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RBI and Finance Ministry    
TREND | 19 Apr 2018, 02:22PM
In efforts to address the bad loans epidemic, RBI refuses to relax tough rules on borrowing click to expand

The Reserve Bank of India in February announced new rules for the banking sector, with the goal, according to the deputy governor N.S. Vishwanathan to improve India's credit culture and nip bad loan problems in the bud. Indian banks are sitting on a stressed assets pool of over Rs. 10 trillion, of which gross non-performing assets (NPAs) amount to Rs 8.86 trillion.

However when the RBI announced the new rules, bankers protested, asking for relaxations. The new bad loan rules are aggressive: they say that starting 1 March, lenders must implement a resolution plan within 180 days for loan accounts of at least Rs 2,000 crore, failing which the defaulting borrowers must be referred to insolvency courts. They also mandate banks to report defaults weekly to RBI, even if loan payments are delayed by a day.

The deputy governor has now ruled out any changes to the rules. The RBI is attempting to address the borrower incentive to take loans from banks compared with raising funds from markets. Vishwanathan pointed out that even a single day’s default on a bond would prompt markets to penalize the borrower heavily. The same regulatory environment currently does not exist with loans. 

 

Trendlyne Marketwatch    
19 Apr 2018, 01:30PM
The Midday View: Markets up, IndusInd Bank falls on NPA numbers click to expand

The Sensex and Nifty are riding the green wave into afternoon trade. Market breadth is balanced. Of the 1106 stocks traded today, 459 were on the uptrend, and 524 went down.Mumbai-based privare bank IndusInd Bank declined in share price on high volumes after it reported a Rs. 1,350 crore divergence in NPAs in its March quarter. 

Riding High:

Largecap and midcap gainers today include National Aluminium Company Ltd. (NALCO) (87.40 9.05%), Hindalco Industries Limited (259.10 6.71%) and Vedanta (Sesa Sterlite Limited) (308.55 5.99%).

Downers:

Largecap and midcap losers today include Bharat Petroleum Corporation Limited (381.05 -5.96%), Hindustan Petroleum Corporation Limited(HPCL) (303.45 -5.05%) and Indian Oil Corporation Limited (158.30 -4.03%).

Movers and Shakers

17 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Hindustan Copper Limited (80.05 12.11%), MMTC Limited (67.40 7.24%) and BASF India Limited (2137.15 6.09%).

Top high volume losers on BSE were AstraZeneca Pharma India Limited (988.50 -3.31%) and Gateway Distriparks Limited (182.25 -0.63%).

Vakrangee Limited (132.00 4.93%) was trading at 55.4 times of weekly average. Kirloskar Oil Engines Limited (359.10 4.12%) and D.B.Corp Limited (312.50 0.02%) were trading with volumes 24.5 and 14.3 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

13 stocks hit their 52 week highs, while 10 stocks tanked below their 52 week lows.

Stocks touching their year highs included - Aarti Industries Limited (1310.05 -1.33%), Chambal Fertilizers & Chemicals Limited (190.30 6.64%) and Firstsource Solutions Limited (59.55 1.88%).

Stocks making new 52 weeks lows included - Balrampur Chini Mills Limited (67.60 -4.05%) and Bharat Electronics Limited (136.05 -1.91%).

36 stocks climbed above their 200 day SMA including Hindustan Copper Limited (80.05 12.11%) and Hindalco Industries Limited (259.10 6.71%). 12 stocks slipped below their 200 SMA including Alok Industries Limited (3.05 -4.69%) and Reliance Communications Limited (20.65 -1.67%).

Photo by Satish Krishnamurthy

Dolly Khanna    
19 Apr 2018, 08:42AM
Superstar investor Dolly Khanna may be the greatest finisher of all time click to expand

By Suhani Adilabadkar

Rain Industries caught Dalal Street’s fancy when Dolly Khanna emerged as its major investor, with 1.27% stake in the March quarter filings of 2017. The stock rallied 4% by the end of the day, closing at Rs. 122. Rain Industries produces crucial raw materials, calcined petroleum coke & coal tar pitch essential for the manufacture of aluminium, graphite, carbon black, refractory and titanium dioxide. From then, it was a ride up the chart - this lesser known stock till 2017 has tripled in value.  Rain industries Ltd is the biggest beneficiary of ace investor Dolly Khanna’s priced portfolio - she holds 2.66% of the stock as of March 2018 (over Rs. 304 crore). 

