Wipro may be lagging on growth but is managing its receivables better

The story at Wipro Ltd in recent years has been a series of false starts. Even as revenue growth for its larger peers, Tata Consultancy Services Ltd (TCS) and Infosys Ltd, accelerated, Wipro lagged. But one metric where the company is scoring is cash conversion.

The proportion of Ebitda (earnings before interest, tax, depreciation and amortization) that converted into operating cash flow stood at 98% in fiscal year 2019, the highest among large IT companies. Wipro maintains this lead with cash flows to Ebitda staying at 95% in the 12 months ended June 2019, showed an analysis by Nomura Financial Advisory and Securities (India) Pvt. Ltd.

Wipro’s growth in operating cash flow and free cash flow exceeded Ebitda growth in 12 months to June. Free cash flow adjusts for capital expenditure as well, apart from cash operating expenses.

Importantly, this is not a recent phenomenon. Cash flow growth is far superior at the company even using three-year annual average growth rates. “Over the last three years, cash conversion has been stable for Infosys/TCS, deteriorated at HCL Technologies Ltd and improved for Wipro," analysts at Nomura India said in a note.

What explains the variation in performance is better receivables management. Comparatively, the receivables position increased at other large IT companies, with Infosys seeing material deterioration in recent quarters.

The variation in growth rates may be part of the reason. Constant currency revenue growth year-on-year remains in mid-single digits at Wipro, while its larger peers are growing in double digits. “Typically, a growth-focused company may give some leeway to customers on payment terms," said an analyst on condition of anonymity. Even so, as the analyst added, Wipro is doing a decent job in getting money quickly from customers.

Of course, all of this is but a silver lining on the dark cloud of poor growth. Most analysts remain sceptical about Wipro’s growth outlook. The September quarter revenue growth guidance indicates no major improvement. The pressure on legacy business is more pronounced at Wipro than at other large companies, showed an analysis by HDFC Securities Institutional Research.

This is reflected in the valuation discount vis-à-vis other large peers. “TCS and Infosys trade at premium valuations due to revenue predictability and stable performance," Kotak Institutional Equities said in the June quarter results review note, referring to the valuation gap in IT stocks. For Wipro’s returns to pick up, revenue growth will have to inch up as well.

Gains from massive bond buying helped transfer higher surplus: RBI

MUMBAI : The Reserve Bank could transfer an additional ₹1.23 trillion from its surpluses to the government, thanks to the gains from bond buying and a change in the accounting practices of its forex operations, sources said Wednesday.

These two heads alone have contributed as much as ₹57,000 crore to the income of the central bank, people in the know explained.
There has been widespread criticism after the RBI agreed to part ₹1.76 trillion with the government following the Bimal Jalan committee report on the appropriate economic capital framework for the central bank. The ₹1.76 trillion includes a surplus of ₹1.23 trillion and ₹52,000 crore in one-time surplus.

The higher quantum of bond buying to inject liquidity into the system has resulted in additional income of ₹36,000 crore, while the changes in accounting practices resulted in gains of ₹21,000 crore, the source said.
Without quantifying the gains, the source also said that there is no need to provide money against potential risks as the capital required is falling within the levels prescribed by the Jalan committee.

"These three heads (OMO income, change in forex accounting and zero provisions) are all independent events that have taken place at the some point during the fiscal year," the source explained.

On the one-time transfer of ₹52,000 crore, the source said passing the money to the government is considered a "much neater" way of transferring the excess reserves identified by the Jalan committee.

The source said the Jalan committee was extra conservative while prescribing the preferred levels of buffers required to be maintained, and takes into account a scenario where the 10 largest banks go down simultaneously in an ownership-agnostic way.
The levels prescribed are such that the RBI will be able to carry on its role as the lender of last resort even if these 10 banks were to go down, the source pointed out.

The Jalan panel has asked the central bank to maintain its risk buffers in the range of 5.5-6.5 percent of its overall balance sheet and that the transfer of ₹52,000 crore will not force the RBI to sell any assets to meet this requirement, the source said.

Replying to the initial excitement after papers, including those published by some "respected people" which pegged the excess reserves at ₹3 trillion, the source explained that the same stems from the size of the currency and gold revaluation account (CGRA).

The CGRA stood at ₹7.3 trillion for the year June 2019 (RBI follows a July-June accounting calendar which will be changed to April-March from this year as per the Jalan panel), which resulted in such expectations. However, the panel has made it clear that investments in both forex and gold are prone to volatilities, and only transaction on sale should lead to booking of profit or losses which led to the expectations being belied.

The panel has also felt that paying interim dividend as has been done in the last two years, is "not the right thing to do", the source said.

Interestingly, the source also said the RBI's thinking is still aligned to the concerns expressed by then deputy governor Viral Acharya in an October 2018 speech against raiding the balance sheet of the RBI.
However, the panel has defined the right level of the buffers which takes care of many of those concerns, the source said, adding the levels are arrived at with a lot of rigour.

The Jalan committee also makes the distinction between the sovereign and the RBI's balance sheet very clear, giving a separate place of importance for the latter, the source said.

"This debate the committee has put to rest by saying that the RBI is the primary bulwark of monetary and financial stability," the source said.

Time to buy? 27 stocks in largecap index fall 10-30% from highsTime to buy?

As many as 27 stocks in the BSE Largecap index have fallen 10-30% from their respective 52-week high recorded in 2019

Benchmark indices have fallen 6-8 percent from their respective record highs registered in June 2019 but the big carnage was seen in individual stocks, especially in the small and midcap space.

Largecaps displayed more resilience at a time when most of the stocks were trading in a downtrend. There are as many as 27 stocks in the S&P BSE Largecap index which have fallen 10-30 percent from their respective 52-week high recorded in the year 2019.

Some of the stocks which are available at a discount include names like L&T, Axis Bank, Bajaj Finance, Titan Company, Shree Cement, Siemens, Bajaj Finserv, Dr. Reddy’s Laboratories, HDFC Bank, HDFC, Bajaj Auto, and ICICI Bank.

So can we say all stocks in the largecap index are strong buy even though they might be available at a steep discount? Maybe not, say experts.

Some of the stocks which are part of the largecap index have seen massive wealth erosion in 2019 largely on account of fundamental or structural factors. But, there are some stocks which are still good buy on dips stocks.

Factors like economic slowdown, liquidity concerns, lack of any big bang announcements in budget and surcharge on super-rich including the FPIs (which has been rolled back recently), etc. led to muted investors sentiments, which have dragged the markets down in 2019.

“Amongst the stocks mentioned above, we believe one should invest in ICICI Bank, Bajaj Auto, Tech Mahindra, Aurobindo Pharma, BPCL, etc. in a phased manner as these companies are fundamentally sound with strong financials and have the potential to earn healthy returns over the long term. However, one should avoid investing in PNB (growth concerns) and UPL (high debt levels),” Ajit Mishra, Vice President, Research told Moneycontrol.

Generally, during market corrections fundamentally strong stocks correct lesser than the general market because of their inherent fundamental strength which can be seen in the table above.

“Stocks correcting more than 30-50 percent run the risk of falling further and therefore should be avoided especially if the index has corrected just by about 9 percent so far, which is the current situation,” Umesh Mehta, Head of Research, SAMCO Securities told Moneycontrol.

“Stocks like ICICI Bank, HDFC Bank, Bajaj Finance, Siemens, Shree Cement have all fallen less than 20 percent while the broader indices have fallen over 30-40 percent. By identifying such relatively strong performers investors can get to know about the fundamentals of sound companies. For eg., ICICI Bank, HDFC Bank, Dr. Reddy’s have the highest consensus brokerage targets. Investors should, therefore, focus on such largecap stocks,” he said.

