The Union Budget for fiscal year 2020-21 has laid significant focus on improving agricultural economy, upliftment of farmers, strengthening the rural economy and related infrastructure. Focus has also been laid towards continuing several infrastructure initiatives such as waterways, roads, and seaways.
Several positives were offered for small businesses, MSMEs and investors (other than listed).
Higher limits for audit (increased from Rs10mn to Rs 50mn) where cash transactions are less than 5% of turnover, and
Higher turnover limits for starts-ups for the initial 3 year tax exemption limit, followed by higher number of years for claiming deduction from 7 years to 10 years.
The budget also sought to give significant impetus to addressing environmental and climate change challenges with continued focus on solar power. We also expect the pace of FGD (Flu Gas Desulphurisation) installation to pick up for thermal power plants to make them more environmental friendly.
The bond markets could see a flurry of activity with certain government securities being opened up 100% for non-domestic investors. Even corporate bond investment limit for FPIs has been revised from 9% to 15%. This could keep bond markets excited in the weeks to come.
The much anticipated reform of abolishing Dividend Distribution Tax was announced with the tax liability on dividends shifting to receiver. This is beneficial to corporates and shall have positive cash flow impact. This will also offer leeway to companies to distribute higher dividend and reduce the overall tax outgo for the corporate (and ultimately cash flows). The individual shall pay tax on dividend income at the applicable marginal income tax rate.
However, the budget falters a bit in direct taxation, where, despite making the right noises to simplify the personal income tax structure, the budget proposals appear to have made them more complicated with multiple slabs. Against the old personal tax structure, the new structure does not leave meaningful incremental cash flows in the hands of tax payers. This therefore makes the exercise unviable for tax payers already using the benefits of Section 6C in their tax planning. We therefore see status quo for tax payers in not adopting the new tax slabs except for HUFs.
BUDGET ESTIMATES
The budget projections are based on a nominal GDP growth of 10%YoY with a marginally softer net tax (centre) /GDP ratio of 7.27%.
The fiscal deficit for 2019-20 has been revised to 3.8%, against our expectation of 3.7% while the budgeted fiscal deficit for next year has been pegged at 3.5%.
The estimate for non-debt capital receipts at Rs2.1tn assumes a 2.2x increase YoY.
The receipts fine print shows Rs1.2tn from disinvestment receipts. It may be noted that the disinvestment target was revised from Rs1,050bn to Rs650bn in 2019-20 RE. The disinvestment target has thus spilled over into fiscal 2020-21. Notable disinvestment candidates include Air India and BPCL.
Another Rs900bn is expect from disinvestment of government stake in financial institutions. We believe this is attributable to LIC IPO and privatisation of IDBI Bank in which GoI owns 47.1% stake (current market capitalisation Rs387bn).
The net tax revenues estimated for FY21E are a shade below the budget estimates for FY20 and 8.7% higher than RE for FY20.
The interest payments estimate also appears higher (13.3%YoY, Rs830bn) compared to increase in fiscal deficit (3.8%YoY, Rs300bn)
Overall, the net tax revenue estimate appears conservative and any tax buoyancy due to economic recovery can potentially reduce fiscal deficit.
BUDGET AT A GLANCE
Particulars (Rs bn)
2017-2018 Actuals
2018-2019 Actuals
2019-2020 BE
2019-2020 RE
2020-2021 BE
2020-21 %YoY
RECEIPTS
Revenue Receipts
14,352
15,529
19,628
18,501
20,209
9.2
Tax Revenue (Net to Centre)
12,425
13,172
16,496
15,046
16,359
8.7
Non Tax Revenue
1,927
2,357
3,132
3,455
3,850
11.4
Capital Receipts
7,067
7,622
8,236
8,485
10,213
20.4
Recovery of Loans
156
181
148
166
150
(9.9)
Other Receipts
1,000
947
1,050
650
2,100
223.1
Borrowings and Other Liabilities
5,911
6,494
7,038
7,668
7,963
3.8
Total Receipts
21,420
23,151
27,863
26,986
30,422
12.7
EXPENDITURE
On Revenue Account
18,788
20,074
24,478
23,496
26,301
11.9
of which,
Interest Payments
5,290
5,826
6,605
6,251
7,082
13.3
Grants-in-aid for creation of capital assets
1,910
1,918
2,073
1,917
2,065
7.7
On Capital Account
2,631
3,077
3,386
3,489
4,121
18.1
Total Expenditure
21,420
23,151
27,863
26,986
30,422
12.7
Revenue Deficit
(4,436)
(4,545)
(4,850)
(4,995)
(6,092)
22.0
% of GDP
(2.6)
(2.4)
(2.3)
(2.4)
(2.7)
Effective Revenue Deficit
(2,526)
(2,627)
(2,777)
(3,078)
(4,027)
30.8
% of GDP
(1.5)
(1.4)
(1.3)
(1.5)
(1.8)
Fiscal Deficit
(5,911)
(6,494)
(7,038)
(7,668)
(7,963)
3.8
% of GDP
(3.5)
(3.4)
(3.3)
(3.8)
(3.5)
Primary Deficit
(621)
(668)
(433)
(1,417)
(881)
(37.8)
% of GDP
(0.4)
(0.4)
(0.2)
(0.7)
(0.4)
Implied nominal GDP
168,875
191,005
213,261
204,422
224,894
10.0
Tax Revenue (Centre) / GDP (%)
7.36
6.90
7.74
7.36
7.27
AUTOMOBILES
Union Budget 2020 turned out to be a complete disappointment for the auto industry.
SIAM, the automotive industry association, had highlighted the slowdown in the sector and the resultant job losses. The cost of ownership is already higher by ~10% and with the introduction of BSVI emission norms, its is expected to rise by another ~10%. To boost demand, the industry had requested for a GST cut from 28% to 18%.
Another measure sought in the Budget was a favourble (incentive-based) scrappage policy. The M&HCV segment has reported a decline of ~40% YoY in FY20 and was desperately seeking some government intervention to fuel demand. The governing body had requested for a 50% cut in registration charges as well.
Under the green mobility push, the industry was hoping for a cut in the import duty of lithium-ion cells.
None of the above measures/requests had any mention in the Union Budget.
Our View: Overall, with no major incentive or boost in personal income, the auto industry may continue to struggle in the near term. We currently have a SELL rating on Maruti Suzuki and Eicher Motors in the OEM space (rich valuations). We are hopeful for a rural recovery due to the higher acreage under rabi cultivation. We believe the biggest beneficiaries of the same will be Hero MotoCorp, TVS Motors, Escorts, VST Tillers and Swaraj Engines.
AGRI - INPUTS
Fertilizer subsidy reduced to INR713b (Impact: Neutral)
The government has reduced the fertilizer subsidy to Rs713bn from Rs800bn last year. The urea subsidy has been reduced to Rs478bn (from Rs536bn) while the nutrient-based subsidy has come down to Rs235bn (from Rs264bn). However, given the fact that the prices of key inputs have softened in 9MFY20, the decline in subsidy would not put significant pressure on the working capital of fertilizer companies. The price of phosphoric acid is down 12.1% YoY, ammonia is down 18.9% YoY, sulphuric acid is down 25.4% YoY, and rock phosphate is down 11.6% YoY. We, therefore, believe that the reduced subsidy would be neutral for the industry. However, any upward movement in input cost would potentially stress the working capital and require upward revision in subsidy.
