Author: root

‘Government does not recognise cryptocurrency as legal tender’

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The Finance Ministry on Tuesday informed the Rajya Sabha that the number of ‘billionaires’, in terms of income tax payers, had more than doubled during assessment year or AY 2019-20 (fiscal year 2018-19) but reduced a bit in AY 20-21 (fiscal year 2019-20). In response to another question, it reiterated that it does not consider cryptocurrencies legal tender or coin.

Taxpayers

In her written reply to a question on the number of billionaires, Finance Minister Nirmala Sitharaman clarified that there is no legislative or administrative definition of the term ‘billionaire’ under direct taxes. Wealth tax has been abolished with effect from April 1, 2016; therefore, the Central Board of Direct Taxes (CBDT) no longer captures information about the complete wealth of an individual taxpayer.

‘Ethereum Improvement Proposal’ all set to bring major change to crypto world

She informed that 77 individuals had disclosed a gross income higher than ₹100 crore (one billion rupees) in a year in their return of income during AY 2018-19, and their number rose to 141 the next year before falling to 136 in AY 2020-21.

Crypto-currencies

In response to another question, Minister of State in the Finance Ministry Pankaj Chaudhary said in a written reply: “The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system. The Government will explore use of block chain technology proactively for ushering in digital economy.”

Saverin-backed exchange becomes India’s first crypto unicorn

Further, he mentioned that a high-level inter-ministerial committee (IMC) constituted under the chairmanship of the Secretary (Economic Affairs) to study issues related to virtual currencies and propose specific actions had recommended prohibiting all private cryptocurrencies, except any issued by the State. “The Government would take a decision on the recommendations of the IMC and the legislative proposal, if any, would be introduced in the Parliament following the due process,” he said.

Seizure of govt assets abroad

Replying to a question, Chaudhary said an order has been passed by a French court freezing certain Indian government properties in the case pertaining to Cairn Energy. This had been communicated through diplomatic channels. Counsels with relevant experience have been engaged to handle the enforcement proceedings. In consultation with its counsels, the government is taking legal steps to protect its interests. He also informed that the Taxation Laws (Amendment) Bill, 2021, passed by Parliament, is expected to reduce litigation.

“Government of India is not in receipt of any investment arbitral tribunal award against the Republic of India that in itself allows for the seizure of Government of India properties held abroad,” he said.

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HFCs may see robust growth but NPAs could rise: CARE Ratings

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The second wave of the Covid-19 pandemic is expected to lead to a rise in the non-performing assets of housing finance companies in the near term with the Gross Stage 3 ratio expected to increase by 30 basis points this fiscal.

According to a report by CARE Ratings, the Gross Stage 3 ratio for housing finance companies would be 3.1 per cent, which would be around 30 basis points higher that 2.8 per cent in 2020-21.

“The deterioration would be higher in the first half of 2021-22; however, we expect that collections and asset quality for housing finance companies would improve in the second half as the economy improves,” CARE Ratings said on Monday.

While a large portion of deterioration would come from developer loan book, it expects that retail prime loans would also witness stress as borrowers have also been impacted economically during the pandemic.

The agency had earlier estimated a 20 basis points increase in Gross Stage 3 assets to 2.9 per cent at the end of 2021-22 from an estimated 2.7 per cent last fiscal.

For the analysis, it has considered top six large housing finance companies it rates.

Robust business growth

However, business growth for housing finance companies has remained robust and early indications from this fiscal suggest there would be a growth of about 8 per cent to 12 per cent in their portfolios, it said.

It also noted that many large housing finance companies have raised equity capital during last fiscal and some are in the process of raising equity capital in this financial year. “This has improved the strength of their balance sheets and augmented their loss-absorption capacity,” it said.

CARE Ratings further said that according to its estimate, the total equity capital likely to be raised during the current fiscal along with actual equity raised last fiscal would be more than sufficient for the total increase in Gross Stage 3 assets during 2020-21 and 2021-22.

“While we expect that the impact of the pandemic on Gross Stage 3 assets would be higher than what was earlier estimated, stronger balance sheets of large housing finance companies and higher equity capital buffers provide good comfort,” it said, adding that improvement in fund-raising abilities of these firms by tapping retail deposits augurs well for their longer-term credit outlook.

