Despite having lost nearly a third of the gains made this year, Chinese markets are poised to outperform Indian markets for the second consecutive calender year. The Shanghai Composite gave year-to-date returns of 6.5% during CY15, against a 4.9% decline witnessed by the Sensex, Bloomberg data showed.

After a massive rally that saw it more than double between June 2014 and June 2015, the Shanghai composite lost more than 40% of its value between mid-June and August. The fall was accentuated with investors offloading their holdings in the Chinese markets over fears of slowdown in the economy and poor factory data. On July 27, the Shanghai Composite posted its biggest single-day fall in eight years, forcing the Chinese government to take corrective measures.

The government suspended scrips with high volatility from trading further and asked brokerages to buy shares backed by China’s central bank. However, Chinese scrips made a comeback in the last three months as the Shanghai Composite climbed 7% during the period.

The Indian markets, on the other hand, started off on a positive note as the Sensex touched its lifetime high of 30,000.24 points on March 4. However, markets have corrected sharply since April as global uncertainties triggered sell-off by investors, especially foreign portfolio investors (FPIs). While investors trimmed back their expectations on economic reforms by the NDA government, worse-than-expected earnings performance of India Inc has fuelled concerns that the economic recovery may take longer than anticipated. Investors also grew increasingly impatient with the pace of economic reforms.

The FPIs bought equities worth $3.5 billion during CY15 – the worst in last four years. In fact, in the five of the last seven months, FPIs have sold equities close to $5.4 billion worth of Indian shares.

Inferior market performance notwithstanding, India continues to command the highest valuations among emerging markets due to its relative attractiveness. The one year forward price to earning of the Sensex is currently 16.84 times. Numerous brokerages have pointed that India would be an outperformer in the emerging markets universe due to better GDP trajectory as well as relative stability in the domestic currency.

Morgan Stanley said in a research note published on November 26 that India continues to be an ‘overwieght’ among emerging markets due to improved fiscal discipline, lower inflation and balanced current account position.

Reiterate ‘outperform’ on SKS Microfinance and set a 12-month target price of R520, based on 15x P/E (price-to-earnings) multiple, in line with the historical average, applied on 24 months forward EPS of R35. We see the company to continue to deliver healthy loan/EPS growth, while we find the stock attractively valued.

The Reserve Bank of India (RBI) has relaxed the ticket size restrictions for MFIs. Under the existing rules, MFI loans that are above R15,000 in ticket size, have to be of at least two-year duration. The reason behind stipulating a higher tenure for higher ticket loans was to ensure manageable weekly installments for the borrowers. For a long time, this R15,000 limit was an effective cap on the lending ticket size for MFIs — since the lenders were uncomfortable taking longer term exposures.

It is important to note that in April 15 when the RBI relaxed the overall single borrower lending limits for the sector, this rule on ticket size was not relaxed.

IDBI Bank share price surged as much as 10.07 per cent on BSE on Monday on reports that the government is in talks with International Finance Corporation (IFC) to sell a stake in the bank. The stock also hit a new 52-week high of Rs 95.10 in trade.

IDBI Bank share price surged as much as 10.07 per cent on BSE on Monday on reports that the government is in talks with International Finance Corporation (IFC) to sell a stake in the bank. The stock also hit a new 52-week high of Rs 95.10.

At 2.20 pm, the share price of IDBI Bank was up 7.64 per cent at Rs 93. The scrip opened at Rs 87.55 and had touched a high and low of Rs 95.10 and Rs 87.20, respectively, in trade so far. Sensex was marginally up 0.07 per cent at 26,145.95.

Shares of IDBI Bank on Monday soared to 52-week high of Rs 92.50 after reports suggested that the
government is in talks with International Finance Corporation (IFC) to sell a stake in the lender.

IDBI Bank has also launched a $350 million 5 year Reg S Green Bond issue on November 23, 2015. The transaction received an overwhelming response and the issue was oversubscribed by 3 times. The issue was made under the $5 billion MTN Programme listed on the Singapore Stock Exchange.

The transaction attracted interest from a diversified range of investors including Asset Managers (50 per cent), Banks (28 per cent), Private Banks (17 per cent), and corporate and Others (5 per cent). Around 82 per cent of the allocation was made to Asian Investors, 18 per cent to European investors. ANZ Bank, BNP Paribas, Citibank, EISBC, JP Morgan Chase and Standard Chartered Bank acted as Joint Book Runners and Lead Managers to the transaction.

At present, the government holds 76.5 per cent in IDBI Bank, which is grappling with high bad loans and other legacy issues.

Earlier, Finance Minister Arun Jaitley and Minister of State for Finance Jayant Sinha had spoken about the government’s plan to privatise the lender. “We will consider transforming IDBI Bank in a manner
similar to the way Axis Bank was done,” Sinha had earlier told reporters.

(With inputs from Reuters)

According to market experts, GST aims to simplify the current indirect tax regime by bringing all central and state levies (like excise duty, sales tax, octroi, VAT and other countervailing duties) under one single head having uniform tax rate across goods and services (with some exclusions like electricity, alcohol and petroleum products).

Benchmark indices extended gains last week and closed 1 per cent up following positive global cues and hopes of smooth passage of the Goods and Services Tax (GST) bill in the ongoing Winter session of the Parliament.

During the previous week ended November 27, 2015, Sensex gained 259.71 points to 26,128.20 on November 27, while Nifty gained 86.15 points at 7,942.70.

