TECHNICAL TREND ( NIFTY - BANK NIFTY FUTURES )

NIFTY FIFTY : The Nifty is down more than 10 percent from its record high of 12,103 recorded on June 3 but there
at least 20 stocks trading at a steep discount of 50 percent or more in the Nifty500 index. Twenty-two Nifty500 stocks,
including RBL Bank, PC Jeweller, YES Bank, Coffee Day, Reliance Capital, Jet Airways, Reliance Home Finance, and Cox &
Kings, have fallen 50-90% since June 3. Most of the stocks which witnessed a huge selloff have some structural or
fundamental reason attached to it hence, some of them might not qualify as a value buy, and will be best to avoid
catching the falling knife. You may catch a falling knife but you should be doubly sure of that both the sides of the knife
are not equally sharp. It hurts only if both the sides are sharp, and if only one side is sharp then you will be able to catch
it comfortably with your experience,” Dr Joseph Thomas, Head of Research at Emkay Wealth Management, told
Moneycontrol. It was important to follow the market, identify value and growth and choose investments selectively, he
said. “In a scenario of falling markets, during which time things become cheaper and cheaper still with each passing day,
one needs to be more careful because everything would look the same and equally attractive,” Thomas said. He added
that higher tax surcharge on high-networth individuals (HNIs) and foreign investors and the absence stimulus package
dented sentiment on D-Street after the budget. Markets have failed to hold on to crucial support levels since June,
dragged down by a bruising trade war between the US and China, and a slowdown in economic growth and earnings of
India Inc at home. Recent measures announced by the government will improve the sentiments and help revive the
economy, but there will be a lag effect. Most experts are of the opinion that it could take two or more quarters for the
measures to show results, but investors can start accumulating large and quality midcaps for their portfolios. We believe
that as and when the economy rebounds, largecap will first move and small and midcaps will follow

BANK NIFTY : - Reversing early gains, BSE benchmark Sensex slipped into the red while Nifty ended flat in a volatile trading

session on Thursday dragged down by private bank stocks amid expiry of weekly options. The market opened on a positive note
supported by auto, pharma and metal stocks following a slew of positive developments on US-China trade talks, Hong Kong crisis and
Brexit.The Nifty Private Bank index closed 0.75 per cent down at 14,950.55. Shares of ICICI Bank (down 2.14 per cent) , Federal Bank
(down 1.16 per cent) , Kotak Mahindra BankNSE 2.20 % (down 1.14 per cent) , RBL Bank (down 0.92 per cent) , IndusInd Bank (down
0.72 per cent) and HDFC Bank (down 0.56 per cent) were among the top losers in the index. Public sector units’ stocks hogged
limelight during the session. PSU companies have seen consistent declines because of a lot of supply from the government. However,
the government’s current stance of not willing to sell at distress valuations is a significant positive and that has been the reason for
the interest in state-run companies," said Naveen Kulkarni, Head of Research at Reliance Securities. However, analysts believed that
overall sentiment continued to remain weak as foreign investors remained sellers on dismal macroeconomic data. Last week
the Nifty came close to 10,850 mark and maintained its five-week losing streak. While the Nifty lost around 2.54 per cent, the Bank
Nifty lost nearly 3.8 per cent during the week. On the sectoral front, Nifty Media (-12.31 per cent) and Nifty Metal (-8.67 per cent)
were the worst performers, only Nifty IT (+0.48 per cent) displayed some fighting spirit. Now, technically at this juncture the Nifty is
hovering between the consolidation zone (10,800–10,500) where the markets oscillated in the months of December 2018 to March
2019 and then posted a fresh rally towards the alltime highs. This being a demand zone, there is a possibility of some relief for the
bulls going ahead. Technically, any dip below 10,800 can be used to buy some selective strong group of stocks with a stop below
10,500. Another important observation which supports our view is that on the derivatives front, the long & short ratio of FIIs in index
futures has reached near 28 per cent. Generally, we have witnessed a sharp recovery in the markets in such conditions. Thus, we feel
we might settle down soon and there could be at least a meaningful bounce in the markets. On the upside, intermediate resistances
are at 11,150 – 11,350 levels for the time being.

Monday, 9 September 2019

(NIFTY )

Detail of Chart: On the above given daily chart of Nifty has Applied the,Movinga

average, moving average channel and Bollinger band all the indicators are
indicating that the Nifty to trade in negative. Today nifty gap up open. Nifty has
broken its weekly trend line. Nifty formed double top then foll down now its will
be support 10700 to Resistance 11140.
( BANK NIFTY )

Detail of Chart - On the above given daily chart of Bank Nifty has Applied the,

Moving average, Moving average channel and Bollinger band all the indicators
are indicating that the Bank Nifty to trade in negative . nifty Bank gap up open.
Bank Nifty berish flag and along that it gose down and now it will be between
support 26740 and Resistance 28400.
 NSE WEEKLY CALLS ( AS PER TECHNICAL ANYLYSIS )

NSE CASH
NSE CASH BUY KAVERI SEED ABOVE 492 TARGET 530 Sl 461

NSE CASH BUY TATA MAHINDRA ABOVE 725 TARGET 745 SL 710

(On the basis of last week data and the research of our expert you can make profit
of 1 lac on the investment of 3 lacs if you proper follow our guidelines it is also
depends on market condition )
 (NSE FUTURE)

NSE FUTURE SELL ITC BELOW 243 TARGET 235 SL 249

NSE FUTURE BUY AXIS BANK ABOVE 674 TARGET 690 Sl 661

(On the basis of last week data and the research of our expert you can make
profit of 1 lac on the investment of 3 lacs if you proper follow our guidelines it
is also depends on market condition )
 NIFTY WEEKLY GAINERS/LOOSER

( GAINERS )

