RBI likely to cut interest rate by 25 bps in June; 50 bps in next 2 quarters: ASSOCHAM

In a note submitted to the Governor of Reserve Bank of India (RBI) Dr Raghuram Rajan, ASSOCHAM Secretary General D S Rawat said, the Consumer Price Index (CPI) is expected to be in a range of 4.5-6.0% over the remainder of 2015.

Apex Industry body ASSOCHAM today said it expects the RBI to cut policy interest rates by 25 basis points in its June 2 policy and another 50 bps in the subsequent two quarters since the retail inflation is hovering at levels,  much below  foreseen by the central bank itself and the industry needs a demand trigger for a revival.   

In a note submitted to the Governor of Reserve Bank of India (RBI) Dr Raghuram Rajan, ASSOCHAM Secretary General D S Rawat said, the Consumer Price Index (CPI) is expected to be in a range of 4.5-6.0% over the remainder of 2015. Based on the RBI’s view, the real interest rate should be around 150-200 bps. “Thus, we anticipate a 50 bps reduction in the repo rate over the remainder of this calendar year, while 25 bps should be announced right away".  

The ASSOCHAM also highlighted its concern over non-transmission of lower policy interest rates by banks to the borrowers. It said the RBI had, in the last review, left the rates unchanged, since it was waiting for transmission of earlier 50 bps Repo cuts to the borrowers.

 

In its April 2015 review, the central bank had indicated its forecast that CPI inflation would be at 5.8% in March 2016, lower than its target of 6.0% for January 2016. It also indicated that it would look through seasonal as well as base effects with reference to the inflation trajectory. The two CPI prints released post  April 2015 review have pointed towards easing of inflationary pressures, with a decline in retail inflation from 5.4% in February 2015 to 5.3% in March 2015 and further to 4.9% in April 2015. 

While caution is warranted on account of reports of an evolving El-Nino and the Indian Metrological Department’s (IMD’s) forecast of a 7% deficit (~62 mm) in monsoon rainfall during 2015, this is milder than the shortfall of 12% (~109 mm) recorded in 2014.

Moreover, the impact of a weak monsoon may be reduced by the moisture in the sub-soil as a result of excess rainfall of ~53 mm during Jan 1-May 20, 2015, as well as higher reservoir storage levels in north and south India relative to the year-ago period. Nevertheless, the spatial and temporal dynamics of rainfall in 2015 would be critical. 

While it is possible that MSP growth going forward will exceed the modest levels seen in the last year, adequate buffer stocks of wheat and rice as well as a global downtrend in prices of sugar and edible oils would dampen inflationary pressures. Persisting high inflation related to pulses (12.5% in the CPI, 15.4% in the WPI in April 2015) remains a dominant concern, particularly given that a substantial portion of production is concentrated in states with relatively limited irrigation coverage and that demand exceeds domestic supply. 

Aban Offshore gains ahead of earnings

So far, the stock has surged over 5 percent from the day's low. 

Aban Offshore witnessed a sharply rally in early noon deals and jumped over 5 percent from the day's low of Rs. 387 to hit a high at Rs. 407, on hopes of positive earnings.

The company is scheduled to announce its results today.

Now, the stock is up over 1.5 percent at Rs. 401 on the BSE. So far 237,000 shares have changed hands at the counter as compared to its daily average volume of 135,000 shares in the past two weeks.

Meanwhile, the BSE Sensex is only down 16 points at 27,514.

Govt appoints Jayant Kumar as Director (Finance)

The Board of Directors in its meeting scheduled to be held on May 29, 2015 shall inter-alia consider his appointment as an additional director. 

NHPC Ltd has announced that the Ministry of Power vide its Letter dated May 26, 2015 has appointed Jayant Kumar to the post of Director (Finance) with effect from the date of assumption of charge of the post till the date of superannuation i.e. February 28, 2017 or until further orders, whichever is earlier.

The Board of Directors in its meeting scheduled to be held on May 29, 2015 shall inter-alia consider his appointment as an additional director.

Top corporate news of the day - May 27, 2015

Lupin has confirmed that it was among the pharma companies that had received communication from the European Medicines Agency with regard to suspension of some medicines.

Lupin has confirmed that it was among the pharma companies that had received communication from the European Medicines Agency with regard to suspension of some medicines.

