Tuesday, February 5, 2019

Market breadth improves - e paper - english news paper today - news headlines today

Market breadth improves - e paper - english news paper today - news headlines today
Market breadth improves

The market ended with gains in a highly volatile trading session, with the Nifty settling above the 10,900-mark. The BSE Sensex rose 113.31 points or 0.31 per cent to close at 36,582.74. However there was selling in broad market, as the BSE Mid-Cap index fell 0.82 per cent and the BSE Small-Cap index plunged 1.17 per cent.

The market breadth of the market was weak as 781 shares rose and 1,776 shares fell. Among the major Sensex gainers were Reliance Industries (up 3.52 per cent), TCS (up 0.81 per cent) and HDFC (up 0.87 per cent) and Bajaj Auto (up 1.67 per cent).

Technical view

Sameet Chavan, ch­i­ef analyst-technical & de­rivatives, Angel Br­o­k­i­ng, said: “We had a gap down opening to kick off the new trading week af­t­er Friday’s volatile sess­i­on. During the first half, the broader market rem­a­ined under; however, the latter half turned out to be an excellent one for the bulls. The market br­e­adth improved tremend­ously and in the pr­o­c­e­ss, Nifty managed to surp­ass the 10,900-mark on a closing basis. The he­a­v­yweight banking space, which has been under pe­rforming for the last co­uple of days, became the charioteer of this splendid recovery.

“We believe that the st­age is very much set for our benchmark in­d­ex to go beyond recent hurdles. The last two da­ys’ up-move has laid the foundation and furt­h­er impetus may probab­ly be provided by the RBI monetary policy. Fr­i­day’s low of 10,800 pl­a­y­ed a sheet anchor role and going ahead, 10,987 are not too far now. A move beyond 10,987 would unfold the next leg of the rally.

Market view

Jayant Manglik, presid­e­nt, Religare Broking, sa­id: Markets traded vo­l­a­t­ile on expected lines and settled marginally higher, tracking mixed cues. Investors were in cautious mood from the be­ginning, citing weak gl­obal cues and not so encouraging earnings an­nouncements over the weekend. Mixed tr­e­nd was witnessed on se­c­toral front while press­u­re continued on broader front. We­­’re seeing ma­yhem on the stock-sp­ecific front and the cu­r­rent positioning of the Nifty is not reflecting the ac­tual underlying sentim­ent. We strongly advise tr­aders to avoid averagi­ng long making positions and preferring options instead of naked futures for short term trading.

—Ashwin Punnen

Market breadth improves

Source: EP

RCom dives 35%; other group shares sink too - e paper - english news paper today - news headlines today

RCom dives 35%; other group shares sink too - e paper - english news paper today - news headlines today
RCom dives 35%; other group shares sink too
City: 

Shares of Reliance Communications fell sharply on Monday and ended nearly 35 per cent lower after the company decided to opt for insolvency proceedings following its failure to sell assets for paying back its lenders.

RCom shares plummeted 34.91 per cent to close at Rs 7.55 on BSE. Intra-day, it nose dived 48.27 per cent to Rs 6 — its record low. At NSE, shares tumbled 34.91 per cent to close at Rs 7.55.

The company’s market valuation plunged Rs 1,120.02 crore to Rs 2,087.98 crore on BSE. On the traded volume front, 425.09 lakh shares changed hands at BSE and over 37 crore shares on NSE.

Heavy selling was also seen in other group shares, with Reliance Power tumbling 35.10 per cent, Reliance Capital 19.80 per cent, Reliance Infrastructure 14.87 per cent and Reliance Naval and Engineering 14.72 per cent on BSE.

The combined market valuation of five of these group firms tumbled Rs 5,830.72 crore on the BSE.

“RCom board of directors decides upon implementation of debt resolution plans through NCLT framework,” the company said in a statement on Friday.

It is estimated that RCom has been reeling under debt of over Rs 46,000 crore. The board on Friday reviewed the progress of debt resolution plans since the invocation of strategic debt resolution on June 2, 2017.

The board noted that despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway, the statement said.

“Accordingly, the board decided that the company will seek fast-track resolution through NCLT, Mumbai. The board believes this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time bound manner within the prescribed 270 days,” the statement said.  

RCom on Sunday said it will propose a similar debt resolution plan to the National Company Law Tribunal that it had been pursuing outside the court.

RCom dives 35%; other group shares sink too

Source: EP

Karnataka to host a jumbo trade body meet in Bangalore - e paper - english news paper today - news headlines today

Karnataka to host a jumbo trade body meet in Bangalore - e paper - english news paper today - news headlines today
Karnataka to host a jumbo trade body meet in Bangalore
City: 

The tech capital Bangalore will host the first edition of the ASEAN Chamber of Commerce and Industry Business Meet between February 25th and 27th, in association with the Federation of Karnataka Chambers of Commerce & Industry (FKCCI) and the government of Karnataka. The Business Meet is expected to direct investments to the tune of Rs 2,000 crore to state from over 23 participating countries.

The 3-day summit will bring together the Chambers of Commerce, Exporters and Importers of ASEAN, ASEAN Plus countries along with some special invitee countries, high-profile conference delegates from India & Overseas, C level and top management of leading corporates and industry, bureaucrats, policy makers and heads of PSUs and members of national and state industry associations on a single platform to promote trade, business and investments for mutual benefit of both the host country as well as the participating countries.

The Business Meet aims to create a high-level networking ground for people to explore new collaborations and showcase new products to stakeholders. It can also help trade bodies of all partner countries to enhance trade & business of these countries and also of their members with each other.

Announcing the event to the media here on Monday, Karnataka chief minister HD Kumaraswamy said, “We are excited to host this mega event and provide a unique platform to bring together business leaders, policy makers and innovators from across ASEAN countries. Karnataka, with its rich heritage and immense human capital has contributed towards the development of the country. The state has been recognized the world over as one of the most progressive and business friendly state. This event will help showcase our strengths and explore and attract mutually beneficial partnerships globally.”

Speaking on the occasion, K J George, state minister for large & medium scale industries and sugar said, “The event will showcase Karnataka to the ASEAN plus and special invitee countries and also make trade & industry of Karnataka aware of the opportunities for trade and investment in ASEAN plus and special invitee countries. Our endeavor is to bring together the chambers of commerce, business persons, exporters and importers of ASEAN countries along with some special invitee countries on one platform to promote trade, business and investment.”

Sa Ra Mahesh, minister for tourism, government of Karnataka said, “The aim of the meet, along with promotion, identification of mutual business development, is also to provide a platform to share the best practices in the business. With the ASEAN countries participating and getting the best of their trade applications on the same table with a purpose to strengthen the commerce and investment opportunities. Karnataka is a state of immense capabilities and we believe that opening the gates for better business prospects will help us build a better and more stable commercial/trade industry. We look forward to hosting the countries and having an eventful three days, with maximum exchange of the best business ideas.”

Principal secretary, department of commerce & industries and department of IT, BT and science & technology, Mr. Gaurav Gupta, said, “ASEAN as an economic bloc is becoming an increasingly important driver of global growth.

Karnataka to host a jumbo trade body meet in Bangalore

Source: EP

No incidents of security breach reported, says SBI chief - e paper - english news paper today - news headlines today

No incidents of security breach reported, says SBI chief - e paper - english news paper today - news headlines today
No incidents of security breach reported, says SBI chief
City: 

In a strong rebuttal, State Bank of India (SBI) has on Monday said there was no data breach or incident of it failing to safeguard the financial records of its customers.

Responding to media queries on recent reports of data leakage involving the bank, SBI chairman Rajnish Kumar said, “Customer data security is top most priority for us. None of our customers lost data, there was a gap in the process that caused the error, but no incident of customer data loss was reported. Also, no customer-identifiable information, username or passwords of any account holder, was kept on the system.”

Kumar further added, “We are reviewing the entire systems. We have been examining the issue in totality to ensure complete safety and security of data and storage.”

It may be recalled that an online publication recently reported that a security breach had exposed financial information of SBI customers through an unprotected server. SBI is the country’s largest bank with a customer base of 43 crore people and a network of 22,500 branches.

On the bank’s digital push, the chairman said, some 85 per cent of its entire transactions take place outside branches, ATMs account for 35 per cent of transactions while 50 per cent of the transactions are done online.

Commenting on priority sector lending, Kumar said, agriculture, MSME and affordable housing etc continue to be focus areas for the bank.

“We are in the last leg of loan waivers, we are moving towards direct transactions, so that we can do away with waiver systems.”

Prices of agriculture produce have fallen while cost production has gone up. Vagaries of nature have also added to farmers’ distress, he added.