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Key factors driving the market, BFSI News, ET BFSI

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Bulls continued the upward momentum on Dalal Street on Tuesday as well, thanks to buying in bank and financial services stocks. However, gains were in check due to some weak global cues.

A clear trend in the market during the last several trading sessions is the outperformance of largecaps led by high-quality private sector financials. The underperformance of the mid- and smallcaps segment is a desirable and healthy trend since it is removing the froth in the segment, said an analyst.

“An area of concern in the market now is the frenzy in the IPO market where retail investors are applying for IPOs and OFSs without any consideration of fundamentals and future prospects. The goal is just to make money on the listing. Many retail investors are likely to lose money in the future from some of these issues,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

How are the bluechips doing?
After opening in the green, benchmark indices climbed further. At 9.32 am, BSE flagship Sensex was up 207 points or 0.40 per cent to 54,610. NSE benchmark Nifty advanced 52 points or 0.32 per cent to 16,310.

“Nifty closed higher after testing our turnaround point of 16,174, which is encouraging, but not an outright signal towards directional upsides. We would pin our hopes on the 16,246/33 region to hold early dips and attempt a push towards 16,320 or 16,400. However, even such an up move would still be within our broadening wedge expectation. In other words, volatility would continue to dominate,” said Anand James, Chief Market Strategist at Geojit Financial Services.

In the 50-share pack Nifty, HDFC was the biggest gainer, up 1.57 per cent. Kotak Mahindra Bank, Axis Bank, HDFC Life Insurance, Reliance Industries and IndusInd Bank were among other gainers.

Shree Cement was the top loser in the pack, down 3.50 per cent. Power Grid, Hero MotoCorp, Grasim, Nestle India, Bajaj Auto, Wipro, Britannia, Indian Oil and ITC were other losers in the pack.

FACTORS DRIVING MARKETS
Good news
US job data: Job openings, a measure of labour demand, shot up by 590,000 to a record high of 10.1 million on the last day of June, the US Labour Department reported. This signifies improving economic conditions.

Bad news:
Bond yields, dollar rise: The dollar index firmed near more than two-week high. US Treasury yields rose to a more than three week high as record-high job openings on top of stronger-than-expected employment gains in July added to the narrative of an improving labour market.

Rate hikes?: Two Federal Reserve officials said on Monday that the US economy is growing rapidly and that while the labour market still has room for improvement, inflation is already at a level that could satisfy one leg of a key test for the beginning of interest rate hikes.

Virus scare: Persistent concerns over the spread of the Delta variant of the coronavirus dented sentiment and triggered falls in metals and oil prices.

Broader markets
Broader market indices were trading mixed, underperforming their headline peers in morning trade. Nifty Smallcap was down 0.04 per cent, while Nifty Midcap rose 0.45 per cent. Broadest index on NSE, Nifty 500 was up 0.32 per cent.

Birlasoft, IOL Chemicals and Pharma, Future retail, Hindustan Aeronautics, GSPL and Escorts were gainers from the space, while Vodafone Idea, Prestige Estates, IDFC First Bank, Happiest Minds, Caplin Point and BASF were under selling pressure.

Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.4 per cent, with Korea’s KOSPI index down 0.56 per cent, while China’s blue chip index CSI300 shed 0.33 per cent.

Japan’s Nikkei was UP 0.9 per cent while Australia’s benchmark S&P/ASX200 was 0.2 per cent higher on the back of strong earnings results.



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Sidbi launches various MSME cluster development focused initiatives, BFSI News, ET BFSI

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NEW DELHI: Small Industries Development Bank of India (SIDBI) on Monday said it has launched various micro, small and medium enterprises (MSMEs) cluster development focussed initiatives.

SIDBI has been supporting MSMEs through its focused cluster development initiatives such as support for technology upgradation/modernisation, skilling/re-skilling/up-skilling and market linkages.

The cluster development strategy of SIDBI has gradually evolved over a period of time and it now caters to over 600 MSME clusters through its offices and supports the entire value chain (Micro Finance, Missing Middle and Small and Medium Enterprises), the financial institution said in a statement.

Some of the unique engagements in clusters include EU Switch Asia in 18 clusters of 9 states, cluster outreach programmes followed by setting up of Project Management Unit (PMU) in 11 states with thrust on clusters and state cooperation, State Rural Livelihood Missions (SRLM), Artisanal Cluster and Engagement in One District One Product (ODOP) districts of Uttar Pradesh, it said.

