Sunday, May 20, 2018

NPA: banks may get over ₹1 lakh cr.

Amount from resolution under IBC will add to bottomline and help in reduction of PSBs NPAs: Finmin

Enthused by successful conclusion of Bhushan Steel case, the Finance Ministry expects banks to write back more than ₹1 lakh crore after the resolution of all 12 NPA cases referred to insolvency proceedings by the RBI it its first list.
Last week, Tata Group acquired controlling stake of 72.65% in the debt-ridden Bhushan Steel Ltd. for about ₹36,000 crore will help in cleansing the banking system as well as boost lenders profitability.
The remaining 11 NPA cases, which are in the pipeline, will easily bring to the table more than ₹1 lakh crore and the amount coming from resolution under the Insolvency and Bankruptcy Code (IBC) will directly add to the bottomline and help in reduction of NPAs of the public sector banks, a senior Finance Ministry official said.
Last year, in June, RBI’s internal advisory committee (IAC) identified 12 accounts, each having more than ₹5,000 crore of outstanding loans and accounting for 25% of total NPAs of banks.
Following the RBI’s advisory, banks referred Bhushan Steel Ltd., Bhushan Power & Steel Ltd., Essar Steel Ltd., Jaypee Infratech Ltd., Lanco Infratech Ltd., Monnet Ispat & Energy Ltd., Jyoti Structures Ltd., Electrosteel Steels Ltd., Amtek Auto Ltd., Era Infra Engineering Ltd., Alok Industries Ltd. and ABG Shipyard Ltd. to NCLT. These accounts together have total outstanding loan of ₹1.75 lakh crore.
The Kolkata Bench of the National Company Law Tribunal (NCLT) has already approved Vedanta Resources’s resolution plan for acquisition of Electrosteel Steels last month.
Besides, the NCLT last month also asked the lenders of Bhushan Power & Steel to consider the bid submitted by the U.K.-based Liberty House for the debt-ridden company.
Bhushan Power and Steel owes close to ₹48,000 crore to banks and was referred to the NCLT by Punjab National Bank in June last year.
Last week, Bamnipal Steel Ltd (BNPL), a wholly-owned subsidiary of Tata Steel, has acquired 72.65% stake in Bhushan Steel by paying about ₹36,400 crore, of which ₹35,200 crore will be paid to financial creditors.
The buy-out is expected to bring relief in the form of capital boost to PNB that was one of the leading lenders to the debt-ridden company, the bank said in a statement.
PNB said it had the second highest exposure to Bhushan Steel and will benefit greatly from this acquisition.
PNB sources say that the ledger outstanding to Bhushan Steel was ₹3,857.49 crore while ₹1,542.99 crore were earmarked for provisioning.

Vijaya Bank defers fundraising plan for 2018-19

Mumbai: Public sector bank Vijaya Bank on Sunday said that its board has deferred a fund-raising plan for 2018-19. On 17 May, the bank had informed exchanges that its board will meet on 20 May to discuss a proposed capital-raising plan under Basel III.
However, on Sunday, the bank informed the exchanges that its board had deferred the plan. The bank did not disclose further details. Vijaya Bank had last made a qualified institutional placement (QIP) in September 2017, raising Rs700 crore.
QIP is a capital-raising tool through which listed companies can sell equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into stocks, to a qualified institutional buyer.
The development comes at a time when state-owned lenders have been struggling with high non-performing assets (NPA) and cases of fraud that have dented investor confidence. Since the start of the year, shares of Vijaya Bank have lost 15.6%, closing at Rs58.3 on BSE on Friday.

Stock markets in India to bleed more on BJP's Karnataka setback

The setback suffered by the in Karnataka will further weigh on the stock market, already grappling with macro economic headwind. The developments there are seen as a key step for galvanising opponents of the ruling party ahead of the general election in 2019.
"The sharp correction (in share prices) that is underway is likely to gather momentum,” said Ajay Bodke, chief executive officer, portfolio management services at Prabhudas Lilladher.

