, Gianna," NBA commissioner Adam Silver said in a statement. "For 20 seasons, Kobe showed us what is possible when remarkable talent blends with an absolute devotion to winning."He was one of the most extraordinary players in the history of our game with accomplishments that are legendary: five NBA championships, an NBA MVP award, 18 NBA All-Star selections, and two Olympic gold medals. But he will be remembered most for inspiring people around the world to pick up a basketball and compete to the very best of their ability. He was generous with the wisdom he acquired and saw it as his mission to share it with future generations of players, taking special delight in passing down his love of the game to Gianna."We send our heartfelt condolences to his wife, Vanessa, and their family, the Lakers organization and the entire sports world."Former president Barack Obama was among the hundreds of people weighing in on the tragedy."Kobe was a legend on the court and just getting started in what would have been just as meaningful a second act," Obama said on Twitter. "To lose Gianna is even more heartbreaking to us as parents. Michelle and I send love and prayers to Vanessa and the entire Bryant family on an unthinkable day."Orange Coast College announced that baseball coach John Altobelli, his wife Keri and daughter Alyssa were among the people killed in the crash.Alyssa Altobelli was a basketball teammate of Gianni Bryant. John Altobelli, 56, was entering his 28th season as the community college's baseball coach. He won four state championships and recorded his 700th career win last season."John meant so much to not only Orange Coast College, but to baseball," Orange Coast athletic director Jason Kehler said in a statement. "He truly personified what it means to be a baseball coach. The passion that he put into the game, but more importantly his athletes, was second to none -- he treated them like family. Our deepest condolences go out to the Altobelli family during this time of tragedy."A fire broke out after the plane landed and emergency personnel responded but found no survivors, according to TMZ.TMZ reported that eyewitnesses to the crash heard the helicopter sputtering before it went down.Onlookers came to the scene and stared toward the hill as the brush was still smoldering. People were also gathering at Staples Center, the home of the Lakers, in downtown Los Angeles.The cause of the crash is under investigation.After attending high school in suburban Philadelphia, Bryant was the 13th overall pick of the 1996 draft, selected by Charlotte, which traded his rights to the Lakers in exchange for center Vlade Divac. He spent the next 20 seasons in Los Angeles before retiring following the 2015-16 season.Bryant won five NBA championships for the Lakers and amassed a number of accolades. He was the NBA's Most Valuable Player in 2007-08, a 15-time All-NBA selection, 18-time All-Star and 12-time All-Defensive team member. He twice was named MVP of the NBA Finals and was the All-Star Game MVP four times.Bryant played in 1,346 career games and retired as the third-leading scorer in NBA history with 33,643 points. On Saturday night, Lakers star LeBron James passed him on the all-time list when he scored 29 points against the Philadelphia 76ers. Bryant stands behind Kareem Abdul-Jabbar, Karl Malone and James on the all-time list.Bryant sent out a congratulatory tweet to James on Saturday night."Continuing to move the game forward @KingJames. Much respect my brother," Bryant tweeted.On Jan. 22, 2006, Bryant scored 81 points against the Toronto Raptors. It is the second-highest total in NBA history, behind only Wilt Chamberlain's famed 100-point game in 1962.His final game was one for the ages as Bryant scored 60 points during a 101-96 victory over the Utah Jazz on April 13, 2016.Bryant also won the 1997 NBA Slam Dunk Contest at age 18, the youngest to win the popular event.Both numbers Bryant wore for the Lakers -- 8 and 24 -- were retired by the club.He won Olympic gold medals for the United States in 2008 and 2012 and is among the candidates this year for induction into the Naismith Basketball Hall of Fame.Reaction from the basketball world and beyond had a recurring theme -- disbelief over the news -- and one of those grieving was Hall of Famer Shaquille O'Neal, a former teammate of Bryant's on the Lakers."There's no words to express the pain Im going through with this tragedy of loosing my neice Gigi & my brother @kobebryant I love u and u will be missed. My condolences goes out to the Bryant family and the families of the other passengers on board. IM SICK RIGHT NOW," O'Neal tweeted.Tweeted former NBA star Dwyane Wade: "Nooooooooooo God please No!"The sentiments continued all over Twitter.Pau Gasol, a former Lakers teammate, expressed disbelief: "Beyond devastated... my big brother... I can't, I just can't believe it.""I'm stunned. Words can't even come close to describing it. Just an incredibly sad and tragic day," former Chicago Bulls star and NBA Hall of Famer Scottie Pippen tweeted.Tweeted Cleveland Cavaliers forward Kevin Love: "Please no. Please god no. It can't be true."Clippers coach Doc Rivers expressed his somber thoughts prior to Sunday's road game with the Orlando Magic."The news is just devastating to everybody who knew him, knew him a long time," Rivers told reporters. "... He means a lot to me, obviously, he was such a great opponent, that's what you want in sports."He had that DNA that very few athletes could ever have, the Tiger Woods, the Michael Jordans. I was getting to know him more since he retired. ... Yeah, this is a tough one. We have to go play. The news is just so devastating for (his wife) Vanessa, and his family. Just so many people he touched."Six years into his NBA career, in July 2003, a 19-year-old hotel worker in Colorado accused Bryant of rape, leading to his arrest. Bryant admitted to a sexual encounter with the woman but said the act was consensual.When the woman declined to participate in the criminal case, the district attorney dropped the charges and he later settled a civil case out of court in 2005. Bryant did not admit guilt.Bryant released a statement through his attorneys after the settlement:"Although I truly believe this encounter between us was consensual, I recognize now that she did not and does not view this incident the same way I did. ... After months of reviewing discovery, listening to her attorney, and even her testimony in person, I now understand how she feels that she did not consent to this encounter."After retirement, Bryant turned his focus to both business and entertainment. He won an Academy Award in the animated short category in 2018 for his work on "Dear Basketball," sharing it with Disney animator Glen Keane.He also saw a $6 million investment he had made in sports drink BodyArmor turn into a $200 million windfall.Before entering the NBA, Bryant was a star at Lower Merion High in the Philadelphia area and led the school to the 1996 state championship."Aces nation has lost its heartbeat," coach Gregg Downer said in a statement through the Lower Merion school district.Director of school and community relations Amy Buckman read a statement from outside Kobe Bryant Gymnasium on the Lower Merion campus."The Lower Merion school district community is deeply saddened to learn of the passing of one of our most illustrious alumni in Kobe Bryant," Buckman said. "Mr. Bryant's connection to Lower Merion high school, where he played basketball prior to joining the NBA, has raised the profile of our high school and our district throughout the world. Our school community will always be grateful for his ongoing generosity to his alma mater, including the dedication of our Kobe Bryant gymnasium and his support of our girls and boys basketball team."A moment of silence was held before Sunday's game in Denver between the Nuggets and Houston Rockets. The public address announcer ended the tribute with "Rest In Peace, Mamba," referencing Bryant's nickname. 73650617 The Toronto Raptors and San Antonio Spurs began their game by letting the 24-second clock run out on both club's first possession, in honor of Bryant's No. 24.Bryant was also honored outside of NBA circles as a moment of silence was held in his memory prior to a game between San Diego State and UNLV in Las Vegas.Bryant is the son of former NBA player Joe "Jellybean" Bryant, who played eight seasons with three teams from 1975-83. In 2001, he married Vanessa Laine, and they had four daughters: Natalia Diamante, 17; Gianna Maria-Onore, 13; Bianka Bella, 3; and Capri Kobe, born last June.

