According to the bi-annual financial stability report released by RBI, for the first time since 2015 the bad asset problem of the
banking sector is receding. Gross nonperforming assets (GNPA) ratio of the banks declined from 11.5% in March 2018 to 10.8% in Sept 2018.
Stress-test results showed banks had liquidity and should be able to withstand pressure, while there appeared to be greater discipline
in credit assessment, higher sensitivity to market risk, and better appreciation of operational risks. The report further stated that introduction
of Insolvency and Bankruptcy Code had improved the discipline in the credit culture of the country.
Chairman of State Bank of India, Rajnish Kumar said that multiple opportunities for growth are opening up during 2019. He said that bank credit, currently growing at 15%, will continue to expand due to increased spending by public sector units. He was confident of private sector investment also picking up in the near future.
Keki Mistry, Vice-chairman and CEO of HDFC, said that thrust on housing by Government, benefits of RERA reform, increased rural demand helped by upcoming polls and increased investment in infra projects will all combine to drive growth.
Investors can benefit from the growth of banking sector in India by buying "Banking Bulls" Safal Nivesh. The Safal Nivesh has returned 7.13% over the previous month compared to Nifty returns of -0.52%.
Stock returns consist of two parts - price return and dividend return. For a long term investor, dividend returns are very important as they can earn back a significant
portion of their investment in the form of dividends, before selling the stock.
This Safal Nivesh consists of companies who have maintained an average dividend yield of at least 3% over the previous 10 year period without any cuts in dividends during that period.
"Regular Income" Safal Nivesh is trading at 22% discount to Nifty PE. 9 out of 14 stocks in the theme have "Strong Buy" or "Buy" rating. 8 stocks in the basket have more than 10% upside potential according to analysts. 7 companies have more than 10% institutional holding indicating high management quality, good performance track record and expectation of bullish performance going forward.
Crowdsale Safal Nivesh is based on Benjamin Graham's investment philosophy. Graham is widely considered to be the father of value investing.
He believed that inexperienced equity investors should invest into conservatively financed companies with long history of profitable operations.
This Safal Nivesh consists of stocks that boast of a strong financial position, manageable debt and stable earnings.
The Safal Nivesh is trading at a steep 64.3% discount to Nifty PE. 4 out of 7 stocks in the theme have been rated either Buy or Strong Buy by analysts. All the stocks in the theme have price target at least 20% above the current market price. 5 out of 7 stocks in the theme have institutional holding greater than 10%, indicating good management quality and bright future prospect for the company. The Safal Nivesh has returned 22.56% over the price year compared to Nifty returns of 11.40%.
India has improved its ranking by one notch to 35th in the global real estate transparency index, driven by policy reforms and liberalisation
of FDI rules in property as well as retail sectors, realty consultant JLL said. According to JLL, the ranking is expected to improve further in the next
survey in 2020, on the back of several government initiatives such as Real Estate (Regulation and Development) Act (RERA), GST and Benami Transactions Act.
India has emerged as one of the top ten countries to register maximum improvement in transparency in real estate over the last two years. The improvement is
being attributed to improvement in ranking to better market fundamentals, policy reforms and liberalisation of FDI into realty and retail sectors.
In related news, a Knight Frank report released last week said that capital inflow into the Indian real estate market witnessed a jump of 31% to $2.6 billion in 2017, primarily on the back of the government's reforms initiatives and new regulations. This put India on the 19th spot among 73 countries, which attracted cross-border capital into their property markets. Foreign investment into real estate has grown by 600% since 2012 to reach reach $2.6 billion in 2017.
Benefit from this trend by buying "Realty Demystified" Safal Nivesh. The theme has returned 22.23% over the previous year compared to 12.73% Nifty returns.
Last week, Minister of state for housing and urban affairs Hardeep Singh Puri said that of the 99 smart cities announced so far, as many as 91 have incorporated special purpose vehicles and 948 projects are under implementation. The total investment proposed in these projects is Rs 2.03 lakh crore and around 994 lakh crore urban population will be impacted by these projects.
In related news, Shillong capital of Meghalaya was last week selected as the 100th city to be transformed as a smart city under Smart Cities Mission. Under the mission, the Centre allocates Rs 500 crore to each of the cities for implementing projects proposed by it. This amount is matched with a grant of the same amount by the respective state.
Smart Cities Safal Nivesh has companies that will help build smart cities and improve the quality of life in urban India.