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The benchmark indices shed two per cent last week, their worst weekly performance in two months. Investor sentiment was already been fragile amid a worsening macro situation, with brent crude climbing to $80 per barrel, the rupee breaching 68 to the dollar and yield on the 10-year government security inching towards eight per cent.
"The Indian markets are focused on adverse fallout of surging global crude prices on the macro economic fundamentals and slow takeoff in corporate earnings,” said Bodke. Had the BJP won the Karnataka confidence vote, it would have helped market sentiment, he added.
The Street was following the Karnataka election closely as a test for the Modi-led BJP’s prospects in the 2019 Lok Sabha poll. Some analysts, however, believe investors will wait for the next round of state elections to judge whether the momentum is still with it. “The impact of the Karnataka political outcome will be short-lived,” predicts V K Vijayakumar, chief investment strategist at 
There will be polls in Madhya Pradesh, Rajasthan and in December. Between now and these elections, economics will dictate the market direction, said Vijayakumar. “Of immediate concern will be the impact of crude at $80 on inflation, the interest rate, exchange rate and (GDP) growth rate. With the macros turning unfavourable with the crude spike, the upside to the market is capped.”
In a recent note, foreign brokerage Nomura had said every $10 per barrel rise in worsens India’s current account balance by 0.4 per cent of GDP, increases inflation by 30-40 basis points (bps), hurts growth by about 15 bps and worsens the fiscal balance by 0.1 per cent of GDP.
Brent crude was $54 a barrel only a year ago.
Vijayakumar said there could be a huge sell-off in the stock market if crude breached $85 a barrel.

What changed your markets while you were sleeping

Easing China-US trade war has pushed Asian shares higher on Monday, but rising crude oil prices and a fluctuating rupee may pose a threat to the domestic market. The BJP’s failure to prove majority in Karnataka trust vote may not hurt sentiment much, say analysts.

Let’s check out what all might matter to Dalal Street on the day:
 

Singapore trading sets stage for flat start 
Nifty futures on the Singapore Stock Exchange were trading 4.50 points, or 0.04 per cent, lower at 10,61.50, indicating a flat start for the Nifty50. 

Nifty50 forms 'Bearish Engulfing' patternThe Nifty50 fell for the fourth straight session on Friday to settle below the 10,600 mark. The index formed a robust bearish candle on the daily chart and made lower highs and lower lows for the third straight session. The index made a bearish engulfing formation on the weekly chart, suggesting the possibility of further downside. Analysts say the 50-day moving average around the 10,550 level should act as a major support for the index for now. 

BJP’s loss in K'taka not to hurt Street 

Experts believe that BJP’s loss in the state has been factored in, but believe the country has more pressing issues like oil prices and a weakening rupee. "The market may open on a weak note but may recover early on of the day. We believe, now market focus may return to its fundamentals, corporate earnings, domestic macros & events. Investors’ should take any correction as a buying opportunity and keep focus on stock specific and stay invested on the companies, which are fundamentally strong and sound management," said Sanjeev Jain, AVP - Equity Research at Ashika Stock Broking. 

Easing trade war lifts US futures, Asian stocksUS stock futures jumped on Monday as US Treasury Secretary Steven Mnuchin said the US trade war with China is “on hold” after the world’s two largest economic powers agreed to drop their tariff threats while they work on a wider trade agreement, Reuters reported. Japan's Nikkei index ticked up 0.1 per cent while MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.1 per cent in early trade, the report suggested. 

Oil prices near $79 a barrel markBrent crude futures were at $78.87 per barrel at 0045 GMT, up 36 cents, or 0.5 percent, from their last close, Reuters reported. Brent broke through $80 for the first time since November 2014 last week. US West Texas Intermediate (WTI) crude futures were at $71.68 a barrel, up 40 cents, or 0.6 per cent, from their last settlement.  .. 