Curb the excessive use of chemical fertilizers and focus on zero-budget farming (Impact: Negative)
The government has increased its focus on promoting traditional organic and other innovative fertilizers with a view to curb the excessive use of chemical fertilizers. The announcement comes amid the government’s continued focus on zero-budget farming, which promotes the use of own seeds and natural manure rather than using fertilizers and agrochemicals. We believe the announcement will have a negative impact on the fertilizer and agrochemical industry over the long term. However, the concept of zero-budget farming is still at a nascent stage and has been receiving mixed reviews from the farmer community, as the lack of chemical inputs puts pressure on yield and consequently production.
Other key announcements (Impact: Positive)
The government has proposed the creation of agri-warehouses. As of now, India has an estimated capacity of 162mn million tonnes of agri-warehousing, cold storage, reefer van facilities, etc. NABARD will undertake an exercise to map and geo-tag them. We believe this is a positive step for farmers as agri-warehouses help in the price stabilization of agricultural commodities by keeping the tendency to make post-harvest sale under check.
The NABARD re-finance scheme is proposed to be further expanded with an agriculture credit target of Rs15 lakh crore for 2020-21, up from Rs12 lakh crore last year.
A total allocation of Rs2.83 lakh crore has been made for rural development and agricultural activities. An amount of Rs1.6 lakh crore has been earmarked for agriculture, irrigation and allied activities, while an amount of Rs1.23 lakh crore has been earmarked for rural development and Panchayati Raj.
CONSUMER
Key Proposal
Impact
Companies impacted
National Calamity Contingent duty per 1000 sticks
Negative
ITC, Godfrey Phillips, VST Industries
Filter/non-filter
From (Rs)
To (Rs)
≤65mm
Non-filter (Plain)
90
200
65-75mm
Non-Filter (Plain)
145
250
≤65mm
Filter
90
440
65-70mm
Filter
90
440
70-75mm
Filter
145
545
Other
Containing tobacco
235
735
Other
Containing tobacco substitutes
150
600
Excise duty increased from 10% to 25% for manufactured tobacco, chewing tobacco, tobacco extracts
Negative
ITC, Godfrey Philips, VST Industries
Refund of accumulated credit of compensation cess on tobacco products arising out has been disallowed w.e.f. 1 October 2019 with retrospective effect from 1 July 2017 onwards. No refund on account of inverted duty structure would be admissible on any tobacco products.
Negative
ITC, Godfrey Phillips, VST Industries
Custom duty increased from 25% to 35% on footwear
Positive
Bata India, Relaxo Footwears, Liberty Shoes, Khadim India, Sreeleathers Ltd
Custom duty increased from 10% to 20% kitchenware
Positive
Borosil Glass Works
Custom duty increased from 20% to 60% on toys
Positive
Reliance Industries (Hamley’s)
Proposed outlay of Rs25bn on tourism promotion
Positive
All hotels
Revocation of anti-dumping duty on import of purified terephthalic acid (PTA)
Positive
Filatex India, Essel Propack Ltd, Jindal Films, Polyplex
CONSUMER DURABLES
Products
Custom Duty(%)
Old
New
Impacted
Table Fans, Ceiling Fans, Pedestal Fans, Blowers, Portable, Food Grinders, Grinders & Mixers, Shavers, Hair Clippers, Hair-removing Appliances, Water Heaters, Immersion Heaters, Storage Heating Radiators, Hair Dryers, Hair Dressing & Drying Apparatus, Electric Smoothing Irons, Other ovens, Cookers, Cooking Plates, Grillers, Roasters, Coffee and Tea Makers, Toasters, Electro-thermic fluid Heaters, Electrical or Electronic devices for repelling insects, Other electro-thermic appliances used for domestic purposes, Electric heating Resistors
Positive for Johnson-Controls Hitachi; Negative for Voltas, Bluestar, Whirlpool
Railway Carriage Fans, Industrial Fans, Blowers, Pressure Vessels, Welding & Plasma cutting Machines, Motors like Single Phase AC motors, Stepper motors, Wiper Motors, etc.
7.5
10
Positive for ABB, Siemens
Commercial Refrigerator Freezers, fit with separate external doors, Commercial freezer of chest type (800lt)
7.5
15
Positive for Bluestar, Voltas
Other chest type freezers, Water cooler, Vending machine, other than automatic
10
15
Dip bridge rectifier, Populated/loaded/stuffed printed circuit boards, PCBA of Cellular mobile phones
10
20
Positive for Electronic Manufacturing Service companies like, Dixon
Budget Allocation
FY19A
FY20B
FY20RB
FY21B
Impact
Bharat Net
43,155
60,000
20,000
60,000
Positive for Sterlite Tech, Polycab, KEI, Finolex
Optical Fibre Cable based network for Defence Services
19,272
47,250
47,250
50,000
Positive for Sterlite Tech, HFCL
CAPITAL GOODS
Budget Allocation
FY19A
FY20B
FY20RB
FY21B
Impact
Railways Capital Outlay (net of recoveries)
528,377
658,370
678,370
700,000
Railways
310,677
372,149
365,958
407,415
- New Lines (Construction)
56,476
72,550
78,816
120,000
To benefit KEC, Kalpataru, Texmaco, Titagarh, IRCON
- Gauge Conversion
25,899
22,000
23,442
22,500
- Doubling
6,101
7,000
6,303
7,000
- Traffic Facilities - Yard Remodeling and Others
11,314
12,100
10,733
12,250
- Rolling Stock
45,720
61,148
90,690
57,870
- Road Safety Works - Road Over/Under Bridges
35,229
53,500
36,973
43,500
- Track Renewals
96,901
101,200
84,617
105,995
- Signalling and Telecom
15,384
17,500
13,748
16,500
- Other Electrical Works
2,499
9,150
4,836
7,800
- Traction Distribution Works
3,513
0
0
0
- Metropolitan Transportation Projects
11,640
16,000
15,800
14,000
Department of Space
55,326
65,985
72,645
77,753
Positive for HAL, L&T, Solar Industries, PEL
Capital Outlay on Roads & Bridges
676,383
659,736
660,844
751,747
In addition to Road EPC players, we expect Solar Industries, ACE, to be the indirect beneficiaries
Total-MRTS and Metro Projects
143,646
184,139
181,620
195,710
To mainly benefit BEML
Products
Customs Duty(%)
Old
New
Impacted
Static Converters
15
20
Positive for Voltamp, Schneider Electric,
Machinery required for use in High Voltage Power Transmission project
5
7.5
Positive for KEC, Kalpataru
DEFENCE
Actual FY18-19
Budget FY19-20
Rev. budget FY19-20
Budget FY20-21
Revenue
Capital
Total
Revenue
Capital
Total
Revenue
Capital
Total
Revenue
Capital
Total
Defence – Pension
1,017,746
0
1,017,746
1,120,796
0
1,120,796
1,178,104
0
1,178,104
1,338,250
0
1,338,250
Defence – Capital Outlay
0
952,306
952,306
0
1,103,943
1,103,943
0
1,103,943
1,103,943
0
1,137,340
1,137,340
Defence Services – Revenue
1,955,716
0
1,955,716
2,019,018
0
2,019,018
2,059,018
0
2,059,018
2,093,190
0
2,093,190
Defence – Misc/Civil
63,099
45,706
108,805
87,807
48,545
136,352
97,365
49,771
147,136
96,790
48,210
145,000
Total
3,036,561
998,012
4,034,573
3,227,620
1,152,488
4,380,108
3,334,487
1,153,714
4,488,201
3,528,230
1,185,550
4,713,780
Defence – Capital Outlay (exc. land & construction, not core)
- Indian Army
0.0
217,970.8
217,970.8
0.0
228,056.3
228,056.3
0.0
234,198.1
234,198.1
0.0
257,986.1
257,986.1
- Indian Navy
0.0
170,214.8
170,214.8
0.0
181,270.0
181,270.0
0.0
202,090.0
202,090.0
0.0
177,160.0
177,160.0
- Indian Air Force
0.0
347,597.8
347,597.8
0.0
373,953.4
373,953.4
0.0
424,818.4
424,818.4
0.0
400,319.1
400,319.1
Totals
0.0
735,783.4
735,783.4
0.0
783,279.7
783,279.7
0.0
861,106.5
861,106.5
0.0
835,465.2
835,465.2
as % of outlay
77%
77%
71%
71%
78%
78%
73%
73%
FY21E defence allocation at ~Rs4,700bn vs FY20 revenue budget estimate of ~Rs4,500bn, reflects a ~5% increase. On comparing the revised budget FY20 to actuals for FY19 (~Rs4,000bn), the growth stood at ~11%. This indicates openness to spend more, in case of need.
