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Confederation of Indian Industry (CII) on Friday termed the budget presented by the Tamil Nadu government as ‘historic’, ‘transformational’ and ‘growth oriented’ with thrust on ‘inclusive development’.
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“It is a great opportunity for Visa, which has been engaging heavily with start-ups in the last 18-24 months to move these sourcing pipes in their favor,” said Amit Das, Co-founder of Think360 – a payments analytics firm. “We have also heard of fintechs like YAP taking this opportunity to show how differentiated their agility is. They have managed to switch over completely to Visa pipes in less than 48 hours.”
Industry sources say that Visa and MasterCard together process a significant chunk – over 70 per cent – of India’s credit cards. For debit card issuances, NPCI’s RuPay is said to be the largest card issuer. The central bank doesn’t disclose the breakup.
These sources indicate that while Visa has a 44 per cent market share, MasterCard owns 37 per cent of the market.
“While both Visa and Rupay will benefit in the segments they are trying to address, Visa will benefit more because of its ability to roll out products faster than Rupay,” brokerage house Macquarie said in a recent report. “Visa has a concept of providing exceptional approval and is able to go live within 24 hours at times. Since the process of transition is shorter and faster with Visa, it could benefit more from this disruption.”
Visa is also gaining an upper hand in getting new debit card issuance contracts as well. The central government’s zero Merchant Discount Rate rule on RuPay debit cards means that private sector banks, which were tying up with Mastercard to issue these cards, are almost exclusively moving to Visa.
Last month, the Reserve Bank of India (RBI) imposed regulatory restrictions on MasterCard from onboarding new domestic debit, credit, or prepaid customers on its card network in India from July 22 onward. The central bank’s supervisory action cited “non-compliance with directions on Payment System Data.”
To be sure, these restrictions are only on Mastercard’s new cards and not the existing instruments held by customers.
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Unless they fall into the electric-vehicle class, two-wheelers purchased for domestic use are not subject to a tax deduction. A two-wheeler registered in the name of the owner or purchaser and used for business purposes are tax-deductible. If the customer is a business owner, self-employed individual, or professional, tax incentives are available on two-wheelers under Section 80C of the Income Tax Act 1961 up to Rs 1.5 lakh only if the purchased bike or two wheeler has been purchased for business purposes or if the vehicle is an electric vehicle.
The ITR form must be filled completely and interest certificates issued by the bank must be attached with it to claim a tax exemption on your two-wheeler loan. However, borrowers should and should keep in mind that they can only enjoy tax deductions on their yearly interest payments, transportation cost, and depreciation cost.
One needs to meet the following eligibility criteria and keep the documents ready before applying for a two-wheeler loan.
Eligibility
Documents
The borrower must keep his or her identity proof, address proof, income proof, age proof, and bank account statement of the last 3 months.
Here are our own hand-picked top 10 banks that are currently promising the lowest interest rates on two wheeler loans.
| Sr No. | Banks | Interest Rates In % | Loan amount |
|---|---|---|---|
| 1 | Central Bank of India | 7.25% to 7.70% | Rs 10 lac (max) |
| 2 | Bank of India | 7.35% to 8.55% | Rs 50 lac (max) |
| 3 | Punjab National Bank | 8.70% to 10.05% | Rs 10 lac (max) |
| 4 | Jammu & Kashmir Bank | 8.70% onwards | Rs 2.5 lac (max) |
| 5 | Punjab & Sind Bank | 9.00% onwards | Rs 10 lac (max) |
| 6 | Canara Bank | 9.00% onwards | Rs 10 lac (max) |
| 7 | ICICI Bank | 9.50% to 26.00% | Rs 3 lac (max) |
| 8 | IDBI Bank | 9.80% to 9.90% | Rs. 1.20 lacs onwards |
| 9 | Union Bank | 9.90% to 10.00% | Rs 10 lac (max) |
| 10 | IDFC First Bank | 9.99& onwards | Rs 3 lac and above |
| Source: Bank Websites |
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1. READY, STEADY, GO
New Zealand’s central bank meets on Wednesday and looks set to become the first major economy to lift interest rates since COVID-19 hit.
Super-strong jobs data have cemented expectations of a hike, which would be New Zealand’s first since mid-2014. What a contrast with 2020, when rates were slashed 75 bps to 0.25% and a move below zero became a real possibility.