The banking sector finally seems to be making some progress on the Non performing asset (NPA) front. According to a news report, promoters of 2100 companies who had earlier defaulted on repaying loans to banks have now settled their dues, worth around Rs.83,000 crore, before action was initiated under the newly-enacted Insolvency and Bankruptcy Code (IBC).
After the resolution of all 12 NPA cases referred to insolvency proceedings by the RBI in its first list, banks are expected to write back more than Rs.1 lakh crore onto their books. This will directly add to the bottom line and help in reduction of NPA’s. Last week Tata Group acquired controlling stake of 72.65% in the debt-ridden Bhushan Steel Ltd for around Rs 36,000 crore. Last month National Company Law Tribunal (NCLT) approved Vedanta Resource’s resolution plan for acquisition of Electrosteel Steels. These 2 were among the 12 companies that banks had referred to NCLT following RBI’s advisory.
Banks are also working on a plan to resolve Rs.70,000 crore worth of NPA’s in the power sector, through operation and maintenance contracts. 10 such projects are expected to be resolved next month.
Banking Bulls Safal Nivesh allows investors to take exposure to banking sector stocks and benefit from boost in bottom line of banks.
Speaking to reporters last week, Union Commerce and Industry Minister Suresh Prabhu said that, Government has finalised a new industrial policy with a major focus on promoting setting up of industrial units in rural areas and that the same will be announced soon.
Government last week announced that agriculture credit disbursal stood at Rs.10 lakh crore during the 2017-18 financial year. The disbursal is line with budget target for the year. The target for the current financial year has been enhanced to Rs 11 lakh crore.
According to news reports, Government has set a target to increase the country’s foodgrain production by over 2% to a record 283.7 million tonne in 2018-19 crop year (July-June), helped by a normal monsoon. The Government will also soon take a decision on schemes that would ensure farmers get the minimum support prices (MSPs) for their crops. It would fix the MSPs at 50% over cost of production for all the kharif crops, where not already done.
Anurag Jain, senior official with Canara HSBC OBC Life Insurance, said in an interview that good monsoon, coupled with Government focus on rural economy in terms of building rural infrastructure, providing better agricultural support prices, focus on increasing farm incomes and creating job opportunities, bodes well for rural India. He said that signs of the same are visible in terms of tractor sales, two wheeler sales and consumer durables doing well, and they are expected to continue doing well in the foreseeable future. He said that he was optimistic about benefits arising out of strong rural economy.
Benefit from this trend by buying Rural outperformer Safal Nivesh. The theme has returned 23.97% over the previous year compared to Nifty returns of 14.5%.
Automobile companies ended the year on a high note, registering a strong double-digit growth in the month of March compared to the same period last year.
Government's push towards infrastructure development, restriction on overloading of trucks, push on road construction and mining has boosted demand in the medium and heavy commercial vehicle (M&HCV) segment. Increased thrust on agriculture, FMCG and e-commerce sectors and increasing demand coming for container and refrigerated trucks is driving demand for LCV’s. Tata Motors recorded 34% year on year (YOY) growth in sale of commercial vehicles for March 2018 whereas Ashok Leyland recorded 20% growth for the same period.
In the passenger car segment sales of market leader Maruti Suzuki India grew by 15% YoY in March 2018, with sales of 1.47 lakh units compared to 1.27 lakh units recorded in March 2017. The strong monthly sales numbers were driven by 24.3% growth in Utility vehicle (UV) segment.
In the 2 wheeler space, Hero Motorcorp’s March 2018 sales grew by 19.8% to 730,473 units.
Positive rural sentiment, higher rabi production and new model launches over the past couple of months helped Mahindra and Mahindra sell 28,277 units of tractors during March 2018 recording a 46.2% growth on YOY basis.
Benefit from the growth in auto market by buying Automania Safal Nivesh. The theme has returned 24.64% over the last 1 year compared to Nifty returns of 11.55%.
According to data released by RBI, over the previous 10 years public sector banks (PSB’s) have been slowly giving up their market share to their private sector peers.
At the end of fiscal year 2007, PSB’s commanded 72.6% share of all advances by banks, whereas currently they have 68.1% market share. During the same period
private sector banks have improved their market share from 21.5% to 27.8%. Non banking financial companies (NBFC’s) have done much better and their market
share has gone up from 9.5% in March 2008 to 15.5% in March 2017. Gross nonperforming assets (NPA’s) as percentage of advances for PSB’s has increased
from 2.8% in 2007 to a whopping 11.8% in 2017. For private sector banks the numbers are 2.2% and 4.3% whereas for NBFC’s the numbers are 2.8% and 4.8% respectively.
