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Analysts are ratcheting up their profit forecasts for Indian companies

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Mumbai: For stocks worldwide, it may be time to worry about the upcoming earnings season. But there’s one place where profit estimates are surging: India.

The fundamentals of corporate India are improving, and the average analyst projection for next year’s earnings at S&P BSE Sensex Index companies has jumped to a record high — not just in rupee terms, but also in US dollars. That’s a stark contrast with members of the MSCI All-Country World Index and MSCI Emerging Markets Index, which have seen steady declines in estimates.

“We expect the earnings recovery momentum to continue this quarter as well with aggregate earnings growth expected in mid-double digits,” said Jyoti Vaswani, the Mumbai-based chief investment officer at Future Generali India Life Insurance Co. overseeing 40 billion rupees ($570 million) in assets.

 

She expects corporate banks to report a significant recovery in earnings, while retail banks are expected to continue with their steady performance.

Screenshot: Bloomberg Screenshot: Bloomberg

The beginning of the earnings recovery may be apparent in results for the final quarter of the last financial year, ended March 31, particularly when it comes to banks. With financials accounting for more than a third of the Sensex, good results for the sector could help boost the nation’s stock market. A pickup in credit demand and a recovery in loans is helping the firms now, after a mountain of bad debt — especially at state-run banks — dented profitability last year and took the market down 14 per cent from a peak.

“We expect earnings to grow at 15 per cent to 20 per cent and that should drive markets higher, bringing in foreign investors,” Vaswani said. “With this, domestic investors, too, should start coming back.”

For the three months ended March 31, profit at NSE Nifty 50 Index members increased 15 per cent, almost double the 8 per cent pace a year earlier, Motilal Oswal Securities Ltd. estimates. JM Financial Ltd. sees earnings-per-share up 17 per cent, buoyed by financials and health-care companies, even as telecoms and autos remained a drag.

Asia’s second-largest software exporter, Infosys Ltd., kicks off the quarterly earnings season in India on Friday. Here’s what some analysts expect:


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India’s trade deficit narrows by 7.98% to $15.28 billion in June, exports falls by 9.71%

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New Delhi: India’s trade deficit for June 2019 narrowed by 7.98 percent to USD 15.28 billion as against the deficit of USD 16.60 billion in June 2018, government data showed.

The country’s exports registered a negative growth of 9.71 percent during June 2019 to USD 25.01 billion as compared to USD 27.70 billion in June 2018. Non-POL exports for June 2019 declined by 5.73 percent; non-POL and non-gems and jewelry exports declined by 4.86 percent.

India’s imports in June 2019 too fell 9.06 percent to USD 40.29 billion in June 2019 as compared to USD 44.30 billion in June 2018, data further showed.

 

The major commodities which contributed towards decline exports in June 2019 have been Petroleum products (-32.85 percent), Rice (-28.05 percent), Cotton yarn/Fabrics/made-ups (-19.73 percent), Gems and Jewellery (-10.67 percent), Readymade garments (-9.18 percent), Organic & inorganic chemicals (-8.17 percent), and Engineering goods (-2.65 percent), data showed.

Import of petroleum crude & products in June 2019 (USD 11.03billion) has recorded a negative growth of 13.33 percent as compared to June 2018 (USD 12.73billion). In this connection it is mentioned that the global Brent price ($/bbl) has decreased by 15.81 percent in June 2019 vis-à-vis June 2018 as per data available from World Bank, official data said.

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It will take 2-3 days for scheduling to use Pakistani airspace: AI

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New Delhi: Hours after the Pakistan Civil Aviation Authority ordered its airspace to be opened to all civilian traffic for flights between India and Pakistan, Air India official said that it will take 2 to 3 days for scheduling to use Pakistani airspace.

Indian airlines resumed flight operations over the Pakistan airspace, after the latter removed access restrictions, following Balakot airstrikes by the Indian Air Force in February. Air India was saddled with heavy financial losses following this.

The Ministry of Civil Aviation wrote on Twitter, “After cancellation of NOTAMS by Pakistan and India in the early hours of Tuesday, there are no restrictions on airspaces of both countries, flights have started using the closed air routes, bringing a significant relief for airlines”.

 

In March, Pakistan partially opened its airspace but did not allow Indian flight to fly over its airspace.

Since then, foreign carriers had been using Indian airspace have been forced to take costly detours because they cannot fly over Pakistan. The closure mainly affects flights from Europe to Southeast Asia.

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RBI slaps Rs 7 cr penalty on SBI for violating various norms

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Mumbai: The Reserve Bank of India said it has slapped a penalty of Rs 7 crore on the country’s largest bank SBI for non-compliance with norms related to NPA identification and fraud risk management, among others.

The penalty has been imposed on the bank for non-compliance of income recognition and asset classification (IRAC) norms, code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), and fraud risk management and classification and reporting of frauds.

Giving details of the case, it said the statutory inspection of SBI with reference to its financial position as on March 31, 2017, revealed, non-compliance with IRAC norms, sharing of information about customers with other banks, reporting of data on CRILC, fraud risk management, and classification and reporting of frauds.

 

Based on the inspection report and other relevant documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by the RBI.

“After considering the bank’s reply and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty,” the RBI said.

The penalty, RBI said, is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

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