}

Monday, 29 February 2016

BUDGET SUMMARY - 2016-17


Apr 1, 2016

* To allot 190 bln rupees FY17 for PM Gram Sadak Yojana
* To spend 270 bln rupee with states FY17 on rural roads plan
* To launch new panchayat scheme at 6.5 bln rupees
* To allot 877.65 bln rupees for rural development schemes
* To allot 20 bln rupees for LPG connection to rural women

HEALTHCARE

* To start National Dialysis Service under PPP mode
* To exempt certain dialysis equipment from basic custom duty
* Health protection scheme with 100,000 rupee/family cover
* 3000 drug stores to be opened under PM Aushadhi Yojana
* To provide 130,000 rupee/yr health cover to senior citizens
* To launch new health protection scheme

INFRASTRUCTURE, INDUSTRY

* Propose to circulate model shops and establishments bill
* To give choice to shops to remain open on 7 days/week
* 10,000 km of national highways to be added FY17
* Total outlay for infra 2.21 trln rupees FY17
* Total outlay for roads, railway 2.18 trln rupees FY17
* Total investment in road sector 970 bln rupees
* NHAI to raise 150 bln rupees via bonds FY17
* Allot 550 bln rupees for roads, highways FY17
* 85% of 70 stranded road projects back on track FY16
* To allot 550 bln rupees for roads, highways
* India's highest ever kilometre of highways awarded in 2015
* 30 bln rupees/yr to augment nuclear power in 15-20 yrs
* Mkt freedom for gas from difficult blocks to have price cap
* Mull calibrated mkt freedom for gas from difficult blocks
* Need to diversify resources for power generation
* Drawing up comprehensive plan on nuclear power
* To incentivise ultra-deep sea gas exploration
* Achieved highest coal production growth
* To provide incentives for gas production from tough blocks
* 10 non-functional air strips to be redeveloped
* To partner with state govts to develop airports
* Started series of measures for modernising ports
* To partner with states to develop regional airports
* Medium-term goal is to abolish permit raj
* Plan new public transport policy to up pvt participation
* FY17 allocation for new port development 8 bln rupees
* Motor Vehicles Act to be amended to up passenger segment
* New greenfield ports to be developed on east, west coasts
* Govt to open up road transport sector
* Medium-term goal is to abolish permit raj
* 50,000 km state highways to be converted to national highways
* FY17 total infrastructure outlay 2.21 trln rupees
* To have new policy for mgmt of assets of PSUs
* NITI Aayog to identify PSUs for strategic sale
* To encourage PSUs to divest individual assets
* 100% FDI in marketing of food pdts produced in India
* To have more FDI reforms in asset restructuring companies
* To change FDI policy for asset reconstructions cos
* To modify FDI policy for bourses, asset recast cos
* Duty drawback schemes to be widened, deepened
* Have deepened, expanded duty drawback scheme
* More FDI reforms in insurance, stock exchanges, pension
* To modify FDI policy for insurance, pension sectors
* FDI policy to address requirements of farmers
* To allow mobilisation of 313 bln rupee by govt infra bodies
* Mulling gas production incentive from high temperature area
* May incentivise gas production from ultra deep water areas
* Mulling incentives for gas production from deep sea areas
* New credit rating system for infra to be developed
* To issue guidelines for renegotiation of PPP contracts
* Received conflicting suggestions on FRBM roadmap
* To amend Companies Act for ease of doing business
* Will amend companies act this Parliament session
* Registration of cos to be done in one day
* 300,000 fair price shops to be automated by Mar 2017

FINANCIAL SECTOR, BANKING

* Banking Board bureau to be operational in FY17
* To strengthen debt recovery tribunal
* Considering cutting stake in IDBI Bank to below 50%
* Stand solidly behind PSU banks
* To find resources if PSU banks need additional capital
* Allot 250 bln rupees for recapitalisation of PSU bks FY17
* Not interfering in lending activities of PSU bks
* To amend SEBI act to provide for more SAT benches
* To bring legislation FY17 on illicit deposit taking schemes
* Sponsor in asset recast cos can hold 100% stake
* Financial Data Management Centre to be established
* To allow 100% FDI in asset recast cos
* To make necessary amendments in SARFASI Act
* Bankruptcy code to help deepen corporate bond mkt
* SEBI to develop new commodity derivative pdts
* SEBI to introduce new derivative pdts in commodity mkts
* To adopt comprehensive approach for invest in central PSUs
* To introduce comprehensive Bankruptcy Code in Parliament
* To rename divest dept as Dept of Invest & Public Asset Mgmt
* To amend RBI Act to implement monetary policy framework
* Vibrant fincl sector critical for econ growth
* PM Mudra Yojana target to give 1.8 trln rupees loans FY17
* To draw road for consolidation of PSU banks
* Banking board bureau to be operationalized in FY17
* To draw roadmap for consolidation of PSU banks
* To take up massive rollout of micro-ATMs across nation
* Public money should reach poor without leakages
* Nationwide roll out of ATMs via post offices
* To list govt-owned general insurance cos on stock exchanges
* To list general insurance cos on stock exchanges
* To set up panel to review FRBM Act
* Time has come to review FRBM Act
* Propose to set up committee to review FRBM Act
* Govt open to reducing its stake in PSU banks below 50%
* Consolidation roadmap for PSU banks next year