Indostar Capital to make market debutNBFC Indostar Capital Finance, which recently concluded its initial public offer, will make stock market debut on Monday. The Rs 1,844-crore IPO was subscribed 6.80 times during May 9-11. The price band of the offer was fixed at Rs 570–572 with a face value of Rs 10 per share. Indostar is mainly into offering structured term financing solutions to companies and loans to SME borrowers. 

Key Q4 earnings todayDLF, Colgate-PalmoliveNSE 3.92 % , Future Retail , Just Dial, Petronet LNGNSE 0.05 %, TK Prestige, Usha Martin, Safari Industries would be among the companies scheduled to report their quarterly numbers during the day. 

FPIs sold Rs 166 cr worth of equities on Friday 
Foreign portfolio investors (FPIs) sold Rs 166 crore worth of domestic stocks on Friday, provisional data available with BSE suggested. DIIs were net buyers to the tune of Rs 150 crore, data suggested. 

Hindalco to raise Rs 5,000 cr to repay loansLeading aluminium producer Hindalco Industries is set to raise about Rs 5,000 crore by selling corporate bonds to repay bank loans, a move that is expected to reduce its credit costs. “We want to pay back at least Rs 5,000 crore this year and probably refinance it with a bond in the Indian market,” Satish Pai, MD at Hindalco, told ET. The company’s current net debt stands at Rs 15,000 crore. 

UltraTech to acquire Century’s cement bizAditya Birla Group-owned UltraTech on Sunday approved the reorganisation of the cement business of Century Textiles and Industries and its absorption into UltraTech, giving itself the leadership in all regional markets in a deal that has long been in the works involving Kumar Mangalam Birla and his grandfather BK Birla. 

Trade war on 'hold', but tariffs will be back if China breaks promises: US

The Trump administration won’t impose on Chinese products for now, after the two nations made progress on trade issues during two days of talks, Treasury Secretary Steven Mnuchin said.
“We’re putting the on hold. So right now, we have agreed to put the on hold while we try to execute the framework,” Mnuchin said on “Fox News Sunday.”
President has threatened to impose on as much as $150 billion in Chinese imports to punish Beijing for allegedly violating American intellectual property and unfair trade practices. vowed to retaliate with tariffs on everything from soybeans to airplanes.