The Nifty index is currently at about the same level as it was at the beginning of the year and is trading with marginal gains so far in the year 2019, but has fallen by about 9 percent from its respective 52-week high.

Correspondingly, stocks have corrected in various proportions from their highs and give an opportunity to investors to accumulate largecap blue-chip stocks at these levels which investors should make use off.

“Simultaneously, there are a few stocks which have delivered solid performance in Q1FY2020. We accordingly prefer stocks like Titan, Bajaj Finance, HDFC Bank and HDFC Ltd,” Atish Matlawala, Sr Analyst, SSJ Finance & Securities told Moneycontrol.

“We would also recommend accumulating stocks like ICICI Bank, Axis, Siemens, UltraTech Cement, Larsen & Toubro at different price intervals should they continue to see further price corrections,” he said.

Best mutual funds to invest in 2019

Our list of top mutual fund schemes that you may consider to invest in 2019.

Which are the best mutual funds to invest? Most investors have this query before they start investing in mutual funds. Curiously, it is the first question most investors ask or type on a search engine. Sadly, it is also the main reason why many investors keep on postponing their investments forever.

Even when the online search shows some results, most investors don't proceed further. They are still unsure about the dependability of the list. That is why we at ETMutualFunds.com thought about putting together a list of mutual fund schemes to help investors who are struggling with this question.

Here is ETMutualFunds.com ’s list of best or top mutual fund schemes that you may consider investing in 2019. We have included almost every important category of schemes in our recommendation list: equity schemes, hybrid schemes, and debt schemes. You can scroll down to take a look at the complete list.
However, before proceeding further, here are a few pointers you must keep in mind. One, you should always choose your mutual funds based on your financial goals, investment horizon, and risk profile.

If your goals need to be met within less than five years, you may consider investing in debt mutual fund schemes. If you are investing for long-term goals of over five years, you may consider hybrid or equity schemes. You should invest in riskier options like mid cap and small cap mutual fund schemes only if you have a longer investment horizon of seven to 10 years.

Note, it is extremely important to choose a debt mutual fund scheme that matches your investment horizon. Even while choosing equity mutual fund schemes, you should not overlook this aspect. For example, you should have a minimum investment horizon of five to seven years to invest in an equity scheme. However, if you are investing in mid cap or small cap schemes, you should have a longer investment horizon (seven to 10 years).
However, you should keep in mind that all debt or hybrid or equity mutual funds do not have the same element of risk. Some schemes are riskier than the others. For example, overnight funds and liquid mutual fund schemes are the least risky among debt mutual funds, whereas credit risk schemes can be highly risky.

Similarly, a small cap scheme is riskier than a largecap or multicap scheme.

That is why it is extremely important for investors to keep their risk appetite in mind while choosing a mutual fund scheme. Any mismatch could cause a lot of heartburn later. If you do not have the appetite for the risk associated with your investments, you may find it extremely difficult to hold on to your investments during trying times.

Here is the list of best mutual fund schemes across categories:

Equity mutual funds

Equity: Large Cap
Axis Bluechip Fund
Canara Robeco Bluechip Equity

Equity: Multi Cap
Motilal Oswal Multicap 35 Fund
Kotak Standard Multicap Fund

Equity: Mid Cap
Invesco India Midcap Fund
L&T Midcap Fund

Equity: Large and Mid Cap
Sundaram Large and Midcap Fund
Invesco India Growth Opportunities Fund

Equity: Small Cap
L&T Emerging Businesses Fund
HDFC Small Cap Fund

Equity: ELSS
Aditya Birla Sun Life Tax Relief 96
Invesco India Tax Plan

Debt mutual funds:
Debt: Corporate Bond
ICICI Prudential Corporate Bond Fund

Debt: Dynamic Bond Fund
Franklin India Dynamic Accrual Fund
Kotak Dynamic Bond Fund

Debt: Gilt
ICICI Prudential Gilt Fund
Reliance Gilt Securities

Debt: Medium Duration
Axis Strategic Bond Fund
Franklin India Income Opportunities

Debt: Short Duration

Hybrid mutual funds
Hybrid: Aggressive Hybrid
SBI Equity Hybrid Fund
Mirae Asset Hybrid Equity

Hybrid: Conservative Hybrid
ICICI Prudential Regular Savings Fund
UTI Regular Savings Fund

Hybrid: Arbitrage
Kotak Equity Arbitrage Fund
Reliance Arbitrage Fund

Planning to invest in small cap funds? Spread your risk via SIPs

Valuations have become cheaper, but investors should have 5-7 year horizon, say wealth advisors

Wealth managers are advising investors keen on looking at battered small cap shares to start systemic investment plans (SIP) in schemes that bet on these shares. Many of the small cap stocks have tumbled 50-70 per cent since January 2018, resulting in their valuations becoming cheaper; but analysts rule out an immediate broad-base revival with earnings growth showing no signs of recovery. SIPs in small cap mutual fund schemes would help investors spread their risk over a period of time.

“The sharp drawdown in small cap funds, is a good opportunity to add small cap funds. They can accumulate with a 5-7 years horizon,” says Deepak Challani, head -- third party products at Prabhudas Lilladher

Small cap funds have disappointed investors in the recent past. In the past one year, the category has lost 18.76 per cent, as per data from Value Research. The category has gained 2.2 per cent in the last three years and risen 12.96 per cent in 10 years. The Sensex has lost 2 per cent in the last one year and gained 10.43 per cent in three years. With the S&P BSE Small Cap Index losing 39 per cent from its peak of January 2018, fund managers say there is scope to pick potential winners.

“The selling pressure provides an opportunity for bottom-up stock picking, as this reflects a correction in the valuation multiples rather than any significant reduction in earnings profile for quality companies,” said Navneet Munot, ED, SBI Mutual Fund. “For retail investors, taking exposure via the SIP route is the ideal way to approach the current scenario as it cushions them against any knee jerk reaction in the market.”

A research note by SBI Mutual showed that 83 per cent of the stocks forming part of the S&P BSE Small Cap index are now down more than 30 per cent from their peak prices in the last 18 months. The note said that whenever the small cap index corrects more than 30 per cent, it bounces back strongly and has delivered 20 per cent on a compounded basis over the next three years.

However, distributors believe given that corporate earnings are slow to come back, investors should be in no hurry to invest, and should build their portfolio slowly over a period of time.

Some financial planners said investors should wait for the economic cycle to recover before investing in small caps. “Once you see a consistent recovery through better monthly data for at least two months in segments like auto, cement and flight bookings, you could opt for investments in such funds,” says Jignesh Shah, founder capital advisors.

SBI Equity Hybrid Fund: Fund review

Among balanced schemes, SBI Equity Hybrid is one of the most stable performers in the long term.

High valuation and a lack of visibility of near-term earnings’ growth have made equities unattractive, at least in the short term. It is quite clear that earnings growth in equities has become a little longer term story.

As opposed to this, many savvy participants do not perceive grave concerns about debt markets.

Given this situation, investments in hybrid or balanced schemes which offer the best of both worlds — equities and debt— with at least a five-year time horizon must not be ruled out. When equities are volatile, debt markets provide stability to the portfolio’s returns.

Among balanced schemes, SBI Equity Hybrid is one of the most stable performers in the long term. In the past three- and five-year periods, the scheme has given 8.2 per cent and 10.1 per cent returns, respectively, while its peers in the category have given 5.4 per cent and 7.3 per cent returns, respectively, in the same period.