(LOOSERS )
( WORLD INDICES )
✍ TOP NEWS OF THE WEEK

RPower, Japanese energy major JERA JV to build 750 MW plant in Bangladesh. Reliance
Power on Tuesday said it, along with Japanese energy major JERA, will jointly set up a 750 MW gas-
based combined cycle power project (phase-1) at Meghnaghat in Bangladesh. Reliance Power will
hold 51 per cent stake in the joint venture company, while JERA will hold 49 per cent stake, the
company said in a statement. Reliance Power signed a partnership agreement with JERA, one of the
largest power utilities of Japan, for jointly setting up 750 MW gas-based combined cycle power
project (phase-1) at Meghnaghat, Bangladesh," the statement said. The project agreements for phase-1
were signed with the authorities in Bangladesh on Sunday. Reliance Power, the power generation
company of Reliance Group, had signed a memorandum of understanding (MoU), during the visit of
Prime Minister Narendra Modi to meet Prime Minister of Bangladesh Sheikh Hasina at Dhaka in June
2015, for setting up 3,000 MW gas-based combined cycle power project in phases in Bangladesh. The
project agreements include the Power Purchase Agreement and Land Lease Agreement with BPDB
(Bangladesh Power Development Board) for the power project, Gas Supply Agreement with Titas
Gas, a subsidiary of Petrobangla for the supply of gas to the power project and Implementation
Agreement with Ministry of Power, Energy and Mineral Resources. The project will be set up within
36 months of signing the agreements, it said. "This joint venture project will give a tremendous boost
to the economic and industrial growth of Bangladesh and will enhance the energy security of the
country with clean, green and reliable LNG based power. We are excited to be part of the growth
story of Bangladesh in partnership with JERA," Reliance Group of Companies Chairman Anil
Ambani said in the statement, JERA President Satoshi Onoda said, "It is our great honour to
participate in the largest IPP in Bangladesh. Together with Reliance Power, a leading private power
company in India, JERA will realize a stable power supply and contribute to sustainable economic
growth in Bangladesh." The project will represent the largest Foreign Direct Investment (FDI) in the
power sector in Bangladesh, and shall cater to the country's rising needs for power, contributing to
Bangladesh's goal of energy security, it said. Reliance Power will relocate one module of equipment
procured from internationally reputed original equipment manufacturers for its combined cycle power
project at Samalkot in Andhra Pradesh for phase-1 of the project in Bangladesh. The transaction will
result in Rs 835 crore (USD 116 million) debt reduction for Reliance Power, payable to US-Exim.

Ashok Leyland meets BS-VI emission norms for all its heavy-duty vehicles Ashok Leyland Ltd
has said that it will be the first Indian original equipment manufacturer (OEM) to meet the BS-VI
emission norms for all its heavy-duty trucks. The company said it becomes the first Indian OEM to
meet the BS-VI emission norms across the full range of heavy duty trucks – Gross Vehicle Weight
(GVW) 16.2 tonnes and above, according to company's release. N Saravanan, Chief Technology
Officer of the company received the certificates, confirming compliance to BS-VI emission standard,
from Automotive Research Association of India (ARAI). From April 1, 2020 onwards all vehicles
have to comply with the BS-VI emission norms, the company said. “Ashok Leyland has always been
a pioneer in introducing new technology in the commercial vehicle industry and this achievement of
meeting the BS-VI emission standard across our heavy-vehicle range further reinforces our position
as technology leaders,” Dheeraj Hinduja, Chairman, Ashok Leyland was quoted as saying in the
statement. Compliance in the LCV (light commercial vehicle) and ICV (intermediate commercial
vehicle) range will be completed shortly and we will offer a comprehensive range from 70 hp to 360
hp in BS VI application,” Hinduja added. Shares of Ashok Leyland hit an over 5-year low to trade at
Rs 61 per share, slipping 12 per cent intra-day, on the BSE on Friday as analysts remained cautious
on the company's medium-term outlook for the domestic medium and heavy commercial vehicle
(M&HCV) industry. The stock was trading at its lowest level since February 10, 2015, when it had
touched Rs 56 per share in the intra-day trade. The commercial vehicle company's net profit dropped
by 45 per cent to Rs 230 crore in the June 2019 quarter (Q1FY20) from Rs 422 crore reported in the
corresponding quarter of the last year. The revenue of the company declined by nine per cent to Rs
5,684 crore from Rs 6,263 crore year-on-year (YoY). Meanwhile, the company’s sales continued to
slide in July, 2019. The total sales fell by 28 per cent YoY to 10,927 units in July 2019 over July
2018, whereas the total domestic sales fell by 29 per cent to 10,101 units in July 2019 over the same
month in the previous year. According to Moody’s Investor Service, the outlook for auto
manufacturing remains negative as global sales of light vehicles are set to keep falling amid geo-
political dangers including the US-China trade conflict and Brexit.