The principal financial institution engaged in the promotion, financing and development of MSMEs has been regularly bringing publication, policy papers etc on MSME development.

Financial Services Secretary Debasish Panda launched the first information series titled as ‘Diagnostic Mapping of Cluster- Charting the Path ahead through Intervention’. Additional Secretary in Department of Financial Services (DFS) Pankaj Jain and Joint Secretary in DFS Madnesh Kumar Mishra were also present on the occasion.

The book marks the commencement of focussed attention of SIDBI on clustering strategy aimed towards building and supporting sustainable growth of MSMEs. “It compiles the findings that emerged out of diagnostic studies in 30 clusters. It contains recommendations and action plan for financial and non-financial issues, interventions suggested at the policy, cluster and unit level,” it said.

SIDBI is geared up to undertake diagnostics of 100 clusters and plan engagement in 15 clusters. On this occasion, SIDBI Chairman and Managing Director S Ramann said, the financial institution has identified a multi-pronged strategy to impact local, regional, national and global value chain through MSE clusters.

“We are giving a thrust to hard infrastructure support to state governments. DFS and Reserve Bank of India have supported us in setting up the SIDBI Cluster Development Fund,” Ramann said.

The soft infrastructure engagement shall complement the hard infrastructure, he said. “In line with cluster experts we have initiated the mapping exercise of 100 clusters such that the implementation by SIDBI and other institutions can lead to sustainable growth of clusters,” he said.

Since the typology of cluster development generally involves hard and soft infrastructure aspects, to address the soft infrastructure aspects, SIDBI has launched the Business Development Services intervention programme in 5 Clusters (Tourism Cluster – Jammu & Kashmir; Delhi-NCR Innovation Cluster; Jodhpur Wood Furniture Cluster, Sambalpur Textile Cluster, Chennai Leather Cluster).

The holistic aim of the intervention is to strengthen Clusters to evolve as model Clusters and also to increase MSMEs’ access to services thus rising up the value chain.



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NBCC, BFSI News, ET BFSI

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Interference by the apex court in the matter at this stage may not be necessary as the high court has already taken it up on the judicial side, the bench said.

NBCC Ltd on Tuesday said that banks have shown interest in providing funds to complete the stalled projects of defunct Amrapali group. On July 23, 2019, the Supreme Court ordered cancellation of the registration of Amrapali Group under real estate law RERA. The court had directed NBCC to complete the stalled projects of the group.

In a statement, NBCC said that the monitoring committee appointed by the Supreme Court convened a meeting on Monday with nationalised and private banks to discuss the financing for Amrapali Projects. NBCC’s Executive Director was present in the meeting.

“Post MoU signing of Ld Court Receiver with SBICAP Ventures Ltd for funding 6 Amrapali Projects at Noida and Greater Noida last week, other reputed banks have shown interest in funding the stalled Amrapali Projects,” NBCC said in a statement.

More than 42,000 homebuyers, who have been waiting for possession of their dream homes, will be benefited by this progressive initiative, it added.

Currently, the NBCC is facing execution hurdles due to slow inflow of cash which is expected to get sorted soon.

“All the credit of these initiatives taken for completing the works of erstwhile Amrapali group projects goes to the Supreme Court of India, appointed Committee members and the team of NBCC collectively working to end the long wait of the suffered homebuyers,” the statement said.

Last week, NBCC informed that the SBICAP Ventures Ltd has agreed to provide Rs 650 crore for completing six stranded projects of erstwhile Amrapali Group in Uttar Pradesh.

SBICAP Ventures Ltd has signed a Memorandum of Understanding (MoU) with the Court Receiver for providing Rs 650 crore for the six stalled projects. The MoU will pave the way for completion of flats of 6,947 home buyers.

The six projects are — Silicon City-1, Silicon City-2, Crystal Homes, Centurian Park- Low Rise, O2 Valley and Tropical Garden across Delhi-NCR.

SBICAP Ventures Ltd manages the central government-sponsored Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund that is to be utilised for completion of stalled real estate projects.