As regards the scheme’s debt investments, fund managers Dinesh Ahuja and R Srinivasan have given special attentions to quality. The scheme is heavily invested in government and AAA-rated securities which, moderately, offer a certain amount of stability to the portfolio.
With respect to its benchmark index, the scheme has higher exposure to debt securities than its benchmark index. This aggressive exposure shows the conviction of the fund managers. Its equity investments are also spread across good dividend-paying, superior asset-possessing multi cap growth stocks.

Nomura upgrades India to 'overweight', BNP sees Sensex at 40,500 by Dec

Morgan Stanley said India's underperformance year-to-date to emerging markets may reverse in the weeks ahead

The measures announced by Finance Minister Nirmala Sitharaman to boost the economy is a welcome step and will help improve market sentiment in weeks to come with Sensex climbing 40,000 by end of this year, global brokerages said.

Japanese brokerage house Nomura upgraded its India rating to overweight, saying it is the time to raise allocation on positive local developments amid rising global uncertainty.
According to the research house, reform measures and sectoral incentives could provide a much-needed booster shot for the economy. "We expect the recovery in economic growth to 6.6 percent in the second half of FY20 from 5.8 percent in the first half," it said.
Indian market with less than average leverage to global growth could do relatively better, it feels.

Having a Sensex target for December 2019 at 40,500, BNP Paribas said the government's flexibility and focus on ensuring confidence-boosting measures is a short-term positive, but the escalation in US-China trade tensions have turned more unfavourable for India.

To bring the economy on track, Finance Minister Nirmala Sitharaman, on August 23, announced several measures for various sectors like autos, MSMEs, PSU banks, housing finance, etc.

Also, the government removed additional surcharge on long and short term capital gains of foreign portfolio investors, which had affected market sentiment.

Global economic environment has been weak. As a result, the Reserve Bank of India lowered its FY20 growth forecast to 6.9 percent from 7 percent.

"Government has given a clear signal that it acknowledges an economic slowdown. Measures will improve investor sentiment and drive at least a short-term bounce," CLSA said.
Morgan Stanley said India's underperformance year-to-date to emerging markets may reverse in the weeks ahead.

"Key risk is that our view on global equities is cautious," it said.

From a portfolio perspective, the global brokerage likes financials, consumer discretionary and industrials while Nomura's top picks are ICICI Bank, ICICI Prudential Life, L&T, SBI and Container Corporation.

Jefferies said higher depreciation benefit is likely the most material but even this is at best a 5 percent benefit. It was more of a sentiment positive than a material boost to auto demand, but no GST rate cut is a disappointment particularly for 2-wheelers, it added.

Stimulus package: PSU banks, auto to hog limelight; about 30 stocks to benefit

Measures such as removal of surcharge on foreign portfolio investors (FPI) and removal of CSR violation as the criminal offence will cheer market participants

Finance Minister Nirmala Sitharaman on August 23 unveiled a slew of measure to boost growth, increase liquidity, and revive consumer and investor sentiment in the Indian economy.
The announcement couldn’t have come at a better time as the Indian businesses have reported a muted earnings in June quarter. Coupled with a trade war that could lead to the global recession and corporate governance issues, it has dented sentiment.

Measures such as removal of surcharge on foreign portfolio investors (FPI) and removal of CSR violation as the criminal offence will cheer market participants.

"The withdrawal of an additional surcharge should help shore sentiment amongst foreign investors. The tax situation had made India less attractive than our peers in the emerging markets space. FPIs have been withdrawing money from the Indian capital markets ever since the budget, this should slow down and hopefully stop the outflow from Indian markets," Nikhil Kamath, Co-Founder & CIO, Zerodha told Moneycontrol.

"A reduction in the LTCG and STCG should also aid sentiment in the short-term. The slowdown in the industry looks systemic, and while this could be a good start to stimuli, a lot more has to be done to turn the economy around," he said.

Deferring the increase in registration fee till June 2020 on new vehicles, the decision to review scrappage policy and linking vehicle loan rates to repo rate will help in reviving the auto sector.

"Delating the revision of one-time registration fees till June 2020 is a very important boost to the sector as this would have had a significant impact on demand in the short term. The costs would have gone significantly up,"  Ashwin Patil, Senior Research Analyst (Auto Sector) at LKP Securities said.

"The step is positive for 2-wheeler, 3-wheeler and personal vehicles. The revision of depreciation rate for all vehicles—from 15 percent to 30 percent for vehicles purchased up to March 2020—will give a big boost mainly to the commercial vehicle (CV) industry considering the extreme stress on the manufacturers, dealers, buyers and the entire value chain of CVs," he said.

Measures for the banking industry—immediate infusion of Rs 70,000 crore in public sector banks, additional liquidity support to housing finance companies and establishing task force to finalise Rs 1 Lakh crore infra investments—will go a long way in reviving investor and consumer sentiments, say experts.

“Upfront release of Rs 70,000 crore to PSU banks would create credit expansion to the tune of Rs 5 lakh crore. Credit growth of PSU banks will get a sizeable boost,” Anusha Raheja at LKP Securities told Moneycontrol.
“Banks have agreed to transmit the reduction of repo rate into credit markets by reducing their MCLR rates. Credit demand should get some boost and lower interest rates will also be beneficial for NBFCs,” she said.

Raheja further added allaying concerns of the auto sector should also be helpful for banks and NBFCs in general.

Vinay Pandit, Head - Institutional Equities, at IndiaNivesh Securities Limited

We expect banks, NBFCs, housing finance companies, auto and consumption stocks to come back in flavour. We continue to be positive on major automakers—Maruti Suzuki, Hero Motocorp, TVS Motor and Bajaj Auto.
Among the consumer durables companies, we are positive on Blue Star as our key pick followed by Voltas. We are also positive on RBL Bank, ICICI Bank, SBI and Axis Bank. Banking stocks will see a strong relief rally in the next week.

Mustafa Nadeem, CEO, Epic Research

The surprise was the recapitalisation of banks that was not expected at this point in time. We rather expected sector-specific measures, which would have been related to automotive, consumer space or so. PSBs like SBI, BOB and PNB may see some incremental improvement in their net-interest margins.

Romesh Tiwari, Head of Research, CapitalAim
Markets will surely appreciate these much-needed decisions. Tata Motors, Ashok Leyland, DLF, SBI and other public sector banks will see a good rebound. The second half of tomorrow's market will be interesting as that will decide the sustainability of the bounce of August 23.

William O’Neil India

According to O’Neil methodology, we will wait for the Nifty to close above August 23 low of 10,638 for two more days to shift the market status to a rally attempt, after which we can take fresh positions.
According to our methodology, stocks of Pidilite, HDFC Life, SBI Life, ICICI Bank, Berger Paints, Asian Paints, Marico, Dabur, HUL, TCS and Infosys stand well.

Prabhudas Lilladher

We recommend investors to use these turbulent times to build a portfolio of companies with moats in their business and ability to withstand technology disruptions. Maruti, Ashok Leyland, L&T, Siemens, HDFC Bank, Cholamandalam Finance are likely to be direct benefices of the stimulus package from the Finance Minister.

4 steps for investors to ride roller-coaster markets

Jump off and you will get hurt. Stay on through all the bumps, you will survive and come back for more.

 For the investor who knows what he is doing, volatility creates an opportunity, said John Train, an American investment advisor and author of many books on investing.

Alas, this is not the case with most investors. Notional losses have got investors concerned about their investments. In my interactive sessions, I have been meeting investors, who have partially exited equity investments, stopped SIPs and have doomsday predictions about the markets. Some investors have moved back to traditional investments such as fixed deposits, gold and endowment policies. This is probably why they say that Investors’ worst enemy is not the stock market but their emotions.

