Mumbai: Investors should forget white noises such as elections and trade wars, and buckle up for the next bull run, HSBC has said in a note.
“Many of the elements required for a sustained bull run are now in place. Sectors that have done well in past bull markets — such as banks, and some recent laggards, consumer discretionary, metals, energy and real estate — look well positioned,” the brokerage said in a note authored by analysts Amit Sachdeva, Anurag Dayal, and Herald Van der Linde.
HBSC has analysed key drivers for Indian equities over the past 20 years and applied it to the current state of the market. India has seen five bull markets, four bear markets, and six periods of temporary weakness over the past two decades. Our verdict is that most of the necessary elements are now in place for the start of a bull run, says HSBC, which recently upgraded its stance on the Indian markets from “neutral” to “overweight”.
“Valuations are well within the boundaries of the peaks and troughs of past bull and bear cycles. The earnings outlook for FY19 and FY20 is the highest in the region. Macro indicators, such as inflation, GDP growth, bond yields, and crude oil prices, also paint a positive picture,” said the note.
Last year, the Indian market averted entering the bear territory. The benchmark Nifty came off as much as 15 per cent between September and October. After bottoming out in October, the 50-share index is currently up 13 per cent from 2018 lows.
HSBC has listed several reasons behind improved sentiment towards domestic equities. It says inflation has been persistently low and is expected to remain stable, which would warrant another rate cut by the Reserve Bank of India in April. Also, India’s economic growth will remain healthy and among the fastest in the region.
On the global front, US bond yields have softened significantly and crude oil prices are “within the tolerance level,” it says.
In the past, rising bond yield and crude prices had led to turmoil in the Indian market. HSBC says India’s valuations are no longer excessive and most sectors are trading well below their five-year average. The benchmark Nifty currently trades at about 17 times its estimated one-year forward earnings.
Also, on the back of tepid flows over the past two years, the Indian markets are “quite under-owned by foreign institutional investors,” it points out. HSBC is the most bullish on the financial sector with Axis Bank, IndusInd Bank, HDFC Bank and Bajaj Finance being the key picks.
“Banks have outperformed almost every time the market has moved out of a bear market,” it says.
Besides financials, consumer discretionary (favoured stocks include Asian Paints, Kajaria Cements and Jubilant Foodworks); real estate (Godrej Properties and Prestige Estates); consumer staples (Avenue Supermarts and ITC); and energy (Gail and HPCL) are among the sectors the brokerage is positive on.
HSBC, however, has stated that the bull market prognosis is its non-consensus view. Also, there are key risks to the assumption.
“The deteriorating macro picture, such as a steep rise in inflation, any large-scale escalation in geopolitical tensions, a slowdown in global growth, or a sharp rise in crude prices,” are key risks, it says.
India can’t achieve 9-10 per cent GDP growth without agri-revolution: Kant
New Delhi: India cannot achieve 9-10 per cent GDP growth without revolution in the farm sector, Niti Aayog CEO Amitabh Kant said.
Addressing Mahindra Samriddhi Agri awards, he said there is a need to boost investment in the agriculture sector as well as to introduce new technology and market reforms.
Kant also stressed on scrapping Agriculture Produce Marketing Committee and some old laws like Essential Commodites Act, which restrict movement of farm produces.
However, he said agriculture is a state subject and the central government has limited role in it.
“In India 50 per cent of our population is dependent on agriculture. If India’s GDP has to grow at 9-10 per cent for the next 30 years, then it cannot be without bringing revolution in the agri sector,” Kant said.
He also emphasised on eliminating middlemen in marketing of farm produces to boost farmers’ income.
Kant expressed confidence that farmer income will be doubled by 2022.
He said there is a need to spread good agriculture practice and success stories of farmers across the country.
“The second revolution in agriculture will come from technology and marketing,” Kant said.
Pawan Goenka, Managing Director, Mahindra & Mahindra Ltd,, said: “The contribution made by our farming community is a manifestation of this new age of farming which we celebrate through our annual awards”.