No incidents of security breach reported, says SBI chief

Source: EP

Consultations begin on drafting e-comm policy - e paper - english news paper today - news headlines today

Consultations begin on drafting e-comm policy - e paper - english news paper today - news headlines today
Consultations begin on drafting e-comm policy
City: 

The newly renamed department of promotion of industry and internal trade has started consulting various stakeholders on drafting an e-commerce policy.

The department has started consulting e-commerce companies, IT industry body, payment companies and other tech companies as part of the exercise, sources said. But some of the e-commerce players said that they were still waiting for the meeting with the department officials. It has not consulted retail entities or retail industry bodies either.

“Setting up a regulator for the e-commerce sector is one of the topics the department is seeking opinion of the industry. The new FDI rules also will be incorporated in the policy. It will also look into payment and logistics related matters concerning the e-commerce industry,’ said an industry insider.

The e-commerce companies had earlier complained that they were not consulted before the government issued clarification of its FDI policy for e-commerce. Even after issuing the press note 2, the companies have been trying to communicate with the government about the “possible disruption’ that could occur due to the new norms. They also have been trying to get some clarity on a few points.

However, some in the industry have been presuming that government is now finding that it not necessary to set up a separate regulator for the sector after renaming the department to include internal trade. Having included internal trade under its purview, trade bodies hope that they too would be consulted on matters relating to retail trade.

“The government has recognised internal trade and we hope it will consult trade bodies before finalising on the policy,” said Kumar Rajagopalan, CEO, Retailers Association of India.

Columnist: 
Sangeetha G.
Consultations begin on drafting e-comm policy

Source: EP

Ranveer raps his way to the runway @ LFW Summer/Resort 2019 - e paper - english news paper today - news headlines today

Ranveer raps his way to the runway @ LFW Summer/Resort 2019 - e paper - english news paper today - news headlines today
Ranveer raps his way to the runway @ LFW Summer/Resort 2019

Ranveer Singh turned the ramp into a 'desi' underground hip hop jam session as walked the runway with "Gully Boy" team and city-based rappers on the final day of Lakme Fashion Week Summer/Resort 2019.

The 33-year-old actor wore a monochrome athleisure attire from the new collection of fashion brand Love Gen, the label started by Bhavana Pandey, Dolly Sidhwani and Nandita Mahtani.

Ranveer, along with rapper Naezy and co-actor Siddhant Chaturvedi, performed on the songs "Apna time aayega" and "Asli hip hop" from Zoya Akhtar's upcoming directorial.

"It was a very unique show. Our film is all about music and music was at the heart of our show. There were great performances, live music and the entire gang has authentic rappers. They contributed to every bit of the film," Ranveer said.

The actor said he loved the limited edition 'GullyGen' collection, which includes jackets, hoodies, track pants and T-shirts.

"I loved it. It is the first time that any of movies had merchandise, turned right," he added. - PTI

Ranveer raps his way to the runway @ LFW Summer/Resort 2019

Source: EP

Striking a Fine Balance between Populism and Fiscal Prudence - e paper - english news paper today - news headlines today

Striking a Fine Balance between Populism and Fiscal Prudence - e paper - english news paper today - news headlines today
Striking a Fine Balance between Populism and Fiscal Prudence

India’s government announced an interim budget on February 1st. Although conventionally an interim budget is supposed to be a statement of accounts, it was different this year, as it included significant policy announcements. Against the backdrop of upcoming general elections, somewhat slowing economic activity, and food inflation at historic lows, the budget made several announcements including a flagship program for income support to farmers, and income tax benefits for the salaried class.

The reported fiscal deficit for FY19 did not deviate meaningfully from the target, with the shortfall in GST being offset by higher direct taxes, and lower transfers to states.

Despite being an election year, the budget does not envisage any additional stimulus, with the fiscal deficit in FY20 targeted to be flat at 3.4% of GDP (compared to FY19), but ~0.4 pp higher than the Fiscal Responsibility and Budget Management (FRBM) target of 3%. This is the third consecutive year of deviation from the FRBM targets. Net market borrowings are projected to increase significantly in FY20, and might exert pressure on yields going forward.

We believe that the revised estimates for FY19 and the targets for FY20 are still ambitious, and would require intensified tax collection efforts, particularly on GST.

While equity markets rallied, 10-year bond yields increased, and INR weakened following the budget announcement.

FY19 Budget Math

In the interim budget for FY20, the Indian government announced a revised fiscal deficit estimate for FY19 of 3.37% of GDP (~3.4% of GDP announced by the Finance Minister), compared to the budget estimate of 3.33% of GDP. GST tax collections are estimated to be short of the original estimate by 0.5% of GDP (~ 1 trn INR) by the end of FY19. This may be a conservative estimate of the shortfall – limiting the gap to 1 trn INR would require an average collection of INR 768 bn per month during the last quarter of the fiscal year, compared to the run rate of INR 455 bn so far.

The deficit in GST collections is expected to be offset in three ways. First, the revised estimates assume an overshoot of direct taxes, particularly of corporate taxes. Overall, direct taxes have performed well. They grew 16% year-on-year during April-November, compared to 14% in the budget, and an average of 11% over the previous four years. The FY19 revised estimates, however, assume a significant pick up in tax collection efforts in the last quarter, and a full year growth of 20%, in order to be able increase direct taxes by INR 500 bn relative to the budget estimate. This may be possible to achieve following the strong performance last year, but nonetheless appears to be ambitious compared to historical averages. Second, customs revenues are assumed to outperform relative to what was budgeted. We believe this to be realistic, as the current run rate is in line with the new assumption. Third, while gross tax revenues are estimated to fall short of the budget target by 0.2% of GDP, net tax revenues are expected to be exactly in line with what was targeted. This effectively implies a decline in the share of states in gross tax revenues by an equivalent magnitude, than what was originally budgeted. The FY19 RE estimates assume that the states would receive ~INR 270 bn less than what was assumed originally.

Non-tax revenues as well as disinvestment receipts are estimated to hit the budget target in FY19. There is variation, however, across different categories of non-tax revenues, with an increase in dividends from RBI and the other state-owned banks (SoB), balanced against lower dividends from PSUs and telecom receipts. Out of a total of ~INR 741 bn budgeted for RBI and Sob dividends in the revised estimates for FY19, INR 400 bn has already been received by the government. The rest, comprised mainly of dividends from the RBI, are expected by the end of the fiscal year.

No fiscal stimulus in the FY20 budget

Contrary to our expectations, the government did not stick to the path of fiscal consolidation recommended by the Fiscal Responsibility and Budget Management Committee. That said, despite being an election year, the budget does not envisage any additional stimulus through the reported fiscal deficit figures, with the FY20 targeted fiscal deficit flat at 3.35% of GDP, compared to 3.37% of GDP estimated for FY19, but ~0.4 pp higher than the FRBM target of 3%. The Finance Minister, in his speech, did note the government’s commitment towards fiscal and debt consolidation, with the goal to reduce the center’s fiscal deficit to 3% in FY21, and debt to 40% by FY25. This is the third consecutive year, however, of deviation from FRBM targets.

On the tax side, GST, corporate and income taxes are projected to increase, partly offset by lower excises taxes on items not under GST, e.g. oil. Income taxes are assumed to increase by 0.14% of GDP, a less ambitious growth rate of 17% compared to an estimated 23% in FY19. The lower growth rate in income taxes is likely due to key policy changes introduced in the budget: (i) an increase in the tax exemption limit from INR 200,000 to INR 250,000, with a tax rebate for those up to an income of INR 300,000 (ii) a reduction in tax rate from 10% to 5% for the tax slab of INR 250,000-500,000, and (iii) higher deductions – increase in deduction on savings, and on interest for self-occupied houses. Our estimates suggest a loss of ~0.2% of GDP from these measures. GST revenues are assumed to increase from 3.4% to 3.6% of GDP, and a growth of 18% which might appear realistic, but would still require about 40% increase in the average run rate per month (from INR 455 bn per month in FY19 so far to INR 633 bn). Overall, the budgeted nominal GDP growth of 11.5%, and an assumed tax buoyancy of 1.2 appears reasonable, but would still require intensified tax collection efforts, particularly on GST.

Importantly, expenditures are forecasted to match higher revenues, such that the budget is fiscally neutral. Revenues expenditures are projected to increase by 0.3 pp of GDP, largely explained by the flagship “PM-Kisan” program announced in the budget. Under this program, INR 6000 per year would be transferred in three equal installments to all landholding farmers, having cultivable land of up to 2 hectares, with the first installment to be transferred to the farmers by March 31st 2019. This program is estimated to cost INR 200 bn (0.11% of GDP) and 750 bn (0.36% of GDP) in FY19 and FY20 respectively. Strikingly, despite higher spending on the PM-Kisan program, the overall spending in the FY19 RE estimates remained unchanged vis-à-vis the budget. This is due to offsets in spending on other items, particularly, transfers to the GST compensation fund, which are likely to underspend, as compensation to states is projected to be lower given better run rates on states’ collection.