L&T's construction arm bags contract for Navi Mumbai International Airport Infrastructure
major L&T on Tuesday said its construction arm has bagged the contract for construction of the Navi
Mumbai International Airport. The company did not provide value of the contracts but said the orders
fall under "major" category which ranges between Rs 5,000 crore and Rs 7,000 crore as per its
classification of contracts. "The transportation infrastructure and buildings and factories businesses
of L&T Construction have secured a prestigious project from the Navi Mumbai International
Airport Private Ltd (NMIAPL) for the engineering, procurement and construction of the
greenfield Navi Mumbai International Airport at Navi Mumbai," L&T said in a regulatory filing. The
passenger terminal building is being developed to initially handle a capacity of 10 MPA (million
passengers per annum). The project will subsequently be enhanced to handle 20 MPA, the company
added. Shares of the company were trading at Rs 1,314 apiece, down 1.06 per cent, from their
previous close on BSE. Larsen & Toubro (L&T), a leading player in the airport construction segment,
is set to win contract to build the Navi Mumbai International Airport. The board of City and Industrial
Development Corporation (CIDCO), the planning authority, met on Friday to consider the contract. A
tender to select the engineering procurement and construction (EPC) contractor was floated last
August. A source said L&T has been chosen for the construction work. The contract size is not known
and the award will take place following government approvals, it is learnt. “We are yet to award the
EPC contract and will share an update in due course,” said a spokesperson of GVK, which is
developing the Navi Mumbai airport. A CIDCO spokesperson did not respond to an email query.
An L&T spokesperson confirmed its participation in the bid but did not elaborate. L&T is the project
contractor for ongoing expansion works at Bengaluru, Delhi, and Hyderabad airports. Navi Mumbai
airport has been plagued by delays and cost escalation over issues related to land acquisition and
environment issues. The airport was being planned to handle 10 million passengers in the phase one,
but the terminal will now be built to handle 20 million. The first phase project cost is pegged at over
~14,000 crore and is being funded through equity investment and ~10,300-crore long-term debt.
While the state hopes the airport will be ready by mid-2020, CRISIL in its report in May-end had said
operations are expected to start in 2023. Site complexity is another challenge. One of the first tasks of
the contractor will be to raise the ground level to 8.5 metres and laying utilities. These would need to
be carried out before the construction of runway and other infrastructure. The contract scope covers
cut and fill works, construction of terminal, airfield works, including runway, apron, ancillary
buildings, multi-level car park, GVK had said in its bid notice last August. Pre-development work for
the project began in June 2017. This included flattening a hillock, reclaiming marsh land and
diverting a river. CIDCO, which has been carrying out this work, has increased the land level to 5.5
metres.

Auto dealers unsure of a revival in consumer sentiment in festive season Despite the government
announcing a number of sops, auto dealers are unsure of a revival in consumer sentiment in the
upcoming festive season. On the ground, I can’t say right now if I have seen much change from what
we last reported. Enquiries are still there, but postponement continues as of now,” said Federation of
Automobile Dealers Associations (FADA) President Ashish Harsharaj Kale. He was responding to
queries on whether the measures announced by finance minister Nirmala Sitharaman to help the auto
industry has had any tangible effect. A slump during the festive season would eliminate any chance of
revival of the auto sector this financial year. This is because sales of automobiles during the festive
season comprise almost a third of the total vehicles sold during a particular year.
The muted expectation of dealers come at a time when vehicle manufacturers such as Maruti Suzuki
India, Hyundai Motor India, Mahindra & Mahindra and others reported a double-digit fall in
wholesale dispatches to dealerships in July and August. This comes with the festive season kicking
off with Ganesh Chaturthi and Onam. Maruti’s domestic dealer sales in August declined significantly
by 35.9 per cent year-on-year to 94,728 units. This is the third time the company pushed less than
1,00,000 vehicles to its dealerships in a particular month since July 2017. Vehicles dispatched by the
top six passenger vehicle manufacturers during the same period declined by 34 per cent year on year
to 171,193 vehicles. Maruti, which has 50 per cent share of India’s car market, is not pushing any
stock to its dealers which is unusual before the festive season. “We aren’t pushing any stock to the
dealership in order to rationalise the inventory,” said Kenichi Ayukawa, managing director and chief
executive officer of Maruti Suzuki India. According to data released by the Society of Indian
Automobile Manufacturers (SIAM), passenger vehicle sales in July fell significantly by 31 per cent to
200,790 vehicles. It was the worst sales performance since a 35 per cent decline in December 2000.
However, the credit availability to auto dealers have significantly improved after dealers met bank
representatives. “They are now more inclined to do a case-by-case evaluation of the dealer rather than
tightening the norms for everyone,” said Kale.

Godrej Security Solutions to invest Rs 100 cr in R&D, branding next 2 years India’s top security
solutions company Godrej Security Solutions (GSS) plans to invest Rs 100 crore on research &
development (R&D) and branding in the next 2 years. Besides, the Godrej Group entity is working on
a roadmap to expand retail footprint in India, especially tier II and III markets. We have chalked out a
plan to invest about Rs 100 crore in R&D and marketing initiatives, of which the bulk would be
pumped into new product development,” GSS vice president and global head (marketing, sales and
innovation), Mehernosh Pithawalla, told Business Standard here today. At the same time, the
company is looking to expand its pan-India retail touch points from 8,000 at present to 10,000 by the
end of current fiscal. In Uttar Pradesh, GSS will augment its retail network from 200 to 300 by March
2020, Pithawalla said. GSS is further eyeing greater traction from e-commerce, which makes up about
seven per cent of its sales at present. “In coming years, we expect it to comprise 10-15% of our total
revenues,” Pithawalla said. The company has recently launched an e-commerce portal
(www.godrejsecure.com) as part of its ‘omnichannel’ strategy to help customers to review and
purchase home security solutions online, he added. GSS claims almost 80 per cent share in the
domestic security solutions market, which is pegged at Rs 800 crore, including both home and
office/bank security segments. He was in town to launch Godrej’s new range of home security
products. “Although India is among the global top-6 home security solutions markets, yet the low
penetration level of seven per cent provides huge potential to grow and penetrate further,” he added.
The US, Italy, Germany and Thailand are the other top markets in this segment. Meanwhile, GSS is
aiming at 10 per growth this year, apart from gaining a greater export market share. Currently, exports
contribute to about Rs 65 crore of our turnover from the key geographies of Europe, Africa and
SAARC. We expect the export pie to grow by almost 40 per cent this financial year, with a large
chunk coming from Africa,” Pithawalla said. The company runs a captive manufacturing plant in
Mumbai with an installed capacity of 300,000 units a year, he said, adding there was ample scope for
augmenting the capacity on market demand. “UP is among our prominent markets and is projected to
witness high rate of adoption of home security solutions with an estimated business of Rs 10 crore