  • Dolly Khanna knows when to exit: smart at both sells and buys
  • Brought attention to Rain Industries when the Khannas added it to their portfolio
  • Falls in molasses price driving recent portfolio investments in alcohol stocks
  • Has a well diversified portfolio, across metals, auto, agro, textiles & chemicals
  • Cut investments in sugar as the industry took a beating among falling prices

Initial focus on small and midcaps

Chennai based, Khanna duo, Dolly Khanna and her husband Rajiv Khanna’s stock investments began with the sale of their Kwality Icecream business to Unilever. Though it started as a hobby, Dolly’s investments in various small and midcaps have turned into multibaggers over the years.  The first one was Hawkins Cookers which is assumed they bought at around Rs. 150 and sold at around Rs. 4000. When market veterans were licking wounds inflicted by the later Hawkins Cookers debacle, Dolly Khanna had already exited with flying colors. There is a list of such stocks - Amara Raja Batteries, TTK Prestige, Cera Sanitaryware, RS Software which have been bought in and exited at the right time by the Khannas, delivering multifold returns.

Increasing investments in alcohol stocks

Rajiv Khanna had once compared stock investing with tennis played on different courts. What he implied was the significance of understanding the underlying market condition and acting accordingly, whether for the long or short term. This seems to be true with respect to recent additions to their portfolio, Radico Khaitan, Associated Alcohols and Som Distilleries, all liquor stocks. The underlying reason behind the choice of these stocks is the fall in molasses price which is a major raw material and constitutes 40-70% of sales for most of the top breweries in India. Molasses index has corrected 45% since the beginning of 2018. Thus the falling raw material cost has improved margins leading to steady rise of stock price over the previous few quarters. Radico Khaitan & Associated Alcohols have jumped three times and Som Distilleries has doubled over the last one year.

The Portfolio Balancing Act

Dolly Khanna’s portfolio is well diversified among metals, auto, agro, textiles & chemicals. The largest chunk of her portfolio belongs to Rain Industries, NOCIL, RSWM, Ruchira Papers , Srikalahasthi Pipes Ltd and Thirumalai Chemicals. Added to this list are the liquor stocks and textile stocks namely Trident, Nandan Denim, Nitin Spinners, and financial services names such as Emkay Global & Manappuram Finance.

The portfolio is further diversified by the likes of Nilkamal, Liberty shoes, Heritage Foods, Asian Granito to name a few. All these stocks are not heavyweights moving the BSE Sensex everyday but fundamentally strong companies.

The Art/Science of Investing

Major portfolio changes so far for Khanna have been with respect to the textile and sugar industry. Textile industry has been impacted by GST, lower duty drawback rates and falling exports. On the same lines, after two bullish years, sugar industry has been impacted by a bumper crop both in India and Brazil leading to lower sugar prices and poor margins for the industry. Dolly Khanna has thus been shrewdly reducing her shareholding in RSWM, Nitin Spinners and Dwarikesh Sugar. 

Multibagger 3D Effect

There is a common thread running through the entire portfolio and that is the strong fundamentals of Khanna’s stock picks. Though sectors have been selected on the basis of market conditions which subsume the economic situation, both domestic and global, stocks exhibit strong financial fundamentals with stable ROE, high asset turnover ratios and very low debt which translates into multibaggers in the long run. So what appears to the investing community as a multibagger stock is actually the work of a keen eye, vigilant ear and a simple financial thought process.

Suhani Adilabadkar is a Research Analyst registered with SEBI ((INH200003240)) She has done PGDBA (Finance), MS (Finance) and a Fellowship from Insurance Institute of India. She maintains a blog at oasisfundamentals.blogspot.in.

Disclaimer: Investing in stock markets is subject to market risks. Neither Trendlyne nor the author is liable for losses including consequential losses, claims, or expenses incurred by third parties from following research reports and advisory analysis available on Trendlyne.

The Baseline    
18 Apr 2018, 03:05PM
In the Nifty500 results declared so far, performance largely positive click to expand

As the results season for the March quarter rolls around, the results that have come out so far, for Nifty500 companies have been largely positive. Tata Sponge IronDCB Bank, Gruh Finance and Schaeffler, Infosys and Crisil have all reported revenue growth and net profit growth for the March quarter. DCB Bank and Schaeffler saw falling operating profit margin compared to the same quarter the previous year. For the full results dashboard, click here

 

 

Banks    
SECTOR | 17 Apr 2018
The Indian government ramps up its stake across public sector banks click to expand

The promoter shareholding screener, updated with March 2018 data, shows an interesting trend: the biggest promoter stake increases are happening in public sector banks, with the Government of India amping up its holding. Between December 2017 and March 2018, the Indian government has significantly increased its stake. 

The Union Bank of India, Syndicate Bank, Corporation Bankand seven others have all seen stake increases by the government of more than 5% in the March shareholding disclosures. The Union Bank has seen a stake increase of 11.9%. In all, 14 banks have seen a large increase in shareholding by the Indian government - including State Bank of India where the government has increased its stake by 1.4%. 

 

HDFC Securities released a Sector Update report for Banks on 10 Apr, 2018.