Norway’s central bank, meeting on Thursday meanwhile, could reiterate it will increase rates in September.
Investors, focused on prospects for Fed tapering as labour conditions improve, have boosted the dollar. New Zealand and Norway are a reminder that the greenback is not the only currency standing to benefit from the monetary policy shift under way in the G10.
2. MALLRATS
The U.S. economy is growing robustly and the labour market is rebounding. However, COVID-19 remains a headwind and coming days should bring a fresh perspective on how consumers are faring.
U.S. retail sales likely fell 0.2% in July, after an unexpected rise in June, data on Tuesday is expected to show.
And several large retailers including Walmart (WMT.N), Target (TGT.N), Lowe’s (LOW.N) and Home Depot (HD.N) will report quarterly results. Earnings are due too from Ross Stores (ROST.O), TJX Companies (TJX.N) and Bath & Body Works (BBWI.N).
These come at the end of a stellar U.S. second-quarter results season. S&P 500 (.SPX) earnings are expected to have jumped 93.1%, well above prior expectations of 65.4%, according to Refinitiv IBES.
Fed policymakers, assessing when to start unwinding stimulus, will be watching.
3. DELTA BLUES
The Delta variant is close to breaching Asia’s COVID-zero fortresses, with outbreaks and lockdowns looming over what once appeared the world’s most promising regional rebound.
Save for Taiwan and New Zealand, where strict border controls appear to have kept the variant at bay, cities from Sydney to Seoul are finding it hard to contain infections.
In China, Delta has been detected in over a dozen cities, bearing down on a faltering economy, forcing economists to cut growth forecasts.
We will get a snapshot of how the economy fared in July as local activity and flight curbs bit – retail sales, industrial output and house price numbers are all due on Monday.
4. APOCALYPSE NOW
If this summer has shown us anything, it’s a glimpse of the sort of havoc the planet faces if the climate emergency is not fixed fast.
Apocalyptic forest fires, floods and drought are laying waste to swathes of Greece, Canada, Turkey, China, Argentina and the United States. Extreme weather consequences include deaths, homelessness, social unrest and rising government debt.
The climate emergency will raise costs everywhere: insurance covers just 60% of disaster-linked losses even in rich North America; it falls to 10% in China, Swiss Re estimates. Worse still, the fires are exacerbating emissions, while forests meant to act as carbon sinks will take decades to regrow.
Until now, warnings, including a recent United Nations one, have had limited impact. But with a global climate conference due in November, this summer’s climate disasters might well swing the pendulum.
5. AFGHAN ABYSS
The Taliban‘s rapid advance towards Kabul has raised alarm not only about Afghanistan’s future but also the wider spillover in what is already a dangerous neighbourhood.
Iran to the west, the central Asian republics of Tajikistan, Turkmenistan and Uzbekistan to the north may be at risk, but for markets, Pakistan to the east will be the immediate focus.
Pakistan has lots of debt and a sizable equity market. It also depends on a $6 billion IMF programme. The prospect of years of Taliban violence and mass waves of Afghan refugees will add to the struggle to repair its finances.
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Personal Finance
oi-Kuntala Sarkar
The gold loan segment in India has seen a consistent growth till the first quarter of the current fiscal, since last year. But will the upcoming 3 quarters see the same growth trend – keeping in mind the changed Loan To Value (LTV) and present gold prices? This requires a detailed discussion.
It is yet tough to give a precise idea about the sectoral growth but it can be assumed that a lower LTV will impact the gold loan segment negatively. LTV is identified as the ratio of a loan to the value of an asset purchased. The RBI has already reverted to its pre-pandemic LTV ratio of 75% from 90%. The central bank earlier made it 90% in August 2020 to provide people with relief. This has encouraged the sector since then.
But now people are more interested in selling their gold jewellery to get the full value. They might not have the repayment capacity if they pledge their gold. Financial stress can also oblige people to move towards selling gold rather than having gold loans, as now it would not be more than 75% of its value.
Since the month of August, gold prices in India have witnessed a sharp fall due to better US employment data and the expectations of higher interest rates by the US Fed. Even before that in the earlier month, the gold prices were not substantially high. So, the gold prices started to drop and influenced the gold segment. People are now interested in actually selling their gold rather than putting it out for gold loan, as it will be more profitable on an immediate basis.