Allocation towards pensions saw a sharp increase of 14% YoY.
Of the total budgeted defence capital outlay in FY21E at ~Rs1,130bn vs FY20 revenue budget estimate of ~Rs 1,100bn saw ~3% jump. On comparing the revenue budget FY20 to actuals for FY19 (~Rs952bn), the growth stood at ~16%.
Within capital outlay, if one excludes allocations towards land, construction activities, non-core items, then the FY21E budget at~Rs835bn will see 3% decrease vs ~Rs861bn of revenue budget for FY20. On comparing the revenue budget for FY20 to actuals for FY19 (~Rs735bn), the growth stood at ~17%.
Within capital outlay, if one excludes allocations towards land, construction activities, non-core items, barring, Indian Army saw 10% YoY higher allocation; both Indian Navy and Indian Air Force will see lower capital allocation by 12% and 6% respectively vs the FY20 revenue budget.
This has to be read with the fact that IAF saw ~22% increase in allocation (FY20 revenue budget vs FY19 actuals) and Indian Navy saw ~19% increase in allocation (FY20 revenue budget vs FY19 actuals).
HEALTHCARE
Under the Ayushman Bharat scheme, 20,000 hospitals are already empanelled and the government plans to set up more hospitals under PPP mode across 112 Tier II & III cities which dont have Ayushman Bharat empanelled hospitals.
Expansion of Jan Aushadhi Kendras offering 2,000 medicines and 300 surgical procedures to all districts by 2024. Currently, 5,000 Jan Aushadhi Kendras are reported.
“TB harega, Desh Jitega” campaign launched to end tuberculosis (TB) by 2025.
The government has provided Rs69,000cr for these initiatives, which includes Rs6,400crs for the ‘Prime Minister Jan Arogya Yojana’ (PMJAY).
The government plans to promote animal healthcare, by eliminating foot and mouth disease, brucellosis in cattle and also peste des petits ruminants (PPR) in sheep and goats by 2025.
Views:
We do not see any near-term positive impact for the healthcare and diagnostics sector in the current budget. Jan Aushadhi Kendras currently have a lot of non-operational stores and facing inventory issues.
TB drug manufacturers such as Lupin, Cipla, and J&J (with its new MDR-TB drug, in partnership with Dishman) could see incremental growth with government orders for the TB mission. However, it will not add any incremental growth to the company.
Promotion of animal healthcare would be positive for animal & poultry vaccine and other product manufacturers such as Hester Biosciences and Sequent Scientific.
Stock-specific (Positive):
Hester Biosciences, Sequent Scientific, Apollo Hospitals, Narayana Hrudayalaya.
INFORMATION TECHNOLOGY
The government plans to come out with a policy to promote data centre parks for development of big data technologies.
Our view: We believe an important aspect needs to be the focus on skills development in these technologies, given that IT firms face a shortage of digital talent. From a long-term perspective, the move could potentially benefit all IT firms including TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra, along with mid-sized firms like LTI, Mindtree, Persistent and Hexaware, given the incremental focus on growing their digital businesses.
At present, dividend is taxed in the hands of company distributing such dividend. The government has proposed to change this to taxiing dividends in the hands of shareholders.
Our view: This will lead to rise in cash balances for IT firms from FY21 onward, given savings on DDT. It could also lead to IT firms giving higher dividends in Q4FY20 prior to the new rule taking effect from April 1, 2020. Companies like TCS could award a higher payout, which will benefit minority shareholders as well as promoter Tata Sons, with tax not required to be paid by the shareholders and promoters at their end before the new ruling takes effect. From FY21, dividend payout ratios of IT firms could also rise with no tax incidence at the company end, along with strong cash flows. This move is likely to benefit all IT majors.
LIFE INSURANCE
New personal taxation regime does not appear beneficial to tax payers who are already claiming deductions under one or multiple exemptions (~17) available under Section 80 of the IT Act.
For the individual taxpayer for whom the new tax regime is beneficial, it in no way means that the individual tax payer shall stop saving or buying new insurance / investment products
On the contrary, the tax payer is likely to continue with her savings while exploring means to either save or spend the tax savings.
We therefore believe the new tax option will not necessarily entail a mass shift away from life insurance / tax savings products.
Budget estimates total revenue foregone on account of the new tax regime at Rs400bn.
In other words, this is the tax savings in the hands of the individual tax payers, an opportunity to leverage it into either consumer loans or convert into incremental savings.
Without doubt, the budget proposals appear to have taken some sheen off life insurance as tax savings instruments. This is likely to be reflected in the seasonality given life insurers collect 1/3rd of their premiums in Q4.
We see multiple outcomes for life insurers in near term:
It shall be interesting to watch the persistency as well as new business trends within life insurance sector in near future.
We believe life insurance companies in near future are likely to re-focus messaging on 'insurance', 'protection', and 'life events' to drive sales.
New business for 15 of the 23 private insurers making up ~15% of the private market share could see heavy slowdown. These players have already struggled to scale and may be forced to consolidate.
Product innovation would be the main driver for the sector as savings products would need to be sold as strong investment products with protection features rather than mere tax-saving vehicles .
It would be interesting to watch how slowdown in new business premiums impacts distributor commissions and therefore agency tie-ups
On balance, we feel the market reaction to life insurers' stock prices has been extreme and any dips should be utilised as buying opportunities.
We reiterate 'BUY' on IPRU. Our current target price is Rs642 (3.2x FY21E EV per share).
Seasonality (NBP-basis)
FY18
FY19
Q4
(%)
(%)
Aditya Birla Sun Life
36.2
31.4
Aegon Life
45.4
34.5
Aviva Life
40.8
50.2
Bajaj Allianz Life
32.5
36.9
Bharti Axa Life
39.6
32.2
Canara HSBC OBC Life
26.7
34.9
DHFL Pramerica Life
31.0
18.3
Edleweiss Tokio Life
48.5
40.7
Exide Life
35.7
37.7
Future Generali Life
38.2
41.6
HDFC Life
37.7
33.6
ICICI Prudential Life
28.0
33.4
IDBI Federal Life
33.2
36.0
India First Life
41.4
33.0
Kotak Mahindra Life
41.3
40.3
Max Life
39.4
40.0
PNB Met Life
36.0
38.6
Reliance Nippon Life
33.9
33.8
Sahara Life
SBI Life
34.3
31.3
Shriram Life
32.8
31.9
Star Union Dai-ichi Life
34.2
36.7
Tata AIA Life
42.9
43.6
Private Total
35.1
34.5
LIC of India
25.8
33.8
Grand Total
28.7
34.0
Seasonality - savings APE LOB (%)
FY18
FY19
HDFCLIFE
36.7
35.2
ICICIPRU
27.2
31.0
SBILIFE
31.9
29.4
METALS AND MINING
Key budget highlights related to mining and allied sector
No direct changes in mining regulations
Specific focus on affordable housing and infrastructure spend target of INR103 lakh crore with 6,500 projects
Investment of INR3.6 lakh crore to provide piped water supply to all households, under Jal Jeevan Mission for cities with population of over 1 million
Proposal to expand the national gas grid from the present 16,200km to 27,000km
Custom duties remain largely unchanged and the new duty was introduced on gold (used for industrial purpose) @ 12.5% and few semi-precious stones @0.5%, while the duties for platinum/palladium used for manufacturing, are reduced from 12.5% to 7.5%.