Sun Pharma slides 4% on report of Sebi ordering forensic audit

Sun Pharmaceutical Industries dipped 5 per cent to Rs 416.85 apiece in Wednesday's trade on the
BSE after reports suggested that Securities and Exchange Board of India (Sebi) has ordered a forensic
audit against the company to look into allegations of financial irregularities and lapses in corporate
governance standards. The audit has been ordered based on allegations made by a whistleblower in a
150-page complaint to Sebi, accusing Sun Pharma of committing corporate governance and tax-
related offences and securities market-related violations. Specifically, the whistleblower complained
of a fund diversion of Rs 42,000 crore and of personal profits being made to the tune of Rs 10,000
crore. The letter is also believed to allege that the company's key distributor and subsidiary, Aditya
Medisales (AML) had thousands of crores of rupees worth of transactions with a real estate firm that
is controlled by a director on the Sun Pharma board. Earlier, the market regulator had sought detailed
answers from the company on the two queries. SEBI has ordered a forensic audit to confirm the
findings of its initial inquiry," Moneycontrol quoted a senior SEBI official in its report. At 9:40 AM,
the stock was trading 4.05 per cent lower at Rs 421.65 and was the worst performer on Sensex and
Nifty. In comparison, the benchmark S&P BSE Sensex was down 5 points, or 0.02 per cent. The
counter witnessed huge trading volumes with a combined 4.7 million shares changing hands on the
NSE and BSE, till the time of writing this report. Shares of Sun Pharma Advanced Research
Company were also trading with over 3 per cent cut at Rs 152.25. Shares of Sun Pharmaceutical
Industries rallied 5 per cent to Rs 432 apiece in the early morning trade on the BSE on Thursday on
reports that the market regulator Securities and Exchange Board of India (Sebi) has found no merit in
the allegations of fraud against the company. At 10:16 am, Sun Pharma was trading 3 per cent higher
at Rs 425, and was the top gainer among the S&P BSE Sensex pack. In comparison, the benchmark
index was down 0.54 per cent or 200 points at 37,251. The counter witnessed huge trading volumes
with a combined 7.2 million shares changing hands on the NSE and BSE, till the time of writing this
report.
RBI mandates banks to link fresh retail loans to external benchmark The Reserve Bank of
India (RBI) on Wednesday made it mandatory for banks to link all their fresh retail loans to an
external benchmark, effective October 1 — the central bank’s repo rate being one such benchmark.
All public sector banks have moved to such a regime voluntarily, while private banks are yet to. The
state-run banks have introduced repo-linked products for floating-rate home and auto loans, but
the RBI said loans to micro, small and medium enterprises (MSMEs) should also be linked to an
external benchmark. The three external benchmarks the RBI proposed are policy repo rate, the
Government of India’s three-month and six-month treasury bill yields published by Financial

Benchmarks India Private (FBIL), or any other benchmark market interest rate published by
FBIL. The central bank amended its master directions on interest rate on advances too, reflecting the
changes. Some banks do calculate their marginal cost of funds-based lending rate (MCLR) based on
the three- and six-month treasury bills, but the RBI said “it has been observed that due to various
reasons, the transmission of policy rate changes to the lending rate of banks under the current MCLR
framework has not been satisfactory”. Banks are free to offer such external benchmark-linked loans to
other types of borrowers as well, but the banks must adopt a uniform external benchmark within a
loan category, to ensure transparency, standardisation, and ease of understanding of loan products by
borrowers. Banks are free to decide the spread over the external benchmark. However, credit
risk premium may undergo change only when borrower’s credit assessment undergoes a substantial
change, as agreed upon in the loan contract,” the RBI said. Other components of spread, including
operating cost, could be altered once in three years. The interest rate under external benchmark should
be reset “at least once in three months”. Karthik Srinivasan, senior vice-president and group head -
financial sector ratings, ICRA, said it is going to be “challenging to interest manage margins”. The
effect will be seen on the incremental loan book since only new loans will be linked to external
benchmark. The outstanding loans will still be governed by existing rules. Transition to external
benchmark from the existing interest rate system — such as MCLR, or base rate, or prime lending
rate etc. — will continue till repayment or renewal, as the case may be.
TOP ECONOMY NEWS

Latest bank mergers unlikely to revive growth, profitability: Credit Suisse The mega public
sector bank mergers plan announced over the weekend is unlikely to create any meaningful cost
synergies and revive credit growth or improve their profitability, says a report. Last Friday, the
government had unveiled a mega plan to merge as many as 10 public sector banks into four to help
create stronger global-sized banks. Accordingly, Punjab National Bank would take over Oriental
Bank of Commerce and United Bank of India; Syndicate Bank would merge with Canara Bank;
Union Bank of India would takeover Andhra Bank and Corporation Bank; and Indian Bank would
take over Allahabad Bank. Given the limited flexibility on restructuring and rationalisation,
meaningful cost synergies from these mergers are unlikely," Swiss brokerage Credit Suisse said
Tuesday. Even as size and scale of operations increase, core profitability of these banks is likely to
remain weak, it said, adding, "these banks will continue to depend on government for funds." With
these mergers, together with the two previous consolidations in the past two years, the number of
public sector banks to 12 from 27 in 2017. The government had also said it would infuse Rs 52,250
crore into these 10 banks to boost their balance-sheets. While the recap amount puts all four merged
entities comfortably above the regulatory threshold of 8 percent CET1, given the recent experience of
SBI and BoB, we believe the focus on integration affects near-term growth, and hence, expect growth
to be impacted," the report said. Coupled with the ongoing moderation in growth for private sector
banks led by the slump in the auto sector and increased caution among lenders, credit growth, thus, is
unlikely to be revived by these mergers, it said. The report further said the merger is also unlikely to
meaningfully revive flow of credit to the liquidity pressed NBFCs as given the already high share of
NBFC exposure in constituent banks, all four merged entities will have over 10 percent of their loan
exposure towards NBFCs. Credit flow to NBFCs will remain a challenge even as bond market access
continues to remain differentiated for them," the report said.