On subsidies, while food and fertilizer are projected to decline slightly, petroleum subsidies are forecasted to increase in FY20, such that the overall outlays on subsidies remain changed at 1.4% of GDP. The increase in budgeted petroleum subsidies is surprising, given that oil prices are broadly projected to fall between FY19 and FY20. We conjecture that this increase might reflect some deferring of subsidy payments in a cash accounting framework, given that the government has already spent more than what was budgeted.

While revenue spending is projected to increase, capital spending is assumed to decline by ~0.1% of GDP, making the budget increasingly skewed towards current spending, which may not augur well for a pick up in overall investment and growth. To the extent that there is scope to increase the quality and efficiency of the spending within the budget, or some of the spending happens through public enterprises as off budget allocations, it may reduce some of the concerns.

Net market borrowing projected to pick up

For FY19, the net market borrowing is projected to be lower than was initially budgeted by INR 393 bn. This is mainly due to a shift from market loans to increased borrowings from the National Small Savings Fund (NSSF). Net market borrowing is projected to increase by another INR 500 bn in FY20 to reach INR 4,731 bn (US$66bn). Gross market borrowing is pegged substantially higher, at INR 7,100 bn, driven by repayments of INR 2,369 bn.

Market reaction to the budget differed across equities and bonds

Bond markets had already started reconciling themselves for some fiscal slippage, driving a meaningful increase in yields on 10 year bonds (~7.5% just before the budget announcement from a low of 7.2% in December). Bond yields increased further following the budget announcement, reporting an increase of 13 bp on the day. The INR weakened by 0.64%, coincident with net debt outflows. Equity markets, on the other hand, rallied, with the benchmark equity market index reporting an increase of 0.6%, and FII equity inflows post Budget.

Striking a Fine Balance between Populism and Fiscal Prudence

Source: EP

Trump says US military intervention in Venezuela 'an option;' Russia objects - e paper - english news paper today - news headlines today

Trump says US military intervention in Venezuela 'an option;' Russia objects - e paper - english news paper today - news headlines today
Trump says US military intervention in Venezuela 'an option;' Russia objects

US President Donald Trump said military intervention in Venezuela was “an option” as Western nations boost pressure on socialist leader Nicolas Maduro to step down, while the troubled OPEC nation’s ally Russia warned against “destructive meddling.”

The United States, Canada and several Latin American countries have disavowed Maduro over his disputed re-election last year and recognized self-proclaimed President Juan Guaido as the country’s rightful leader.

Trump said US military intervention was under consideration in an interview with CBS aired on Sunday. “Certainly, it’s something that’s on the - it’s an option,” Trump said, adding that Maduro requested a meeting months ago.

“I’ve turned it down because we’re very far along in the process,” he said in a “Face the Nation” interview. “So, I think the process is playing out.”

The Trump administration last week issued crippling sanctions on Venezuelan state-owned oil firm PDVSA, a key source of revenue for the country, which is experiencing medicine shortages and malnutrition.

Maduro, who has overseen an economic collapse and the exodus of millions of Venezuelans, maintains the backing of Russia, China and Turkey, and the critical support of the military.

Russia, a major creditor to Venezuela in recent years, urged restraint.

“The international community’s goal should be to help (Venezuela), without destructive meddling from beyond its borders,” Alexander Shchetinin, head of the Latin America department at Russia’s Foreign Ministry, told Interfax.

France and Austria said they would recognize Guaido if Maduro did not respond to the European Union’s call for a free and fair presidential election by Sunday night.

“We don’t accept ultimatums from anyone,” Maduro said in a defiant interview with Spanish television channel Antena 3 carried out last week and broadcast on Sunday.

“I refuse to call for elections now - there will be elections in 2024. We don’t care what Europe says.”

 

EMBOLDENED OPPOSITION

The 35-year-old Guaido, head of the country’s National Assembly, has breathed new life into a previously fractured and weary opposition. Tens of thousands of people thronged the streets of various Venezuelan cities on Saturday to protest Maduro’s government.

Guaido allies plan to take a large quantity of food and medicine donated by the United States, multilateral organizations and non-profit groups across the Colombian border into the Venezuelan state of Tachira this week, according to a person directly involved in the effort.

 

The group has not yet determined which border point it will cross, said the person, who asked not to be identified because he is not authorized to speak publicly about the issue.

It is unclear whether Maduro’s government, which denies the country is suffering a humanitarian crisis, will let any foreign aid through.

The embattled president on Sunday promised peace for Venezuela without specifically responding to Trump.

“In Venezuela, there will be peace, and we will guarantee this peace with the civil military union,” he told state television, in the company of khaki and black-clad soldiers who were earlier shown carrying guns and jumping from helicopters into the sea.

Maduro has overseen several such military drills since Guaido declared himself president to display he has the backing of the military, and that Venezuela’s armed forces are ready to defend the country.

Air Force General Francisco Yanez disavowed Maduro in a video this weekend, calling on members of the military to defect. But there were no signs the armed forces were turning against Maduro.

Venezuela has as many as 2,000 generals, according to unofficial estimates, many of whom do not command troops and whose defection would not necessarily weaken the ruling socialists.

The police have also fallen in line with Maduro.

A special forces unit called FAES led home raids following unrest associated with opposition protests in January, killing as many as 10 people in a single operation in a hillside slum of Caracas.

Venezuela’s ambassador to Iraq, Jonathan Velasco, became the latest official to recognize opposition leader Guaido this weekend.

Trump says US military intervention in Venezuela 'an option;' Russia objects

Source: EP

Ericsson asked to file objection by Friday - e paper - english news paper today - news headlines today

Ericsson asked to file objection by Friday - e paper - english news paper today - news headlines today
Ericsson asked to file objection by Friday
City: 

The National Company Law Appellate Tribunal (NCLAT) on Monday allowed telecom gear maker Ericsson India to file its objection by February 8 over the plea of Reliance Communications (RCom) to proceed with the insolvency process.

On February 1, RCom had said in a statement that it decided to opt for the insolvency proceedings following its failure to sell assets for paying back its lenders. RCom even failed to sell spectrum to Mukesh Ambani-led Reliance Jio —a deal that was expected to bring some relief to the cash-strapped company.

A two-member bench headed by chairman Justice SJ Mukhopadhaya also said that until further orders of the NCLAT or the Supreme Court, no one can sell, alienate, or create third party rights over RCom’s assets.

“Until further orders, the Appellants, corporate debtor (RCom), Respondent (Ericsson India), guarantors or any third party will not sell, transfer or alienate any moveable or immoveable property of RCom nor invoke any guarantee or mortgage or any other instrument without prior permission of this appellate tribunal or Supreme Court,” the NCLAT said.

The appellate tribunal has directed to list the matter on February 12 for orders. During the proceedings, senior advocate Dushyant Dave appearing for Ericsson opposed the withdrawal of petitions filed by three Reliance Group employees against an NCLT order.

NCLAT, however, said, “Taking into consideration the nature of the case, we allow the Respondents (Ericsson India) to file their short reply affidavit by February 8.”

The NCLAT’s order came on Monday over the urgent mentioning made by three Reliance Group employees — Satish Seth, Punit Garg and Suresh Madihally Rangachar — seeking withdrawal of their appeals against the orders of the Mumbai bench of the National Company Law Tribunal (NCLT).

On May 15, 2018 the Mumbai bench of the NCLT had admitted an insolvency petition filed by Ericsson against Reliance Communications and two of its subsidiaries seeking to recover unpaid dues.

However, on May 30 NCLAT granted a conditional stay on insolvency proceedings against RCom and its subsidiaries--Reliance Infratel and Reliance Telecom.

The tribunal had directed RCom and its subsidiaries to pay Rs 550 crore to Ericsson India in 120 days, failing which it will direct insolvency proceedings against the company.

Meanwhile, telecom tribunal TDSAT has quashed a government decision to charge for additional spectrum allocated to RCom and asked the Telecom Department to return Rs 2,000 crore to the company, the Anil Ambani-led firm said on Monday.

"TDSAT held that any telecom operator's spectrum holdings of upto 5 MHz in the CDMA band and upto 6.2 MHz in the GSM band were exempt from any OTSC levies. TDSAT hence set aside the levy of OTSC (one-time spectrum charge) on Rcom's said spectrum," RCom said in a statement.