Adani Group is planning to enter defence and aerospace manufacturing sector.

With the intention of touching a $2bn revenue target by 2020, Avvashya Group company Allcargo Logistics will be investing $500mn in the next three-five years towards organic as well as inorganic growth of its business.

Ahluwalia Contracts Ltd aim to bag orders worth Rs.16bn this year.

Punj Lloyd said it has won a Rs.5420mn road project in Bihar from National Highways Authority of India.

IL&FS Transportation Networks said that it has emerged as the lowest bidder for two road projects worth Rs.3150mn offered by the Madhya Pradesh government.

Mahindra and Mahindra, which entered the two-wheeler business six years ago, will intensify marketing efforts to grow its market share by five-fold to about 5%.

Raymond Ltd has rebranded its bed and bath range of home furnishing products as “Raymond Home” to exploit the opportunities in the rapidly growing branded home textiles segment.

Alstom Bharat Forge Power Ltd, a joint venture between Alstom and Bharat Forge Ltd, has commenced production of supercritical turbines and generators at its new Greenfield manufacturing facility at Sanand.

DLF Ltd has been directed to pay nearly Rs.800mn to a private company for rescinding from an agreement for construction and sale of a tower in Gurgaon, by an Arbitral Tribunal which said it breached contractual obligations to make profits.

Crompton Greaves has bagged an order in Portugal to supply data concentrator units, a system used in smart grids, to Energias de Portugal.

With the benchmark rate softening, PowerGrid Corporation of India is back in the bond market, with the triple-A rated company raising about Rs.30bn by selling bonds for the first time in the current financial year.

Satishchandra Doreswamy joins TCS

Report says that Doreswamy's new role at TCS is in in the process of being finalized 

Wipro's former chief business operations officer Satishchandra Doreswamy has rejoined his former company Tata Consultancy Services, according to report.

Report says that Doreswamy's new role at TCS is in in the process of being finalized and is expected to be known over the next few weeks.

Satishchandra Doreswamy will report directly to TCS CEO N Chandrasekaran in his new role, says report. 

One Year of NaMo and India’s capital market

There are few factors that acted in favor of the NaMo government. One of those was the decrease in oil prices, which helped keep a tab on the country’s current account deficit, therefore helping to decrease inflation. 

One year ago (in May 2014), the majority of the citizens of India voted for NaMo (Narendra Modi, Prime Minister of India), with hopes for “Aache Din” (days of prosperity) for the common man of India through the eradication of corruption, increased transparency, faster growth, recuperation of black money stashed abroad, and improved infrastructure, among other things. Modi also had the daunting task of putting in place things that were left a mess, inherited from the prior government.
 
Modi started his duty as Prime Minister even before taking oath by inviting the SAARC (South Asian Association for Regional Cooperation) leaders for his oath taking ceremony.  This sent a strong message to the world that he meant business.  As soon as he took office, Modi initiated a slew of measures to change the image of India, such as starting the “Swacch Bharat Abhiyan” (Clean India Mission) and the “Make in India” campaigns, improving the ease of doing business in India, improving relations with foreign countries, implementing measures to revamp Indian railways, and passing insurance bills and GST bills (passed in a lower house).  Modi has also ensured that top-level corruption will practically disappear.
 
There are few factors that acted in favor of the NaMo government. One of those was the decrease in oil prices, which helped keep a tab on the country’s current account deficit, therefore helping to decrease inflation. The Reserve Bank of India complemented this by reducing interest rates by 25 bps on two separate occasions.
 
Amid these occurrences, there are indications that India’s economy is reviving, and experts are saying that soon India’s GDP growth rate will overtake that of China.
 
For more than a decade, foreign portfolio investors and foreign institutional investors (FPIs and FIIs) have been pouring money into the Indian capital markets, except during the financial crises of 2008 (–FPIs and FIIs were net sellers, selling a total of INR 41,200 crores of equities and debt). Now, India is one of the most preferred destinations for FPIs and FIIs. During the past year, the net investments of FPIs and FIIs added up to more than INR 100,000 crores in equities and INR 170,000 crores in debt.
 