Renewable-thermal power scheme unlikely to attract bidders

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BENGALURU: The Ministry of New and Renewable Energy's new proposal for developers to blend renewable and thermal power may not find many takers, according to renewable energy consultancy firm, Bridge To India (BTI). "We suspect that because of limited number of potential bidders, the scheme would not attract very competitive bids and may therefore not be cost attractive for discoms," it said in its weekly report on the industry.The advantage of the proposal is that while renewable energy is irregular, varying according to the intensity of the sun or the speed of the wind, thermal power is not. Therefore, a blended supply assures a minimum transmission of power at all times."With proposed mandatory blending of thermal power, the scheme remains beyond scope of most renewable power developers," BTI said.This is the first time this combination is being allowed in the Indian power sector. The scheme states that at least 51% of power outcome is required to come from renewable sources – with or without storage.Renewable energy developers feel the scheme would be detrimental to the environment if implemented. "It is detrimental to the health of the environment if this is made successful as we encourage more fossil fuels. We will not be able to achieve our Paris targets if this scheme is implemented in a big way," said Sunil Jain, CEO, Hero Future Energies. Jain also felt that the responsibility of stabilising the grid should be borne by the operator, not the developer. "Nowhere in the world are developers asked to balance the grid," he said."The scheme has been designed to specifically help the thermal lobby," said another developer, requesting anonymity.