Ericsson asked to file objection by Friday

Source: EP

Governance standards improving in corporate India - e paper - english news paper today - news headlines today

Governance standards improving in corporate India - e paper - english news paper today - news headlines today
Governance standards improving in corporate India
City: 
Among the BSE 100 firms, institutionally owned and widely held companies tend to have better governance scores. PSUs continue to fare poorly

Slowly, Indian companies are showing an improvement in their corporate governance standards, with the good companies bettering their governance score.

Proxy advisory firm Institutional Investor Advisory Services (IiAS), in its corporate governance scorecard for 2018, says, “There are five companies in the “Leadership” category against three last year, and the maximum score has increased to 76 this year from 73 last year.”

According to the proxy advisor, “Most of the top 20 companies evaluated last year have displayed an improvement in their overall score or maintained their score despite adoption of a more stringent standard of scoring. Disclosure and transparency levels too have improved, with companies scoring as high as 87 per cent in the category,” according to the IiAS study.

The top five companies with governance score of more than 70 are Hindustan Unilever, HDFC, Infosys, Marico and Wipro.

While the other five in the top ten companies list are Bharti Airtel, Crompton Greaves CE, HDFC Bank, Mahindra Finance and Tata Motors.

“Infosys and Wipro, which were in the ‘Leadership’ category even in the earlier exercise, remained in this category. Two new entrants, HDFC and Tata Motors, made it into the top 10 list this time. Only seven companies in the list are part of the Sensex, suggesting that size is not a necessary determinant of good corporate governance practices,” IiAS said.

However, the median score of the BSE 100 companies has dipped, driven by the banking sector that has undergone a difficult 18-month period, and public-sector enterprises that have had slower progress on the governance agenda, IiAS said.

Attendance at board meetings, which continues to plague some companies, has improved at an aggregate level. Overall stakeholder management by companies has also improved, sending a stronger signal of increased engagement between investors and companies.

“Investors engagement has reached a new high for Indian companies. Mutual funds are taking a position on issues and voting their shares. Insurance companies, under the diktat of the Insurance Regulatory and Development Authority, are voting their shares too and are getting ready to have a structured engagement process with companies. The pension regulator too has asked its funds to vote and develop a stewardship code. But corporate India still needs to focus on conflict of interest,” the report said.

“These issues have plagued several of the large listed companies over the past 12 months, some of these being triggered by whistle-blowers,” IiAS said, adding“Related party transactions continue to be central to this discourse, despite stronger regulation being brought in.”

Among the BSE 100 firms, institutionally owned and widely held companies tend to have better governance scores. PSUs continue to fare poorly. This year, the median score for PSUs decreased to 51 from 54 due to inadequate independent representation on the board and lack of transparency on critical issues like related party transactions, board evaluation and stakeholder management policies, the report said.

Among 50 recently listed companies through initial public offerings on the BSE between April 2015 and March 2017 with a two or three-year track record of being listed five companies with highest corporate governance score were Avenue Supermarts, Equitas, ICICI Prudential Life Insurance, RBL Bank and Ujjivan Financial.

Among BSE 100 constituents only 12 didn’t have at least one non-promoter woman director according to IiAS study, a boost to gender diversity on the company boards.

“That corporate India resorted to appointing promoter family members to fill the mandatory requirement of one woman director is a myth: 88 of the BSE 100 companies have at least one non-promoter woman director. Further, 37 of the 50 IPO companies had constituted a board with a non-promoter woman director.”

“The median scores of recently listed companies were lower than those of the BSE 100, validating that investor engagement has a significant role to play in a company’s journey towards better corporate governance. The market brings its own discipline.”, said Amit Tandon, managing director, IiAS.

Ashishkumar Chauhan, MD & CEO, BSE, which also participated in the study, said,“We at BSE believe in encouraging the listed corporates of our capital market ecosystem in navigating efforts to achieve business leadership not just in numbers but also by channelizing commitment for excellent governance practices. It is hearting to know that our listed corporates are indeed mounting efforts to embrace an approach much beyond compliance ensuring the best interest of all stakeholders.”

Governance standards improving in corporate India

Source: EP

Monday, February 4, 2019

Sonali Bendre returns to work after cancer treatment - e paper - english news paper today - news headlines today

Sonali Bendre returns to work after cancer treatment - e paper - english news paper today - news headlines today
Sonali Bendre returns to work after cancer treatment

Sonali Bendre Behl has resumed work after undergoing treatment for a high grade cancer for about five months in New York.

Last July, Sonali had revealed that she had been diagnosed with a "high grade cancer". The actor returned home in December 2018.

"Being back on a set after a major sabbatical one that has been testing in many ways on so many levels is a surreal feeling.

"After all this, I sort of feel an additional sense of purpose and meaning, and I'm so grateful to be back in action," Sonali posted on Instagram Saturday.

The actor uploaded her picture and a video, where she can be seen entering a vanity van, smiling and waving to the camera.

"I don't think words would do justice to how beautiful it feels to be back at work... To face the camera again and portray the range of emotions required.

"Given that my emotions have been running high for the last couple of months, it feels good to give into the emotions that the job requires. It's just the kind of day that helps me #SwitchOnTheSunshine," she added. - PTI

Sonali Bendre returns to work after cancer treatment

Source: EP

RBI policy, quarterly results key drivers for market this week - e paper - english news paper today - news headlines today

RBI policy, quarterly results key drivers for market this week - e paper - english news paper today - news headlines today
RBI policy, quarterly results key drivers for market this week
City: 

The RBI’s policy meet outcome, ongoing quarterly results season and global cues will set the tone for the stock market this week, analysts said. The market may also witness an overhang of the interim budget announcements.

“For the week ahead, the key drivers would be the outcome of the Reserve Bank of India’s (RBI) monetary policy meeting, corporate results and the sustainability of FII flows,” said Viral Berawala, CIO, Essel Mutual Fund.

“While the reflationary stance of the budget could provide a boost to corporate earnings, especially in consumption, agri-rural sector, retail lending and housing, there can be implications for inflation and interest rates as well,” said Dhananjay Sinha, head, institutional research, economist and strategist, Emkay Global Financial Services.

Bekxy Kuriakose, head - fixed income, Principal Mutual Fund, said, “Focus will shift to the RBI monetary policy review on February 7th.”

Services sector data to be announced early this week will also influence trading sentiment, they said.

CIL, IDBI, BHEL, GAIL, PNB, Cipla and Lupin are among the major corporates scheduled to announce their quarterly results this week.

“The market will, over the next few days, take their own trajectory after this small time window of anticipation of and reaction to the Budget,” said Dhiraj Relli, managing director & cheif exceutive officer, HDFC Securities.

RBI policy, quarterly results key drivers for market this week

Source: EP

RCom to propose same asset sale plan to NCLT - e paper - english news paper today - news headlines today

RCom to propose same asset sale plan to NCLT - e paper - english news paper today - news headlines today
RCom to propose same asset sale plan to NCLT
City: 

Reliance Communications on Sunday said it would propose a similar debt resolution plan to the National Company Law Tribunal (NCLT) that it had been pursuing outside the court.

The Anil Ambani-led company last week announced that it would file for bankruptcy proceedings as it failed to sell its assets for paying back its lenders.

“RCom’s management wi­­­ll propose a similar debt re­solution plan in the Nat­i­onal Company Law Tribunal (NCLT) process, as was earlier being pursued outside the NCLT. Key elements of the debt resolution plan remain unchanged,” the company said in a statement.

Sources privy to the development said that the company is opting for the debt resolution process to overcome the challenge of getting 100 per cent lenders or creditors approval required for taking a decision around asset sale, which has been hampering the process asset monetisation.

“The company has been faced with various mostly, untenable issues raised by the department of telecommunications. These issues inter alia resulted in numerous legal issues at High Courts, TDSAT and the Hon’ble Supreme Court, which frustrated the existing plan and can now be addressed/resolved under the NCLT process.

“Further, challenges ra­i­s­ed by unreasonable minority lenders can now be overc­o­me through the NCLT’s 66 per cent majority rule, ag­a­i­n­st the 100 per cent approvals rule outside NCLT,” RCom said.

The company is le­arnt to be under a debt of Rs 38,000 crore excluding in­terest which includes Rs 19,800 crore that it owes to Indian lenders and around Rs 18,200 crore debt from foreign lenders, a source said.

The company has been tr­ying to sell all telecom infr­a­structure assets and spect­r­um, monetise its submarine cable arm GCX, IDC and Indian Enterprise Business, develop 30 million square feet at the Dhirubhai Ambani Knowledge City complex and sale of other real estate assets to clear dues.

However, despite the passage of over 18 months, le­n­d­ers have received zero proc­eeds from the proposed as­s­et monetisation plans, and the overall debt resolution process is yet to make any headway. RCom even failed to sell spectrum to Mukesh Ambani’s Reliance Jio, a deal that was expected to bring some relief to the cash-strapped company.