INDIRECT TAX

* Propose changes in customs duty to push Make in India plan
* Exempt svc tax on general insurance plans in Nirmaya scheme
* Committed to implementing GAAR from Apr 1, 2017
* Asset recast cos' income to be taxed at hands of investors
* Propose special patent regime to power innovation, research
* Services provided by EPFO exempted from service tax
* STT of 0.05% on options contracts
* Service tax waiver for houses of less than 60 sq mtr
* Service Tax exempt for svc under rural electrification plan
* To give excise duty exemption to ready-mix concrete
* Excise of 12.5% with input tax credit on jewellery
* To abolish 13 cesses by ministries
* To amend Central Value Added Tax credit rules
* To amend CENVAT credit rules
* Taxation panel to fix demand under retrospective tax cases
* Hope old cases on retrospective tax reach conclusion soon
* No retrospective taxation to be undertaken
* 1-time no-interest liability in retrospective tax cases
* To up excise duty on various tobacco products by 10-15%
* Cos incorporated post Mar 1 to be taxed at 25%+ surcharge
* Doubles clean energy cess on coal to 400 rupees/tn
* To up excise duty on some tobacco pdts by 10-15%
* Infra cess of 2% on diesel cars
* 4% infra cess on high capacity vehicles, SUVs
* To levy 1% infra cess on small petrol, LPG, CNG cars

DIRECT TAX

* Plan simplification, rationalisation of taxes
* Tax rebate on rent paid upped to 60,000 rupees vs 24,000
* Tax changes to support Make in India, affordable housing
* To give relief to small taxpayers
* To launch steps to move towards pension society
* To give relief to small tax payers
* Withdrawal upto 40% from Natl Pension plan to be tax exempt
* To allow lower corporate tax for some cos from FY17
* Reduction in corporate tax has to be calibrated
* Faster depreciation rate under income tax act at 40% FY17
* Reduction in corporate tax has to be caliberated
* Detailing roadmap for phasing out corporate tax exemption
* Propose 0.5% Krishi Kalyan cess on all taxable svcs Jun 1
* Propose Krishi Kalyan cess
* To raise surcharge on income over 10 mln rupees to 15%
* 10% tax on recipient if got dividend over 1 mln rupees/yr
* Some home buyers to get extra exemption of 50,000 rupee/yr
* No changes in income tax slabs
* To rationalize tax deducted at source for small tax payers
* Penalty of 200% of tax for misreporting of income
* Penalty of 50% of tax for under-reporting of income
* Penalty to be 50% of tax in income under-reporting cases
* Modifying scheme of penalty under Income Tax Act
* Revenue secy to head committee on taxation
* Committed to stable, predictable taxation regime
* To focus on bringing to book people with black money
* Prosecution immunity for undisclosed income declaration
* 300,000 tax

Union Budget 2016 Highlights.

The Complete text of Mr. Arun Jaitly - Finance Minister's speech is available on this blog. CLICK HERE

