IL&FS crisis: India’s busted Macquarie clone must go under the knife

When even a 24-year-old Indian entrepreneur has no difficulty raising $1 billion in a day from global investors, it’s easy to forget that it wasn’t always like this.

Only two decades ago, a storied Mumbai financier could get away with raising $25 million of debt for a client, giving it just about half of that money five years later, and making the company service the full amount thereafter.

But what goes around, comes around. The institution that made a business of exploiting India’s desperation for funds, particularly for long-gestation infrastructure projects, is now seeking to protect its assets from unpaid creditors trying to push it into bankruptcy.

Infrastructure Leasing & Financial Services Ltd. had 30 years to spawn an Indian clone of Macquarie Group: a powerhouse of finance, investments, asset ownership and risk management. Instead, Ravi Parthasarathy, the founder who stepped down recently as chairman, went on to build an unwieldy, debt-fueled empire that has now crumbled. Shareholders will have to move in to rescue IL&FS in their meeting on Saturday.

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Commodity outlook by Tradebulls Securities: Sell copper, buy natural gas

Commodity outlook and trading ideas by Bhavik Patel – Sr. Technical Analyst (Commodities), Tradebulls:

The dollar index (DXY) this week has traded roughly in the range of 93.30-94.08. We expect Indian Rupee (INR) to trade in the range of 72.50-73.30 next week. Any correction in Indian Rupee will only come if it manages to sustain below 72.20. If USDINR breaches 73.06 in Future, we may see rapid depreciation in our currency till 73.30-73.50. INR got a small boost with a decline in US Treasury yields reducing support for the greenback. US 10 yr yield decline from 3.110 to 3.05 which has put brakes on DXY. However given the hawkish view of Fed, we expect DXY to trade above 94.50 and so we are not expecting a significant correction in our currency. Next week chances are high for RBI’s rate hike so INR may get support but as long as 72.20 is not breached, we remain convinced that USDINR will remain weak.

Sell Copper

Target: Rs 438

Stop loss: Rs 460

Copper made ‘shooting star’ candlestick pattern at 463.25 and now has retraced to 452. In last 3 trading session, Copper has made lower high which is an indication of buyers strength getting exhausted and bears trying to capture the trend. Copper has broken the last 3 trading session low which further confirms bears getting hang of the commodity. RSI_14 has also retraced from oversold territory and is now currently at 62. We expect Copper to re-test the lows of 738 where 200 DMA is placed and recommend short with a stop loss of 460.

Buy Natural Gas

Target: Rs 226

Stop loss: Rs 207

Natural Gas has made ‘hanging man’ candlestick pattern on the daily scale near 223.4 and has since retraced back to 216.40. Overall trend remains bullish but risk-reward ratio settles better near creating long position near Rs.212. On the daily scale, 20 DMA comes near 212 with previous swing high also collaborating near 212 making it important support. We would recommend creating long position near 212 with a target of 226 and stop loss below 207 on a closing basis.

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Today’s picks: From TCS to Tata Motors, hot stocks to watch on Friday

Nifty

Current: 10,977 (fut: 11,043)

Target: NA

Stop-long positions at 10,950. Stop-short positions at 11,125. Big moves could go till 11,175, 10,900. A long 10800p (111) short 10,700p (86) will pay 10-15 if the index drops to 11,900.

Bank Nifty

Current: 25,042 (futures: 25,269)

Target: NA

Stop-long positions at 25,100. Stop-short positions at 25,400. Big moves could go till 25,600, 24,900. Trend remains negative.

TCS

Current price: Rs 2,188

Target price: Rs 2,220

Keep a stop at Rs 2,170 and go long. Add to the position between Rs 2,210 and Rs 2,215.

Book profits at Rs 2,220.

Tata Motors

Current price: Rs225

Target price: Rs220

Keep a stop at Rs 228 and go short. Add to the position between Rs 221 and Rs 222. Book profits at Rs2 20.

Sensex, Nifty fall as RBI and govt measures fail to cheer investors

The benchmark indices fell on Thursday as concerns over the effects of a weaker local currency and crude oil prices on the economy outweighed steps by the government and the central bank to restore investor confidence.