Impact on the sector (Positive)
The mining sector is likely to benefit from the series of measures embraced to boost infrastructure, which would arguably drive demand for steel (long products in particular). The development will also boost demand for incremental supply from the upcoming capacity addition in the sector. We see this as positive for key steel companies including JSPL and JSW Steel.
This is a positive development for steel pipe and tubes manufacturers, which are likely to see demand from the government’s plan to provide piped water supply to all households, under Jal Jeevan Mission and with the expansion of the national gas grid. This will be a positive for pipe manufacturers including Ratnamani Metals, Man Industries, Welspun Corp, Jindal Saw and Maharashtra Seamless.
Key pipe manufacturers
Product portfolio
Sector play
Ratnamani Metals
Stainless steel, nickel alloy pipes and coating solutions
Oil & Gas, Water
Man Industries
Large diameter Carbon Steel Line Pipes
Gas, Petrochemical Products and Potable Water
Welspun Corp.
Large diameter pipes, Plates and Coil etc.
Oil and Gas
Jindal Saw
SAW Pipes, seamless tubes and pipes etc.
Oil and gas sector as well as water and slurry transportation
The government currently offers a partial credit guarantee on assets originated by NBFCs before Mar'19.
This scheme is available for NBFC assets purchased by SCBs and was done to offer liquidity to NBFCs.
The guarantee is available for a period up to 24months and for aggregate purchases of Rs1tn.
To further this support NBFCs under partial credit guarantee scheme of providing liquidity, a mechanism would be devised. Government will offer support by guaranteeing securities so floated.
Under the existing partial credit guarantee scheme, the government offers one time guarantee upto 24 months for assets originated before Mar'19 and for a cumulative amount of Rs1tn.
View: Positive
Financing conditions have been normalising for NBFCs and additional measures that the likely to be announced shall help to further ease the operating environment for NBFCs.
A number of small as well as large NBFCs are likely to benefit from this measure.
Our conversation with select NBFCs suggest the tie-ups for asset sales to SCBs are almost in place and FY21E shall witness a meaningful activity on this front.
Measure: Agricultural credit target for FY21 set at Rs15tn.
View: Neutral
This is in-line with the higher agricultural credit targets usually set in the union budget every year.
Measure: NBFCs eligible for effecting NPA recoveries under SARFAESI Act
Limit for NBFC eligibility for debt recovery under the SARFAESI Act to be reduced from Rs5bn to Rs1bn and loan size from the existing Rs10mn to Rs 5mn.
View: Neutral
The experience of recoveries through SARFAESI has been patchy although this incremental measure is a welcome tool for addressing recovery efforts. The proposal lowers the bar and makes more NBFCs eligible to use this mechanism.
Measure: Invoice financing through TReDS
Amendments to be made to Factor Regulation Act 2011 to enable NBFCs to extend invoice financing to MSMEs through TReDS.
View: Positive
The volumes in TReDS have been going up ever since the introduction of this mechanism. Presently, invoice financing is done by banks to MSMEs. The participation of NBFCs shall further provide depth to the market.
Invoicemart, the largest TReDS platform, has reported a throughput of ~Rs60bn in the two and half years of operations with 4,320 participants on its platform.
VALUATION SUMMARY SHEET
Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."
Posted by Mehul Kothari | Published on 03-FEB-2020
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Change (%)
R2
R1
Pivot
S1
S2
GOLD
41205
0.37
41593
41399
41056
40862
40519
SILVER
47118
0.27
47565
47342
47071
46848
46577
CRUDE
3677
-0.16
3771
3724
3693
3646
3615
NG
133.90
1.13
135.40
134.60
133.50
132.70
131.60
ALUMINI
138.85
-0.18
140.15
139.50
138.95
138.30
137.75
COPPER
426.35
-0.21
429.30
427.80
426.90
425.40
424.50
LEADMINI
147.85
-0.14
148.60
148.20
147.90
147.50
147.20
NICKEL
944.10
0.03
951.00
947.40
944.40
940.80
937.80
ZINCMINI
174.00
-0.26
175.50
174.70
174.30
173.50
173.10
DIAMOND
3590.70
0.10
3601.80
3596.25
3587.25
3581.70
3572.70
STEELLONG
32170
-0.92
32680
32420
32280
32020
31880
Comex division
Bullions
Last close
Change (%)
Gold
$1587.90
0.01
Silver
$18.03
0.19
Base metal inventory
Scrip
Inventory
Change
Alumni
1288350
+14025
Copper
180725
-1825
Lead
66800
+0
Nickel
195942
+1374
Zinc
49775
-125
BULLION
Gold and silver gain as WHO declares Chinese coronavirus as health emergency. Trend firm.
Review
On Friday, gold and silver prices settled on a positive note in the international markets. Gold April futures settled at $1,587.90 per troy ounce, up by 0.01%, while silver March futures settled at $18.03 per troy ounce, up by 0.19%. Domestic markets also settled on a positive note on Saturday. Gold settled at Rs41,205 per 10 grams with a gain of 0.37%, and silver settled at Rs47,118 per kilogram with a gain of 0.27%. Gold and silver prices gained as WHO declared the Chinese coronavirus as a health emergency. Global equity markets tumbled on Friday, which supported precious metal prices. Prices also gained in domestic markets as the Finance Minister maintained status quo on the import duty on gold and silver in the Union Budget. The Union Budget also disappointed domestic equity markets and the rupee is also weakening, thereby supporting the prices of both precious metals. We expect prices of both precious metals to remain firm and could test next resistance levels. Gold has support at $1,584–1,572 and resistance is at $1,592–1,600. Silver has support at $17.84–17.60, while resistance is at $18.18–18.40.
ENERGY
Crude oil prices dip due to coronavirus outbreak and rising Russian oil production. Trend volatile.
Review
On Friday, crude oil settled on a weaker note in international markets as WTI crude settled at $51.62 per barrel, while Brent settled at $56.65 per barrel. Domestic markets also settled on a weaker note at Rs3,677 per barrel with a loss of 0.16%. Crude oil prices slipped on Friday due to the coronavirus outbreak and rising Russian oil production. Russian oil and gas condensate output rose to 11.28 million barrels per day (bpd) in January, from 11.26 million bpd in December, Interfax news agency reported on Sunday, citing the Energy Ministry's data. This is in line with what sources told Reuters last week and the highest since it reached 11.29 million bpd in August. The coronavirus outbreak is already slowing down global oil demand and the record production in the US and Russia will continue to put pressure on prices. If crude oil breaks below $51.50 per barrel, it could test $50 per barrel in days to come. Crude oil has support at $51.20–50.50 and resistance at $52.20–52.80.