Speaking in an interview Uday Kotak, chief of Kotak Mahindra Bank said that share of PSB’s in lending business would come down by further 20% over the next 5 years and the ratio of market share of advances would be more like 50:50 for PSB’s and private sector banks compared to present ratio of 70:30.
Benefit from the trend of fast growth in private sector banks and NBFC’s by buying Privy Banks Safal Nivesh. The theme has returned 22.14% over the previous 1 year compared to Nifty returns of 10.03%.
Stock returns consist of two parts - price return and dividend return. For a long term investor, dividend returns are very important as dividends help them earn back a
significant portion of their investment.
"Regular Income" Safal Nivesh consists of companies who have maintained an average dividend yield of at least 3% over the previous 10 year period without any cut in dividends during the before mentioned period. The theme has returned 3.86% during the previous week and 52.84% over the previous 1 year. Nifty has returned 17.51% during the same 1 year period. The theme is trading at a 17% discount to Nifty PE of 21.8x. According to analysts, half of the stocks in the theme have an upside of at least 10%. 7 stocks in the basket have an institutional holding of at least 10% indicating high management quality and positive future prospects of these companies.
Auto sales started off 2018 on a strong note according to data released by SIAM last week. Sales of passenger vehicles grew by 7.57% year on year to 2,85,477 units.
2 wheeler sales in January were up by 33.43% to 16,84,066 units compared to 12,62,140 units in the year-ago month. Sales of commercial vehicles grew by 39.73% during
the same period to 85,660 units. Within the CV segment, medium and heavy commercial vehicle sales increased by 18.77% to 34,170.
Sales of commercial vehicles are expected to continue with their growth momentum for the rest of the year due to Government's infra spending push, implementation of GST, strict enforcement of rules against overloading and policy to scrap vehicles that are more than 15 years old. Anuj Kathuria, senior official at Ashok Leyland, speaking in an interview said that prospects of the segment looks rosy for the next 2 years as projects like Sagarmala, Bharatmala, freight corridor construction, smart cities etc. will drive vehicle demand.
Benefit from high vehicle sales by buying AutoMania Safal Nivesh. The theme has returned 24.73% over the previous year compared to Nifty return of 19.07%.
Guided by a mission to strengthen agriculture and rural development, Government will spend
Rs.14.34 lakh crore during 2018-19 period to create livelihood and infrastructure in rural areas. Besides generating employment, this investment is expected to lead to construction of 3.17 lakh
km of roads, 51 lakh new houses, 1.88 crore toilets, and will provide electricity connections to 1.75 crore new households.
Finance Minister Arun Jaitley last week unveiled details of the recapitalisation package for public sector
banks. The capital infusion plan for 207-18 includes Rs.80,000 crore through recapitalisation bonds and
Rs.8,139 through budgetary allocation. State Bank of India will get Rs.8,800 crore while Punjab National
Bank, Bank of Baroda and Syndicate Bank will get Rs.5,473, Rs.5,375 and Rs.2,839 respectively.
The recapitalisation package has come along with a slew of recommendations which aims to reform the banking sector. The list of recommendation covers areas such as specialised stress management mechanism, new norms for consortium lending, appointment of independent directors etc.
Fresh capital infusion and possibility of further fund raising through qualified institutional placement will help strengthen banks balance sheet and give boost to increased lending.
Buy into Indian banking sector via Banking bulls Safal Nivesh. The theme is up 2.05% up this week and has returned 38.60% in the last 1 year.
Earlier this week Government approved 100% FDI under automatic
route in the construction development segment, which includes townships, housing, built-up infrastructure and
real estate broking services. Industry players had been demanding the relaxation for some time now. The move is expected to bring in clean money into the system from stronger
entities such as pension funds and sovereign wealth funds.
After the triple strike of demonetisation, RERA and GST, realty sector seems to be slowly but surely recovering. Comparatively lower interest on home loans, correction in property prices and Government's push on affordable housing is expected to drive growth in the sector. Robust demand from occupiers in IT/ITeS, banking, financial services & insurance (BFSI) sectors, apart from co-working space operators and data centres focusing on digitization, low vacancy levels and increasing rentals in commercial space will further aid growth.
These factors along with any further allowances that might be made in budget 2018 towards realty sector will continue to drive up stock prices. Buy into the sector via Realty Demystified Safal Nivesh. The theme has returned 3.65% returns this week and 132.65% over the previous 1 year!