In July 2019, the Supreme Court mandated NBCC to complete various stalled real estate projects in Noida and Greater Noida in Uttar Pradesh. These projects are currently under the Receiver appointed by the apex court. PTI MJH RAM MJH DRR DRR



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SoftBank’s Vision Fund posts $2 bn profit, share weakness casts shadow, BFSI News, ET BFSI

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TOKYO: SoftBank Group Corp‘s Vision Fund unit on Tuesday posted a 236 billion yen ($2.14 billion) profit in the first quarter after gains from listing portfolio companies were offset by falling shares in firms like e-retailer Coupang Inc.

The Japanese conglomerate posted record annual profit in May with executives pointing to further upside from Vision Fund investments such as Chinese ride-hailing firm Didi Global Inc and “Uber for trucks” startup Full Truck Alliance Co Ltd.

Those companies listed in New York during the quarter but Chinese regulatory action has subsequently hammered valuations, underscoring SoftBank’s China risk even as the group seeks to reduce dependence on its largest asset, a stake in Chinese e-commerce giant Alibaba Group Holding Ltd.

While the crackdown has affected returns expectations, “our broader thesis in China is unchanged: It’s still a large, growing and compelling economic opportunity,” said Vision Fund Chief Financial Officer Navneet Govil.

The turmoil is clouding the outlook for the group, whose shares have slipped a third from two-decade highs in March amid the completion of a record 2.5 trillion yen buyback. Shares closed up 0.9% ahead of earnings.

“Having a large public portfolio introduces volatility but at the same time it allows us to continue to monetise in a very disciplined manner,” said Govil.

More than two-thirds of the portfolio of the first $100 billion Vision Fund is listed or exited. SoftBank has distributed $27 billion to its limited partners since inception.

Further upside will come from listings by Indian payments firm Paytm and insurance aggregator Policybazaar as well as Southeast Asian ridehailer Grab, which is due go public via a blank-cheque company merger, Govil said. SoftBank is also ramping up investing through Vision Fund 2, to which it has committed $40 billion of capital, with the unit making 47 new investments worth $14.2 billion made in the April-June quarter alone.

In the first quarter, Vision Fund unit gains included 310 billion yen from selling shares in investments including delivery firm DoorDash Inc and ridehailer Uber Technologies Inc.

First-quarter group net profit, however, fell 39% to 762 billion yen.

SoftBank has also been betting on publicly listed shares through its SB Northstar trading unit. It held stakes in firms worth $13.6 billion at the end of June with the portfolio no longer including Microsoft Corp or Facebook Inc listed three months earlier.



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Neeraj Chopra roped in for RBI awareness campaign, BFSI News, ET BFSI

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A public awareness campaign is being run by the Reserve Bank of India to warn people of digital banking frauds. The RBI has roped in Neeraj Chopra, Olympic gold medalist for this campaign.

The RBI tweeted about this campaign, and asked people to be cautious when banking online.

Neeraj Chopra, in the video said, “RBI says not to share your OTP, CVV, ATM Pin with anyone, change your online banking passwords and pins from time to time and if you lose your ATM card, credit card then block it immediately”.After winning the country a gold medal at the Tokyo Olympics 2020, Neeraj Chopra was warmly welcomed at the airport in Delhi. He brought home the first Olympic gold in athletics.

The Javelin thrower has said, that he has now set his sight on the 2022 Asian Games.

“I want to thank everyone in the country, it is due to their blessings and I am really happy to win a gold medal. I did my best and now I look forward to the Asian Games that will take place next year,” Chopra said to ANI.



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Saverin-backed exchange becomes India’s first crypto unicorn

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CoinDCX became India’s first cryptocurrency unicorn after the exchange raised ₹670 crore ($90 million) from investors led by Facebook Inc. co-founder Eduardo Saverin’s B Capital Group, even as local authorities push back against crypto assets. The latest funding round values the firm at $1.1 billion, Chief Executive Officer and co-founder Sumit Gupta said in an interview on Tuesday. Other investors include existing partners Coinbase Ventures, Polychain Capital, Block.one, and Jump Capital.

Gupta plans to use part of the funds to double his team in the next six months to about 400 people in India, where investments in crypto grew to nearly $6.6 billion in May from some $923 million in April 2020, according to Chainalysis. The investment comes as policymakers continue to debate on the status of digital currencies in India — as recently as last week the central bank said it has “major concerns” about private virtual currencies and the government will take a final stance on the matter.