Higher local demand may hurt steel exports in FY21

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MUMBAI: India's steel exports are likely to decline in the next fiscal year starting April 1 on higher domestic demand from automotive and infrastructure companies, analysts said.Exports of finished steel during the April-December period of the ongoing fiscal year increased marginally to 6.5 million tonnes from 6.36 mt in the same period last year, according to provisional figures released by the Joint Plant Committee, an authoritative and independent source of information about the Indian iron and steel industry.In December, however, steel exports fell 11.5% to 767,000 tonnes, according to the report."The auto sector has seen one of the worst periods in the last 9 months and we see that the worst is behind...we expect better demand from auto and infra companies in FY2021E on a low FY2020 base and we are seeing that restocking has resumed since December 2019," Kotak Institutional Equity analyst Sumangal Nevatia said.73650176 Iron ore exports grew 132% in April-December to 26 mt, according to the JPC data.Analysts, however, said the numbers are likely to come down marginally this year.Iron ore exports should fall in FY2021 because of an interim disruption due to licence expiry and auctions of iron ore mines in Odisha, Nevatia said. "A tight domestic market should elevate domestic iron ore prices and inflate costs for steel companies," he added.Jayant Acharya, director (commercial and marketing), JSW Steel, said "green shoots for steel demand are coming from various sectors, especially from construction and auto companies. Along with this, the government's spending on infrastructure will further boost demand, which will continue for the next 3-4 months."The company cut down steel exports to 24% from 31% in the second quarter of the current fiscal year."Steel supply could be lower in India and in the global market in 2020 due to rising Chinese demand and increasing prices of coking coal and iron ore, the basic raw material for steel," said Manoj Jain, director, commodities and forex banking, India Nivesh.Iron ore prices have increased by 14% in the last one month to $106 a tonne and coking coal prices have gone up about 10% to $145, data sourced from the Indian Commodity Exchange showed. While exports may come down, India will still be a net exporter, Jain said."Dumping of Chinese steel into other countries could be lower and India can tap the opportunity. Rising steel and iron ore prices could support Indian steel export and probably India could still be a net exporter of steel in the year 2020," he said.

HDFC Q3 preview: Profit likely to jump 3-4 times on one-time gain

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Mumbai: Mortgage lender Housing Development Finance Corporation (HDFC) is expected to report three-four times jump in profit for the December quarter buoyed by one-time fair value gain on derecognition of investment in Gruh Finance. The NBFC is slated to release its quarterly number on Monday.Kotak Institutional Equities expects HDFC to post a 303.78 per cent jump in profit at Rs 8,527.8 crore. The brokerage pointed out that post merger of Gruh Finance with Bandhan bank, HDFC has recorded a fair value gain of Rs 9,000 crore, and the company will likely set aside 30 per cent of the gains – Rs 2,700 crore -- as extraordinary provisions.Net interest income (NII) may come in at Rs 3,125 crore, up 8.5 per cent from the year-ago period.Kotak analysts expect HDFC to deliver 14 per cent year-on-year (YoY) growth in assets under management (AUM) on the back of 17 per cent YoY growth in retail business even as non-individual loan book may remain flat on a sequential basis.Net interest margins (NIM) will likely remain stable at 2.4 per cent QoQ as decline in marginal cost of funds was passed on to new retail borrowers, and credit cost (excluding extraordinary provisions) will likely remain stable at about 25 basis points of AUM.Edelweiss expects HDFC to post a profit of Rs 8,417.1 crore, a rise of 298.2 per cent."We are estimating NII growth of 10- 12 per cent, though due to one-time fair value gain, earnings growth will optically look higher. Individual loan growth momentum will be 14-16 per cent though conservative stance on corporate book will lead to AUM growth of 8-10 per cent," the brokerage said.Motilal Oswal Financial Services expects the mortgage lending giant to post profit of Rs 6,428.40 crore, a rise of 204.10 per cent. It sees NII rising 7.2 per cent to Rs 3,086.7 crore.Antique Stock Broking expects the mortgage lender to post a 196 per cent rise in profit for the quarter to Rs 6,253.80 crore, while NII may rise 3 per cent to Rs 3,100.2 crore.