1. Rs. 35984 crores allotted for agriculture sector. 
2. Rs. 17000 crores for irrigation projects.
3. Two new Organic farming scheme for 5 lakh acres.
4. Rs. 19000 crores for Gram Sadak Yojana
5. Rs. 9 Lakh Crores Agriculture Credit Target.
6. Rs. 38500 crores for MANREGA, highest ever.
7. Rs. 2.87 Lakh crores to be spent on Villages in total.
8. Rs. 9000 crores for Swach Bharat Mission.
9. Rs. 97000 Crores for Roads.
10. Total Outlay on Roads and railway Rs. 2.18 Lk Crores.
11. Rs. 2.21 Lakh Crores on Infra Projects.
12. NHAI to raise Rs. 15000 crores via NHAI Bonds.
13. More benches for SEBI Appellate tribunal.
14. Registration of Company in One Day for Start-ups.
15. Rs. 25000 crores for Banks rehabilitation.
16. 100% FDI for food processing.
17. Non planned expenditure of Rs. 14.28 Lk Crores.
18. Planned expenditure increased by 15.3% .
19. Relief Section 87A Rs. 2000 to Rs. 5000
20. Relief Sec 80GG Rs. 24000 to Rs. 60000
21. Section 44AD limits Rs. 1 crores to Rs. 2 crores. Rs. 50 Lakh for professional
22. Accelerated depreciation limited to 40%
23. New manufacturing companies will pay tax @ 25%.
24. LTCG on unlisted securities limited to 2 years.
25. 100% tax deduction for companies building houses upto 30 sq. mtrs.
26. Additional interest deduction for first house.
27. No service tax for building houses upto 60 sq mtrs.
28. 10% dividend tax for recipient over Rs. 10 lakh per annum.
29. TCS on purchase of asset over Rs. 2 Lakh in case and luxury cars.
30. VDS Scheme @ 30% + surcharge, Ist June to 30th September 2016.
31. Dispute resolution for appeal pending before Commissioner(Appeals).
32. Penalty for concealment of Income from 100-300% to 50-200%.
33. Rationalisation of TDS provisions.
34. 11 new benches for Income Tax Appellate tribunal.
35. No face to face scrutiny.

29 February 2016 - Today's View & News


Domestic equity benchmarks are likely to open on a cautious note, as investors keenly wait for Union Budget of the new financial year.


Nifty Spot Levels

Support
6990 – 6946 – 6869
Resistance
7050 – 7090 - 7145
  Recommended Action on Stocks  
ITC
The expectations in budget are that there will be a likely increase in excise duty on cigarette.
Action to be taken
Initiation Range
Stop Loss
Target
Sell
290-291
296
281









Emami
Emami to invest Rs 500 crore to set up cement grinding unit in Kolkata
Action to be taken
Initiation Range
Stop Loss
Target
Buy
968-970
958
988-990

*Stock mentioned above are in Sharekhan research coverage. We also like these Stocks for short-term.
  In The News

  1. UltraTech Cement says -Agreement with Jaiprakash Associates to be withdrawn as High Court declined the approval
  2. PSU banks' NPAs may increase to average 7 percent in Q4FY16: Sources
  3. Finance ministry to encourage PSU banks to publicly declare wilful defaulters
  4. Dr Reddy’s Labs recalls Paricalcitol capsules in US
  5. Gammon India lenders to convert part of debt into equity at Rs 11.89/share as part of CDR
  6. Sharp Corp, Japan to issue shares to Hon Hai Precision Industry & FoxConn
  7. L&T to sell 49 percent in insurance arm: BS
  8. Indiabulls Real Estate to raise Rs 500 crore: BS
  9. Reliance Industries introduces two entry level range of LYF smartphones in sub Rs 7000 category
  10. Aurobindo Pharma   gets tentative US FDA approval for Ritonavir tablet (used to help control HIV infection)
  11. SBI gets shareholders nod to raise Rs 15,000 crore: PTI
  12. Emami to invest Rs 500 crore to set up cement grinding unit in Kolkata: PTI
  13. PVR   says Competition Commission of India (CCI) proposes certain modifications w.r.t DT Cinemas' acquisition
  14. Coal India   says board to meet on March 5 to consider payment of interim dividend
  15. Corporation Bank   : ICRA downgrades ratings of lower tier bonds from ICRA AA+ to ICRA AA (stable)
  16. Filatex allotted 1.15 crore warrants to promoters at Rs 45/share
  17. Gayatri Projects   JV with Sembcorp launches 2640 MW power complex
  18. JMC Projects   operations in Kurukshetra Expressway have resumed
  19. United Breweries   commenced supplies of beer upon commissioning of brewery in Rajasthan
  20. Cupid   received order from DKT India worth Rs 2.95 crore
  21. Smartlink board meet today to consider buyback
  22. Zee Media   to acquire 80 percent stake in Today Merchandise & Today Retail Network
  23. Reliance Communications   , Aircel to hold 50 percent each in new merged company: ET
 Update - Derivatives