Capital Market Performances over the Past One-Year Period Ending May 15, 2015
 
The past month (April 15, 2015, to May 15, 2015) has been a bear market; out of 22 trading sessions, 15 ended in the red, eroding investor wealth by more than 5%. India’s bellwether index, the S&P BSE SENSEX, is hovering around a six-month low and closed at 27,324 on May 15, 2015.  The index increased by 16% (including dividends) during the trailing 12-month period before that close.
 
As of May 15, 2015, the S&P BSE AllCap, a broad benchmark index in India, has outperformed the S&P BSE SENSEX by a margin of 8% (the S&P BSE AllCap yielded 24% during the past one-year period. Among the other size indices, the S&P BSE MidCap and the S&P BSE SmallCap both returned 41%, while the S&P BSE LargeCap returned 18%.
 
On the sector front, the S&P BSE Healthcare was the best-performing index, returning 59%. Meanwhile, the S&P BSE Energy was the only index with a negative return, down 7% during the same period, primarily due to the fall in oil prices.
 

 
Source: www.asiaindex.co.in Data from May 15, 2014, to May 15, 2015. Index performance based on total return. Past performance is no guarantee of future results. Table is provided for illustrative purposes only.
 
During last couple of months the T20 cricket fever was at its peak, thanks to the Indian Premier League, with AB de Villiers and Chris Gale being the players that stand out most due to its flamboyant batting.  Modi’s “inning” is certainly not a T20 or a one-day cricket match, but rather it is a test that will play out over five years. Modi started his maiden inning well by unveiling his vision for India during his first year; however he needs to build a strong foundation for India’s development before dreaming of reelection in 2019.

SBI General achieves 33% growth rate during 2014-15

Bhaskar J Sarma, MD & CEO of SBI General Insurance said, “In the last financial year, SBI General Insurance has emerged as the fastest growing amongst major private general insurance companies. We have grown at a rate of 33% compared to the industry growth of 9.3%.”

SBI General Insurance Company Limited (SBI General), the general insurance arm of State Bank of India (SBI), has achieved Premium Income of Rs.1,577 Crores during FY 2014-15, registering an impressive 33% growth.

Sharing the Financial year performance, Bhaskar J Sarma, MD & CEO of SBI General Insurance said, “In the last financial year, SBI General Insurance has emerged as the fastest growing amongst major private general insurance companies. We have grown at a rate of 33% compared to the industry growth of 9.3%.”

“We believe that SBI General has managed a stellar performance due our customer focussed Insurance covers, exceptional service and most importantly, our single minded attention towards Claims service which was ably demonstrated during the recent disasters.” He added. 

Some of the Key achievements of SBI General during the last FY:

Fastest Growing Insurer in the Industry with a YOY growth of 33%

Increased market share from 1.53% to 1.86%

Ranked 2nd in the fire business amongst the Private players with 6.4% share 

Ranked 2nd as per Market share in the Personal Accident Business with a 13.4% share

Maintaining one of the highest solvency ratios in the Industry, of 2.80, reinforcing SBI General’s financial soundness and claim-paying ability. 

Acquiring over 275,000 Health Insurance customers through the Bancassurance Channel. 

During the last FY SBI General generated 70% of its business from the Retail segment. The SME segment contributed nearly 15%, while Corporate segment accounted for 15%. Mr.Sarma added, “We are especially happy with the way our Retail and Corporate Business Segments are growing. Corporate segment registered a growth of 47% and Retail Segment registered a growth of 42% during the last FY. Our strength in retail is strongly driven by distribution reach of our Banca partners. We intend to harness it further by making consumers aware of our products, services and brand.” 

Talking about the Distribution Channels used by SBI General, Sarma said, “Bancassurance is the lead Channel with a contribution of 61%, followed by Agency Channel with 17%, Broker Channel with 14% and Direct Channel contributing the balance 7% of the Premium Income” . 

Speaking on SBI General's focus for the new financial year, Mr Sarma concluded, “We will continue to create simple, innovative products that are easy to understand and develop our distribution channels. We are focussed on promoting General Insurance covers to smaller towns and rural areas."