RCom was expecting to realise Rs 975 crore from sale of spectrum to Jio which it promised to use for paying dues of Rs 550 crore to Ericsson and Rs 230 crore to settle dues of minority stakeholder Reliance Infratel. Reliance Jio, however, declined to take over any past liability of RCom for which the department of telecom may raise demand in future.

“The RCom board, theref­ore, sees a fast-track NCLT resolution in 2019, free of all uncertainties and challe­n­g­es. The board remains confid­ent on future prospects as a going concern under new ow­nership on completion of the NCLT resolution process,” the statement said.

RCom to propose same asset sale plan to NCLT

Source: EP

FPIs pull out Rs 5,300 cr from capital markets in Jan - e paper - english news paper today - news headlines today

FPIs pull out Rs 5,300 cr from capital markets in Jan - e paper - english news paper today - news headlines today
FPIs pull out Rs 5,300 cr from capital markets in Jan
City: 

Foreign Portfolio Investors (FPIs) withdrew more than Rs 5,300 crore from the capital markets in January, signalling a ‘wait and watch’ approach by them ahead of the general elections.

Prior to this, they had infused a net sum of over Rs 17,000 crore in the capital markets -- equity and debt -- during November and December 2018. In October, they had pulled out a massive Rs 38,900 crore.

According to data available with the depositories, FPIs pulled out a net amount of Rs 5,264 crore from equities and Rs 97 crore from the debt markets last month, taking the total outflow to Rs 5,361 crore.

“Investors are taking a cautious approach given their focus on global headwinds and upcoming general election,” said Vinod Nair, head of research, Geojit Financial Services.

It has not been a good start of the year with regards to FPI flows and clearly they are continuing with their cautious or ‘wait and watch’ stance towards India, which they have been maintaining for a long time, said Himanshu Srivastava, senior analyst manager research at Morningstar Investment Adviser India.

He further said the focus would continue to be on economic growth and the general elections.

Other factors such as movement in crude prices and currency, which would have a bearing on the country’s macro-environment, and worries over global trade war will continue to guide the direction of FPI flows, Srivastava added.

Echoing the views, Alok Agarwala, senior VP and head investment analytics at Bajaj Capital, said FPI flows would continue to be volatile in the coming months.

“The outflows could continue further with escalating trade disputes. The domestic macroeconomic concerns viz, weakness in currency, movement of crude oil prices, trade deficit would also weigh on inflows,” he said.

FPIs pull out Rs 5,300 cr from capital markets in Jan

Source: EP

Long shadow over market - e paper - english news paper today - news headlines today

Long shadow over market - e paper - english news paper today - news headlines today
Long shadow over market
Weak corporate governance standards have come to haunt the equity market

Investors’ losses and worries are piling up with more and more bad news flowing from corporate India. Be it Vedanta, DHFL or ICICI Bank, key stocks were bleeding on the Budget day, with their corporate governance standards getting thumbs-down from the investor community.

Falling corporate governance standards are likely to hurt inflows from foreign portfolio investors (FPIs) to Indian equity and debt markets this year.

FPIs have already turned net sellers. They have pulled out Rs 4,262 crore in January and their overall outflow year-to-date stands at Rs 1,506 crore. While their pull out could be influenced by various global and domestic factors, a par of the blame should certainly go to falling corporate governance standards and rising cases of fund mismanagement by the corporate houses.

Last year, India saw outflow of Rs 33,014 crore from the equity market and Rs 47,795 crore from the debt market.

Sridhar A K, director and chief investment officer, IndiaFirst Life Insurance Company, said, “At a time when other factors in terms of macros are not looking advantageous, such incidences will add to the negative bias against the country in the minds of the foreign investors.”

Earlier Zee Group stocks fell sharply as investors panicked on the news of over-leveraging by the media and entertainment conglomerate. Sun Pharma shares fell sharply on whistleblowers’ complaints to market regulator Sebi and IL&FS Group’s default led to major panic in the debt market, rattling non-banking finance companies’ stocks.

Vedanta shares fell close to 20 per cent on Friday after analysts raised concern over Cairn India’s plan to buy $200 million worth of stock in African miner Anglo American Plc from Volcan Investments, its parent company and an Anil Agarwal family trust.

Dewan Housing Finance continued to bleed for the fifth session and fell 23.92 per cent on Friday to its one-year low, even as DHFL informed stock exchanges that it has appointed independent auditor to investigate allegations of financial mismanagement against the company.

ICICI Bank shares were also under pressure on Friday and closed 2.68 per cent down as S&P Global Ratings, in a bulletin issued during the market hours, said that the recent developments surrounding former ICICI Bank CEO Chanda Kochhar and the changing view of the bank's board of directors affirmed their view of generally weak governance and transparency in the Indian banking sector.

“The ICICI Bank board had in 2016 and early 2018 offered full-fledged support to Kochhar. The board's reversal of its previous strident support of Kochhar is significant in our view, and will likely result in boards across the sector being more careful in giving clean chits to key management personnel facing allegations,” S&P Global Ratings said.

Earlier last week, ICICI Bank had said that an enquiry committee headed by a former Supreme Court judge has observed that the bank's processes failed to detect Kochhar's violation of Indian laws and regulations and the committee primarily blamed Kochhar for her lack of diligence with respect to annual disclosures, which rendered the bank's processes ineffective.

Similarly, last year Punjab National Bank’s stock had received investors’ wrath for discounting fraudulent letters of undertaking worth Rs 14,356.84 crore issued by jeweller and designer Nirav Modi, making the bank liable for the amount.

The PNB stock too fell, by 4.77 per cent, on Friday, as S&P Global Ratings flagged concerns about generally weak governance and transparency in the Indian banking sector.

Drug-maker Sun Pharmaceutical Industries is facing questions on governance and the stock has been hammered several times recently after a whistleblower complained of fund diversion to market regulator Securities and Exchange Board of India.

A conference call organised by Sun Pharma promoter Dilip Shanghvi on December 3 couldn’t help much in alleviating investors concern over mismanagement of funds.

A second complaint by the whistleblower to Sebi has alleged huge transactions between Aditya Medisales, a Sun Pharma-owned subsidiary, and private companies of Sun Pharma promoters.

“In just over three years, between 2014 and 2017, Aditya Medisales has had over Rs 5,800 crore of transactions with Suraksha Realty, controlled by Sun Pharma’s co-promoter, Sudhir Valia, alleges the new 172-page complaint (with documents) sent by the whistleblower on Sun Pharma to the market regulator,” reported a finance and investment advisory publication.

It is feared the remedial measures being initiated by the law enforcement agencies may not be able to bring back investors confidence in these companies.

The Central Bureau of Investigation on January 24  filed a case of criminal conspiracy and fraud against Chanda Kochhar and her husband. According to the investigating agency, Kochhar headed a committee that sanctioned some high value loans to Videocon Industries, violating the bank's lending policies. This was in exchange for an investment by the consumer electronics company's owner in a business headed by Kochhar's husband.

The ICICI Bank board said it would revoke all of Kochhar's existing and future entitlements, and claw back bonuses paid to her from April 2009 to March 2018.

“The board's ability and willingness to claw back bonuses and other benefits when a person is deemed to be at fault is an important check that supports accountability and good stewardship of companies,” S&P Global Ratings observed.

Last year, CBI has also questioned former Punjab National Bank managing director Usha Ananthasubramanian. In May 2018, Ananthasubramanian was divested of her powers as MD and CEO of the Allahabad Bank following the biggest bank fraud allegedly carried out by diamond jeweller Nirav Modi and associates at the PNB.

Along with Ananthasubramanian, three other top officials, PNB executive directors KV Brahmaji Rao and Sanjiv Sharan and general manager (international operations) Nehal Ahad, have also been named for lapses in the handling of the SWIFT system, which allowed the fraud to be carried out. Ananthasubramanian, who was at the helm of PNB from August 2015 to 2017, allegedly did not comply with the year 2016 circular of the Reserve Bank of India on the Swift system, according to the CBI charge sheet in the matter.

The fall out of the growing corporate frauds is beginning to be felt on the markets in other ways, too. Last week Chalet Hotels’ Rs 1,641 crore initial public offering got almost nil response from the retail investors. According to sources close to the merchant bankers managing the issue, the negative sentiment in the primary market was partly owing to some of these large corporates facing governance issues.

raviranjan@mydigitalfc.com

Columnist: 
Ravi Ranjan Prasad
Long shadow over market

Source: EP

Digitization of MSME to become a $10 billion market - e paper - english news paper today - news headlines today

Digitization of MSME to become a $10 billion market - e paper - english news paper today - news headlines today
Digitization of MSME to become a $10 billion market
City: 

Offering digital services to MSMEs is a market that has a potential to grow exponentially in the coming years. Studies find that this market will grow at a CAGR of 50 per cent for the next five years to touch $10 billion from $1.5 billion last year.