NIFTY PCR:
0.82
NIFTY IMPLIED VOLATILITY:
21.87
MARKET WIDE OPEN INTEREST:
Rs. 1,58,742 Cr. and Rs.13,566 Cr. added in OI
Nifty Call :
Addd 68.70 lakh shares
Nifty Put :
Added 47.26 lakh shares
MAJOR OI GAINERS
Arvind (18%), Jain Irrigation (18%), BEML (10%), Bharti Infratel (10%) and Reliance Power (8%)
MAJOR OI LOSERS
Syndicate Bank (-7%), Pidilite Industries (-6%), NHPC (-5%), Hindustan Zinc (-5%) and Kotak Mahindra Bank (-3%)

 Stock Updates from Sharekhan

Punnj Lloyd
Reco – Book out
Cmp 22

Pain persists, long way to go; Book out

Key points

  • Weakening execution and high leverage eroding net worth: Punj Lloyd’s 9MFY2016 earnings were severely affected with consolidated revenues down by 33% at Rs3,561 crore YoY and operating loss almost 100% up at Rs583 crore on account of no movement in a set of projects, freezing of working capital limits and delay in award of new projects won. Further, its consolidated net debt at Rs7,067 crore has extended loss for the company with quarterly interest expense rate at almost Rs300 crore. Consequently, we believe the company’s consolidated net worth which stood at Rs966 crore in FY2015 is likely to get completely eroded.
  • Marred with claims and account receivables: Punj Lloyd has been targeting Rs3,500 receivables, major ones being from ONGC (Rs1,730 crore) and Qatar Petroleum (100 million dollars) for the past one year. The management is expecting claims from ONGC to settle around in Q4FY2017 and in Q1FY2017 for Qatar Petroleum. The company has been able to receive only Rs340-crore claims during 9MFY2016. The only silver lining has been healthy order booking (Rs6,400 crore) and L1 position (Rs3,000 crore) during FY2016. However, the Libya order backlog (Rs7,457 crore) has seen no traction at all.
  • Mammoth task to restructure business; Book out: We believe the focus of the company during FY2017 will be on cleaning up its balance sheet with settlement of claims and maintaining execution through mobilisation advances to be received from new projects. In the meanwhile, the significant losses at the consolidated level is likely to totally erode its net worth and liquidity crunch to be faced through the year for debt servicing will put further delay in recovery in restructuring its balance sheet. We have been negative on the stock with Reduce rating. With growing uncertainty on possible revival and clean-up of its books, we Book out the stock from our active coverage.
  • Risk to our call: A faster-than-expected receipt in claims and significant deleveraging are the risks to our take on the stock. 
OTHER NEWS

Dr Reddy recall’s Paricalcitol capsules in US due to reports of breakage and leakage. It’s a class III recall; meaning that use/exposure to product is not likely to cause adverse reaction – Negative for Dr Reddy.


UltraTech acquires Jaiprakash Associates' cement plants for Rs 16,500 crore (USD 107 per tone): Positive for Jaiparkesh Associate, Ultratech and ICICI Bank 

Aurobindo Pharma gets tentative nod form USFDA for Ritonavir; used to help control HIV infection – Positive for Aurobindo

Bank Board Bureau set up with Mr Vinod Rai ( former CAG Chief) as Chairman—positive readthru for PSBs

Economic survey stress on need to introduce more hybrid and genetically modified seeds to improve farm productivity – Sentimentally Positive for Monsanto, Kaveri Seeds

Kansai Nerolac’s (news came in market hours) Japanese promoter Kansai Paint Co. Ltd has acquired additional 2.02 percent (to 71.29%) stake in Kansai Nerolac for Rs287crore (at price of Rs263 per share) – sentimentally positive for Kansai Nerolac

Indian Hotels through its overseas subsidiary Samsara Properties divested 1.24% stake in Belmond for $11.96 Million (over Rs82crore) to repay debt – positive read through for the stock

Survey calls for big changes in agri-sector, bats for GM crops: If implemented positive for Seeds companies ( Kaveri Seeds) and Monsanto
Suzlon bagged a 71.40MW wind power project from Gujarat Industries Power Company Ltd (GIPL). Suzlon will execute the project on a turnkey basis provide operation and maintenance services for 20 years. (Market Hour News)
Reliance has introduced two entry-level range of LYF smartphones, LYF Wind 6 and LYF Flame 1 in sub-Rs 7,000 category.

L&T is planning to sell 49% stake in its wholly owned subsidiary L&T General Insurance Company to a foreign entity as per media reports. The deal is expected to be finalised in the next three to six months. It is estimated that the deal could fetch L&T Rs 1,500 crore. – This is as per its asset monetization drive and Positive for L&T

The southern grid will get an additional 4,000 MW of power in the next one year to mitigate the woes of electricity-deficit states announced Union Power Minister Piyush Goyal. This is positive for Power sector as a whole and key beneficiary could be PTC India. 