Five US Governors to visit India over next 2 months to boost economic ties
The governors of five US states -- New Jersey, Arkansas, Colorado, Delaware and Indiana -- are
scheduled to visit India over the next few months to enhance economic ties with the country. They
will be leading high-powered trade delegations comprising top businesses from their respective
states. The unprecedented move of five American governors visiting India in quick succession is a
part of the efforts by the Trump administration and the Modi government to enhance state-to-state
relationship. The effort has been propelled by the current India's Ambassador to the US, Harsh
Vardhan Shringla, who has travelled to 11 US states so far. Noting that states play an important role
in both the countries, Shringla said this is a very important initiative. Increasingly, states have an
important say in economic activities, investment, trade and people-to-people contact," Shringla told
PTI in an interview. I'm happy to say that in the next two months, we will have five governors of US
States visiting India," he said, days before New Jersey Governor Phil Murphy leaves on his maiden
trip to India with a high-powered trade delegation. In fact, he is the first governor of New Jersey -- a
state which has a sizeable population of Indian Americans -- to visit India. Early this Summer,
Murphy had hosted Shringla over a dinner. Arkansas Governor Asa Hutchinson is scheduled to visit
India from September 29 to October 6. This will also be the first ever India visit by a Arkansas
Governor. Hutchinson had a working lunch with Shringla early this summer. Later this month,
Indiana Governor Eric Holcomb would make his second trip to India, as part of his four-nation Asia
sojourn including China, Japan and South Korea. In India in early October, Holcomb will watch
Indians Pacers in Mumbai for the NBA's first games in India. Similarly, Colorado Governor Jared
Polis announced his decision to travel to India with a trade delegation in the presence of Shringla at a
business round table in Denver this summer. He is slated to visit Mumbai, Bengaluru and New Delhi.
He will also participate in Global RE-Invest Expo, organised by India's Ministry of New and
Renewable Energy, to be held between October 31 and November 2 in Greater Noida.

Govt to miss fiscal deficit target despite getting RBI's money: Reuters
India is likely to miss its fiscal deficit target for the current financial year, despite receiving an
additional dividend from the central bank, five government officials and advisers said, as tax
collections have sunk amid a sharp slowdown. With economic growth falling to a six-year low of 5%
in the April-June quarter, the sources said the government could toward the end of 2019 be forced to
raise the fiscal deficit target to 3.5% of GDP from 3.3%, amid pressure for additional
stimulus measures. The officials asked not to be identified as they have not been authorized to discuss
the matter with media. A Finance Ministry spokesman did not immediately respond to requests for
comment. Tax collections could fall by as much as 1 trillion rupees ($14 billion), or 4% of $344
billion annual target, two of the officials said, noting that sharp shortfalls are expected both in goods
and services tax (GST) and income tax collections. "Overshooting the fiscal deficit target is inevitable
this year as the economic slowdown has hit government revenue," a senior adviser said, adding the
deficit would rise unless the government resorts to hefty spending cuts. Separately, a finance ministry
official said plans to sell minority stakes in some state-run entities including electricity producer
NTPC, state insurer General Insurance Corp and construction finance company HUDCO could be
deferred, as market sentiment has weakened. Two government advisers said they have also urged the
Prime Minister Narendra Modi-led government to defer the fiscal target to tackle the economic
slowdown and outline stimulus steps to help the hard hit sectors such as autos and textiles.
Govt to soon take a call on U K Sinha panel report on MSMEs: Gadkari The government will
soon take a call on the recommendations of U K Sinha committee to strengthen micro, small and
medium enterprises sector, Union Minister Nitin Gadkari said on Thursday. The committee set up by
the RBI under the former Sebi chief among other things had recommended creation of distressed asset
fund with a corpus of Rs 5,000 crore, insurance coverage to employees of MSMEs on the lines of
Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana
(PMJJBY) schemes, and cash flow-based lending. Speaking at the 'National Workshop on Credit
Linked Capital Subsidy' and 'Discussion on Delayed Payment for MSMEs', Gadkari also stressed that
to make India a USD 5 trillion economy in the coming years, MSMEs will have to raise their
contribution to GDP from the current 29 per cent to 50 per cent, in addition to increasing exports from
the sector to 50 per cent from 40 per cent at present. Referring to instances where goods are supplied
by micro, small and medium enterprises (MSMEs) but a particular person or entity does not make
payment after taking their delivery on multiple occasions, Gadkari said stringent action needs to be
taken against such habitual offenders and the government will certainly take remedial measures in this
regard. On UK Sinha panel report, the minister said he has spoken to the finance minister and it has
been decided that finance secretary and his MSME counterpart will prepare a final report on the
recommendations in the next eight days. The Sinha Committee appointed by the Reserve Bank has
given its suggestions. I have spoken to the Finance Minister today and we have decided that Finance
Secretary and our (MSME) Secretary will sit together and submit a final report on the Sinha
Committee recommendations after consulting stakeholders, so that we can implement it in the 15 days
thereafter," said MSME Minister Gadkari, who also holds the portfolio of the Road Transport and
Highways Ministry. The committee was set up to review the framework for MSMEs, and suggest
long-term solutions for economic and financial sustainability for the sector, study the impact of recent
economic reforms, and identify the structural problems impacting its growth.