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Mnuchin’s remarks will be a relief to investors, who had feared the world’s two biggest economies were on the brink of an all-out trade conflict. The Monetary Fund has warned that a global would undermine the broadest global upswing in years.
Asian stocks were set to start the week higher and S&P 500 contracts gained 0.7 percent, an unusually large gain for early Asian trading.
Legal Tools
Even so, Mnuchin said Trump “can always decide to put the tariffs back on if doesn’t go through with their commitments.” Other members of the administration said duties are still an option if needed to get to chance its practices.
“As this process continues, the United States may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations,” U.S. Trade Representative Robert Lighthizer said in a statement. “Real structural change is necessary. Nothing less than the future of tens of millions of American jobs is at stake.”
Asked on CBS’s “Face the Nation” Sunday whether Trump has taken the threat of tariffs off the table, Larry Kudlow, the president’s top economic adviser, said, “I don’t think we’re at that stage yet.”
“Tariffs are part of any negotiation, and tariffs maybe have to be part of any enforcement,” Kudlow said. “You cannot do this kind of major change without using everything that’s in your quiver.”
Switching Positions
It’s also not clear how long any truce will last. Trump has often switched his position on trade issues. He has frequently declared that talks on a new North American Free Trade Agreement are going well, for example, only to threaten again to withdraw from the pact.
Mnuchin’s comments came after the two nations on Saturday released a joint statement in which China proposed to “significantly increase purchases” of US goods.
The statement released by the White House didn’t place a dollar figure on the increased purchases by China, or address a comment on Friday by Kudlow suggesting that Beijing had agreed to slash its annual trade surplus with the U.S. by $200 billion. The US had a $376 billion trade deficit in goods with China last year. The shortfall was $337 billion when services are added.
Rough Estimate
Kudlow on Sunday downplayed the significance of the $200 billion figure, saying on CBS that “maybe I got ahead of the curve” and during a separate interview on ABC’s “This Week” that “both sides have used that as a rough ballpark estimate.”
Vice Premier Liu He, a special envoy of China’s President Xi Jinping, told reporters in Washington that talks with Mnuchin, Secretary of Commerce Wilbur Ross and Lighthizer ended with a pledge not to engage in a trade war, according to a Xinhua news agency report.
“We made very meaningful progress and we agreed on a framework. The framework includes their agreement to substantially reduce the trade deficit by increasing their purchases of goods,” Mnuchin said. He said the two sides have agreed to numerical targets but he didn’t want to disclose them.
The Chinese are offering to make structural reforms such as lowering tariffs and other import barriers that will allow the U.S. to export “billions and billions” of additional goods to China, Kudlow said on ABC.
Positive Mood
“We made a lot of progress here in Washington and built on what happened in China,” Kudlow said. “The president is in a very positive mood about this. I myself am very encouraged.”
The joint statement between the two nations said both sides agreed on “meaningful increases” in U.S. agriculture and energy and that the U.S. will send a team to China to work out the details. Kudlow said Ross is going to the Asian nation and will be “looking into a number of areas where we’re going to have greatly, significant increases,” including energy, agriculture and manufacturing.
Even so, U.S. lawmakers will probably have pointed questions about what the administration has agreed to give up in exchange for a truce with China. In a major reversal, Trump instructed his administration last week to come up with a penalty against Chinese telecom-equipment maker ZTE Corp. that allows the company to stay in business. The Commerce Department had banned ZTE from receiving imports from its U.S. suppliers, a move that crippled ZTE.
‘Real Backlash’
The administration would face a “real backlash” if it offers concessions to ZTE as part of the trade talks, Republican Senator Lindsey Graham told Fox News.
Kudlow said on ABC that while there may be “perhaps some small changes around the edges” in U.S. action on ZTE, there will still be big fines and other remedies and “do not expect ZTE to get off scot-free. It ain’t gonna happen.”
During the trade talks, the delegations discussed expanding trade in manufactured goods, and each side agreed to strengthen cooperation on intellectual property. China will “advance relevant amendments” to its laws and regulations in that area, including its patent law, the White House said.
“If we can fix the technology stealing, which is so important in this China story, and we can get these market openings, this will be good for American export sales,” Kudlow said on ABC. “I think it’s good for Chinese growth. We will have come a long way.”
The White House joint statement didn’t mention additional U.S. demands, including a halt to subsidies and other government support for the Made in China 2025 plan that targets strategic industries from robotics to new-energy vehicles. China had made its own demands, including giving equal treatment to its investment, and warned U.S. companies may be excluded from measures to open its 
“This round of talks is generally positive,” said Li Yong, a senior fellow at the China Association of Trade in Beijing, adding that the U.S. still may take a harder line on reviews of Chinese investments. “Trade tensions will ease gradually, but there still could be frictions.”

Trade setup: Nifty’s weak opening good time to pick quality stocks

Bearish undertone persisted on Dalal Street, as the NSE benchmark Nifty opened lower on Friday and remained in the falling channel throughout the session. The index ended 86.30 points or 0.81 per cent lower. 

The nervousness was evident, as the political drama in Karnataka shifted to proving the majority on the Assembly floor. What happened in the southern state over the past 10 days can also be viewed as a prelude to what can be expected from the general elections in 2019. 

Life sprouting out of almost nonexistent Opposition can instil political uncertainty in the country. This was first seen during Gujarat Assembly elections and now became more evident during the Karnataka polls. 

As we step into Monday’s trade, the market is likely to see a knee-jerk reaction to the BJP’s resignation even before the floor test. There are high chances that the Nifty might see a weak opening. However, that being said, it is also likely that post weaker opening, the Nifty might spend rest of the session trying to improve the show. The 100-DMA levels will be very crucial to watch out for as a major support on a closing basis. 

The levels of 10,630 and 10,665 will act as resistance, while supports may come in at 10,165 and 10,540 zones. 