The present economic situation is also impacting fresh lending for gold loans. Additionally, some customers are not able to redeem their gold, which might hamper the sector later. Even if the overall gold loan sector grows this year compared to 2020, the pace of growth might be sluggish due to the mentioned reasons.
Manappuram, a leading company in the sector, experienced a poor consolidated profit in the June quarter that failed to encourage investors. The finance company had auctioned gold of Rs. 404 crore in the Q4FY21, compared to Rs. 8 crore in the 3 preceding quarters altogether – which is concerning.
The company’s June quarter’s gold loan book decreased 13.3%. Their total customer base reduced 2,00,000 and the company expects only 1% growth in the total customer base during FY22. Manappuram has also reduced its average ticket size assumptions. Their gold asset under management (AUM) for the June quarter dropped 6.8% on a year-on-year basis to Rs. 16500 crore from Rs. 17700 crore.
Commenting on the downfall in the gold loan segment, George Alexander Muthoot, Managing Director, Muthoot Finance told a leading English daily “We are redrawing our strategies in terms of non-gold lending business and we are confident to emerge stronger as the environment improves. On the gold loan front, we are targeting 15% growth in the remaining 3 quarters.” – This certainly does not show aggressive anticipation.
The company might have taken guarded steps as the gold prices in India are declining gradually. With a lower price of gold people might lose interest to recover their collateral gold. This will lead to a stressed position for any finance company. So, to de-risk itself, Manappuram could have auctioned their assets.
In the long term, as the RBI thinks more about the sector and gold prices change again, the situation might change. But the present situation and a recovering economy certainly will not be a preferable atmosphere for the gold loan sphere.
Story first published: Saturday, August 14, 2021, 13:41 [IST]
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Personal Finance
oi-Kuntala Sarkar
The gold loan segment in India is a very popular loan option for borrowers. One important reason is it is very important to apply and get approved for the loan. It is an easier option and not as time-consuming as other loans.
During the pandemic as people encountered sudden job loss, lesser wages, they required immediate liquidity, to meet medical purposes and other related issues. As gold loan is an easier and faster process, borrowers have shown much interest that helped the sector to grow dramatically over the past 1-year. The enhanced price of gold in the last 2 quarters of FY 21 also helped it much.
The Reserve Bank of India (RBI) stated in its report on ‘Sectoral Deployment of Bank Credit – June 2021’ that the overall loan segment grew because of the faster growth in the ‘loans against gold jewellery’ and ‘vehicle loans’.
According to the RBI report titled ‘Statement 1: Deployment of Gross Bank Credit by Major Sectors’, loans against gold jewellery (Outstanding) was Rs. 62221.07 crore as on 18th June 2021 and till 26th March 2021 it was Rs. 60725.60 crore. It was found that the gold loan segment actually boomed during the last one year. The same statement by the central bank declared – till 27th March 2020 the loans against gold jewellery (Outstanding) was Rs. 33308.49 crore. Till 19th June 2020 the figure was standing at Rs. 34266.74 crore. So, the overall gold loan sector actually saw a boost gradually, since last year.
Muthoot Finance, one of the leading NBFCs in India on the sector, gained Rs. 27137.99 millions in the Q1 FY 22 (June quarter) as total revenue which stood at Rs. 28238.54 millions it its previous quarter that is Q4 FY 21 (March quarter). So, the NBFC saw Rs. 1100.55 millions less profits in the June quarter than its earlier quarter. However, the June quarter saw a Rs. 3287.16 millions better profit on a year-on-year basis.
Loan assets were Rs. 52614 crore in the June quarter in 2021 compared to Rs. 41296 crore in the same quarter during 2020. This marked a growth of 27% year-on-year. During the quarter, gold loan assets inflated by Rs. 142 crore. Its Stage III Asset – on Gross Loan Asset percentage as on 30th June 2021 was 3.67%. Muthoot Finance also reported a 14% increase in consolidated net profit for the June quarter in 2021.
This data shows overall growth in the gold segment till June this year. It is yet to analyze how the later quarters of this year will perform with the changes in gold prices and lower low Loan To Value (LTV).
Story first published: Saturday, August 14, 2021, 13:10 [IST]
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Investment
oi-Kuntala Sarkar
The RBI’s Sovereign Gold Bond (SGB) Scheme 2021-22 – Series 5 was open for subscription from 9th August to 12th August, 2021, yesterday. The allotment date is 17th August. SGB is a safe and easier form to invest in gold. But why are buyers concerned with the SGB Series 5 this time?