Fear of losing money makes people take terrible financial decisions. First, they don’t invest in equities and, even when they do, they exit at the slightest hint of volatility and re-enter once markets have rebounded, thus losing out on the market rally. This really means that they seldom make money in equities and are always bad mouthing equity linked investments such as mutual funds.
Here are a few steps to follow when the markets are on a roller coaster ride.

Assess why you chose a particular instrument
Have you done it keeping a financial goal in mind? If not, first build a financial plan. A financial plan will help you know how much to invest for each goal and for how long. If you invest without a goal in mind, your mind will get tuned to thinking about the investment for returns alone, thus, making you focus only on short-term market movements. Once you invest for a goal and know the time horizon, you will not usually react immediately to volatility.

Keep out the noise

Every source of information – TV channels, newspapers, financial websites, and social media – tend to amplify both good and bad news. The information overload causes more harm than good. The more the information you consume, the more anxious you become. This anxiety makes you overreact and take terrible financial decisions. Use news for information and not decision making.

Do not over-monitor your portfolio.

It is a well-known fact that people who trade often on their portfolio do not really make more returns than those who follow a buy-and-hold strategy. I have come across investors monitoring fund NAVs or stock prices daily through various apps and I wonder how this helps them. In fact, I would think that monitoring the portfolio movement on a daily or even weekly basis would lead you to taking wrong decisions as you may exit in situations of temporary volatility too. Checking the portfolio once a quarter would actually suffice.

Remember the laws of nature

Markets cannot remain static. Each time after a downturn, markets have rebounded after a while in a big way. This is true in India and in other world markets as well. There will be ups and downs. But, over long term, returns will average out. The key is to remain invested during the downturn. Sitting tight (like you do on a roller coaster ride) through the volatility should be the mantra.

Take Financial Advice

Investors often tend to follow a herd mentality due to which their portfolios are over-concentrated in a particular asset class or sub-category – over exposure to mid-cap/small-cap stocks/funds. An advisor can stop you from churning investments based on market movements. Find a fee-only financial planner who will work with you on your financial plan and help restructure the portfolio, if required.

Market consolidates amid hopes of govt intervention; more than 470 stocks hit 52-week low, rupee falls to 72/$

The Indian rupee fell to 72.04 against the US dollar, the lowest level since November 14, 2018, due to stronger dollar and FII outflow.

After hitting a new low for August, the benchmark indices continued to consolidate on August 23 amid hopes that the government would take some corrective measures like a rollback of FPI surcharge, provide stimulus to ailing sectors etc.

The BSE Sensex fell 64.46 points to 36,408.47 after losing nearly 600 points in the previous session. The Nifty50 shed 2.60 points to 10,738.80 at the time of publishing this copy.

"The recent fall is a result of growing uneasiness among the participants as they’re keenly awaiting some action from the government to boost the market sentiment," Ajit Mishra Vice President - Research at Religare Broking told Moneycontrol.

"Nifty has now reached closer to its immediate and critical support of 10,750 so we may see some consolidation or pause ahead. We suggest continuing with 'sell on rise' approach and focusing more on stock selection now," he said.

More than 470 stocks hit their 52-week low today including largecaps like ITC, ONGC, IndusInd Bank, Hindustan Zinc, GAIL India, Grasim Industries, Eicher Motors, Tata Steel, Cipla, DLF.
Among others, GIC, Motherson Sumi, NMDC, Bank of India, Bharat Forge, Page Industries, New India Assurance, L&T Finance, IDBI Bank and Ashok Leyland also hit a year low.

Meanwhile, the Indian rupee fell to Rs 72.04 against the US dollar, the lowest level since November 14, 2018, due to a stronger dollar and FII outflow.

The BSE Sensex fell nearly 8 percent and more than Rs 14.5 crore worth of investors' wealth eroded since July 5, the Budget day.

FIIs have been net sellers since then, pulling out more than Rs 25,000 crore from the Indian markets.

Reliance Capital jumps 6% on short-covering

The company is set to exit its mutual fund (MF) business after selling its stake in Reliance Nippon Life Asset Management to Nippon Life Insurance.

Shares of Reliance Capital jumped almost 6 percent in early trade on August 23, mostly on account of short-covering.

The stock has been on a losing spree since August 19 and analysts say some short-covering might have given the stock a push.

The stock has been on a losing spree since August 19 and analysts say some short-covering might have given the stock a push.

The company has been struggling to raise funds to meet its business requirements. The current liquidity crisis has made the condition worse.

Moreover, the company is set to exit its mutual fund (MF) business after selling its stake in Reliance Nippon Life Asset Management to Nippon Life Insurance.

With the closure of open offer, Nippon Life Insurance's stake in Reliance Nippon Life Asset Management (RNAM) has risen to 54 percent.

Nippon Life paid Rs 230 per share in the open offer, and the total pay-out was about Rs 1,500 crore. The company has now become the majority shareholder with 54 percent stake in RNAM.

As per the share purchase agreement, Reliance Capital will completely exit RNAM, and Nippon's shareholding in the asset management company will increase to 75 percent.

Around 1010 hours, shares of Reliance Capital traded at Rs 32.70 apiece, up by Rs 0.70 or 2.19 percent on BSE.

Rupee at 8-month low; here are 10 stocks that could benefit from the fall in INR

A feeble rupee is not a good sign for the market as it indicates that foreign investors are bearish on the market and exiting their positions

Trading at its lowest level since December 2018, the Indian rupee opened lower by 10 paise at Rs 71.91 per dollar on August 23 versus the previous close of Rs 71.81.
The domestic currency looks set for the biggest monthly fall in six years as it is down 4.6 percent this month and 3.1 percent in 2019.

Chinese yuan's fall has also put pressure on emerging market currencies. As per Reuters, the yuan slumped to an 11-year low. Traditionally, Indian currency follows its Chinese counterpart as both countries aim to remain export competitive.

A feeble rupee is not a good sign for the market as it indicates that foreign investors are bearish and exiting their positions. At a time when the market has a lot to worry in terms of the trade war, weakening the economy and lacklustre corporate earnings, the fall in rupee only aggravate the outflow of foreign funds.

However, there are select sectors and stocks that can help you reap profit despite rupee’s weakness, pharma and IT figure prominently among them.

Ajit Mishra, Vice President, Research, Religare Broking

1.Infosys: The stock remains one of the preferred bet because of the company’s consistent performance, strong management, positive sector outlook and stable long term growth prospects.
"The company has near term challenges, but long-term growth outlook remains bright on the back of rupee's weakness, positive management guidance, large orders and higher payout to shareholders," said Mishra.

2.Tata Consultancy Services: India’s largest IT company offers its services to a wide range of industries such as BFSI, manufacturing, telecom, retail, transportation and insurance.
It has over 4.2 lakh consultants present in over 50 countries. In terms of revenue, 51 percent of its business comes from North America.
"We believe the company is well placed to benefit from the increasing demand for offshore IT services seen over the last decade. Further, the company’s wide experience and strong clientele would enable it to maintain its strong position in the IT space," Mishra pointed out.

3.Wipro: Wipro will be one of the beneficiaries of a falling rupee as it means higher dollar earnings for IT firms. "The exact impact of rupee depreciation depends upon each company’s hedging policy as well as the proportion of offshoring business. Besides this, other fundamentals aspects are also important for investing in a company," Mishra pointed out.

The analyst believes near-term challenges persist for the company as there is a weakness in a few verticals such as the capital markets segment in BFSI and manufacturing segment in Europe.