BASE METALS
Short covering lifts base metal prices up; copper unable to gain amid fear of coronavirus. Trend volatile
Review
On Friday, base metals settled on a mixed note in international markets. 3M LME copper settled at $5,559.50 per metric ton with a loss of 0.17% from the previous close. Base metal prices show some recovery at LME on Friday due to short covering. However, copper prices were unable to gain due to the coronavirus outbreak. Global equity markets also tumbled on Friday and put pressure on base metal prices. Copper prices settled below $5,600 per metric ton on a weekly closing basis at LME. We expect base metal prices to remain volatile next week. Today, copper has support in the range of Rs426–424, while resistance is at Rs429–431. Nickel should trade in the range of Rs926–955, zinc should trade in the range of Rs172–177, lead should trade in the range of Rs145–150, and aluminium should trade in the range of Rs137–141.
AGRI COMMODITIES
Edible oil and oil seeds witness very high volatility on Budget day. Trend volatile.
Review
On Saturday, agricultural commodities witnessed a mixed trend, as edible oil, oil seeds and other agricultural commodities saw very high volatility on Budget day. The Government raised import duty on CPO from 37.5% to 44% on imports excluding Indonesia and Malaysia. Bursa Malaysia KLC also closed in the red on Friday. Soybean February future settled on a slightly weaker note in the domestic markets at Rs4,074 per quintal with a loss of 0.24%. CBOT settled at 873 cents. Other agricultural commodities settled on a mixed note at NCDEX. Chana March futures settled with a gain of 0.63%, and castor seed futures settled with a loss of 0.41%. RM seed closed with a loss of 0.63%. Guar seed settled with a loss of 0.45%, and guar gum settled with a loss of 0.35%. The spices pack settled on a mixed note; coriander, and turmeric settled negative while jeera settled positive. Cotton seed oilcake February futures closed positive with a gain of 1.46%. Refined soy oil February futures closed negative at Rs838.40. We expect refined soy oil to trade in the range of Rs826–854.
Disclaimer: This document has been prepared by IndiaNivesh Commodities Private Limited (IndiaNivesh), for use by the recipient as information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or published or made available to others, in whole or in part without prior permission from us. This document is not to be construed as an offer to sell or the solicitation of an offer to buy any commodity. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. The information contained in this document has been obtained from sources that are considered as reliable though its accuracy or completeness has not been verified by IndiaNivesh independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any responsibility or whatever nature for the information, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this material only. IndiaNivesh directors and its clients may have holdings in the commodity and currencies mentioned in the report.)
Budget 2020 : Sectors and Stocks are likely to gain from the Budget Announcements
Key Takeaways on Union Budget 2020!
BUDGET OVERVIEW
BUDGET ESTIMATES
BUDGET AT A GLANCE
Particulars
(Rs bn)
2017-2018
Actuals
2018-2019
Actuals
2019-2020
BE
2019-2020
RE
2020-2021
BE
2020-21
%YoY
RECEIPTS
Revenue Receipts
14,352
15,529
19,628
18,501
20,209
9.2
Tax Revenue (Net to Centre)
12,425
13,172
16,496
15,046
16,359
8.7
Non Tax Revenue
1,927
2,357
3,132
3,455
3,850
11.4
Capital Receipts
7,067
7,622
8,236
8,485
10,213
20.4
Recovery of Loans
156
181
148
166
150
(9.9)
Other Receipts
1,000
947
1,050
650
2,100
223.1
Borrowings and Other Liabilities
5,911
6,494
7,038
7,668
7,963
3.8
Total Receipts
21,420
23,151
27,863
26,986
30,422
12.7
EXPENDITURE
On Revenue Account
18,788
20,074
24,478
23,496
26,301
11.9
of which,
Interest Payments
5,290
5,826
6,605
6,251
7,082
13.3
Grants-in-aid for creation of capital assets
1,910
1,918
2,073
1,917
2,065
7.7
On Capital Account
2,631
3,077
3,386
3,489
4,121
18.1
Total Expenditure
21,420
23,151
27,863
26,986
30,422
12.7
Revenue Deficit
(4,436)
(4,545)
(4,850)
(4,995)
(6,092)
22.0
% of GDP
(2.6)
(2.4)
(2.3)
(2.4)
(2.7)
Effective Revenue Deficit
(2,526)
(2,627)
(2,777)
(3,078)
(4,027)
30.8
% of GDP
(1.5)
(1.4)
(1.3)
(1.5)
(1.8)
Fiscal Deficit
(5,911)
(6,494)
(7,038)
(7,668)
(7,963)
3.8
% of GDP
(3.5)
(3.4)
(3.3)
(3.8)
(3.5)
Primary Deficit
(621)
(668)
(433)
(1,417)
(881)
(37.8)
% of GDP
(0.4)
(0.4)
(0.2)
(0.7)
(0.4)
Implied nominal GDP
168,875
191,005
213,261
204,422
224,894
10.0
Tax Revenue (Centre) / GDP (%)
7.36
6.90
7.74
7.36
7.27
AUTOMOBILES
AGRI - INPUTS
Fertilizer subsidy reduced to INR713b (Impact: Neutral)
The government has reduced the fertilizer subsidy to Rs713bn from Rs800bn last year. The urea subsidy has been reduced to Rs478bn (from Rs536bn) while the nutrient-based subsidy has come down to Rs235bn (from Rs264bn). However, given the fact that the prices of key inputs have softened in 9MFY20, the decline in subsidy would not put significant pressure on the working capital of fertilizer companies. The price of phosphoric acid is down 12.1% YoY, ammonia is down 18.9% YoY, sulphuric acid is down 25.4% YoY, and rock phosphate is down 11.6% YoY. We, therefore, believe that the reduced subsidy would be neutral for the industry. However, any upward movement in input cost would potentially stress the working capital and require upward revision in subsidy.
Curb the excessive use of chemical fertilizers and focus on zero-budget farming (Impact: Negative)
The government has increased its focus on promoting traditional organic and other innovative fertilizers with a view to curb the excessive use of chemical fertilizers. The announcement comes amid the government’s continued focus on zero-budget farming, which promotes the use of own seeds and natural manure rather than using fertilizers and agrochemicals. We believe the announcement will have a negative impact on the fertilizer and agrochemical industry over the long term. However, the concept of zero-budget farming is still at a nascent stage and has been receiving mixed reviews from the farmer community, as the lack of chemical inputs puts pressure on yield and consequently production.
Other key announcements (Impact: Positive)
CONSUMER
Key Proposal
Impact
Companies impacted
National Calamity Contingent duty per 1000 sticks
Negative
ITC, Godfrey Phillips, VST Industries
Filter/non-filter
From (Rs)
To (Rs)
≤65mm
Non-filter (Plain)
90
200
65-75mm
Non-Filter (Plain)
145
250
≤65mm
Filter
90
440
65-70mm
Filter
90
440
70-75mm
Filter
145
545
Other
Containing tobacco
235
735
Other
Containing tobacco substitutes
150
600
Excise duty increased from 10% to 25% for manufactured tobacco, chewing tobacco, tobacco extracts
Negative
ITC, Godfrey Philips, VST Industries
Refund of accumulated credit of compensation cess on tobacco products arising out has been disallowed w.e.f. 1 October 2019 with retrospective effect from 1 July 2017 onwards. No refund on account of inverted duty structure would be admissible on any tobacco products.