The subscription date just closed yesterday, and the prices of gold in the international market and Indian markets were dropping lower. The price of Sovereign Gold Bonds are linked to the price of 24 carat gold. Yesterday the price of 24 carat gold was Rs. 4654 per gram. The price today is Rs. 4686 per gram.
The prices of gold have been sinking sharply across the Indian markets. Within 1 week the prices went down Rs. 8400 per 100 grams of gold in India.
On 6th August the price was Rs. 47700 per 10 grams and the price today is Rs. 46860 per 10 grams. Yesterday, when it was the last date for the SGB subscription, and the rate of 24 carat physical gold was Rs. 46540.
So, investors who purchased the SGB series 5, did they make a better decision? Or investing in physical gold could be a better choice – as the prices are considerably lower than the SGB subscription price now?
The Sovereign Gold Bond (SGB) Scheme 2021-22 Series V issue price was Rs. 4,790 per gram and Rs. 47900 per 10 grams. Online investors get an additional Rs. 50 per gram discount on the Sovereign Gold Bond that was Rs. 47400 per 10 gram. So, anyhow the SGB subscription price was actually higher than the Indian 24 carat physical gold price. But there are many perks of investing in SGB.
In case of physical gold there might be risks of loss, theft, burglary etc. Also if the investor tries to keep the gold coin or bar or ornament protected, the bank locker storage cost will have to be paid. For SGB the RBI keeps the gold safe on behalf of the union government. There will also be GST and making charges for physical gold which is not included in SGB – that is a gain. The investor will also get a regular return of 2.5% yearly interest (payable semi-annually) on the total amount invested. SGB, in that sense, is a unique opportunity for any gold investment. Additionally, there is no long-term capital gain tax on maturity of SGB. The cost of the transaction is the lowest for SGB.
However, if SGB is not a suitable option for an investor, there are always options of gold ETFs or gold mutual funds. This can certainly diversify the field of investment.
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In a judgment made public this week, a High Court judge granted requests by artificial intelligence (AI) company Fetch.ai for Binance to take steps to identify the hackers and track and seize the assets.
While involving a relatively small sum, the case is one of the first public ones involving Binance and will be a test of the English court system’s ability to tackle fraud on cryptocurrency platforms.
“We can confirm that we are helping Fetch.ai in the recovery of assets,” a Binance spokesperson said.
“Binance routinely freezes accounts that are identified as having suspicious activity occurring in line with our security policies and commitment to ensuring that users are protected while using our platform.”
Binance, which has an opaque corporate structure, has faced intense regulatory scrutiny amid a worldwide crackdown on cryptocurrencies over concerns that such exchanges could be used for money laundering or to allow consumers to fall victim to scams or runaway bets.
Binance has said it is committed to complying with appropriate local rules wherever it operates and has expanded its international compliance team and advisory board.
“We need to dispel the myth that cryptoassets are anonymous. The reality is that with the right rules and applications they can be tracked, traced and recovered,” Syedur Rahman, a partner at Rahman Ravelli, which is representing Fetch.ai, told Reuters.
Fetch.ai, which is incorporated in England and Singapore and develops AI projects for blockchain databases, alleges fraudsters hacked their way into its cryptocurrency accounts on the Binance exchange on June 6.
Unable to remove the assets because of account restrictions, they allegedly sold them to a linked third party at a fraction of their value in under an hour.
Rahman said Binance, which had notified Fetch.ai of unusual activity in its account, had already frozen a sum and had indicated it would comply with the orders. The claimants will have to prove they are victims of fraud before seeking a recovery order.
“We have been working closely with Binance and local enforcement to obtain details about the hacker,” Fetch.ai said in an emailed statement. “Issuing a court order for the release of this information is a standard process.”
(Reporting by Kirstin RidleyEditing by Mark Potter and Richard Chang)
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| Current market price | Rs 171 |
| Target price | Rs 220 |
| Gains | 30% |
The brokerage has suggested buying this iron ore mining company’s stocks with a target price of Rs 220, as against the current market price of Rs 171, implying an upside of nearly 30% on the stock. According to Sharekhan, NMDC is a play on strong iron ore prices and volumes.
The brokerage expects a strong (13%) volume Compounded Annual Growth Rate to 42 million tonnes over FY21-23E and higher iron ore prices, which should result in a 12%/16% EBITDA/PAT Compounded Annual Growth Rate over FY21-23E to Rs 111 billion and Rs 83.5 billion, despite a 22.5% premium levy on iron ore sales.