However, the digital business has been performing well.
The company is likely to maintain a strong cash balance of over Rs 20,000 crore (post buyback) and boasts of strong free cash flow. It also trades at a discount to its peers indicating upside potential in the long-term.

Nikhil Shetty, Research Analyst, BP Equities

4.Divi's Labs: The company has no foreign exchange debt and has not hedged future revenues.
Its 70 percent of the revenue is in foreign exchange. "Rupee's fall will add to sales and margins as Divi's is a net exporter," said Shetty.

5.Sun Pharma: The company got a benefit of Rs 67.4 crore due to its foreign transactions as against a loss of Rs 90 crore in the previous year.
The company has a foreign exchange debt of Rs 6,422 crore and net foreign exchange exposure is 60-65 percent of revenue.

At operating level, the company’s EBITDA grew at 24.2 percent to Rs 1,996 crore while its margin expanded 166bps YoY that was aided by favourable gains in foreign currency (200bps). Falling rupee will add to sales and margins as it is a net exporter.
Anand Rathi Shares & Stock Brokers

6.Mphasis: The company has expertise in application development and maintenance, infrastructure outsourcing, and business and knowledge process outsourcing.
The company has won new deals in direct international business with TCV of $151 million in Q1FY20; 80 percent of deal wins is in the focus area of new-gen services.
"Going ahead, improvement in margins, momentum in deal wins, decent revenue growth coupled with rupee depreciation are the catalysts to drive strong earnings growth," said the brokerage.

7.Biocon: Biocon is one the largest and fully-integrated, innovation-led biopharmaceutical company emerging globally with presence in over 120 countries.
"We continue to expect the company to get benefits of the first wave of biosimilar commercialisation in the next two years, which should drive higher revenues and margins," said the brokerage, adding that the rupee's weakness will be a further catalyst for it.
Umesh Mehta, Head of Research, SAMCO Securities.

8.Balkrishna Industries: A competent off-highway tyre manufacturer, Balkrishna has a strong fundamental profile and is a global player with around 6 percent market share in the off-highway tyre industry.

9.Fine Organics: Fine Organics is likely to benefit from rupee’s decline as it generates around 60 percent of its revenues from exports.

10.Indo Count Industries: Indo Count Industries looks attractive as it exports to 54 countries across the globe and stands to benefit the most during currency fluctuations.

Finance ministry amends PMLA Act to offer clarity on digital KYC

PMLA is the means through which lenders, investment platforms and telecom companies are authorised to capture customer details.

The finance ministry has amended the Prevention of Money Laundering Act, 2002, to clarify the various modes of capturing customer details electronically, in what could potentially change the way regulated entities such as banks and telecom companies capture these details completely.

PMLA is the means through which lenders, investment platforms and telecom companies are authorised to capture customer details before onboarding them on to their platforms.
While the government has not spelt out video KYC through the amendment, the move clears the path for regulators like the Reserve Bank of India or others to come out with such guidelines, industry insiders said.

Further, the changes in the Act will also enable customers to submit Aadhaar details to companies voluntarily, thereby paving the way for remote onboarding, which had stopped after a Supreme Court order last year.

“The notification from the government brings in the different modes through which full customer details can be captured, Aadhaar eKYC, electronic documents which are digitally signed and digital KYC,” said Wriju Ray, cofounder, IDfy, a Mumbaibased digital KYC solutions provider.

The amendments have also added electronic documents besides physical documents, which will now allow regulated entities to capture full customer details through eKYC as well, removing the need for physical papers and photos.

These changes are an extension of the multiple changes to the KYC rules that have been brought in by the telecom regulator and the banking regulator, this is formalisation of the entire process, said
 Dipti Lavanya Swain, partner, HAS Advocates.

“This will pave the way for documents to be accessed from digi-lockers as well, which can give a huge boost to remote lending and frictionless digital customer onboarding,” said Aditya Kumar, founder, Qbera.

Digilocker is a government backed online document storage service through which digitally signed and verified documents can be stored by citizens to be used digitally for multiple purposes.
Besides the remote KYC process, the amendment has also cleared a digital KYC process for offline checking of documents where an agent of the company visits the customer in person.

Functions of Enforcement Directorate

The Enforcement Directorate was established in the year 1956. Its Headquarters is situated at New Delhi. ED is responsible for enforcement of the Foreign Exchange Management Act, 1999 (FEMA) and certain provisions under the Prevention of Money Laundering Act (PMLA).

As of now the term ‘Enforcement Directorate’ is most sought after in Indian politics. But most of the general peoples are not aware about this term. So in this article we have explained the meaning and functions of the Enforcement Directorate which is popularly known as ED also.

About Enforcement Directorate (ED);
The Enforcement Directorate was established in the year 1956. Its Headquarters is situated at New Delhi.

ED is responsible for enforcement of the Foreign Exchange Management Act, 1999 (FEMA) and certain provisions under the Prevention of Money Laundering Act (PMLA).
The Directorate is under the administrative control of Department of Revenue (under the Ministry of Finance) for operational purposes.
The Directorate enforced regulations under the Foreign Exchange Regulation Act, 1973 but later on FERA is being replaced by the FEMA.
Enforcement Directorate has 10 Zonal offices each of which is headed by a Deputy Director and 11 sub Zonal Offices each of which is headed by an Assistant Directors.

List of Zonal Offices is as Follows;
1.Mumbai
2.Delhi
3.Chennai
4. Kolkata
5. Chandigarh
6. Lucknow
7. Cochin
8. Ahmedabad
9. Bangalore
10. Hyderabad

Functions of the Enforcement Directorate:-

1. ED; investigates suspected violations of the provisions of the FEMA. Suspected violations includes; non-realization of export proceeds, “hawala transactions”, purchase of assets abroad, possession of foreign currency in huge amount, non-repatriation of foreign exchange, foreign exchange violations and other forms of violations under FEMA.

2. ED collects, develops and disseminates intelligence information related to violations of FEMA, 1999. The ED receives the intelligence inputs from Central and State Intelligence agencies, complaints etc.

3. ED has the power to attach the asset of the culprits found guilty of violation of FEMA. “Attachment of the assets” means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III of the Money Laundering Act [Section 2(1) (d)].

4.  To undertake, search, seizure, arrest, prosecution action and survey etc. against offender of PMLA offence.

5. To provide and seek mutual legal assistance to/from respective states in respect of attachment/confiscation of proceeds of crime and handed over the transfer of accused persons under Money Laundering Act.

6. To settle cases of violations of the erstwhile FERA, 1973 and FEMA, 1999 and to decide penalties imposed on conclusion of settlement proceedings.

RIL's plan to become debt-free in 18 months: Credit Suisse upgrades stock

The brokerage factored in stronger balance sheet with debt reduction of $22 billion till FY21, and low capex intensity guidance and higher Jio valuation.

Global brokerage house Credit Suisse took a U-turn on Reliance Industries on August 19 after downgrading stock and cutting price target on August 5.

The brokerage upgraded its rating on Reliance Industries to neutral and also raised price target to Rs 1,210 from Rs 1,028 earlier after reading and analysing the speech of Chairman and Managing Director Mukesh Ambani.

The brokerage factored in the stronger balance sheet with debt reduction of $22 billion till FY21, and low capex intensity guidance and higher Jio valuation.

On August 5, the brokerage downgraded Reliance Industries to underperform (from neutral) and cut target to Rs 995 (from Rs 1,350) on rising debts and interest cost in last four years.

Its target price cut had factored in (1) higher liabilities of $10 billion from crude payables, JioPhone financing and East-West pipeline; (2) multiple cuts and lower earnings for refining; (3) slow enterprise roll-out and weak Jio ARPU in Q1FY20.