Greater adoption by more number of MSMEs and increased spending by them for digital services, including online sales, payments, lending, logistics, advertisements and SaaS are set to grow. According to RedSeer Consulting, as of 2018 three million or just 6 per cent of the MSMEs had adopted digital services.

Low level of awareness, talent crunch and cost are some of the factors that lead to lower adoption of digital services. “Small businesses find it difficult to get resources who know how to operate the various software and digital tools. Since businesses are small/less complex, they do not feel need to buy or use these digital services,” said Anil Kumar, founder and CEO of RedSeer. 

However, RedSeer expects that 20 per cent of the MSMEs or 14 million will adopt digital services by 2023, growing at a CAGR of 35 per cent. There annual spend will increase $500 to $650 in five years. Both together will take the total market size to $10 billion.   

“We are very bullish on the opportunity ahead in digitization. We expect rapid growth as more MSMEs come online to these platforms. Additionally, we expect MSMEs to adopt a wider bouquet of services with platforms pushing them to adopt them in future. Our research with MSME validated that those who have adopted digital services show a strong benefit and optimism from their digital journey and are willing to adopt other digital services in the future especially advertising and enterprise software,” said Kumar.

Associating with online marketplaces is one of the major triggers for this growth. Online Marketplaces have been instrumental in MSME digitization, by opening a wide customer base which never existed for MSMEs, supported with deep insights around the products, demand, planning and pricing. Starting from this initial hook for MSMEs, over time these platforms have themselves become more mature and are offering an ever-wider bouquet of services for their MSME partners.

These platforms put MSMEs deeper into an ecosystem that offers digital payments, lending, advertisements, logistics and other digital services. MSMEs can then selectively adopt various business services over time as the marketplace matures and MSMEs feel a greater need to invest on these services in order to stay relevant and to continue serving their consumers effectively.

Columnist: 
Sangeetha G.
Digitization of MSME to become a $10 billion market

Source: EP

Passenger vehicle sales remain subdued in Jan - e paper - english news paper today - news headlines today

Passenger vehicle sales remain subdued in Jan - e paper - english news paper today - news headlines today
Passenger vehicle sales remain subdued in Jan
City: 

Passenger vehicle sales in January continued to remain tepid with top six carmakers reporting flat and decline in sales. Prospective buyers put off their decision to buy cars due to rise in cost of ownership.

Higher insurance cost, liquidity crunch and price hikes by automakers in the range of 1-5 per cent across models from January 1 kept prospective customers away from the showrooms.

Sales at dominant market leader Maruti Suzuk remained flat last month selling 1,39,440 units as against 1,39,189 units it had sold last year.

Sales of compact cars like the Swift, Celerio, Ignis, Baleno and the Dzire also dipped by 3.50 per cent to 65,523 units from 67,868 units.

Sales at Hyundai, were also flat at 45,803 units compared with 45,508 units sold last year.

Sales at Mahindra & Mahindra, the utility vehicle specialist, also reported flat sales at 23,872 units as against 23,686 units sold last year. “There is buoyancy in rural growth, commodity costs are levelling, fuel prices are coming down and we see improvement in forex movement, which in turn will drive positive customer sentiment,” Rajan Wadhera, president, automotive sector at M&M, said.

However sales at Honda Cars India rose 23 per cent at 18,261 cars bringing cheer to the industry, up from 14,838 units it sold in January 2018.

Sales at Tata Motors fell 11 per cent at 17,826 units, down from 20,055 units sold last year despite newly launched Harrier SUV receiving good response. “January 2019 has been a rather sluggish period for the entire auto industry and has resulted in muted consumer sentiment,” Mayank Pareek, president, passenger vehicles at Tata Motors, said.

Sales at Toyota Kirloskar Motor also dropped by 9.14 per cent at 11,221 units in January as against 12,351 units sold last year.

The tightening of vehicle financing availability has also added to the challenges in the market.

Columnist: 
Michael Gonsalves
Passenger vehicle sales remain subdued in Jan

Source: EP

Be patient with investment - e paper - english news paper today - news headlines today

Be patient with investment - e paper - english news paper today - news headlines today
Be patient with investment

Daylynn Pinto is associate director fund management at IDFC Mutual Fund. He entered the mutual fund industry in July 2004 with UTI AMC, where he focused on the transportation and logistics sector. In the years that he served at the firm, he specialised in equity research in the auto, infrastructure, shipping and logistics sectors, post-which he managed the UTI Transportation and Logistics Fund. In October 2016, he joined IDFC AMC as the associate director–fund management, where he is responsible for equity fund management and equity research and at present manages the IDFC Tax Advantage (ELSS) Fund and IDFC Sterling Value Fund. Daylynn has over 13 years experience in the mutual fund industry and is a B.Com (H) and PGDM.

He is quite sanguine on equity as an asset class for multiple reasons. “Firstly, investors have benefitted from the move towards ‘financialisation’ of household savings and today a higher proportion of their savings are enjoying the potential for above-inflation growth through equities, combined with the high transparency, liquidity and lower transaction cost offered by mutual funds as compared to traditional physical assets,” he says. “However, I have often seen that investors can be lured into chasing quick returns by being attracted to stellar recent investment returns. Unfortunately, very high quick returns are most often not sustainable, and such investment strategies can end up in a failure,” he adds.

Investment strategy

According to him, making investment choices just based on immediate past performance is like driving a car looking through the rearview mirror. The opportunity is in the future, and several other factors need to be considered. At IDFC, he seeks out stocks that are under-appreciated by the market relative to their peer group and the company’s earning potential and also look for companies that have good operating leverage, i.e. companies which have set up capacities and are yet to reap the benefits of higher utilisation. His investment philosophy is rooted in being patient and believing in the growth potential that equity investing can generate. This philosophy also drives him to look for businesses where the management focuses on return on invested capital (ROIC), cash-flow generation and prudent capital allocation.

For retail equity investors who are just starting their investment journey, he recommends a goals-led approach to building a portfolio.

Their goals will help factor in time horizon, risk appetite, liquidity and other considerations. Once implemented, it is important not to b swayed by short-term market conditions or immediate performance, but to remain focused on the original financial goal and review periodically to help remain on track.

Be patient with investment

Source: EP

Inside STORY: Maduro's crackdown on critics - e paper - english news paper today - news headlines today

Inside STORY: Maduro's crackdown on critics - e paper - english news paper today - news headlines today
Inside STORY: Maduro's crackdown on critics

After Vene-zuelan police officers clad in black military uniforms and masks stopped 27-year-old Yohendry Fernandez at gunpoint in the Caracas slum of Jose Felix Ribas, they asked him if he had a criminal record. He replied yes.

The officers then dragged him into an alley and shot him twice in the chest, killing him, according to his family and a witness. It was the afternoon of Jan. 24, the day after tens of thousands of slum residents left their hillside homes to join mass protests against President Nicolas Maduro, who they blame for an economic crisis that has left them without water, power, medicines and food.

Several dozen officers from the National Police’s Special Action Force (FAES) drove into the slum in armored vehicles and on motorcycles.

As they roared down the dusty streets, some opened fire as residents fled before them shouting “They’re here,” according to witnesses. Police snipers clambered atop tin rooftops and locals hid under beds as the gunshots rang out, the witnesses said.

By dawn, the FAES unit had killed as many as 10 people, leaving with their bodies and about a dozen hooded detainees, according to four local community leaders. Venezuela’s Information Ministry, which handles all media inquiries, including on behalf of the national police, did not respond to requests for comment on the operation. Diosdado Cabello, the ruling Socialist Party’s deputy head, accused the opposition of fabricating death tolls from police raids.

The FAES said reports of abuses were “fake news” spread by right-wing opponents. “Our struggle is against all criminals that ravage our communities. If you fear the FAES it’s because you’re a criminal,” the unit said on Thursday on Instagram.

Residents said the FAES officers returned to Jose Felix Ribas for the next three afternoons, spreading terror in a poor community that used to be a bastion of support for Maduro and his predecessor, the late Hugo Chavez. Five years of economic recession have turned many into Maduro’s most fervent opponents.

The raids, the deadliest of several in Caracas last month, show how the government has used the FAES to target critics since opposition leader Juan Guaido proclaimed himself interim president and won the support of Western powers who say Maduro is illegitimate.

Reuters spoke with a dozen witnesses, local politicians, and lawyers, along with experts who study the FAES, to provide the first detailed look at the operation. Reuters also pieced together footage of the raid posted on social media, which witnesses verified.

