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GST rate cut triggers rally in footwear, paint, consumer durable stocks

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Mumbai :Shares of paint, consumer durables and footwear companies rallied by up to 10 per cent on the BSE on Monday after the GST Council reduced tax rates from 28 per cent to 18 per cent on a range of daily use products and appliances.
Among items on which GST was reduced on Saturday include footwear, small televisions, water heater, electric ironing machines, refrigerators, lithium-ion batteries, hair dryers, vacuum cleaners, food appliances and ethanol.
The development triggered a 5 per cent to 9 per cent rally in Bata India, Relaxo Footwears, Mirza International, Khadim India, Superhouse and Liberty Shoes from the footwear sector; Asian Paints and Shalimar Paints from the paint segment; and Havells India, IFB Industries and Butterfly Gandhimathi Appliances from the consumer durables space.
Asian Paints, Berger Paints, Havells India, Bata India and Relaxo Footwears hit their respective 52-week highs on the BSE. Meanwhile, ITC (up 3 per cent at Rs 282) and VST Industries (up 20 per cent at Rs 2,993) from the cigarette sector rallied up to 20 per cent over the past few months as the GST Council kept the tax rates unchanged.
The recent move to cut rates, analysts say, should help boost sales, particularly in the consumer durable segment over the next few months.
“The latest changes in the tax rate structure impact positively a few companies (consumer appliances/durables space) under our active coverage such as Whirlpool of India, IFB Industries, Bajaj Electricals, V-Guard Industries, Havells India and Crompton Consumer. Footwear companies like Bata India are also positively impacted. The hospitality sector will also be positively impacted,” say analysts at Nirmal Bang Securities.
For their part, companies plan to pass on the benefit of the rate cut to consumers going ahead to prop up sales, especially in the festive season.
“The rate cut will benefit consumer durable companies like us to pass on the benefit to the consumers for the upcoming festive season. The 10 per cent cut in the television segment is of particular interest to us, as we have a good acceptability in the 22 inch and 24 inch TV size segment. The move will make the televisions more affordable for consumers in Tier 3 and 4 cities,” says Nidhi Markanday, director of Intex Technologies.
Among individual stocks, Bata India hit a new high of Rs 878, up 4 per cent after India’s largest footwear retailer reported 37 per cent growth in net profit in the June 2018 quarter over the corresponding period last year.
Though analysts at Motilal Oswal peg the revenue hit for the government at Rs 60 billion-Rs 70 billion going ahead, they too believe the slashing of GST rate across these products/segments will benefit consumers, light electrical, hotels and the textile industry.
“Asian Paints, Berger, Kansai Nerolac, Akzo Nobel, P&G, BATA, Relaxo Whirlpool, Bajaj Electrical, Havells, V Guard, Crompton Consumer, Siemens, Coromandel, Indian Hotels, EIH, Lemon tree, ITC, Shree Renuka Sugars, Balrampur Chini, Bajaj Hindusthan and Arvind, among others, will benefit from the move,” says Gautam Duggad, head of research, Motilal Oswal Securities.


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Business

RBI needs to ensure stability: Shaktikanta Das

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New Delhi: The head of the Reserve Bank of India (RBI) said he would take the steps necessary to maintain financial stability in the country and help create favourable conditions for growth.

India’s economy has grown because of measures such as the nationwide goods and services tax and the insolvency and bankruptcy code that prevents wilful defaulters from bidding for stressed assets, Shaktikanta Das said in his address to an investor roundtable.

The country’s growth story is backed by its strong domestic fundamentals, he said, citing lower inflation.

 

Annual retail inflation rate dropped to an 18-month low of 2.19 per cent in December, strengthening the views of some economists that the central bank could ease monetary policy next month.

India’s top business groups on Thursday urged the central bank to cut its benchmark interest rate by at least half a percentage point and lower the cash reserve ratio it imposes on banks.

The country also needs to watch out for any sudden turbulence in the gloal financial market, Das said.