"RIL has been free cash flow (FCF) negative for six years and given margin pressure in refining and petrochemical (high supply), FCF should be negative for FY20-21. Total liabilities are already up from $19 billion (FY15) to $65 billion (FY19) (debt, higher crude payables, customer advances, capex creditors, spectrum liabilities, JioPhone financing and East West (EW) pipeline) and are 40 percent of enterprise value," it had said in its report earlier.

Total interest cost has increased to $4 billion in FY19 against $1.2 billion in FY15 and was equivalent to 44 percent of EBIT, it had added.
The reason for taking U-turn in rating as well as the target was the strong outlook from Mukesh Ambani in his speech while addressing the company's 42nd Annual General Meeting on August 12.

"We have a very clear roadmap to becoming a zero net debt company within the next 18 months that is by March 31, 2021. After around Rs 3.5 lakh crore spending on Jio, the investment cycle for Jio is now complete," he said.

Last year, Reliance had transferred telecom infrastructure assets to two separate infrastructure trusts for a consideration of Rs 1.25 lakh crore with the intention of raising this money from large global institutional investors.
For the same, it has received strong interest and commitments from reputed global investors and are confident that these transactions will be completed by the end of this Financial Year, Ambani said, adding post this, company ended last year with net debt of Rs 1,54,478 crore.

He said Saudi Aramco would buy 20 percent stake in RIL’s oil-to-chemicals (02C) division, at an enterprise value of $75 billion. Reliance also signed an agreement with BP for investment in KG-D6.

"We expect to complete these transactions within this financial year subject to definitive agreements, due diligence, regulatory and other customary approvals. The commitments from these two transactions are about Rs 1.1 lakh crore," he said.

The company also received strong interest from strategic and financial investors in consumer businesses, Jio and Reliance Retail, and it will also evaluate value unlocking options for real estate and financial investments, he added.

Yes Bank falls over 5% on concerns over CG Power; stock hits 52-week low

The lender held 12.79 percent stake in CG Power and Industrial Solutions as of June 2019.

Shares of Yes Bank fell over 5 percent intraday on August 21, hitting their fresh 52-week low of Rs 67.55, following worries over the valuation of stake in Gautam Thapar's CG Power, which has been hit by allegations of financial irregularities.

The lender held 12.79 percent stake in CG Power and Industrial Solutions as of June 2019.

Shares of CG Power and Industrial Solutions remained on the course of free fall, plunging as much as 20 percent, to hit their fresh all-time low of Rs 11.80 on BSE on August 21.

As per media reports, the Ministry of Corporate Affairs (MCA) has ordered an inspection into the affairs of the company after reports of financial wrongdoings came into the light.

CG Power in a BSE filing on August 20 said, "While working on one of its priority tasks of seeking refinancing of certain facilities and as a part of conducting financial analysis in this regard, the operations committee was made aware of some unauthorised transactions by certain employees of the company."

The operations committee was also made aware of a letter received by the company from a financing company regarding a certain interest payment failure which the committee was unable to trace or ascertain from the financials of the company, the filing added.

The board also found that the total liabilities of the company and the group may have been potentially understated.

"The total liabilities of the company and the group may have been potentially understated by approximately Rs 1,053.54 crore and Rs 1,608.17 crore respectively as at 31 March 2018; and by Rs 601.83 crore and Rs 401.83 crore respectively as at 1 April 2017," the filing added.

Around 1040 hours, hares of Yes bank traded at Rs 69.45 on BSE, down Rs 1.80 or 2.53 percent.

Here's how to trade Indiabulls Housing, Tata Motors & RIL in coming days

By applying concepts like Time cycles, Channels and indicators like RSI or the Relative Strength Index, one can still derive amazing trades from these stocks.

Indiabulls Housing Finance, Tata Motors and Reliance Industries have been in news for different reasons in August. These stocks have been showing amazing trending moves in either direction.

By applying concepts like time cycles, channels and indicators like RSI or the relative strength index, one can still derive amazing trades from these stocks.

The most important thing to note is that long positions should be created on stocks that move from the bottom left corner to the top right, which means it is in an uptrend and short positions can be created in stocks that move from the top left corner to the bottom right which means it is in a downtrend. This is the most basic principle which I use for my proprietary trades.

Promoters raise, cut their pledge holding in these 30 stocks; what should you do?

Pledging of shares by the promoter group is not new but investor sentiment has turned cautious on those companies which have a high amount of pledged promoter holding

In news that would bring cheer to investors, data reveals that promoter pledged holdings in BSE 500 constituents has fallen in value terms quarter-on-quarter.

The percentage of pledged promoter holdings declined to 2.47 percent in the April-June quarter as compared to 2.83 percent in the January-March quarter, Kotak Institutional Equities said in a recent note. Outstanding pledged shares by promoters stood at 1.73 trillion, or about 1.21 percent of BSE 500’s market capitalisation as at June-end.

Pledging of shares by the promoter group is not something new and must not be seen as a bad practice, but in the backdrop of rising defaults by companies, investors have turned cautious on such companies.

Companies often adopt such a practice to meet their liquidity needs, but at a time when the economy is showing signs of a slowdown, companies with high promoter pledge could add to your risk.
Kotak too clarified that pledging of shares does not necessarily imply that a company or a promoter is under financial stress. “Banks (lenders) could have sought additional security in the form of promoter shares,” it emphasised.

Vinod Nair, Head of Research at Geojit Financial Services, explained that a fall in pledge shares by promoters provides a sense of security and indicates an improvement in the financial position of the company.

A fall in promoter pledges is a good omen and investors must consider this as a positive signal while arriving at an investment decision. The top 30 companies in which promoters reduced their holding by over 10 percent in the June quarter include CG Power and Industrial Solutions, Sterlite Technologies, Indiabulls Real Estate, Himatsingka Seide, India Cements, Sadbhav Engineering, Indiabulls Housing Finance, Advanced Enzyme Technologies, Jubilant FoodWorks and Adani Ports.
Romesh Tiwari, Head of Research at CapitalAim, said a decline in pledged holdings combined with a fresh infusion of capital from the promoter group will generate trust and shows the promoters’ commitment towards the company.

When equity mutual funds offer negative returns, here’s what you do

The need of the hour is to stay insulated from the panic in the market.

The domestic equity market has been volatile over for quite some time now, and there have been numerous reasons for this - trade wars, liquidity crisis, economic slowdown, global recession risk and the list goes on. Given the volatile movement in equities, portfolios of many mutual fund investors, especially those who ventured into the market recently, are in the red, reflecting negative returns.

But even in such an environment, we are witnessing a steady investing behaviour, as highlighted by monthly SIP inflows. Retail investors put Rs 8,324 crore into the mutual funds through in July 2019, clocking the highest monthly SIP inflows ever.

At the same time, a few investors have turned cautious, as they are not used to seeing their portfolios going into red.

Warren Buffet once said, “the stock market is a device for transferring money from the impatient to the patient.” Markets tend to reward those investors handsomely who show conviction and stay invested. Investors must realise this is not the first time markets are correcting. In fact, market corrections are crucial for healthy uptrends in the times ahead.

The equity market has seen much more hiccups in financial and economic markets, including but not limited to the Harshad Mehta scam, Satyam saga, Mumbai terror attacks, Kargil War and 2008 global recession, but the rebound has always been stronger.

No wonder, S&P BSE Sensex has generated around 16 per cent returns CAGR for investors since its inception 40 years back, absorbing all such financial shocks.

The need of the hour is to stay insulated from the panic in the market and continue to stay invested. If you decide to redeem your investment at currently prevailing lower valuations, you are giving away your potential returns to another investor.