Negative
ITC, Godfrey Phillips, VST Industries
Custom duty increased from 25% to 35% on footwear
Positive
Bata India, Relaxo Footwears, Liberty Shoes, Khadim India, Sreeleathers Ltd
Custom duty increased from 10% to 20% kitchenware
Positive
Borosil Glass Works
Custom duty increased from 20% to 60% on toys
Positive
Reliance Industries (Hamley’s)
Proposed outlay of Rs25bn on tourism promotion
Positive
All hotels
Revocation of anti-dumping duty on import of purified terephthalic acid (PTA)
Positive
Filatex India, Essel Propack Ltd, Jindal Films, Polyplex
CONSUMER DURABLES
Products
Custom Duty(%)
Old
New
Impacted
Table Fans, Ceiling Fans, Pedestal Fans, Blowers, Portable, Food Grinders, Grinders & Mixers, Shavers, Hair Clippers, Hair-removing Appliances, Water Heaters, Immersion Heaters, Storage Heating Radiators, Hair Dryers, Hair Dressing & Drying Apparatus, Electric Smoothing Irons, Other ovens, Cookers, Cooking Plates, Grillers, Roasters, Coffee and Tea Makers, Toasters, Electro-thermic fluid Heaters, Electrical or Electronic devices for repelling insects, Other electro-thermic appliances used for domestic purposes, Electric heating Resistors
10
20
Positive for CG Consumers, Havells, Bajaj Electricals, V-Guard, Orient Electric, TTK Prestige, Hawkins, amongst others
Fans with self-contained Electric Motor
7.5
20
Compressor of Refrigerator and Air conditioner
10
12.5
Positive for Johnson-Controls Hitachi; Negative for Voltas, Bluestar, Whirlpool
Railway Carriage Fans, Industrial Fans, Blowers, Pressure Vessels, Welding & Plasma cutting Machines, Motors like Single Phase AC motors, Stepper motors, Wiper Motors, etc.
7.5
10
Positive for ABB, Siemens
Commercial Refrigerator Freezers, fit with separate external doors, Commercial freezer of chest type (800lt)
7.5
15
Positive for Bluestar, Voltas
Other chest type freezers, Water cooler, Vending machine, other than automatic
10
15
Dip bridge rectifier, Populated/loaded/stuffed printed circuit boards, PCBA of Cellular mobile phones
10
20
Positive for Electronic Manufacturing Service companies like, Dixon
Budget Allocation
FY19A
FY20B
FY20RB
FY21B
Impact
Bharat Net
43,155
60,000
20,000
60,000
Positive for Sterlite Tech, Polycab, KEI, Finolex
Optical Fibre Cable based network for Defence Services
19,272
47,250
47,250
50,000
Positive for Sterlite Tech, HFCL
CAPITAL GOODS
Budget Allocation
FY19A
FY20B
FY20RB
FY21B
Impact
Railways Capital Outlay (net of recoveries)
528,377
658,370
678,370
700,000
Railways
310,677
372,149
365,958
407,415
- New Lines (Construction)
56,476
72,550
78,816
120,000
To benefit KEC, Kalpataru, Texmaco, Titagarh, IRCON
- Gauge Conversion
25,899
22,000
23,442
22,500
- Doubling
6,101
7,000
6,303
7,000
- Traffic Facilities - Yard Remodeling and Others
11,314
12,100
10,733
12,250
- Rolling Stock
45,720
61,148
90,690
57,870
- Road Safety Works - Road Over/Under Bridges
35,229
53,500
36,973
43,500
- Track Renewals
96,901
101,200
84,617
105,995
- Signalling and Telecom
15,384
17,500
13,748
16,500
- Other Electrical Works
2,499
9,150
4,836
7,800
- Traction Distribution Works
3,513
0
0
0
- Metropolitan Transportation Projects
11,640
16,000
15,800
14,000
Department of Space
55,326
65,985
72,645
77,753
Positive for HAL, L&T, Solar Industries, PEL
Capital Outlay on Roads & Bridges
676,383
659,736
660,844
751,747
In addition to Road EPC players, we expect Solar Industries, ACE, to be the indirect beneficiaries
Total-MRTS and Metro Projects
143,646
184,139
181,620
195,710
To mainly benefit BEML
Products
Customs Duty(%)
Old
New
Impacted
Static Converters
15
20
Positive for Voltamp, Schneider Electric,
Machinery required for use in High Voltage Power Transmission project
5
7.5
Positive for KEC, Kalpataru
DEFENCE
Actual FY18-19
Budget FY19-20
Rev. budget FY19-20
Budget FY20-21
Revenue
Capital
Total
Revenue
Capital
Total
Revenue
Capital
Total
Revenue
Capital
Total
Defence – Pension
1,017,746
0
1,017,746
1,120,796
0
1,120,796
1,178,104
0
1,178,104
1,338,250
0
1,338,250
Defence – Capital Outlay
0
952,306
952,306
0
1,103,943
1,103,943
0
1,103,943
1,103,943
0
1,137,340
1,137,340
Defence Services – Revenue
1,955,716
0
1,955,716
2,019,018
0
2,019,018
2,059,018
0
2,059,018
2,093,190
0
2,093,190
Defence – Misc/Civil
63,099
45,706
108,805
87,807
48,545
136,352
97,365
49,771
147,136
96,790
48,210
145,000
Total
3,036,561
998,012
4,034,573
3,227,620
1,152,488
4,380,108
3,334,487
1,153,714
4,488,201
3,528,230
1,185,550
4,713,780
Defence – Capital Outlay (exc. land & construction, not core)
- Indian Army
0.0
217,970.8
217,970.8
0.0
228,056.3
228,056.3
0.0
234,198.1
234,198.1
0.0
257,986.1
257,986.1
- Indian Navy
0.0
170,214.8
170,214.8
0.0
181,270.0
181,270.0
0.0
202,090.0
202,090.0
0.0
177,160.0
177,160.0
- Indian Air Force
0.0
347,597.8
347,597.8
0.0
373,953.4
373,953.4
0.0
424,818.4
424,818.4
0.0
400,319.1
400,319.1
Totals
0.0
735,783.4
735,783.4
0.0
783,279.7
783,279.7
0.0
861,106.5
861,106.5
0.0
835,465.2
835,465.2
as % of outlay
77%
77%
71%
71%
78%
78%
73%
73%
HEALTHCARE
Views:
Stock-specific (Positive):
INFORMATION TECHNOLOGY
The government plans to come out with a policy to promote data centre parks for development of big data technologies.
Our view: We believe an important aspect needs to be the focus on skills development in these technologies, given that IT firms face a shortage of digital talent. From a long-term perspective, the move could potentially benefit all IT firms including TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra, along with mid-sized firms like LTI, Mindtree, Persistent and Hexaware, given the incremental focus on growing their digital businesses.
At present, dividend is taxed in the hands of company distributing such dividend. The government has proposed to change this to taxiing dividends in the hands of shareholders.
Our view: This will lead to rise in cash balances for IT firms from FY21 onward, given savings on DDT. It could also lead to IT firms giving higher dividends in Q4FY20 prior to the new rule taking effect from April 1, 2020. Companies like TCS could award a higher payout, which will benefit minority shareholders as well as promoter Tata Sons, with tax not required to be paid by the shareholders and promoters at their end before the new ruling takes effect. From FY21, dividend payout ratios of IT firms could also rise with no tax incidence at the company end, along with strong cash flows. This move is likely to benefit all IT majors.