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Centre removes two PNB executive directors for lapses in Rs 13,500-cr fraud

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Chennai:The Central government has removed two Punjab National Bank (PNB) Executive Directors — Sanjiv Sharan and K.Veera Brahmaji Rao — for the lapses in the Rs 13,500 crore fraud allegedly perpetrated by absconding diamantaire Nirav Modi.

The PNB has intimated the action to the stock exchanges.

“We welcome the Central government’s action to dismiss the two Executive Directors. The scam of such proportions could not have happened without the knowledge of the top management,” C.H. Venkatachalam, General Secretary, All India Bank Employees’ Association (AIBEA), told IANS.

 

“Perhaps for the first time, the Centra has removed the Executive Directors of a nationalised bank under the Nationalised Banks (Management and Miscellaneous Provision) Scheme, 1970. All these days it was said the top management of government-owned banks — Chairman, Managing Director, Executive Directors — are governed only by the contract of appointment.

“It is also good that the central government has followed the due process of giving the two PNB Executive Directors opportunity to put forth their views before dismissing them,” Venkatachalam added.

According to the Central government’s notification, on July 3, 2018, Sharan and Rao were issued a show cause notice as to why they could not be removed from office for having failed to exercise proper control over the functioning of PNB, thus enabling the fraud through the misuse of SWIFT at the bank’s Brady House branch in Mumbai.

After considering Sharan and Rao’s replies and the comments of the bank’s Board, the Centre removed them from office as it found it was expedient in the interests of PNB.

According to the notification, the dismissal of Rao is subject to the outcome of a plea in the Delhi High Court.

“We are happy to see some action being taken. Whether it is only the two Executive Directors and other officials are also involved in the scam has to be probed in full,” Venkatachalam said.

According to him, in the past, low-level officers would have been the scapegoats for such massive scams.

“With the action taken on the top management, people will be satisfied that public sector bank officials are answerable for their lapses,” Venkatachalam added.

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In this new world, data is the new wealth: Ambani

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Mumbai: Reliance Industries chairman and managing director Mukesh Ambani urged Prime Minister Narendra Modi to take steps against ‘data colonisation’, specially by global corporations, stating that Indian data must be owned by Indians.

Invoking Mahatma Gandhi’s movement against political colonisation, Ambani said India now needs a new movement against data colonisation.

“Gandhiji led India’s movement against political colonisation. Today, we have to collectively launch a new movement against data colonisation,” he said Gandhinagar at the Vibrant Gujarat Global Summit.

 

Stressing that, in this new world, data is the new wealth, Ambani said, “India’s data must be controlled and owned by Indian people and not by corporate, especially global corporations.”

He further said, “For India to succeed in this data driven revolution, we will have to migrate the control and ownership of Indian data back to India. In other words, give Indian wealth back to every Indian.”

Stating that the “entire world has come to recognise” Modi “as a man of action”, Ambani said, “Honorable Prime Minister, am sure you will make this one of the principal goals of your digital India mission.”

Later in the day, countering Ambani’s call, Governor – Commonwealth of Kentucky, Matthew Griswold, asked Modi “to think in the opposite” in order to realise the tremendous opportunity that lies in Indo-US partnership.

“Honorable prime minister you have been asked from this stage to think about limiting the amount of competition, limiting the exchange of ideas, information and goods. I would encourage you to think in the opposite,” he said.

While stating that it is important to put the people of India first, Griswold said, “It is also important to put their opportunity and our opportunity as citizens of the world to trade with one another and exchange ideas because iron sharpens iron.”

The greatest possibility comes from the exchange of these idea, he added.

“If we can cut the regulations, cut the bureaucracy, cut the red tape, the opportunity is enormous between our nations,” he added that India is now the 10th largest trading partner for the US and “climbing quickly”.

“The opportunity before us between India and the United States is incredible, but responsibility falls on each of one us, those of us in elected positions, those of you in the industry, those of you who represent various constituencies, we have much work to do…we must do this, ” Griswold said.

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