Finance ministry asks departments, PSUs to expedite capital expenditure As part of the Modi
government’s bid to boost economic activity and pump in liquidity into the infrastructure sector,
senior finance ministry officials are meeting officials from other departments, as well as state-owned
firms. The PSUs are being told to boost capital expenditure (capex), while the departments, especially
those related to infrastructure sectors, are being told to expedite spending of allocated sums and
release outstanding payments to contractors. Economic Affairs Secretary Atanu Chakraborty and
Expenditure Secretary Girish Chandra Murmu on Thursday met officials from the ministries of road
transport & highways, railways, telecom, and housing & urban affairs to review their capex
programme. The two secretaries, it is learnt, are expected to meet representatives of other
infrastructure-related departments, as well as managing directors and senior officers of PSUs, on
Friday. The departments are being told to clear pending payments to contractors, especially those in
the micro, small & medium enterprises (MSMEs) sector. They will be directed to front-load their
capex allocations, while PSUs are also being told to boost capex. The idea is to create more liquidity
in theinfrastructure sector,” said an official. These capex reviews come just a day after Finance
Minister Nirmala Sitharaman met representatives of the infrastructure sector — the latest of the many
sectoral meetings she has had in the past one month. The meetings came against the backdrop of
India’s gross domestic product growth slumping to a six-year low of 5 per cent in the April-June
quarter. Experts have pointed out that a capex boost focused on infrastructure by the private sector
and the government is a way out of the slowdown as the Centre looks to create jobs. In his
Independence Day speech, Prime Minister Narendra Modi had said the government will invest Rs 100
trillion on developing modern infrastructure to help nearly double the size of the economy to $5
trillion in the next five years. In the meeting on Wednesday, representatives of infrastructure
companies like Hindustan Construction, NHAI, and Ircon had discussed issues related to financing,
land, capital, and environmental clearances. There were suggestions on speeding up the execution of
projects.

We plan to reorganise NHAI, review financing models: Nitin Gadkari Union Road Transport and
Highways Minister Nitin Gadkari has said he plans to reorganise the National Highways Authority of
India (NHAI). A relook at the financing models, including raising Rs 85,000 crore through road asset
monetisation over the next five to six years, is also priority, the minister told Business Standard in an
e-mail interview. All completed projects would be put up for monetisation after two years of
operation and all the BoT (toll) projects will be considered for monetisation immediately on
completion of the existing concessions, the minister said. On the Prime Minister’s Office (PMO)
recently flagging concerns on the operational performance of the NHAI, Gadkari said, “They (PMO)
have forwarded to us certain suggestions received by them, and asked for our views on the same. We
do have plans to reorganize the NHAI and take a relook at our financing models to further innovate
and improve. The need to construct national highways would come down after the completion of the
Bharatmala programme, according to the minister. “The NHAI would then be more focused on road
asset management and include asset monetisation, contract management, operation and maintenance
of existing highways with capacity augmentation wherever required. The NHAI has already taken up
asset monetisation through toll operate transfer mode. After receiving a favourable response in the
first bundle that was secured by Macquaire for Rs 9,700 crore, Gadkari expects it to be the main
funding source in the coming years. The NHAI is working on plans to raise at least Rs 85,000 crore
through asset monetisation till 2024-25 through ToT and InvITs (infrastructure investment trusts), he
said. InvITs are innovative vehicles that allow developers to monetise revenue-generating real estate
and infrastructure assets, while enabling investors or unit holders to invest in these assets without
actually owning them. InvITs will be for monetizing projects and mobilise additional resources
through capital markets. The highways ministry will require Cabinet approvals for these plans.
Another innovative model of financing for the NHAI is through the National Investment and
Infrastructure Fund (NIIF). It would form a special purpose vehicle with equity contribution from
institutional financial investors. The SPV will raise debt to ensure off-budget funding of projects.
Construction risk will be borne by the NHAI.

RBI deputy governor B P Kanungo sees risk of bond supply dwindling Demand for bonds may
significantly outstrip supply in just five years, but the bond market could be preventing issuers from
the market, according to Reserve Bank of India (RBI) Deputy Governor B P Kanungo. It is a
paradoxical situation,” Kanungo said in his keynote address at the annual conference of bond dealers
on August 31 in Moscow. Non-banking financial companies, that used to comprise at least 70 per cent
of the issuance in the corporate bond market, are witnessing a credit freeze as investors shun bond
issued by lower-rated firms. The investors are stunned by the defaults by AAA-rated firms that were
downgraded to default rating in a matter of months. Mutual funds and insurance companies, major
buyers of bonds in the markets, are shying away as a result. Ironically, investors in government bonds
are also complaining of oversupply by the government. Kanungo’s caution, in this context, assumes
significance. The government securities outstanding in the market is about Rs 58 trillion, with another
Rs 6 trillion in short-term treasury bills (that mature in less than a year). However, liquidity in most
papers remains thin. Though the primary issuances have been quite seamless, only the 10-year
benchmark security accounts for bulk of the trading volumes,” Kanungo said. Even as the bid-ask
spread is “impressive” and among the best in emerging markets, liquidity “almost completely dries
off in other off-benchmark securities, which does not reflect well on the market”. The situation is not
impressive in corporate bonds either. While in the five years between June 2014 and June 2019, the
market size has grown from Rs 14.43 trillion to Rs 30.63 trillion, most of the issuances are private
placements, and by financial firms. There are in excess of 24,000 instruments outstanding, reducing
the average outstanding per instrument to a small figure, Kanungo said. The secondary market in
corporate debt is so illiquid that we can very well say there is no such market. The rating transition of
some corporate debt, particularly those issued by financial firms, has been phenomenal — from sound
credit to junk,” said the deputy governor. Besides, the evolution of the money market “continues to be
stunted”, with most of the activity being concentrated in the overnight segment while a “robust term
money market continues to elude us”. While treasury bills are still traded, short-term commercial
papers and certificates of deposits issued by companies and banks is confined to primary issuances.
“The interest rate derivatives market also continues to be lacklustre.
There is reasonable liquidity in overnight interest swaps, but there is no appetite, and hence not much
trading in other derivatives including interest rate futures.” In particular, the credit default swap
market, introduced in 2012 “is moribund”. “It is ironical that while some participants used to write
little understood products like quanto swaps a decade and a half back, there is little effort to provide
simple products like caps or collars on bonds today,” the deputy governor told the bond investors
under the umbrella of Fixed Income Money Market and Derivatives Association and Primary Dealers
Association of India.