“I am pretty sure the industry will be regulated at the right time,” Gupta said. “We have chosen to put at stake our money and career as we feel this is going to be a very good wealth generation opportunity for people.”

Also read: ‘Ethereum Improvement Proposal’ all set to bring major change to crypto world

The 30-year-old engineer from the elite Indian Institute of Technology spent several hours daily reading about blockchain and cryptocurrencies before setting up CoinDCX in 2018. Registered in Singapore as Primestack Pte., it aims to expand its user base to 50 million from 3.5 million over the next few years and focus on educating users on crypto and blockchain.

Investments surged after the Supreme Court last year quashed a ban on banks facilitating crypto trades. The four biggest crypto exchanges in India saw daily trading jump to $159 million from $28.6 million a year ago, according to CoinGecko.

Volatile nature of asset

For regulators, the volatile nature of the asset has been a worry. After touching a high of $64,870 in April, Bitcoin lost more than half of its value and fell to $28,824 in June. The Reserve Bank of India is looking to create its own digital currency. Gupta believes India has what it takes to achieve dominance in the space.

The company plans to offer new products including for wealthy individuals in coming months. “We have a very tech savvy population, good mobile penetration, big base of engineers and developers who can leverage blockchain technology,” Gupta said. He believes India will produce more than 100 crypto unicorn start-ups in the next few years once regulation is firmed up.

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Buy These 2 Stocks For 23% Gains Says Motilal Oswal

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Buy Bank of Baroda with a price target of Rs 100

Current market price, Bank of Baroda Rs 81.50
Target price Rs 100
Gains 23.00%

Bank of Baroda reported a strong earnings performance, supported by a healthy core operating performance, despite sluggish business trends. Domestic Net Interest Margins improved sharply by 39 basis points on quarter to quarter basis to 3.12%.

Asset quality trends were stable sequentially in a challenging environment, with fresh slippage at Rs 51.3 billion (annualized slippage rate of 3.1%).

“Bank of Baroda reported a healthy earnings performance, supported by strong Net Interest Income and sharp improvement in domestic NIMs. The margin expansion was supported by an improving asset mix, as retail growth held strong, while corporate loans declined 11% QoQ.

The bank expects growth to pick up, led by retail segments, while corporate growth would see gradual recovery as the economic situation normalizes. The bank reported stable asset quality in a challenging quarter, with stable CE at 93%. Furthermore, SMA 1/2 declined to 2.7% of loans. We increase our earnings estimates by 47%, 22% for FY22/FY23E and estimate RoA/RoE of 0.7%/10.3% by FY23E. Therefore, we upgrade our rating to BUY, with revised target price of Rs 100 (0.7x FY23E ABV),” the brokerage has said.

Buy Bharat Electronics, target price Rs 205

Buy Bharat Electronics, target price Rs 205

Current market price, Bharat Electronics Rs 172
Target price Rs 205
Gains 20.00%

Bharat Electronics is working on entering newer segments, including lithium ion battery manufacturing. The lithium ion technology is not a new area for the company has been using it in defense applications for over a decade. It has initiated discussions with OLA and could start manufacturing lithium ion batteries if the discussion materializes. In this case, Bharat Electronics would apply for PLI as well.

According to Motilal Oswal, the company maintained its revenue guidance at 15-17% growth and margin guidance at 22% for FY22, and is confident of achieving this despite the miss in 1QFY22.

On the order front, Bharat Electronics expects more than Rs 150 billion worth of order inflows in FY22. Large orders such as D-29 and Himshakti are expected to come in 2QFY22. The management expects Rs 10-15 billion worth of orders per year from the Metro business from FY23

“We maintain a Buy rating. Higher growth in the non-Defense business poses an upside risk to our EPS estimates, while working capital deterioration poses a key downside risk to valuations,” Motilal Oswal has said in its report.

Disclaimer

Disclaimer

The stocks are taken from brokerage report of Motilal Oswal and is for informational purpose only. You should analyse your risk and other aspects before participating in the equity markets. Further a more cautious approach is needed when markets trade at record highs. Investments mentioned here need not be construed as investment advice, the company and the author shall not be responsible for any decisions taken based on the above report.



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