Most global markets, too, were down as investors digested the likelihood of more Federal Reserve interest-rate increases stretching into next year.

The Sensex declined 0.6 per cent to 36,324.17, after falling as much as 0.8 per cent. The benchmark is now headed for its worst month in two and a half years, and volatility is back to levels seen in February. The index is down 5.9 per cent in September.

The Nifty declined 0.7 per cent to close at 10,977. The index has ended with losses in seven of eight past trading sessions. From its peak touched a month ago, the 50-share blue chip index is down 6.5 per cent.

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Aadhaar: What happens to firms like Jio, Paytm as SC strikes down sec 57?

Finance minister Arun Jaitley on Wednesday indicated that the Centre would examine whether separate legal backing is needed for Section 57 of the Aadhaar Act, a provision which allows private entities access to the core Aadhaar database.

The Supreme Court on Wednesday struck down Section 57 of the Aadhaar Act, which deals with private entities, and read down a few others, stating that they were unconstitutional.

“If it is backed by law, it is not unconstitutional,” Jaitley said when asked about Supreme Court striking down Section 57, which allows ‘any body corporate or person’ or ‘private entity’ to demand Aadhaar.

He added that the Centre would see if the court’s decision arose from a “procedural concern”.

“So let us first read the judgement. There are two-three prohibited areas. Are they because they are totally prohibited or are they because they need legal backing. So my answer in general, the generic answer will depend on what is the rationale… for instance on these private entities, it needs to be backed by law. That’s my understanding. I still have a detailed reading of the judgement to do,” Jaitley said

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Nifty outlook and top trading ideas by Prabhudas Lilladher for today

Nifty outlook and few trading ideas by Vaishali Parekh, research analyst – technical research at Prabhudas Lilladher:

NIFTY VIEW

Nifty has held on to the support of 10900 levels & Bank Nifty at 24600 with Rupee & Crude remaining where it is. Volatility would continue with the expiry of September series. The support for the day is seen at 36270/10080 while resistance is seen at 36800/11120. Bank Nifty would have a range of 25100-25650. Among the metal sector, Vedanta and Hindalco look positive while Cement sector has also got into momentum-ACC, Ambuja, Shree cement etc. look positive.

BUY GUJARAT ALKALIES & CHEMICALS

CMP: Rs 620.55

TARGET: Rs 680

STOP LOSS: Rs 580

The stock has been in a consolidation phase for quite some time at around 550-565 levels and currently has indicated a breakout with a positive bullish candle pattern in the daily chart and we anticipate an upward rise with strength and potential in the coming days. The RSI also has indicated a positive bias with a trend reversal and has signalled a buy. With good volume participation witnessed, we recommend a buy in this stock for an upside target of 680 keeping a stop loss of 580.

BUY AMBUJA CEMENTS

CMP: Rs 226.10

TARGET: Rs 250

STOP LOSS: Rs 215

The stock has been consolidating for some time gathering strength and currently has moved past the 50 DMA moving average and has maintained a positive bias and we anticipate an upward rise in the coming days. The RSI looks positive and with the chart looking attractive, we recommend a buy in this stock for an upside target of 250 keeping a stop loss of 215.

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US Fed raises interest rates by 0.25%; top takeaways from the FOMC meet

As expected, the US Federal Reserve raised short-term interest rates by a quarter percentage point or 0.25 per cent in its latest policy meet, that concluded Wednesday. It was the third rate hike by the US Fed this year and the eighth such move since December 2015.

Here’re the key takeaways from the latest FOMC meet –

Rates move up

The Federal Open Market Committee (FOMC) increased the interest rates by 25 basis points, thus setting a new range of 2 per cent to 2.25 per cent. The move reflected an upbeat assessment of the economy that was identical to the Fed’s last policy statement eight weeks ago, despite concerns over Trump’s escalating trade war, Bloomberg reported. Growth and job gains have been “strong” and inflation remains near the central bank’s 2 per cent target, the FOMC said in its statement. Also, it has signalled one more rate hike this year and three more in 2019.