GST aims to simplify the current indirect tax regime by bringing all central and state levies (like excise duty, sales tax, octroi, VAT and other countervailing duties) under one single head having uniform tax rate across goods and services (with some exclusions like electricity, alcohol and petroleum products).

In response to favourable outcome related to GST in the ongoing Parliament session some positive statements were made by the government representatives and the same were supported by some opposition parties also. According to reports, government is hopeful of passage of the GST bill in the Winter session of the Parliament as it claims 30 of the 32 parties have supported it. GST will be in focus this week after Prime Minister Narendra Modi met Opposition Congress party leader Sonia Gandhi for talks last week to try and break a deadlock over the new indirect tax.

Jayant Manglik, president, retail distribution, Religare Securities, said, “If the bill doesn’t get passed in the winter session, the government will miss the 1 April roll-out date and that will certainly dent the sentiments.”

The benefits of GST are immense in terms of reducing economic distortions, creating a nationwide single tax market, widening of tax base and eliminating cascading of taxes (tax on tax).

However, Chandan Taparia, analyst, Anand Rathi securities said, “In Rajya Sabha 1/3 members retire by every 2 years, so if the bill will not clear in the ongoing session then it will delay till 2017.”

For manufacturing companies, it means level playing field for organised and unorganised sectors, and cost optimisation in terms of movement and warehousing of goods due to uniform tax rate. Consequently, it would have positive fallout on inflation, curtailing tax avoidance and creating buoyancy in the economy.

According to estimates, the implementation of GST could bring in incremental positive effect of 1-1.5 per cent in the GDP depending upon the GST rate (likely range of 18-20 per cent would mean tax saving of 3-4 per cent for many manufacturing segments; a GST rate beyond 22 per cent could be detrimental for business confidence and growth in near term) and in ideal conditions.

However, Sharekhan in a research note said, “The proposed GST bill has exclusions and an additional tax of 1 per cent for inter-state movement for the initial two years which dilutes the essence of GST (to an extent) and limits positive impact on the economy.”

Vijay Singhania, founder, director, Trade Smart Online, said, “Clearance of GST bill in the prevailing winter session holds prominence currently. Optimism on the GST bill has built up over the last few days, however, overall expectations from the ongoing Parliament session is low. So, if anything positive come out then that could be the trigger for the markets.”

We list out 15 stocks that brokerage houses believe may benefit with the passage of GST.

Picks by Sharekhan

1) Maruti Suzuki India: Potential reduction in effective tax rate for mid-sized passenger vehicles.
2) Britannia Industries: Cost optimisation at each level of product value chain and competitive advantage could improve the growth prospects in long run.
3) Gateway Distriparks: With services across the distribution value chain, it will gain from incremental demand arising from the higher inter-state transport of products.
4) Century Plyboards: Organised players to gain market share with unorganised players losing tax advantage.
5) Pantaloons Fashion & Retail: Set-off for service tax paid on lease rentals and inventory cost optimisation.

Picks of Anand Rathi Securities

1) Bata India and Relaxo Footwear: According to Chandan Taparia, there are so many types of taxes that are levied by the Central and State Governments on goods and services, with the implementation of GST footwear companies will also be benefit as they transport their final products to their regional heads and then local dealers.
2) Exide Industries and Amara Raja Batteries: These stocks will also benefit with the passage of GST. Lower lead and copper prices are also supporting to batteries companies and raw material cost is also declining.
3) PVR and Dish TV: Entertainment taxes will be absorbed once the GST will be implemented.
4) Others stocks: Cigarette majors ITC and Godfrey Phillips and some FMCG companies like Emami and Dabur will also benefit from the GST implementation.

(Disclaimer: The stocks are recommended by the respective brokerage houses and not a recommendation from Financial Express online)

Amtek Auto share price fell as much as 5.62 per cent in the early trade on Monday after the company on Saturday reported a consolidated net loss of Rs 987 crore for the year ended September. (Photo: Reuters)

Amtek Auto share price fell as much as 5.62 per cent in the early trade on Monday after the company on Saturday reported a consolidated net loss of Rs 987 crore for the year ended September against a net profit of Rs 848.21 crore last year. Amtek Auto follows October-September financial year.

At 9.30 am, the share price of Amtek Auto was down 2.58 per cent at Rs 41.60. The scrip opened at Rs 41.90 and had touched a high and low of Rs 41.90 and Rs 40.30, respectively, in trade so far. Sensex was up 52.45 points at 26,180.65.

Total income of the company fell to Rs 15,213.4 crore, from Rs 15,706.6 crore a year ago, Amtek Auto said in a BSE filing. For the quarter ended September, it reported a stand-alone net loss of Rs 158.62 crore as against a net profit of Rs 74.37 crore in the same period of the previous fiscal.

Total income has narrowed to Rs 833.8 crore for the quarter under review, from Rs 1,042.1 crore a year earlier.

The Delhi-based company had defaulted on repayment of bonds worth Rs 800 crore in September, thus signaling a crisis. Trouble started after leading fund manager JPMorgan Mutual Fund in August restricted withdrawals from two of its funds – JP Morgan India Treasury Fund and JPMorgan India Short-Term Income Fund, which have a collective exposure of about Rs 200 crore in Amtek Auto.

The bonds matured in September, but Amtek Auto was unable to make repayments to its investors as it was facing a “cash flow mismatch”.

(With inputs from PTI)