LIFE INSURANCE
Seasonality (NBP-basis)
FY18
FY19
Q4
(%)
(%)
Aditya Birla Sun Life
36.2
31.4
Aegon Life
45.4
34.5
Aviva Life
40.8
50.2
Bajaj Allianz Life
32.5
36.9
Bharti Axa Life
39.6
32.2
Canara HSBC OBC Life
26.7
34.9
DHFL Pramerica Life
31.0
18.3
Edleweiss Tokio Life
48.5
40.7
Exide Life
35.7
37.7
Future Generali Life
38.2
41.6
HDFC Life
37.7
33.6
ICICI Prudential Life
28.0
33.4
IDBI Federal Life
33.2
36.0
India First Life
41.4
33.0
Kotak Mahindra Life
41.3
40.3
Max Life
39.4
40.0
PNB Met Life
36.0
38.6
Reliance Nippon Life
33.9
33.8
Sahara Life
SBI Life
34.3
31.3
Shriram Life
32.8
31.9
Star Union Dai-ichi Life
34.2
36.7
Tata AIA Life
42.9
43.6
Private Total
35.1
34.5
LIC of India
25.8
33.8
Grand Total
28.7
34.0
Seasonality - savings APE LOB (%)
FY18
FY19
HDFCLIFE
36.7
35.2
ICICIPRU
27.2
31.0
SBILIFE
31.9
29.4
METALS AND MINING
Impact on the sector (Positive)
Key pipe manufacturers
Product portfolio
Sector play
Ratnamani Metals
Stainless steel, nickel alloy pipes and coating solutions
Oil & Gas, Water
Man Industries
Large diameter Carbon Steel Line Pipes
Gas, Petrochemical Products and Potable Water
Welspun Corp.
Large diameter pipes, Plates and Coil etc.
Oil and Gas
Jindal Saw
SAW Pipes, seamless tubes and pipes etc.
Oil and gas sector as well as water and slurry transportation
Maharashtra Seamless
Seamless Pipes, Cold Drawn Seamless Pipes, ERW Pipes
Gas Potable Water
NBFC
Measure: NBFC/HFCs: Partial credit guarantee scheme
View: Positive
Measure: Agricultural credit target for FY21 set at Rs15tn.
View: Neutral
Measure: NBFCs eligible for effecting NPA recoveries under SARFAESI Act
View: Neutral
Measure: Invoice financing through TReDS
View: Positive
VALUATION SUMMARY SHEET
Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."
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Share Market Today 1st February 2020
Market Recap Market Outlook Bank Nifty Outlook Exhibit 4: Participants Activity FII STATS FII (Activity in no. of Contracts) in Rs. Cr. Bought Sold Net Chg Conclusion NET OI INDEX FUTURES -2282.79 2268 28189 -25,921 Short Addition -101363 INDEX CALLS 1497.47 21148 15269 5,879 Sold CE and Bought PE 48981 INDEX PUTS 24479 13690 10,789 81157 NET -1993.81 Bearish PROP (Activity in no. of Contracts) Bought Sold Net Chg Conclusion NET OI INDEX FUTURES 2856 -4983 7,839 Short covering 9118 INDEX CALLS 32036 92659 -60,623 Sold CE -101672 INDEX PUTS 33663 45822 -12,159 -216154 Neutral Source: Company, IndiaNivesh Research Note on Participants Activity Derivative Outlook Exhibit 6: LONG BUILT UP SYMBOL Close Price change % OI OI Change % CENTURYTEX 647.45 5.03% 3426000 13.52% TECHM 800.6 0.53% 16783200 7.58% DLF 260 1.50% 30940800 7.30% DABUR 498.05 3.56% 13288750 3.67% UBL 1269.3 0.70% 1667400 2.72% Source: Company, IndiaNivesh Research Exhibit 7: SHORT BUILT UP SYMBOL Close Price change % OI OI Change % OIL 128.6 -4.14% 13262898 85.81% BEL 88.5 -11.81% 51138000 76.86% COALINDIA 179.15 -2.85% 53959500 65.74% NTPC 110.1 -1.08% 133142400 64.55% POWERGRID 180.35 -4.07% 65636000 46.71% Source: Company, IndiaNivesh Research Exhibit 8: LONG UNWINDING SYMBOL Close Price change % OI OI Change % EQUITAS 109.2 -4.59% 21413000 -10.29% MOTHERSUMI 133.85 -4.05% 21900000 -6.97% RAMCOCEM 779.4 -0.86% 1824800 -5.74% TORNTPHARM 1929.55 -0.55% 412500 -5.39% INDIGO 1376.9 -3.04% 3610500 -3.31% Source: Company, IndiaNivesh Research Exhibit 9: SHORT COVERING SYMBOL Close Price change % OI OI Change % BANKNIFTY 30937.3 0.55% 1079680 -12.36% ESCORTS 804.65 0.13% 4660700 -10.74% MFSL 506.95 0.90% 8625500 -5.67% HEROMOTOCO 2456.1 0.50% 2018600 -4.58% L&TFH 116.95 1.08% 31488800 -4.40% Source: Company, IndiaNivesh Research Nifty 50 Pivots SYMBOL Close S2 S1 Pivot R1 R2 ADANIPORTS 369.40 359.77 364.58 373.07 377.88 386.37 ASIANPAINT 1795.65 1767.48 1781.57 1802.78 1816.87 1838.08 AXISBANK 729.30 718.53 723.92 730.58 735.97 742.63 BAJAJ-AUTO 3180.05 3100.05 3140.05 3190.00 3230.00 3279.95 BAJFINANCE 4365.90 4286.97 4326.43 4373.27 4412.73 4459.57 BAJAJFINSV 9441.40 9221.80 9331.60 9519.80 9629.60 9817.80 BPCL 456.95 445.32 451.13 461.87 467.68 478.42 BHARTIARTL 496.45 481.88 489.17 494.28 501.57 506.68 INFRATEL 248.30 238.50 243.40 248.60 253.50 258.70 BRITANNIA 3200.70 3132.97 3166.83 3220.72 3254.58 3308.47 CIPLA 446.90 435.80 441.35 447.65 453.20 459.50 COALINDIA 181.70 174.27 177.98 183.72 187.43 193.17 DRREDDY 3114.50 3046.40 3080.45 3136.15 3170.20 3225.90 EICHERMOT 20289.30 19949.97 20119.63 20380.67 20550.33 20811.37 GAIL 120.45 116.42 118.43 121.42 123.43 126.42 GRASIM 778.90 761.73 770.32 784.13 792.72 806.53 HCLTECH 591.40 577.33 584.37 596.63 603.67 615.93 HDFCBANK 1226.30 1210.57 1218.43 1228.12 1235.98 1245.67 HEROMOTOCO 2501.85 2475.42 2488.63 2505.27 2518.48 2535.12 HINDALCO 189.35 184.02 186.68 190.92 193.58 197.82 HINDUNILVR 2034.25 1992.65 2013.45 2040.85 2061.65 2089.05 HDFC 2414.00 2387.50 2400.75 2417.75 2431.00 2448.00 ICICIBANK 525.65 516.58 521.12 526.93 531.47 537.28 ITC 235.15 231.52 233.33 235.87 237.68 240.22 IOC 113.45 108.92 111.18 114.87 117.13 120.82 INDUSINDBK 1258.85 1228.02 1243.43 1257.52 1272.93 1287.02 INFY 775.95 764.15 770.05 777.50 783.40 790.85 JSWSTEEL 250.70 243.03 246.87 252.93 256.77 262.83 KOTAKBANK 1691.75 1655.45 1673.60 1701.30 1719.45 1747.15 LT 1369.30 1352.37 1360.83 1368.92 1377.38 1385.47 M&M 567.15 558.12 562.63 569.82 574.33 581.52 MARUTI 6913.50 6789.23 6851.37 6957.68 7019.82 7126.13 NTPC 112.85 109.45 111.15 113.20 114.90 116.95 NESTLEIND 15359.45 15108.72 15234.08 15435.67 15561.03 15762.62 ONGC 108.95 101.32 105.13 110.57 114.38 119.82 POWERGRID 186.85 178.75 182.80 189.15 193.20 199.55 RELIANCE 1411.65 1377.98 1394.82 1424.03 1440.87 1470.08 SBIN 318.45 303.15 310.80 316.25 323.90 329.35 SUNPHARMA 434.30 424.70 429.50 437.45 442.25 450.20 TCS 2079.05 2025.58 2052.32 2098.33 2125.07 2171.08 TATAMOTORS 176.60 167.90 172.25 180.30 184.65 192.70 TATASTEEL 55.50 53.70 54.60 56.00 56.90 58.30 TECHM 796.60 774.53 785.57 794.03 805.07 813.53 TITAN 1187.75 1172.72 1180.23 1187.52 1195.03 1202.32 UPL 526.55 509.52 518.03 533.52 542.03 557.52 ULTRACEMCO 4416.10 4340.50 4378.30 4442.80 4480.60 4545.10 VEDL 137.90 134.83 136.37 139.03 140.57 143.23 WIPRO 236.80 232.83 234.82 236.98 238.97 241.13 YESBANK 39.25 37.88 38.57 39.38 40.07 40.88 ZEEL 269.15 264.05 266.60 269.75 272.30 275.45 Note: The levels for TATASTEEL are of TATASTEEL Partly Paid up Share. Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing.")