The market is currently trading at relatively lower valuations compared with those seen some time back. While it is not a good feeling to see portfolio valuations trend south, investors should focus on grabbing this opportunity to increase their investment exposure at attractive valuations, instead of thinking about temporary loss in their portfolios.

Since similar investments will now help you get a more shares at lower prices, it will help average out the cost of investment and equip you with the potential of higher growth when the market rebounds.

Staying away from the market in volatile times can cause a permanent deferral of investing, as volatility comes naturally to equity investing. As such, it is always desirable to make friends with it, rather than fearing it.

Dynamic asset allocation funds can help you maintain an active asset allocation for your portfolio, suiting current valuations and market sentiment. Following the simple investing principle of “buy low, sell high”, regular profits can be booked on investments trading at higher valuations and where the money is invested in an asset class and security at relatively inexpensive valuations.

Even when you stay invested in mutual funds, valuation-based portfolio churning by fund managers can help generate better returns for investors. As such, staying dynamic with asset allocation through asset allocation funds can be a great idea to turn the volatility wave in your favour.

Opening a mutual fund SIP can be another way of eliminating emotional bias from your investing journey. Since investments continue to be made irrespective of the market direction, investors continue to move towards their financial goals effortlessly. While negative returns might not be a desirable feeling to have in your portfolio, the long-term outlook for the market continues to be positive. As such, it is just a matter of time before your portfolio turns from red into green.

These are the times when your confidence in the market gets tested. Don’t let short-term market movements deviate you from the route to achieve your financial goals.

36 stocks return over 100% in 2019, many more multibaggers in making

• Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful”. Most experts suggest this is the time to turn greedy

Given the dismal performance of the equity market, it may be ironical but experts feel that 2019 could be the golden year for investments. There are many stocks that are trading at attractive valuations and can turn out to be multi-baggers in years to come.

In recent years, the number of stocks that gave multi-bagger returns has come down. The number of stocks that rose more than 100 percent tanked from 611 in 2017 to 36 in 2019. The number of stocks that gave more than 500 percent return fell from 15 in 2017 to 1 in 2019. And, the number of stocks that rose more than 1,000 percent also reduced from 4 in 2017 to 1 in 2019.

Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.” Most experts suggest this is the time to turn greedy. Market valuations, at an aggregate level, are still not cheap, however many stocks do look attractive.

Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.” Most experts suggest this is the time to turn greedy. Market valuations, at an aggregate level, are still not cheap, however many stocks do look attractive.

“After the trough in the last three corrections, equities were up 28 percent one year after the date of the trough. Midcaps have done better, up 39 percent during similar periods. Our opinion is that this would be a good time to buy stocks with an investment horizon of one year or longer,” he said.

The investor sentiment has turned sour in 2019 thanks to fears of a slowdown in the economy. Trade war tensions between the US and China is not helping either.

For the sentiment to improve, private capex has to pick up. The Reserve Bank of India reduced rates by 35 bps earlier in August to kick start the economy but the results are still some time away. Hence, investment should be made with a time horizon of 3-4 years.

“Given a three to five-year time horizon, stock nibbling won’t be such a bad idea, especially if done in a staggered manner,” Amar Ambani, President-Head of Research, YES Securities said.

India does not have a 10% GDP growth rate model right now: Rakesh jhunjhunwala.

Rakesh Jhunjhunwala is not bearish on the market at current levels and sees 10,750-11,000 levels on the Nifty to act as a bottom for market.

The big bull of D-Street, Rakesh Jhunjhunwala, in an exclusive interview with CNBC-TV18 expressed his concerns about the state of the market, and slowdown seen in the economy.

Rakesh Jhunjhunwala highlighted that NBFC crisis, elections as well as fiscal situations have led to a short-term slowdown in the economy.

"Every bank is shy to lend corporates. This reluctance can be overcome by capitalizing banks & flushing the system with liquidity," said Jhunjhunwala.

However, he is optimistic that the economy and the market will rebound, but can’t put a timeline on it.

“India is not in the ICU but we need a sense of urgency w.r.t dealing with NBFCs, and price being paid for correctness in business models is not too high,” said Jhunjhunwala.

“Constant restructuring of PSU entities has also led to pain in the economy. I don’t feel that India has a 10 percent GDP growth rate model as of now,” he added. And, it would be difficult to see double-digit growth in the next 2-3 years, added Jhunjhunwala.He is not bearish on the market at current levels and sees 10,750-11,000 levels on the Nifty to act as a bottom for markets.

If the Indian economy has to grow beyond the 6-7 percent mark, it would require stimulus from the government, and at the same time subsidy should be stopped to public sector enterprises.

“Govt needs to act fast on the economy. The economy needs govt stimulus to grow beyond 6.5 percent. Govt should stop subsidising Air India, BSNL & MTNL,” said Jhunjhunwala.

He further added that the Govt may not want to do things in a hurry, but has no doubt that this government will do whatever it takes to push the economy to a $5 trillion mark.

SEBI expresses concerns over 35% minimum shareholding plan

The SEBI panel is yet to take a final decision, the report said.
Majority members of a SEBI committee have expressed concerns over the government's plan to raise minimum public shareholding, according to a report in The Economic Times.

Finance Minister Nirmala Sitharaman in the Budget had proposed that the minimum public shareholding for listed companies be raised to 35 percent from 25 percent.

The 24-member committee, led by former Infosys CFO Mohandas Pai, is yet to take a final decision, the report said.
"There were numerous thoughts on the proposal. There have to be more discussions before forming any view," a source told the paper.Current market conditions, inability of state-owned companies to comply with the mandatory 25 percent minimum public shareholding, potential flight of capital and disadvantages for listed MNCs were some of the complaints raised, the report said.

The government's move intends to improve weightage of Indian companies on global indices. Currently, India's weight has been limited due to higher promoter holdings.

"If you want liquidity in the market, you must increase the free float of shares rather than just look at a broad increase in percentage," a source told the paper.
The source also questioned the rationale behind the plan, given that the limit is 25 percent in most countries.

Tata Consultancy Services, HDFC Life and Avenue Supermarts are some of the large companies where promoters will have to sell some of their shares in the market.

Lack of buyers force realty firms to target Rs 45 lakh category projects

Homes costing up to Rs 45 lakh have emergedas the sweet spot for builders and buyers alike,helping partially offset a tough real estate environment in India, with rising demand in this price category aided by benefits under the Goods & Services Tax (GST) and the government’s aim to provide Housing for All.

An increasing number of property developers are looking to tap the so-called affordable housing segment because of high demand and decent profit margins.

The government has, of course, sought to make it easier to buy homes, particularly for first-time buyers, through steps such as reducing the concessional GST rate to one percent from eight percent on under-construction affordable homes and offering interest rate deduction up to Rs 3.5 lakh, compared with Rs 2 lakh previously, for homes priced up to Rs 45 lakh and having a carpet area up to of 60 square metres.

“Homes in this price category have huge potential not only for the tax benefits, but also for the sheer demand and affordability,” said Pankaj Kapoor, CEO of Liases Foras Real Estate Rating and Research Pvt. “In the past year, 20-30 percent of homes sales came from this price segment and this will grow, with increase in new supply in both Tier I and II cities. Even in an expensive market like the Mumbai Metropolitan Region (MMR), 30,000 one BHKs were sold in the last financial year.”

Rohit Poddar, Managing Director of Poddar Housing and Development, which builds affordable housing projects in MMR and Pune, said the company’s strategy is to build Rs 20-45 lakh homes. In Badlapur, a distant suburb of Mumbai, Poddar Housing launched 300 residential units of 350 sq ft at around Rs 20 lakh each this year and sold all of them. It plans to start three-four projects in Pune and Mumbai in the months ahead.