Analysts at Rabobank International said, “We would like to add that with recent data indicating that domestic momentum remains strong – the Atlanta Fed’s GDP nowcast for Q3 stood at 4.4 per cent on September 19 – it would take time for the trade war to slow US economic growth down to a pace that would concern the FOMC. Therefore, we now change our call to four hikes this year, with the next hike in December.”

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Top trading ideas by Tradebulls Securities: Buy United Spirits, sell TVS

Nifty outlook and top trading ideas from Sacchitanand Uttekar, DVP – Technical (Equity), Tradebulls Securities:

Nifty Outlook:

Nifty did display some resilience & witnessed a bounce after facing relentless selling from 11,500 zone. The market breadth has not been that comforting while the volatility index continued to scale higher. On the pattern front, the index did witness a Harami formation on Tuesday session but the confirmation of the same is yet awaited in terms of an affirmative close. Hence, any non-sustenance above 10970 could unlock fresh pessimism & push the index towards its 200 DEMA placed around 10,780. As the broader trend looks weak pullback towards 11,170 zone should be used to create fresh shorts with a Stop above 11,310.

Stock: United Spirits

Reco.: BUY

CMP: Rs 533

Since May 2018 the stock has been declining within the bounds of a channel pattern. The wave formation within the pattern also resembles a Bullish Three Drives Harmonic structure. The support near 520 looks strong & a Bullish Harami formation confirms the same. Positional longs could be deployed with a stop below 505 & a move back to 600 could be witnessed in the coming month.

Stock: TVS Motor Company

Reco.: SELL

CMP: Rs 584

Rising wedge on the daily scale with the stock facing resistance near its 200 DEMA around 595. Shorts could be initiated below 575 with a Stop above 596 for a pattern target up to 545.

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Sebi issues show-cause notices to 300 brokerages in NSEL case

The Securities and Exchange Board of India (Sebi) has issued a show-cause notice to 300 brokerages whose clients lost significant money in the infamous Rs 56-billion National Spot Exchange (NSEL) scam.

Sebi’s notice alleged that these brokerages no longer meet the “fit and proper person” criteria and hence should not be allowed to continue as intermediaries.

The regulator asked these brokerages to explain why the action recommended should not be taken against them under the prescribed provisions of Sebi (intermediaries) and Sebi (stock-brokers and sub-brokers) regulations.

Sebi’s fit and proper criteria define basic conditions that intermediaries need to fulfil in order to perform their duties and responsibilities. Among key conditions are integrity, absence of any conviction and not being a willful defaulter.

The regulator said that it has initiated adjudication proceeding and appointed designated authority on September 21 to inquire into the alleged violation of the fit and proper norms.

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Aadhaar not mandatory for bank account, mobile connection: Key takeaways

The Supreme Court on Wednesday declared government’s Aadhaar scheme as Constitutionally valid and also struck down Section 57 of Aadhaar Act permitting private entities to avail Aadhaar data. “Robust data protection regime has to be brought in place as early as possible,” Justice Sikri said while reading out the majority judgement.

The court said that the Aadhaar authentication data cannot be stored for more than six months.

The apex court’s five-judge Constitution bench said Aadhaar means unique and it is better to be unique than being best. The first of the three judgements was pronounced by Justice A K Sikri. Justice Sikri pronounced the judgement for himself, Chief Justice Dipak Misra and Justice A M Khanwilkar.

Here are the key takeaways:

1. Individuals and corporates cannot collect Aadhaar data

2. Government not to give Aadhaar to illegal immigrants

3. Aadhaar need not be made compulsory for school admissions

4. Linking Aadhaar to telecom services unconstitutional

5. No person can be denied govt benefits only due to absence of Aadhaar

6. No need to link bank accounts, mobile numbers to Aadhaar

7. Aadhaar card is mandatory for PAN linking, Income Tax return

8. Aadhaar can be passed as Money Bill

9. Nothing in Aadhaar Act that violates right to privacy of individual

10. No child can be denied benefits of any schemes on not being able to bring their Aadhaar number

11. CBSE, NEET, UGC cannot make Aadhaar mandatory, also not compulsory for school admissions