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Commodity Report 3rd February 2020
Daily change & technical levels Scrip Close Change (%) R2 R1 Pivot S1 S2 GOLD 41205 0.37 41593 41399 41056 40862 40519 SILVER 47118 0.27 47565 47342 47071 46848 46577 CRUDE 3677 -0.16 3771 3724 3693 3646 3615 NG 133.90 1.13 135.40 134.60 133.50 132.70 131.60 ALUMINI 138.85 -0.18 140.15 139.50 138.95 138.30 137.75 COPPER 426.35 -0.21 429.30 427.80 426.90 425.40 424.50 LEADMINI 147.85 -0.14 148.60 148.20 147.90 147.50 147.20 NICKEL 944.10 0.03 951.00 947.40 944.40 940.80 937.80 ZINCMINI 174.00 -0.26 175.50 174.70 174.30 173.50 173.10 DIAMOND 3590.70 0.10 3601.80 3596.25 3587.25 3581.70 3572.70 STEELLONG 32170 -0.92 32680 32420 32280 32020 31880 Comex division Bullions Last close Change (%) Gold $1587.90 0.01 Silver $18.03 0.19 Base metal inventory Scrip Inventory Change Alumni 1288350 +14025 Copper 180725 -1825 Lead 66800 +0 Nickel 195942 +1374 Zinc 49775 -125 BULLION Gold and silver gain as WHO declares Chinese coronavirus as health emergency. Trend firm. Review On Friday, gold and silver prices settled on a positive note in the international markets. Gold April futures settled at $1,587.90 per troy ounce, up by 0.01%, while silver March futures settled at $18.03 per troy ounce, up by 0.19%. Domestic markets also settled on a positive note on Saturday. Gold settled at Rs41,205 per 10 grams with a gain of 0.37%, and silver settled at Rs47,118 per kilogram with a gain of 0.27%. Gold and silver prices gained as WHO declared the Chinese coronavirus as a health emergency. Global equity markets tumbled on Friday, which supported precious metal prices. Prices also gained in domestic markets as the Finance Minister maintained status quo on the import duty on gold and silver in the Union Budget. The Union Budget also disappointed domestic equity markets and the rupee is also weakening, thereby supporting the prices of both precious metals. We expect prices of both precious metals to remain firm and could test next resistance levels. Gold has support at $1,584–1,572 and resistance is at $1,592–1,600. Silver has support at $17.84–17.60, while resistance is at $18.18–18.40. ENERGY Crude oil prices dip due to coronavirus outbreak and rising Russian oil production. Trend volatile. Review On Friday, crude oil settled on a weaker note in international markets as WTI crude settled at $51.62 per barrel, while Brent settled at $56.65 per barrel. Domestic markets also settled on a weaker note at Rs3,677 per barrel with a loss of 0.16%. Crude oil prices slipped on Friday due to the coronavirus outbreak and rising Russian oil production. Russian oil and gas condensate output rose to 11.28 million barrels per day (bpd) in January, from 11.26 million bpd in December, Interfax news agency reported on Sunday, citing the Energy Ministry's data. This is in line with what sources told Reuters last week and the highest since it reached 11.29 million bpd in August. The coronavirus outbreak is already slowing down global oil demand and the record production in the US and Russia will continue to put pressure on prices. If crude oil breaks below $51.50 per barrel, it could test $50 per barrel in days to come. Crude oil has support at $51.20–50.50 and resistance at $52.20–52.80. BASE METALS Short covering lifts base metal prices up; copper unable to gain amid fear of coronavirus. Trend volatile Review On Friday, base metals settled on a mixed note in international markets. 3M LME copper settled at $5,559.50 per metric ton with a loss of 0.17% from the previous close. Base metal prices show some recovery at LME on Friday due to short covering. However, copper prices were unable to gain due to the coronavirus outbreak. Global equity markets also tumbled on Friday and put pressure on base metal prices. Copper prices settled below $5,600 per metric ton on a weekly closing basis at LME. We expect base metal prices to remain volatile next week. Today, copper has support in the range of Rs426–424, while resistance is at Rs429–431. Nickel should trade in the range of Rs926–955, zinc should trade in the range of Rs172–177, lead should trade in the range of Rs145–150, and aluminium should trade in the range of Rs137–141. AGRI COMMODITIES Edible oil and oil seeds witness very high volatility on Budget day. Trend volatile. Review On Saturday, agricultural commodities witnessed a mixed trend, as edible oil, oil seeds and other agricultural commodities saw very high volatility on Budget day. The Government raised import duty on CPO from 37.5% to 44% on imports excluding Indonesia and Malaysia. Bursa Malaysia KLC also closed in the red on Friday. Soybean February future settled on a slightly weaker note in the domestic markets at Rs4,074 per quintal with a loss of 0.24%. CBOT settled at 873 cents. Other agricultural commodities settled on a mixed note at NCDEX. Chana March futures settled with a gain of 0.63%, and castor seed futures settled with a loss of 0.41%. RM seed closed with a loss of 0.63%. Guar seed settled with a loss of 0.45%, and guar gum settled with a loss of 0.35%. The spices pack settled on a mixed note; coriander, and turmeric settled negative while jeera settled positive. Cotton seed oilcake February futures closed positive with a gain of 1.46%. Refined soy oil February futures closed negative at Rs838.40. We expect refined soy oil to trade in the range of Rs826–854. Disclaimer: This document has been prepared by IndiaNivesh Commodities Private Limited (IndiaNivesh), for use by the recipient as information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or published or made available to others, in whole or in part without prior permission from us. This document is not to be construed as an offer to sell or the solicitation of an offer to buy any commodity. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. The information contained in this document has been obtained from sources that are considered as reliable though its accuracy or completeness has not been verified by IndiaNivesh independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any responsibility or whatever nature for the information, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this material only. IndiaNivesh directors and its clients may have holdings in the commodity and currencies mentioned in the report.)