“Demand is there if adequate infrastructure is present. The big challenge is to find the right cost structure because earning profits building Rs 20 lakh homes is tough,” said Poddar.

Many developers have burnt their fingers with luxury housing, and low-cost housing has been equally difficult, with high land costs, lack of infrastructure and execution challenges.

Despite the adversities, developers are pursuing a middle ground to bring back elusive homebuyers.

Ram Walase, Managing Director and CEO of VBHC Value Homes, said it is focusing on building homes costing Rs 20-45 lakh. At least 75 percent of its new project at New Panvel in Navi Mumbai is in this category.

Alok Mehta, Vice President of Product Strategy at Vatika, said that at the 225-acre Vatika India Next 2 township in Gurugram while the largest category of homes cost Rs 40-80 lakh, it has earmarked a couple of land parcels where it plans to build Rs 10-20 lakh homes.

In Bengaluru, that has been the best-performing market during the property slowdown, with developers trying to be practical and strategic about building.

Shriram Properties has decided to build sub-Rs 45 lakh projects in Chennai, Bengaluru and Kolkata. It has around nine launches planned this year, a few of which are in the Rs 30-40 lakh price bracket.

Ozone Group CEO Srinivasan Gopalan said all the company’s products in Bengaluru are priced at less than Rs 45 lakh each. Ozone, which is also present in Mumbai and Chennai, has a new launch of homes costing Rs 18-35 lakh in Bengaluru later this year, he added.

“Indexation of Rs 45 lakh homes will help affordable housing,” said Sriram Mahadevan, Managing Director of Joyville Shapoorji Housing Pvt. “While the benefits of Rs 45 lakh homes are good to bring down the cost for the buyer, even if we can build homes in the Rs 30-60 lakh range in the metros, it’s good to ensure end user-driven sales.”

Chennai-based Casagrand Builder Pvt, which has 35-36 ongoing projects, is aiming to clock Rs 2,500-2,700 crore in sales this year, with most of its home launches in the price range of Rs 40-80 lakh.

CG Satish, Director of the Bengaluru zone at Casagrand Builder, said the ‘sweet spot’ in pricing has moved down to Rs 3,000-6,000 per sq ft now from Rs 6,000-10,000 per sq ft earlier in Chennai, because the latter isn’t selling that well.

RIL rallied over 20% since last AGM: Investors eye GigaFiber, Jio Phone 3 launch

The stock rallied from Rs 964 recorded on 5th July 2018 when RIL held its 41st AGM, to Rs 1,162 registered on Friday, 9 August, which translates into a rally of over 20 percent.

India’s second-largest company by market capitalisation, Reliance Industries will hold its 42nd annual general meeting (AGM) on Monday, August 12 in Mumbai which would be eyed by both investors as well as analyst community

The stock rallied from Rs 964 recorded on 5th July 2018 when RIL held its 41st AGM, to Rs 1,162 registered on Friday, 9 August, which translates into a rally of over 20 percent.
Investors could see the launch of Jio Phone 3, commercial rollout and pricing of Jio’s broadband service GigaFiber, and the triple play plan for GigaFiber that bundles broadband, landline as well as television services, are also expected to be announced at the RIL AGM, CNBC-TV18 said quoting market sources.

Jio Phone 2 was launched at the last AGM and carried a price tag of Rs 2,999. Its next iteration, Jio Phone 3, is expected to be priced at Rs 4,500, the report added.

Jio Phone 2 was launched at the last AGM and carried a price tag of Rs 2,999. Its next iteration, Jio Phone 3, is expected to be priced at Rs 4,500, the report added

AK Prabhakar, Head of Research at IDBI Capital expects the launch of triple play plan for GigaFiber which bundles broadband with DTH as well as a telephone in one package. Pricing is something which will be watched by the D-Street.

The pricing for the broadband plans is expected to be in line with peers but RIL will sweeten the deal by making it a triple play —a combination of broadband-landline-TV OTT service. A base price of ranging between Rs 500-600 for GigaFiber is expected, according to CNBC-TV18 report.

Apart from Jio broadband rollout as well as the launch of Jio Phone 3, some analysts will also keep a close eye on the deleveraging plan, expansion on the retail front, as well as any important development on the refining front.
AK Prabhakar, Head of Research at IDBI Capital expects the launch of triple play plan for GigaFiber which bundles broadband with DTH as well as a telephone in one package. Pricing is something which will be watched by the D-Street.

The pricing for the broadband plans is expected to be in line with peers but RIL will sweeten the deal by making it a triple play —a combination of broadband-landline-TV OTT service. A base price of ranging between Rs 500-600 for GigaFiber is expected, according to CNBC-TV18 report.

"Focus will be more on its retail, telecom business expansion plan, and fund mobilisation. Also, towards its oil refining business front some important announcement is expected," Sanjeev Jain, VP Equity Research at Sunness Capital India Pvt Ltd, told Moneycontrol.

Last week, Credit Suisse said that the company is expected to remain free-cash-flow negative over FY20-21, just as it has been for the last six years. The report further added that liabilities have dramatically gone up to $65 billion in FY19 from $19 billion in FY15.

Reliance Industries, the country's second largest company by market capitalisation, reported a consolidated profit after tax of Rs 10,104 crore for the June quarter, up 6.8 percent from a year ago. The net profit also beat a poll of analysts which had pegged the profits at Rs 9,852 crore.

“Investors would watch out for some news from RIL on how it can substantially deleverage its balance sheet through either induction of a partner in the refinery business because there were some talks of a deal with Saudi Aramco,” Ajay Bodke CEO- PMS Prabhudas Lilladher told Moneycontrol.

The analyst would watch out for a medium-term plan for monetizing their stake in the refinery, retail, fiber, and tower business because the company has become net debt company from a net cash company amid expansion plans.

The second thing that investors would watch out for would be the return ratios, said Bodke. He further explained that with increased contribution of consumer-focused business like retail and telecom – investors would expect the return ratio of the company to move northwards to just premium valuations compared to pure-play refining and Petro companies.

It is official! Small & Midcaps are in a bear market

Small and midcap stocks are in a bear market, data suggests. To add to the worries, it shows S&P BSE Sensex is almost halfway there.

According to the data collated on August 7, the S&P BSE Smallcap index has fallen about 39 percent from its 52-week high, while the S&P BSE Midcap index is down a little over 20 percent from its peak.

The S&P BSE Sensex is approximately halfway there as in the same period, it is down about 9 percent from its 52-week high of 40,312.

Small and midcap stocks are in a bear market, data suggests. To add to the worries, it shows S&P BSE Sensex is almost halfway there.

According to the data collated on August 7, the S&P BSE Smallcap index has fallen about 39 percent from its 52-week high, while the S&P BSE Midcap index is down a little over 20 percent from its peak.The S&P BSE Sensex is approximately halfway there as in the same period, it is down about 9 percent from its 52-week high of 40,312.
The S&P BSE Sensex is approximately halfway there as in the same period, it is down about 9 percent from its 52-week high of 40,310
A bear market is a condition in which securities/stock prices fall 20 percent from their recent peak amid widespread pessimism or fear in the market. A situation analysts say we are already deeply entrenched in.

Smallcap & midcap stocks continued to be under pressure even when benchmark indices were hitting record highs two months ago. It was about time, benchmark indices would catch up to the broader market, largely weighed down by expensive valuations, budget proposals, selling by foreign investors, muted results, and trade war concerns.