Consumption sector is expected to be in the focus in 2018, due to uptick in rural economy. Recovery in non agri segment of rural economy from demonetisation/GST related disruptions,
possibility of good monsoons and Government thrust on rural economy via increased fiscal allocation towards affordable housing, rural roads and electrification will combine to drive demand.
Recovery in demand is expected to contribute to greater domestic consumption, as demand for two-wheelers, tractors, diesel, consumer non-durables and cash would increase significantly.
Rural Outperformer theme consists of companies from across sectors like tractors, seeds & fertilizers, home electronics etc. which not only derive significant amount of their revenue from rural India, but are also striving to enhance their foothold across rural markets and are likely to benefit due to increasing rural demand. The theme has returned 71.61% over the last 1 year!
Realty Demystified was one of the best performing themes last week - generating a weekly return of more than 4%. On the back of multiple positives like passing of RERA and increased activity of large PE players, realty sector has been performing handsomely for the last one year. This theme has generated a return of more than 120% in the last one year!
In spite of the recent euphoria over recapitalization, private sector banks are expected to
continue grabbing market share by public sector banks. Indicators suggest that macro factors will rebound over
the next 2 years and this in turn should lead to increase in demand for working capital loans. Overall loan growth
is expected to return to mid teens over the next 2 years.
Benefit from this trend by buying Privy Banks theme. It consists of private banks and non banking financial companies, which are at an advantageous position going forward due to their robust business model, low loan loss and high profits. Theme has returned 54.55% over the previous 1 year!
This theme consists of companies experiencing earnings growth, witnessing margin improvement & increasing
return on capital, and still available at justifiable valuations.
The Safal Nivesh portfolio is trading at a discount of 50% to Nifty PE. Also, 6 out of 10 stocks in the theme have been rated either "Strong Buy" or "Buy". These stocks also have a potential upside of 10% and at least 10% institutional holding. High institutional holding indicates good management quality, favorable performance track record and expectation of bullish performance going forward. The theme has gained 4.34% over the previous week and gained 69.63% over the previous 1 year!
After Titan Ltd, last week, reported 67.45% growth in net profit and 29.5% growth in revenue during September
ended quarter, the company's share prices surged 19% on Monday to hit 52 week high. Deutsche Bank forecasted that
the company’s earnings will double by 2018-19 from last year's base. The company is also planning to open 15 more
jewellery stores during the year.
Luggage maker VIP Industries reported 8.6% growth in revenue, 38.4% growth in earnings before interest, taxes and depreciation and 27% growth in profit for September ending quarter.
These companies are part of Affluent Stocks theme. This theme consists of stocks expected to benefit from India's increasing affinity for luxury goods and services. It has generated a return of 74.32% in last one year!
Sales volumes of fast moving consumer goods (FMCG) companies have seen an uptrend this quarter compared to
low volume growth seen in the previous 2 quarters due to the effects of demonetization and GST implementation.
Hindustan Unilever reported a 4% volume growth in the quarter ended September compared to a flat growth in the
June quarter. Dabur India reported a 7.2% volume growth for the recent quarter, compared to a 4.4% decline in
the previous quarter. Godrej Consumer Products reported a 10% volume growth compared to a flat growth in the previous quarter
Markets seem to also recognise this, as counters of FMCG companies are seeing heightened activity. According to Morningstar data, mutual fund houses bought Rs. 1433 crore worth of ITC shares in September which led to over 10% month-on-month increase in their holding. Shares of Dabur India hit 52 week this week after global brokerage firms like Macquire Securities and UBS retained buy rating on the stock
You can participate in the FMCG recovery rally with Indian Shopper theme. It has generated a return of 6.28% in last one month
Suven Life Sciences has been granted a patent by Singapore corresponding to the New Chemical Entities (NCEs) for the treatment of disorders associated with neurodegenerative diseases. The patent is valid till 2033.
Aurobindo Pharma Ltd has received final approval from the US Food & Drug Administration (USFDA) to manufacture Esomeprazole Magnesium Delayed-Release Capsules. The capsules are indicated to treat frequent heartburn. The approved product has an approximate annual sales in excess of $300 million. According to company release the product will be launched immediately. Cadila Healthcare has received final approval from the USFDA to market Allopurinol tablets. The drug is used to treat major depression. These stocks are part of this theme. Portfolio gained 1.7% during the week. 6 out of 8 stocks in the theme have an estimated upside of at least 10%. The sector has been out of flavour for quite some time now and could be ripe for a contra bet.