As part of Mahindra Agri Village (MAV) programme, he said the company has worked closely with more than 50 villages.
“Our Prerna initative has empowered nearly 2,000 women farmers over 40 villages, through the introduction of gender-neutral farm tools for reducing farm drudgery, and dissemination of knowledge and essential capabilities,” Goenka said.
Mahindra Samriddhi Krishi Shiromani Samman (Lifetime Achievement Award) 2019 was conferred upon E A Siddiq for his immense contribution to Indian agriculture. The award was handed over to recognise his contribution of enhancing productivity of paddy (Both Basmati & Non Basmati).
The group gave awards in total 11 categories.
Mukesh Ambani bails out Anil in Ericsson payout case day before SC deadline
Mumbai: Billionaire Mukesh Ambani stepped in to bail out younger brother Anil Ambani by helping him repay Reliance Communications’ (RCom’s) dues to Ericsson. The last-minute rescue spares the younger Ambani a three-month jail term for contempt of court.
RCom cleared the entire dues to Ericsson India to purge the contempt of a Supreme Court order. The debt-ridden company had already paid Rs 118 crore of the Rs 550-crore dues. In addition, the company had paid around Rs 3 crore in penalties to Ericsson.
“My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita for standing by me during these trying times and demonstrating the importance of staying true to our strong family values by extending this timely support,” said Anil Ambani in a media statement. RCom had time until Tuesday to make the payment, failing which Anil Ambani, its chairman, would have had to serve a three-month jail term, according to the court’s order.
Probing Amazon, Flipkart for alleged violation of foreign exchange law: ED
New Delhi : Investigation has been initiated against e-commerce giants Amazon and Flipkart for alleged violation of foreign exchange law, the Enforcement Directorate (ED) Monday informed the Delhi High Court.
A bench of Chief Justice Rajendra Menon and Justice A J Bhambhani noted the submissions of the ED that a case has been registered under provisions of the Foreign Exchange Management Act (FEMA) against the two companies and disposed of a PIL which has alleged that the e-commerce giants were violating foreign direct investment (FDI) norms.
The court had earlier sought response of the central government, Amazon and Flipkart to the plea which has sought a probe into the alleged FDI violations.
The ED, in its reply filed through central government standing counsel Amit Mahajan, has said the “department has already registered and initiated investigation under the provisions of FEMA against the two companies to ascertain whether they have been contravening any provisions of FEMA or contravening any rule, regulations, notification, direction or order issued in exercise of the powers under FEMA….”
The agency also sought dismissal of the petition.
The petition by an NGO, Telecom Watchdog, also asked for initiation of legal proceedings against the two e-commerce companies under the FEMA for alleged violation and circumvention of FDI norms.
The plea, filed through advocate Pranav Sachdeva, has claimed that Amazon and Flipkart have created multiple entities to circumvent the FDI norms and route the hot-selling stock at cheaper rates.
The petition has contended that according to Press Note 3 of 2016, which regulates FDI in e-commerce, entities like Amazon and Flipkart are not to exercise ownership over stock, nor directly or indirectly influence price of goods and services sold on their marketplace.
It claimed that by creating name lending companies, Amazon and Flipkart buy branded goods in bulk at discounts from manufacturers and render small sellers uncompetitive by a wide margin, thus influencing the prices in violation of the FDI norms.
“As a consequence of this FDI norms violation, smaller sellers are unable to participate in the fast growing e-commerce sector,” the plea has contended, adding that due to subsidised prices on such platforms, small sellers are unable to sell in the brick-n-mortar world too.
Besides, the plea has also claimed that the two e-commerce firms have created several other group companies in the chain to divide discounts and losses.
“Exchange offers, EMI costs and bank offers are funded completely or substantially by Amazon and Flipkart and constitute a clear influence on price in violation of FDI norms,” it has alleged.