✍ TOP CORPORATE NEWS –

(M&M )

Mahindra & Mahindra’s Managing Director (MD) Pawan Goenka said on Thursday automakers had
taken every step to revive consumer sentiment, but only a goods and services tax (GST) rate cut
would boost demand. “I think the industry has done whatever it could. An intervention from the
government can only revive the demand,” he said, adding: “It’s not good to ask for a cut in GST rate,
but we are now in a situation where only that can help us. M&M has decided to defer capacity
expenditure by at least 15-20 per cent in light of the slowdown. A lending crisis among the country’s
shadow banks, which fund nearly 55-60 per cent of commercial vehicles and 30 per cent of passenger
cars, has led to automakers, including M&M, Maruti Suzuki India, and Tata Motors, to either cut
production or temporarily close plants. Goenka said things could become worse if the expected festive
season demand doesn’t pick up in the next 10 days. “Right now, we are not even thinking in terms of
year, we are thinking what would happen in the next ten days and if it remains subdued, I am afraid
manpower has to be rationalised to align with capacity cut,” he said, when asked about if there would
be further job loss. M&M has retrenched about 1,500 temporary workers since April 1.
“No one wants to cut jobs, but there are no other options in unprecedented times,” he said. Auto sales
in India witnessed its sharpest decline in nearly 19 years in July, dropping 18.71 per cent, rendering
almost 15,000 workers jobless over the past three months, Siam reported earlier this month. However,
Goenka was enthusiastic about the future of electric vehicle and said that the company has
recongnised electric and not hybrid as the future of mobility. “I am not at all against incentive for
other solutions like hybrid but regarding M&M we have decided to put our money in electric,” he
said.

(Prabhat Dairy )

Shares of Prabhat Dairy were locked in the upper circuit band of 20 per cent at Rs 78.15 apiece on the
BSE on Friday, after the company said the promoters, including Sarangdhar Ramchandra Nirmal, and
Vivek Sarangdhar Nirmal, were mulling purchasing publicly held shares, and delisting of the
company. In comparison, the benchmark S&P BSE Sensex was ruling 0.32 per cent higher at 36,761
level. The company has received letter from Sarangdhar Ramchandra Nirmal, Vivek Sarangdhar
Nirmal, Madhyam Farming Solutions Private Limited and Nirmal Family Trust, the members of the
promoter and promoter group, where they have expressed their intention to acquire 4,87,40,547 fully
paid-up equity shares of the company representing 49.90 per cent of the paid-up equity share capital
that are presently held by the public shareholders,” it said in a regulatory filing. Consequently, the
board of the company would consider voluntary delisting of the shares of the company on September,
10. The promoter groups held 4,89,35,584 paid-up equity shares, making 50.1 per cent, of the
company, at the end of June, 2019. Of this, Nirmal Family Trust, Sarangdhar Ramchandra Nirmal,
and Vivek Sarangdhar Nirmal held 46.64 per cent, 1.15 per cent, and 1.15 per cent, respectively, the
company’s data on shareholding pattern show. So far in CY2019, the stock of the company has
underperformed the frontline index by plummeting 28 per cent YTD, as against a 1.6 per cent rise in
the S&P BSE Sensex. A total of 4.83 lakh shares changed hands on the BSE and NSE till the time of
writing this report.
(Indiabulls Housing )

Indiabulls Housing Finance crashed 9 per cent to Rs 406.20, hitting its fresh 52-week low, on the BSE
on Friday on reports that a public interest litigation (PIL) has been filed against the company and its
promoters in Delhi High Court on allegations of siphoning-off of funds. According to a CNBC-
TV18 report, the PIL seeks Special Investigation Team (SIT)-led investigation into the alleged
violations and offences. It also alleges inaction by regulators such as Reserve Bank of India (RBI),
Securities and Exchange Board of India (SEBI), Serious Fraud Investigation Office (SFIO), Registrar
of Companies (ROC), and National Housing Bank (NHB). Indiabulls Housing Finance, today, issued
a clarification to the Bombay Stock Exchange (BSE) regarding the report, saying that "the petition
hasn't yet been filed in High Court as per its website, but leaked in social media with malicious intent
to create turbulence in IBH stock price".The purported PIL admits that allegations are same as in
earlier petition of Abhay Yadav which was subsequently withdrawn, the mortgage lender said in the
BSE filing, adding that the company is determined to fight out the petitioners in the court. Earlier this
month, credit rating agency ICRA downgraded Indiabulls Housing Finance’s long-term debt
instruments to AA+ from AAA, on account of rising woes for non-banking financial companies
(NBFCs) and housing finance companies (HFCs). The NBFC and HFC sectors have been plagued by
increase in cost of funds and prolonged squeeze in liquidity. The rating of IBHL remains under watch
with “developing implications” in light of its merger proposal Laxmi Vilas Bank, ICRA said. At 9:50
AM, Indiabulls Housing Finance was trading 5.15 per cent lower at Rs 424.85 as compared to 0.4 per
cent rise in the benchmark S&P BSE Sensex. More than 12 million shares of the company have
changed hands on the NSE and BSE so far. Lakshmi Vilas Bank, meanwhile, slid 5 per cent to Rs
36.55 apiece.
(Tech Mahindra )