Mindtree shareholders approve bonus shares, top brass rejig

Zee Media to acquire 80% stake in India Today companies

Andhra Bank’s Board of Directors have approved raising of Rs 136.5 crore by  issuance of 2,88,53,210 equity shares at Rs. 47.3 per share on preferential basis to Life Insurance Corporation of India


 Update on Global Market 

·         Wall Street ended lower on Friday in a feeble end to another week of strong gains after concerns about the timing of future interest rate hikes offset gains in materials and energy stocks.
·         The Commerce Department said gross domestic product expanded at a 1-percent annual rate in the fourth quarter, an upward revision from its previous estimate of 0.7 percent growth.
·         The data exacerbated concerns that the US Federal Reserve could raise rates sooner rather than later.
·         The economy grew at a rate of 2 percent in the third quarter.
·         The Dow Jones industrial average fell 0.34 percent to end at 16,639.97 points.
Currency
Subject
Forecast
Previous
GBP
Nationwide HPI (MoM) (Feb)

0.3%
EUR
German Retail Sales (MoM) (Jan)
0.1%
-0.2%
EUR
CPI (YoY) (Feb)
0.1%
0.3%
CAD
Current Account (Q4)

-16.2B
USD
Chicago PMI (Feb)
54.0
55.6
USD
Pending Home Sales (MoM)

0.1%
CNY
Manufacturing PMI (Feb)
49.3
49.4

Saturday, 27 February 2016

Economic Survey 2015 - 16 Highlights

  • Pay panel to have little impact on inflation 
  • FY17 economic growth seen 7-7.5% 
  • Need major invest in health, education 
  • 8% growth possible in the next couple of years 
  • India haven of stability amid gloomy global econ 
  • Pay panel to have little impact on inflation 
  • Correlation between India, world growth rate sharply up 
  • Confidence in price stability has improved 
  • Low inflation has taken hold 
  • Budget will have to contend with global econ situation 
  • Short term econ growth depends on global growth, demand 
  • 7th pay panel, good monsoon can up domestic consumption 
  • Tax base should widen to over 20% from 5.5% now 
  • Govt to meet FY16 fiscal deficit target of 3.9% of GDP 
  • FX reserves as on Feb 5 at $351.5 bln 
  • Expect FY16 GDP growth rate in 7.00-7.75% range 
  • FY16 fiscal deficit target seems achievable 
  • FY17 expected to be challenging from fiscal point 
  • FY16 GDP growth seen 7.6% 
  • Trade gap declined Apr-Jan to $106.8 bln vs $119.6 bln 
  • CAD at 1.4% of GDP Apr-Sep

Friday, 26 February 2016

HUDCO Tax Free Tranche II


HUDCO Tax Free Bond Tranche II Issue.

Issuer
HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED

Issue Size
Rs. 500 Cr with an option to retain over subscription up to Rs. 1,288.50 Crs aggregating upto Rs. 1,788.50 Cr
Issue opens
Wednesday, March 2, 2016

Issue closes
Thursday, March 10, 2016

Allotment
First Come First Serve Basis

Face Value
Rs. 1000 per Bond

Issue Price
Rs. 1000 per Bond

Nature of Instrument
Tax-free secured redeemable and non-convertible

Minimum Application
5 Bonds (Rs. 5,000) (individually or collectively, across all Series of Bonds)
and in the multiple of One Bond (Rs. 1,000) thereafter

Listing
BSE / NSE

Rating
“CARE AAA” by CARE , “IND AAA” by IRRPL

NRI  
NRI cannot apply in the Issue


SPECIFIC TERMS FOR EACH SERIES OF BONDS


Options
Option 1
Option 2
Frequency of interest payment
Annual
Annual
Tenure of Bonds
10 years
15 years
Maturity/Redemption Date
10 years from Deemed Date
of Allotment
15 years from Deemed Date
of Allotment
Coupon Rates for Category I, II and III#
Series of Bonds
Tranche II Series IA
Tranche II Series II A
Coupon Rate (%) p.a.
7.04%
7.39%
Annualized Yield (%) p.a.
7.04%
7.39%
Coupon Rates for Category IV#
Series of Bonds
Tranche II Series IB
Tranche II Series IIB
Coupon Rate (%) per annum
7.29%
7.69%
Annualized Yield (%) p.a.
7.29%
7.69%