1

The Relative Strength Index (RSI) on the daily chart is 47.3261. It has marked a fresh 14-period low, which is bearish. RSI does not show any divergence against the price. The daily MACD stays bearish while trading below its signal line. No significant formations were seen on the candles. 

Overall, Monday is likely to turn out to be a volatile session for the market. We will continue to see selective buying at any given levels in the sectors that are outperforming the general market or in the stocks, which have posted good results. 

In an event of any possible downside, the 100-DMA levels will be crucial to watch out for. Though overall exposures should be kept at modest levels, lower levels can be utilised to make good quality purchases. 
With political dust nearly settled, market may now attempt to find its bottom in the days to come. 

STOCKS TO WATCH: Relatively resilient technical setup was observed in stocks such as Tata Global BeveragesNSE -1.13 %, Manappuram FinanceNSE -1.60 %, Gujarat Narmada, CadilaNSE -4.46 % Health, Ujjivan, Indiabulls Real Estate, Karnataka BankNSE 2.12 %, Tech MahindraNSE 2.54 %, TV Today and Linde India. 

Wilful defaults by PNB's big borrowers slip further to Rs 152 bn by Apr-end

State-run (PNB) saw wilful defaults by big borrowers slipping further to Rs 152 billion in April this year over the previous month, soon after suffering a record loss of more than Rs 134 billion for January-March due to frauds and bad loans.
The bank which posted a record loss of more than Rs 134 billion for the last quarter of 2017-18 closed the fiscal with big wilful defaults of Rs 152 billion, according to the data.
Big wilful defaulters are categorised by as those borrowers with loan outstanding of Rs 2.5 million and over.

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The country's second largest public sector lender is already in troubled waters due to the Rs 143.57 billion fraud allegedly carried out by celebrity jewellery designer and his associates.
Major defaulters in big borrowers category include Kudos Chemie Rs 130 billion; Kingfisher Airlines Rs 5.97 billion; BBF Industries Rs 1 billion; ICSA (India) Ltd Rs 1.34 billion; Arvind Remedies Rs 1.58 billion and Indu Projects Ltd Rs 1.02 billion.
Jas Infrastructure and Power Limited Rs 4.10 billion; VMC Systems Ltd Rs 2.96 billion; MBS Jewellers Pvt Ltd Rs 2.66 billion also figured in the list. These borrowers were part of the consortium lending by 
Those among key borrowers who borrowed money solely from the bank included Winsome Diamonds and Jewellery Ltd Rs 8.99 billion; Zoom Developers Rs 4.10 billion; Forever Precious Jewellery & Diamonds Ltd Rs 7.47 billion.
Of the others are Surya Vinayak Industries Rs 1.33 billion; Nafed Rs 2.24 billion; and Mahuaa Media Rs 1.04 billion.
The scam-hit bank earlier last week posted a standalone net loss of Rs 134.16 billion for the January-March period of 2017-18, the biggest ever by any domestic lender, as bad loans surged.
As a result, provisions for the bad loans jumped four-fold to Rs 162 billion for the quarter under review compared to Rs 491 billion parked aside in the same period a year ago.
For the full fiscal 2017-18, bank posted standalone loss of Rs 122.82 billion against a profit of Rs 13.24 billion in 2016-17.
Bank's asset quality has witnessed sharp deterioration as gross net performing assets (NPAs) or bad loans, hit 18.38 per cent of gross advances at the end of March this year, as against 12.53 per cent a year ago.
Net NPAs were also soared to 11.24 per cent against 7.81 per cent year ago.
In absolute term, the gross NPA of the bank surged to Rs 866.20 billion in the fourth quarter as compared to Rs 553.70 billion in same quarter a year ago. Similarly, the net NPA also rose to Rs 486.84 billion from Rs 327.02 billion at the end of March 2017.

NPA: banks may get over ₹1 lakh cr.

Amount from resolution under IBC will add to bottomline and help in reduction of PSBs NPAs: Finmin Enthused by successful conclusion of...