FEAR THE FAES

The reporting reveals a pattern of street justice employed by FAES, set up in 2017 as an elite force to combat terrorism and organized crime, and an atmosphere of impunity.

The Venezuelan Observatory of Violence, a local crime monitoring group, attributes 43 deaths to security forces during protests and raids since Jan. 22, and says it is processing reports of more.

Keymer Avila, a criminology professor at the Central University of Venezuela, said he had not yet verified all the deaths in Jose Felix Ribas but that 10 seemed reasonable based on his understanding of the events. Rights groups accuse the government of using the FAES to raid Venezuelans’ homes after they return from protests, with the help of tip-offs from supporters. Authorities have arrested more than 900 protesters since Jan. 21, the rights groups say.

Jose Pinto, head of the Revolutionary Tupamaro Movement, a militant group that backs Maduro, told Reuters he and other so-called “colectivos” were expanding their networks of informants.

They alerted police to “suspicious activity” before the Jan. 23 protests, Pino said, sending them images and addresses of suspected “right-wing conspirators,” which he said led to raids.

“CONSEQUENCES”

On Jan. 22, according to residents, an unmarked pickup truck mounted with speakers drove through Jose Felix Ribas, a district within Caracas’ sprawling Petare shantytown, broadcasting a message: “If you protest tomorrow, there will be consequences.”

Most said they took little heed. But six locals said the consequences became clear on Jan. 24 when FAES officers pulled a 23-year-old mother, the cousin of an alleged gang leader, from her house and shot her dead. A church was sprayed with bullets. One man was executed after being handcuffed inside a vehicle, residents said.

Local politicians said authorities justified the raid as an operation against a criminal group. The government has yet to show any evidence against those killed.

Paula Navas, a local political organizer, said the authorities sought to silence her community.

“They traumatized children. What was the objective of this?” Navas asked.

Yohendry Fernandez had been fixing motorcycles in a parking lot on the slum’s main road, some 200 meters (yards) from his family home.

Motorcycles were his obsession, relatives said, and videos on his Facebook page show him racing down Caracas avenues performing wheelies. He sometimes repaired motorcycles for the local police, they said. Just as Fernandez was about to head home, FAES officers arrived and split into groups that advanced into the barrio’s upper reaches. One group set up a blockade on a plaza where the road divided. Fernandez’s home, where his wife and two children were waiting, was on the other side.

“DON’T HURT HIM”

After family members told his mother, Isabel Pino, that he had been arrested at the plaza, she raced to the scene and begged an officer: “Please don’t hurt him, he’s special.”

The officer ordered her to go back inside, Pino, 49, told Reuters. Then, she said, she heard two shots.

The next time Pino saw her son was when she viewed his body at the hospital, a gunshot wound to his heart and another in his sternum. She said she has received no official explanation for his death, and that all his personal belongings were taken.

The family buried Fernandez last week at a cemetery outside the city, the only place they could afford. She says she tells his 4-year-old son, Andres, that his father is asleep. Fernandez’s wife, Wendys, along with Navas and Aviud Morales, a local teacher, confirmed the details of his death. When FAES officers returned to Jose Felix Ribas in the days after the raid, they questioned the family about alleged criminal connections, which Pino denied. A night-time curfew was imposed across the whole sector.

“Just to hear the name, FAES, leaves me terrified. I was just told they are back around here and I can feel the pain in my stomach,” Pino said, her voice shaking.

Inside STORY: Maduro's crackdown on critics

Source: EP

Can budget drive market hopes? - e paper - english news paper today - news headlines today

Can budget drive market hopes? - e paper - english news paper today - news headlines today
Can budget drive market hopes?
The budget may help consumption growth, but sustainable macro growth depends more on capex. The deceleration in capex growth is worrying, says UBS Global Research

The market has reacted positively to budget on hopes of consumption boost Equity markets have reacted positively to the budget, as the headline fiscal deficit does not signal major loosening, and there are hopes that giveaways will aid both rural and urban consumption. The bond market's reaction supports the concern over ambitious revenue assumptions and risk of further fiscal slippage. The budget may help consumption growth, but sustainable macro growth depends more on capex, so the deceleration in capex growth is worrying, especially as it could be cut even more if revenues disappoint.

Budget may raise hopes of PM Modi coming back; our nifty target is 10,000 The budget may raise the market's hopes that Prime Minster Modi will be re-elected, though the link between populist measures and election outcomes is not clearly evident historically (link). The policy space for any new government after the May elections to address capex driven growth will be constrained, given this budget and recent promises by opposition parties. We maintain our Nifty base case of 10,000 in December 2019.

We remain selectively overweight consumer discretionary and neutral on autos.

New schemes and tax breaks for households

The Finance Minister announced a scheme to provide income support to farmers: Rs 6,000 per annum will be transferred in 3 instalments to farming families with cultivable land of up to 2 hectares. The scheme will take effect from 1 December 2018, and the first instalment will be paid in March 2019. The fiscal cost will be 0.36 per cent of GDP (Rs750bn annually). Households earning up to Rs 0.5m will not be required to pay income tax. These schemes could boost consumer staples (especially rural), discretionary consumption, and rural demand for entry-level two-wheelers (link).

FY20 revenue targets look ambitious

The government estimates the FY20 fiscal deficit at 3.4 per cent of GDP, which is a deviation from the 3.1 per cent projected in the medium-term fiscal policy statement last year. It assumes revenue growth of 14 per cent YoY (20.5 per cent YoY in FY19 (revised estimate) and 8 per cent YoY in FY19 YTD). The government continues to rely on tax buoyancy, including from the GST (link).

Slowing capex is a concern

Overall capex is projected to grow 6 per cent YoY in FY20 (vs. 20 per cent in FY19), reflecting deteriorating spending quality and a skew towards social welfare spending. FY19 capex for railways, roads, defence and metro grew 23 per cent YoY (driven by roads), missing the target by 1ppt; budgeted growth in FY20 for these 4 sectors is 13 per cent YoY, led by railways, while FY14-19 growth was 18 per cent YoY. We remain underweight industrials/infrastructure (link).

Will the RBI cut rates?

Gross market borrowing (Rs7.1trn) was much higher than the market expected, and the bond market reacted adversely to this news. We believe the RBI to be cognizant of the risk to inflation from fiscal slippage, and we continue to expect it to keep rates on hold in the upcoming policy review on 7 February. That said, we expect a change in its policy stance from "calibrated tightening" to "neutral".

Key sector/stock implications (see inside for detailed sector impacts) For autos, the budget will support entry-level 2-wheelers, especially in rural areas, but will unlikely benefit premium bikes, MCHV and tractors. HUL, Dabur, Britannia, Titan and Asian Paints will likely be the key beneficiaries of the budget. It maintains the status quo for tobacco taxation, which is positive for ITC.

Income support to farmers

In his budget speech, the Finance Minister announced an "Income Support Scheme" for small and marginal farmers (Pradhan Mantri Kisan Samman Nidhi).

Under this scheme, farmers with cultivable land of up to 2 hectares will receive a direct cash transfer of Rs 6,000 per annum in three instalments.

The scheme will be implemented in the current fiscal year (FY19), and the first instalment will be paid in March 2019. Based on the 2015-16 agriculture census (released in 2018), the scheme will cover 86 per cent of total farmland holders. The government has allocated Rs200bn for FY19 and Rs750bn for FY20 (0.36 per cent of GDP) for the scheme.

Central government spending on rural development and agriculture is budgeted to grow 27 per cent YoY, largely due to the income support scheme; excluding this, it will grow 4 per cent YoY.

Budget spending on rural housing will decline in FY20 and has been revised downward for FY19 compared to the budgeted estimate.

Allocation for Modicare

(Ayushman Bharat)

The government has allocated Rs64bn for the national health insurance scheme, 'Pradhan Mantri Jan Arogya Yojana' (PMJAY), launched in September 2018. The budgeted absolute spend on healthcare looks reasonable (we have assumed a cost of Rs110bn per annum at an annual premium of Rs1,100 covering 100m families), as the cost will be shared 60 per cent/40 per cent between the central and state governments.

Impact on infrastructure and capital goods

Budget FY20 impact: Capex growth in four key sectors will slow to 13 per cent in FY20 from FY14-19 CAGR of 18 per cent

*While FY19 railway capex is set to miss earlier estimates by 4 per cent, FY20 railway capex is set to grow by 14 per cent YoY. The increased railway capex will be funded by a combination of higher budgetary support and borrowing by railways.

*FY19 road capex growth is expected to exceed earlier estimates by 8 per cent, funded by higher borrowing. FY20 capex is set to grow by 13 per cent YoY (on a higher base). Importantly, this higher spending will be mostly funded by borrowing (up 21 per cent YoY) rather than budgetary support (up 5 per cent).