JK Cement plans to raise up to Rs. 300 crore

JK Cement Ltd haS announced that the Board of Directors of the Company at its meeting held on May 23, 2015, has decided to raise long term funds by way of issue of Securities and/or Non Convertible Debentures with warrants on Preferential Allotment basis, Qualified Institutional Placement (QIP) basis 

JK Cement Ltd haS announced that the Board of Directors of the Company at its meeting held on May 23, 2015,  has decided to raise long term funds by way of issue of Securities and/or Non Convertible Debentures with warrants on Preferential Allotment basis, Qualified Institutional Placement (QIP) basis or such other form as may be permissible under law for an amount upto Rs. 300 Crores with a green shoe option subject to shareholders’ approval sought in the ensuing Twenty First Annual General Meeting of the Company convened on August 01, 2015. 

Top Economy news of the day- May 27, 2015

Madhya Pradesh has retained second slot in the country once again in wheat procurement despite this being a "no-bonus" season. Punjab remains the top wheat procuring state 

Madhya Pradesh has retained second slot in the country once again in wheat procurement despite this being a "no-bonus" season. Punjab remains the top wheat procuring state.

The enrolment of beneficiaries under the ambitious modified Direct Benefits Transfer for LPG scheme has finally stopped at 128.7mn people. 

The Chief Economic Adviser said that India's adequate food stocks would help contain inflation, even if summer monsoon rains turn out to be weak. 

Textile exports in 2014-15 registered a 3% growth at $41.7bn, against the targeted $45bn. 

Market recoups losses

The BSE Bankex and Oil Gas indices have gained 0.5 percent each. The broader market has also trimmed losses, the BSE Midcap and Smallcap indices are marginally down at 10,597 and 11,138, respectively. 

The market managed to recover all the early losses and rebounded into the positive zone, helped by fresh buying in shares like - bank, oil & gas, capital goods and consumer durables.

The BSE Sensex touched a high at 27,548 - up 184 points from the day's low of 27,364. Now, the BSE index is down 33 points at 27,498.

The NSE Nifty jumped above 8,300, but still trade lower by 16 points at 8,323.

The broader market has also trimmed losses, the BSE Midcap and Smallcap indices are marginally down at 10,597 and 11,138, respectively.

Sectorwise, the BSE Bankex and Oil & Gas indices have gained 0.5 percent each at 21,168 and 9,456, respectively.

The Consumer Durables and Capital Goods indices have added 0.3-0.4 percent each at 10,412 and 16,554, respectively.

On the losing side, the BSE IT and Auto indices are the major losers - down 1.5 percent each at 10,790 and 18,799, respectively.

About 1,022 shares have declined on the BSE so far, while 851 shares have declined, and 69 shares are unchanged.

All Bankex stocks are trading green - Bank of India and Punjab National Bank have jumped over 1.5 percent each at Rs. 205 and Rs. 153, respectively.

Axis Bank has also rallied 1.4 percent at Rs. 573. Canara Bank and Bank of Baroda have spurted a percent each at Rs. 340 and Rs. 161, respectively.

Yes Bank, Federal Bank, SBI, ICICI Bank and Kotak Bank are the other notable gainers. 

TCS fixes book closure for final dividend & AGM

If the final dividend as recommended by the Board of Directors is approved at the forthcoming AGM, payment of such dividend will be made on July 07, 2015. 

Tata Consultancy Services Ltd has announced that the Register of Members & Share Transfer Books of the Company will remain closed from June 09, 2015 to June 13, 2015 (both days inclusive) for the purpose of Payment of Final Dividend & 20th Annual General Meeting (AGM) of the Company to be held on June 30, 2015.

If the final dividend as recommended by the Board of Directors is approved at the forthcoming AGM, payment of such dividend will be made on July 07, 2015.

Tech Mahindra slumps 11% on weak Q4 results

The company recorded 23.1 percent decline in Q4 net profit at Rs. 472 crore from Rs. 614 crore in Q4FY14.

Tech Mahindra started the day on a gloomy note after posting weak sets of numbers for the quarter ended March, 2015.

Yesterday, after market, the company informed the BSE, that the company recorded 23.1 percent decline in Q4 net profit at Rs. 472 crore from Rs. 614 crore in Q4FY14.

Whereas, total income jumped by 21.7 percent to Rs. 6,051 crore from Rs. 4,971 crore for the above mentioned period.

The stock opened 10 percent lower at Rs. 577 and soon, has crashed to a low at Rs. 550 - down 14.1 percent from previous close.

Now, the stock is down 11 percent at Rs. 564.05. Around 266,000 shares are traded on the BSE counter, as against two-week daily average volume of 177,000 shares.