This theme is trading at a discount of 76.4% to Nifty PE of 23.5x. 10 out of 15 stocks in the theme have a rating of "Strong Buy" or "Buy" by analysts. 7 stocks have at least 10% estimated upside potential. The theme has returned 68.11% over the previous 1 year.
It has been built based on Joel Greenblatt's magic formula investing strategy. This theme comprises of companies which have generated high return on capital employed but are trading at a low valuation. Return on capital employed allows us to understand how many rupees in profit each rupee of capital employed generates. It indicates how efficiently a company uses its capital. The higher the number, the more favourable the situation as it means more profits are generated.
Boosted by festive demand, carmakers reported strong numbers for the month of September. Maruti's sales was up 9%, Tata Motor's 25% and Hyundai's 17%. This theme consists of stocks from segments like auto parts, tyre manufacturers, two wheeler manufacturers and carmakers. With Indian automobile buyers timing their purchases around festive season, this could be a good time to invest in this theme. It has generated a return of 14.5% in last one year.
This year, Deepawali will be celebrated on 18th of October. It is one of the most important festivals in India and also marks the beginning of new financial year in Hinduism with people seeking blessings of goddess Lakshmi, for a prosperous new year.
Deepavali, has a very significant impact on the Indian economy. Indian companies pay bonuses during this time. The Kharif crop season also usually ends by mid-October, bringing money into the rural economy. Also, for the festive shopping people generally save for the whole year. All of these lead to increased economic activity, as the India retail goes on a shopping spree. People spend to buy new clothes and jewellery. Purchase of consumer durable products like fridge, TV, washing machines etc. goes up. Car and two wheeler purchases also sees a spike during this time of the year. This week we have highlighted few themes which are expected to benefit from the increased economic activity during the festive season.
Theme gained 5.47% last week. It is trading at a PE of 6.32, a deep discount of 73.1% to Nifty PE. Also, 11 out of 13 stocks in the smallcase have a buy or strong buy rating.
This theme selects companies which are displaying earnings growth and positive momentum. Momentum is the tendency of stock prices to move in the same direction as the trend, i.e upward trending stocks tend to move higher whereas falling stocks tend to move further downwards. Momentum investing involves chasing performance. Currently, MidCap Star portfolio has a momentum rank of 1 amongst all model based portfolios.
According to data released this week by TRAI, active mobile subscriber base increased by 11.3% since July 2016. July saw a net subscriber addition of 0.1 million - a third straight month of growth. Additionally, mobile broadband subscriber base increased by 96.2%, compared to July 2016.
Last week, in an interview to Economic Times, telecom minister Manoj Shah said that the new telecom policy (expected by Mar'18), will focus on providing affordable internet access to 1.3 billion Indians. You can benefit by digitization trend in Indian by investing with Digitally Yours theme. This theme consists of various companies like data providers, equipment manufacturers and infrastructure enablers working in the data chain and expected to be the beneficiaries of this trend.
This theme gained 5.71% during the past week. It is based on Benjamin Graham's investment philosophy. Graham widely known as the father of value investing believed that inexperienced equity investors should invest into conservatively financed companies with long history of profitable operations. This theme consists of stocks which boast of strong financial position, manageable debt and stable earnings.
The portfolio is currently trading at a PE of 11.7x, discount of 49.3% to Nifty PE. 3 out of 5 stocks in the smallcase are rated as either "Strong Buy". These stocks also have more than 10% institutional holding indicating high management quality, good performance track record and expectation of bullish performance going forward. Theme has generated a return of 53.64% in last one year, as shown in the graph below.
Smart cities was the focus this week, as Prime Minister Narendra Modi, speaking at the BRIC's summit in China, stressed on accelerating cooperation in smart cities, urbanisation and disaster management amongst BRIC nations. Based on the PM's directive, Ministry of housing and urban affairs, the nodal ministry for Smart Cities Mission, this week identified 261 impactful ventures worth Rs 31,000 crore and PPP projects worth Rs 32,000 crore for the states to work on. Focus will be on impactful PPP based smart city projects.
NDA Government launched the "Smart City Mission" with a project outlay of Rs.98,000 crore to revamp and transform 100 cities to the highest level of urbanization. Benefit from this project by buying the Urban India portfolio. The theme has generated a return of more than 40% in last one year, as shown in the graph below.