Impact on Banks and NBFCs

*The government have raised the TDS threshold on interest earned on bank/post office deposits from Rs10,000 to Rs40,000. This is marginally positive for bank deposits growth and will likely boost the attractiveness of bank deposits vs. other savings products.

Sector and stock implications

The increase in the TDS threshold could slow down the dis-intermediation of bank deposits, in our view, and help banks access low-cost deposits. We believe retail deposit gathering will be critical in sustaining above-industry growth rates in loans for banks (link our detailed note) Cement

 

Road capex to grow by 13 per cent YoY

*In FY19, spending on roads exceeded estimates by 8 per cent. The FY20 capex outlay of Rs1,470bn is up 12.6 per cent YoY. The capex outlay for metro projects is also up 18.5 per cent YoY to Rs185bn.

*However, overall capex growth is expected to moderate from 20 per cent YoY in FY19 to 6 per cent YoY in FY20.

*The tax exemption for affordable housing projects (houses up to 60 sqm) has been extended by a year (Section 80IBA). This could provide a continued boost to affordable housing project launches in FY20.

*The long-term capital gain exemption under section 54 can now be availed by the purchase of two properties instead of just one currently. This could mildly aid demand in urban residential.

*Assured income support for 120 million small and marginal farmers could also boost rural cement demand to some extent.

Sector and stock implications

*A limited impact from the above measures on cement volume growth.

*Hence, the budget as neutral for the sector. Consumer Budget FY20 impact: Consumption boost ahead? In our view, the FY20 budget is likely to impact both rural as well as urban consumption. Rural growth has been showing signs of recovery over the last 6-9 months, which in our view is an indicator of rural consumers' intent to consume more. Some of the schemes announced could finally provide some disposable income to such consumers and boost rural consumption after the headwinds of demonetization and GST, which impacted both the supply and demand environment in some of the rural hinterlands.

*Also, consumer companies are likely to be key beneficiaries if the excess liquidity in the hands of consumers increases consumer inflation. Historically, consumer companies, especially those with strong brand recall, have done better in an inflationary environment, as it provides headroom for price increases and therefore EPS increases.

Key policies

*In the Union Budget FY20, the government has announced a direct benefit transfer of Rs 6,000 per year to small and marginal farmers under the PM-KISAN scheme. This amount is to be disbursed in three equal instalments of Rs 2,000 each directly to the farmers' bank accounts. It is likely to benefit around 120m rural households and the first pay-out is expected on 31 March 2019. In our view, if this scheme is implemented successfully, it could meaningfully increase the disposable incomes of a large proportion of rural consumers. In this case, we believe all consumer staples companies with exposure to rural India should benefit. However, in our view, the companies most likely to capture the lion's share of this growth will be the ones with the strongest distribution and sales execution in rural India. We identify HUL, Dabur and Britannia as key beneficiaries of the above scheme.

*The government has also announced that individual taxpayers with taxable annual income up to 5 lakhs will get a full tax rebate. This targeted approach could aid inclusion of the bottom half of the consumer pyramid into the realm of discretionary consumption. Titan and Asian Paints could be key beneficiaries of the above scheme.

*Status quo maintained on tobacco taxation: This is positive for ITC, as it allays investor concerns regarding disproportionate taxation increases on tobacco to fund populist schemes.

Sector and stock implications

*Based on analysis, the following stocks are key beneficiaries of the schemes above:

*HUL is a key beneficiary of the budget announcements. However, we are neutral on the stock given it is already trading at valuations which leave limited upside room.

*Dabur’s on the ground strategy has been working well. Low historic affordability has meant low availability in geographies of brand strength. With improved access to products, consumer throughput is improving. Mr Mohit Malhotra’s refreshed plans for Dabur’s core brands will present to consumers a far more aggressive positioning while differentiating and expanding into adjacent product categories.

*Britannia's brand equity should support extensions into categories other than biscuits across India. Consumers can also now afford better-quality biscuits, and Britannia’s market share and volume growth should improve. This should be further aided by rural distribution expansion undertaken by the company.

*Titan: Gold demand in India is slowing, but importantly the trend of formalisation of jewellery continues. 'Tanishq' as a brand has done even better, with sustained improvements in consumers’ perception as a wedding jeweller.

*This trend is likely to continue given more noise around the need for hallmarking all gold jewellery and as the Indian consumer's preference for diamond  jewellery.

Autos: boost in rural consumption

The FY20 budget announced by the government as supportive for entry-level 2-wheelers, especially in rural areas. We do not see the budget resulting in a major boost for PVs and the tractor industry. Also, the budgeted spends for highways are not encouraging, and we maintain our negative stance on trucks, considering the excess capacity build-up. We were already expecting 9 per cent growth for entry-level bikes in FY20, higher than the 7 per cent industry growth, expecting a populist budget with a focus on the rural segment. We maintain 8 per cent/16 per cent/1 per cent growth estimates for the PVs/LCVs/MHCVs industries in FY20.

*The Rs750bn cash push (0.36 per cent of GDP) as direct income support for small farmers will keep demand strong for 2-wheelers and LCVs.

*The demand boost for PVs will be limited, considering that the net benefit to a person below a Rs0.5m income level will be restricted to Rs10k in the best case.

*Capex growth for highways is expected to decelerate to 13 per cent in FY20, vs. 29 per cent in FY19. Maintaining cautious stance on trucks, as the industry capacity increase of 35 per cent over FY18-20 will be difficult to absorb.

*Do not expect much benefit for tractor growth, as we believe farm loan waivers are more of a stimulus than the direct income benefit of Rs6000/year.

Sector and stock implications

*Expect Maruti to outperform the PV market, given its large distribution network and rural penetration.

*Rural demand for entry-level 2-wheelers will be strong in FY20.

*Expect Mahindra & Mahindra to also benefit considering the rural consumption boost.

*Do not see benefits for MHCVs (impacting Ashok Leyland and Tata Motors), as capex growth for highways is set to decelerate.

Real estate to incentivise demand

*The tax exemption for affordable housing projects (houses up to 60 sqm) has been extended by a year (Section 80IBA). The continued tax exemption for developers augurs well for affordable housing supply and demand during FY20.

*For developers, the tax on notional rent on unsold ready inventory has been extended from 1 year to 2 years. This measure gives developers more time to handle unsold ready inventory, though even the extended period could still be not enough for developers developing luxury projects, as their demand is currently subdued.

*Homebuyers are exempted from paying tax on notional rent on second self-usage houses.

*The long-term capital gain exemption under section 54 can now be availed by the purchase of two properties instead of just one currently

*In line with its favorable policy stance on the sector, the government has now tried to boost investor demand slightly by making second-home purchases (for self-usage) tax exempt and two properties purchases now eligible for capital gains exemption. In addition, the tax exemption for affordable housing projects has been extended by a year, ensuring that demand and supply of affordable homes continue even in FY20. These measures are positive for Godrej, Prestige Estates and Oberoi Realty. Extension of tax relief on notional rent on unsold ready inventory from 1 year to 2 years will give developers more time to handle unsold ready inventory; however, for developers struggling with the wrong inventory in this market, this could still prove not enough.

Oil & Gas

*BFY20 budgeted subsidies significantly higher; providing LPG to poor women remains a focus area

*Fuel subsidies for FY20 have been increased by nearly 50 per cent to Rs375bn, while there is no change in revised estimates for FY19. The higher budgeted subsidy in FY20 with no upward revision in FY19 fuel subsidies indicates a roll-over of 2HFY19 subsidies to next year.

*The government has maintained the target of providing free liquefied petroleum gas (LPG) connections to 80m poor women, with more than 60m connections already provided.

*A high-level inter-ministerial committee has made several specific recommendations, including transforming the system of bidding for exploration, and changing from revenue sharing to an exploration programme for Category II and III basins. The government is in the process of implementing these recommendations.

Stock implications

*The higher budgeted subsidy for FY20 should be positive for upstream SOEs (ONGC and Oil India), as they might not have to bear the Under-recovery (UR) burden, though this could lead to delays in outstanding payments for SOE oil marketing companies (OMCs) (IOCL,BPCL, HPCL).

*An increase in LPG connections is likely to be positive for SOE OMCs, as LPG is typically a higher-margin product.

*FY19 capital expenditure for GAIL/MRPL/CPCL has been revised upwards by 25 per cent/34 per cent/18 per cent respectively, while for Oil India, it has been cut by 10 per cent. FY20 planned capital expenditure is significantly lower for MRPL, OVL, and GAIL, while significantly for HPCL and Numaligarh Refinery.

Can budget drive market hopes?

Source: EP