Trading strategy for Budget ’20: Initiate Call backspread on Nifty

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Mumbai: Traders wishing to punt on NSE Nifty ahead of the upcoming Union Budget could initiate a call backspread on Nifty weekly options.The call backspread has potential for unlimited upside and limited downside. Derivatives and technical experts such as Rajesh Palviya of Axis Securities and Hormuz Maloo of AfCO Investments are bullish on the index in light of the February 1 event.Palviya suggests the backspread, which could yield "huge profits at a reduced upfront cost amid rising premiums."The strategy consists of selling an at the money (ATM) call on weekly Nifty options expiring on January 30 and simultaneously purchasing an out of the money (OTM) Nifty call expiring on February 6.The Jan 30 12,250 call sale fetches the trader Rs 70 a share (75 shares make one contract) while the purchase of a Feb 6 12,300 call costs Rs 140 (all figures rounded off) . The sale reduces the upfront cost of the 12,300 OTM call to Rs 70. That's the maximum loss. The trader allows the Jan 30 sold call to expire and keeps the 12,300 call for Feb 6 open with a view to earn unlimited profit. The investor is cushioned from rise of the Jan 30 call as the Feb 6 call will also rise. The maximum loss is Rs 70 and happens if post Budget the weekly Nifty expires at or below 12,300. The profit begins after Nifty crosses 12,370 post the Feb 1 Budget. "The position is kept open for sharp upmove anticipated on Nifty post Budget," said Palviya. A call buyer profits when an underlier trades above the strike purchased plus premium paid and loses if the underlier trades at or below the strike purchased. For a call seller the logic is reversed. Current resistance for Nifty is at 12,300, followed by 12,500 while immediate support is at 12,200 followed by 12,000.

Mindtree may have to fight harder for deals: Experts

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Bengaluru | Mumbai: Mid-tier IT services provider Mindtree may have brought on board new leaders to change the core components of its business to become a larger entity, but analysts say more needs to be done to bring in sustainable growth despite rising profits.Management commentary that it would strive to win more managed services contracts has made some analysts concerned, who said it would have to compete against larger rivals with the shift.According to Aniket Pande, an analyst at brokerage firm Prabhudas Lilladher, Mindtree has "historically excelled in discretionary spending, (and a) shift in managed services contracts is not their strength".Mrinal Rai, Principal Analyst at research services firm Information Services Group, said this would mean that the company will directly compete with some of the large service providers who have been ramping up their ability to win digital contracts after losing to smaller firms possessing niche digital capabilities. "Another challenge could be to retain the customer confidence and the perception that Mindtree still runs on old values with new leadership and focus while delivering large-scale managed services work. Yet another challenge that could come up is to leverage complementary capabilities across LTI (L&T Infotech) and Mindtree," he added.The company is of particular interest to investors since it went through a hostile takeover last year and has seen a slew of exits in top management. The company has brought in Debashis Chatterjee from Cognizant to lead the company after its takeover by engineering conglomerate Larsen & Toubro.The company has seen some turbulent quarters since the change in leadership. During the first quarter of the current fiscal year, at the time of earlier CEO Rostow Ravanan's exit, net profit halved sequentially to Rs 92.7 crore. Chatterjee was appointed in August and since then the firm has bettered its performance.Revenue grew 1.5% sequentially to $275.2 million and profits by 44.7% to $27.7 million in the third quarter ended December 31.Chatterjee, however, will need to lessen the company's dependence on Microsoft — which contributes about 20% of its revenue, some analysts said. "Concentration with any one firm is always a concern and Microsoft is clearly a large component of their revenue. Mindtree must work hard and fast to add additional clients to balance this out. That is not to say they should not attempt to further grow Microsoft but in addition they have to add other clients faster," Peter Bendor-Samuel, CEO of IT advisory Everest Research, said. Ray Wang, chief analyst at Constellation Research, is however optimistic about growth opportunities that Mindtree can tap into with Chatterjee at the helm.

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