“We have factored in iron ore fines/lumps prices of Rs 5,500/Rs 6,400 per tonne in FY22E and Rs 4,500,Rs 5,200 per tonne in FY23E,” the brokerage has said.
“We value the stock of NMDC at Rs 220 per share on a Sum of The Parts Valuation basis, valuing the iron ore business at 5 times FY23E EV/EBITDA and the steel plant 25% of its book value. At the current market price, the stock is trading at 3.7 times its core Iron Ore Mining business and provides an attractive dividend yield of 13%. We reiterate our Buy rating,” the brokerage has said.
| Current market price | Rs 819 |
| Target price | Rs 965 |
| Gains | 18% |
The company is one of the largest forging companies in the world and Motilal Oswal is pretty upbeat on the stock.
According to the management interaction with the company by Motilal Oswal, despite semi-conductor issues, it expects recovery to sustain in India and exports. The company also has a comprehensive Electronic Vehicles strategy covering power electronics, control electronics, motors, etc. for all Auto sub-segments (from 2W to Buses).
“It has a comprehensive Electronic Vehicles strategy covering power electronics, control electronics, motors, etc., for all Auto sub-segments (from 2W to Buses),” the broking firm has said.
“Bharat Forge’s strong performance in the first quarter of FY22 was driven by strength across segments as well as a better mix. While all core businesses are seeing sharp cyclical recovery, Bharat Forge diversified initiatives in aluminum, light-weighting, and e-Mobility are starting to fructify. We raise our FY22E consolidated Earnings Per Share by 16% to account for strong demand in the export markets, while maintaining our estimates for FY23E. We maintain our Buy rating, with target price of Rs 965 per share (28x Sep’23E EPS),” the brokerage has said.
The article is informational in nature, which is taken from the brokerage report of Motilal Oswal institutional Equities. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.
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| Current market price | Rs 349 |
| Expected price | Rs 500 |
| Gains % | 44% |
Why Motilal Oswal has a buy on the stock of Gujarat State Petronet?
According to Motilal Oswal, over the last year and a half, Gujarat State Petronet’s volumes reached 38-39mmscmd in 1HFY20, there have been continuous investor concerns over the more than optimal utilization rate of its High Pressure Pipeline (HPP) grid.
With an adjustment in lieu of the new tax regime (of 25.17%), the tariff revision became a much larger concern, resulting in a huge de-rating in Gujarat State Petronet’s standalone value, the brokerage has said.
“Considering a gradual ramp up in volumes, with new terminal capacity additions in Gujarat, our sensitivity for a 5%/10%/20% tariff cut from current levels of Rs 34/MMBtu results in an EBITDA CAGR of 15%/13%/8% (on the back of 16% volumes CAGR over the same period),” Motilal Oswal has said in its report.
According to Motilal Oswal strict action against usage of industrial pollution would further increase the demand for gas and may result in higher transmission volume than that considered. Non-approval of capital expenditure proposed by GUJS, resulting in a sharp cut in tariff, remains the biggest risk, the brokerage has said.
“The company would turn net cash by the end of FY23E (v/s a net debt of Rs 6.6 billion in FY21), despite annual capital expenditure plans of Rs 7 billion. The stock trades at 16 times FY23E EPS and 10 times FY23E EV/EBITDA (owing to a huge rally in 45% in the last two months). We reiterate our Buy rating,” the brokerage has said.
Though Indian markets closed at a new record high, it maybe time to be a little cautious on the markets.
“Equity markets are likely to continue with its strong positive momentum as the economic activities are expected to further pick up pace with the lockdown measures getting relaxed. The result season is now largely over with corporate earnings being in-line to better than expectations. Going ahead, we expect corporate earnings to improve further as economy opens up and improving vaccination trends.
We estimate Nifty EPS for FY22E/FY23E at INR725/INR862 which implies growth of 35%/19% respectively. Market has been witnessing a rotation from mid to large caps – a phenomena we believe could continue as well in the near term given the sharp outperformance of the broader market in the last 18 months. In terms of sectors we remain positive on IT, Metals, Cement, select BFSI, Consumer, Auto, and Healthcare space,” says Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.
The article is informational in nature, which is taken from the brokerage report of Motilal Oswal institutional Equities. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.
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