Shares of Tech Mahindra (TechM) gained over 5 per cent to Rs 732 apiece on the BSE in the early
morning deals on Friday, a day after the company announced a strategic and possibly largest-ever
deal with leading American network operator AT&T. At 09:35 am, the stock was trading 4.22 per
cent higher at Rs 724.70 apiece on the BSE. In comparison, the benchmark S&P BSE Sensex was
quoting 197 points or 0.54 per cent higher at 36,841 levels. This deal will accelerate AT&T’s
information technology (IT) network application, shared systems modernisation, and movement to the
cloud. TechM will assume management of many of the applications which support AT&T’s network
and shared systems. This is the largest deal the company has won to date although deal financials
have not been disclosed, The multi-year agreement will enable AT&T to focus on core objectives,
including having the most advanced software defined 5G network, and migrate the majority of its
non-network workloads to the public cloud by 2024. This comprehensive programme will help drive
sustainable operational improvement across the network and software development domains. Jon
Summers, chief information officer, AT&T Communications, said, “Our agreement with TechM is
another step forward in delivering greater flexibility across our IT operations. This includes
optimising our core operations and modernizing our internal network applications to accelerate
innovation as we march forward to our goal of a nationwide 5G network by the first half of 2020." At
the bourses, shares of Tech Mahindra have underperformed market as well as its large-cap peers on
YTD (year-to-date) basis. The stock has slipped nearly 4 per cent as compared to around 2 per cent
rise in the S&P BSE Sensex. Infosys has rallied over 26 per cent while TCS has gained 17 per cent
during the period, ACE Equity data shows. HCL Technologies has spurted over 15 per cent while
Wipro has given a modest return of 3 per cent. The S&P BSE IT index, on the other hand, has added
15 per cent.
(Sun Pharma )

Sun Pharma slipped 4 per cent to Rs 414.6 apiece on the BSE in the early morning trade on Friday
after the drug-maker informed the exchanges about a forensic audit being undertaken by markets’
regulator Securities Exchange Board of India (Sebi). “A forensic audit has been ordered by Sebi w.r.t.
the financial statements of Sun Pharmaceutical Industries for the financial years ending FY16, FY17,
and FY18,” the company said in a filing. At 10:05 am, the stock was trading 3.88 per cent lower at Rs
415.20 per share, as against a 0.34 per cent rise in the benchmark S&P BSE Sensex. Sun Pharma's
related company, SPARC (Sun Pharma Advanced Research Company), too, was trading 2.35 per cent
lower at Rs 146.05. Earlier, media reports said that the audit was ordered based on allegations made
by a whistleblower in a 150-page complaint to Sebi, accusing Sun Pharma of committing corporate
governance and tax-related offences and securities market-related violations. The whistleblower had
complained of a fund diversion of Rs 42,000 crore and of personal profits being made to the tune of
Rs 10,000 crore. In February this year, Sun Pharma had informed stock exchanges that it had received
two queries from the regulator related to a 2004 foreign currency convertible bonds (FCCB) issuance
and about Sun's business with Aditya Medisales (AML), and it had responded to both of them.
(Maruti )

The country's largest carmaker Maruti Suzuki India on Friday asked the components makers to start
manufacturing vehicle electronics and certain key parts in India in order to cut imports of such
articles. The local manufacturing of such parts would not only help Maruti Suzuki India (MSI), but
also support the government's Make in India initiative, MSI MD and CEO Kenichi Ayukawa said
while speaking at the ACMA annual convention here. "I have a challenge and an invitation to offer to
you (components industry). The MSI car is over 90 per cent local, component-wise. But some key
parts and electronics are areas where we still need to import. But we want to Make-in-India,"
Ayukawa said. If anybody can make electronic components and some key parts in India with quality
and reliability, it will not only help MSI, but the entire Indian automobile industry, he added.
Ayukawa said the best opportunity to win in the future lies in developing in-house research and
development (R&D) capability. If India has to be competitive in the world of tomorrow, my message
is - start developing in-house R&D capability.(which) is a very long drawn process and the results
come slowly. We have to be patient and stay committed," he added. On government policy, Ayukawa
said that if the government sets targets on the end-goals and allows freedom to the industry players to
choose the technology, it would be best suited to achieve the end-goals. Such technology-agnostic
approach will give the freedom of technology-choice, while keeping focus on the target," he added.
Ayukawa also emphasised on the virtues of quality manufacturing of auto components.
(JSW Steel )

The Principal Bench of the National Company Law Tribunal (NCLT) on Thursday approved JSW
Steel's Rs 19,700-crore bid for debt-laden Bhushan Power & Steel. In a 138-page judgment,
the NCLT Bench, while approving the resolution plan submitted by JSW Steel, said the committee of
creditors (CoC) and the resolution professional (RP) of the corporate debtor shall continue to function
as monitoring agency for now. The adjudicating authority, however, said the RP shall redistribute the
profits earned by Bhushan Power during the Corporate Insolvency Resolution Process (CIRP) among
the financial and operational creditors in accordance with the National Company Law Appellate
Tribunal’s (NCLAT's) judgment on this aspect in the Essar Steel case. JSW Steel said it was studying
the judgment and would take a call on it soon. In its judgment, the NCLT said the criminal
proceedings initiated by various investigating agencies against the corporate debtor’s erstwhile board
of directors shall continue in accordance with the law and would not affect the implementation of
JSW Steel’s resolution plan for Bhushan Power. Bhushan Power owes close to Rs 50,000 crore to a
consortium of lenders led by Punjab National Bank. It is the sixth out of the 12 large stressed accounts
identified by the Reserve Bank of India for resolution under the Insolvency and Bankruptcy Code
(IBC). The RP of Bhushan Power had admitted claims to the tune of Rs 47,204 crores from financial
creditors of the company, while the operational creditors’ claims of nearly Rs 730 crores had been
accepted. The insolvency process for Bhushan Power & Steel, like Bhushan Steel, remained one of
the most litigated cases to come under the IBC. Liberty House, one of the initial bidders for Bhushan
Power, had at the very onset challenged the lenders’ decision to not open its bid for the company as it
was late. While the CoC had decided to close the bidding for the company on February 8, 2018,
Liberty House had submitted its bid later that month on February 22. The decision of the CoC was
challenged before the NCLAT, which ruled that the CoC must open all the bids that had come before
it, including that of JSW Steel, Tata Steel, and Liberty House.
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