Meanwhile, the Sensex has tumbled 155 points at 27,376. 

DLF to pay Rs. 80 crore to law Firm

Report says that the tribunal's bench, directed company to pay a compensation of Rs 50 crore and also refund Rs 26.53 crore already paid to it by IP Support Services (India) Pvt Ltd. 

DLF Ltd has been directed to pay Rs 80 crore to a private company for rescinding from an agreement for construction and sale of a tower in Gurgaon, according to report.

Report says that the tribunal's bench, directed company to pay a compensation of Rs 50 crore and also refund Rs 26.53 crore already paid to it by IP Support Services (India) Pvt Ltd.

According to the complainant law firm, it had entered into an agreement with DLF in 2010, for the construction and sale of a standalone Tower in Phase V in Gurgaon.

Rupee opens at 64.05/$

The local unit hit a low of 64.17 and a high of 64.06 against the US dollar.

The rupee today opened at 63.60 against the US dollar. The local unit hit a low of 64.17 and a high of 64.06 against the US dollar.

On Tuesday, the rupee closed at 63.98 against the US dollar.

The S&P fell 1%, Dow Jones lost 1.04% and Nasdaq was down 1.1%. Asian markets are also not in good cheer for now.

Equity investors seem to be in a tizzy following hawkish comments from Federal Reserve Chairperson Janet Yellen. With positive data on US economy including increase in job numbers and rising inflation, a rate hike in US seems to be on the cards sooner than later this calendar year. With the dollar appreciating against a basket of international currencies, global investors are taking refuge in treasuries.

The FIIs were net buyers of Rs. 1.15 bn in the cash segment on Tuesday. The domestic institutional investors (DIIs) were net buyers of Rs. 1.24 bn as per the provisional figures released by the NSE.

Nifty below 8,300 levels

The BSE Mid-cap Index is trading down 0.58% at 10,548, whereas BSE Small-cap Index is trading down 0.56% at 11,104. 

At 9:20 AM, the S&P BSE Sensex is trading at 27,388 down 143 points, while NSE Nifty is trading at 8,293 down 46 points.

The BSE Mid-cap Index is trading down 0.58% at 10,548, whereas BSE Small-cap Index is trading down 0.56% at 11,104.

Sun Pharma, Bhel, ITC, Bharti Airtel and ONGC are among the gainers, whereas Tata Motors, GAIL, M&M, Wipro and Vedanta are losing sheen on BSE.

Equity investors seem to be in a tizzy following hawkish comments from Federal Reserve Chairperson Janet Yellen. With positive data on US economy including increase in job numbers and rising inflation, a rate hike in US seems to be on the cards sooner than later this calendar year. With the dollar appreciating against a basket of international currencies, global investors are taking refuge in treasuries.

Meanwhile, back home Chief Economic Advisor Arvind Subramanian has advocated an interest rate cut saying that India should not allow the rupee to become uncompetitive when nations such as China are resorting to aggressive monetary easing to make their currencies weaker. Stock market investors are bracing for some arduous times ahead amid disappointment over the pace of economic revival and sluggish corporate earnings, a report adds.

The S&P fell 1%, Dow Jones lost 1.04% and Nasdaq was down 1.1%. Asian markets are also not in good cheer for now. Tata Motors could slump following disappointing numbers. Attention will be on a number of companies which declare their numbers today. These include GAIL (India), Jindal Steel & Power, Aban Offshore, Abbott India, Adlabs Entertainment and Reliance Infrastructure among others.

Tata Motors skids on poor Q4 show

The company has reported a massive 56.2 percent drop in Q4FY15 consolidated net profit to Rs. 1,716 crore when compared with Rs. 3,918 crore in Q4FY14. 

Tata Motors has tumbled over 6 percent in opening trades on the back of poor Q4 results.

According to a release issued by the company to the BSE, the company has reported a massive 56.2 percent drop in Q4FY15 consolidated net profit to Rs. 1,716 crore when compared with Rs. 3,918 crore in Q4FY14. Total income however was up 3.4 percent at Rs. 67,821 crore from Rs. 65,572 crore.

The stock so far has touched a low of Rs. 464, and is now down 6 percent at Rs. 467. The counter has seen trades of around 119,000 shares in the first few minutes on the BSE.

Meanwhile, the Sensex has slipped 148 points to 27,394.