What’s behind the sharp jump in foreign travel splurge between Nov 2016-Jan 2017?

sharp spike in Indians’ overseas travel-related spending between November 2016 and January 2017 has come under the government’s lens. Officials are now ascertaining whether some of these expenses were attempts to duck the clampdown on undisclosed cash following the sudden demonetization of high value currency notes in early November last year.



Indians spent USD 246.6 million in overseas travel-related payments in November 2016, up 581 percent compared to USD 36.2 million spent in the same month in 2015.



The trend repeated itself in the following two months. Indians splurged USD 201 million in December 2016 travelling across the world, spending 517 percent more than what they did in the same month of the previous year.



The spending spree continued well into the new year. Foreign travel-related spending vaulted 434 percent in January this year, spending USD 217.8 million abroad compared to USD 40.8 million in January 2016.



Growth in foreign travel related spending in the later months (February to August 2017, the latest for which data is available with the Reserve Bank of India) have tapered off significantly, averaging 45 percent, raising questions whether some wealthy Indians have hurriedly used up millions of undisclosed assets by holidaying abroad to escape the authorities’ scrutiny in wake of demonetization.



Travel-related and other overseas remittances take place through RBI’s Liberalised Remittance Scheme (LRS) that allows people to spend up to USD 250,000 overseas in a year through legitimate financial instruments such as travelers’ cheques without specific approval.



Authorities are now scrutinizing suspicious bank transactions that may have been used to remit money overseas through the LRS route after Prime Minister Narendra Modi outlawed Rs 500 and Rs 1,000 notes in a surprise announcement on November 8, 2016 as part of a broader strategy to crack down on black money.



Officials said that data mined after November 8 has thrown up several tax evasion methods that the government will now crack down on.



In some instances, account holders were found to have deposited large sums and later converted these into foreign country travellers’ cheques. Records during November and December 2016 also show a spike in credit card bill payments in cash exceeding more than Rs 1 lakh in thousands of cases. Officials are now examining overseas spending pattern on these credit cards.



The demonetisation announcement set in motion the world’s largest currency culling exercise. People were given 50-days to deposit old notes in banks and post-offices by December 30, 2016.



Records show that cumulative cash deposits of more than Rs 25 lakh were made in about of 4.62 lakh accounts during November 8 to December 30, 2016. Cash deposits of more than Rs 5 lakh were made in 23.87 lakh accounts during these 50 days.



Banks have also reported large number of accounts that show "unusual forex activity compared with past transactions," sudden transactions in foreign exchange in dormant accounts, and fund movement in accounts that are inconsistent with what would be expected from declared income.



Banks are required to report cash deposits of more than Rs 10 lakh in a financial year in one or more accounts. Banks have also been reporting cash payments above Rs.1 lakh in a financial year in one or more credit card bills of the same person.

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Top 10 market-beating stocks with mcap of $1 bn to buy this Diwali

Indian markets rose to a fresh record high in Samvat 2073 and all expectations are Samvat 2074 will also not disappoint investors. The benchmark indices are likely to hit new highs in the next 12 months but investors are advised to stay with quality.

Last Samvat was one of the most eventful years for the economy as well as the equity markets because of two unprecedented events, demonetisation, and introduction of Goods and Services Tax (GST).

The Nifty saw some correction from 8,638 levels on Muhurat Trading day to sub-7,900 levels in December after the announcement of demonetisation in November 2016.

“After hitting a low of 7,099, we have witnessed an almost secular positive movement with Nifty making a new life high of 10,179 during this period. Samvat to Samvat, Nifty has given a return of 15 percent in 1 year,” Reliance Securities said in a report.

“Mid-caps and Small Caps have outperformed with gains of 17 percent and 22 percent, respectively. Nifty achieved a new peak during the year helped by outperformance of financial services index (36 percent weight in Nifty) which increased 24 percent from last Samvat,” it said.

Going into Samvat 2074, investors should handpick stocks which can generate market‐beating returns. This portfolio should be well-balanced to provide superior returns, without any unnecessary risk.

Heavy exposure to small and midcap stocks should be avoided because most of them are already trading above their key long-term moving averages.

The market rally is the testimony of the strength of economy; however, recent macro data is giving mixed signal amid concerns of a further slowdown in the economy due to demonetisation and GST.

“The reforms undertaken in recent past be it demonetization or GST would be instrumental is shaping up the quality of growth in future. Coupled with other reforms viz., implementation of Aadhaar, IBC and Jan-Dhan Yojana, the economic progress would be all-inclusive and positively impacting each and every individual in the country,” Arun Thukral, MD & CEO, Axis Securities told Moneycontrol.

“The markets are expecting robust earnings growth from H2FY18, thereby keeping the markets upbeat. Mid and smallcap stocks have rewarded the investors handsomely in recent past,” he said.

Thukral further added that an investor should undertake a detailed study before investing in small and midcap stocks. Once convinced an investor should set a target based on the fundamentals and accordingly book profit once the target price is reached.

Here is a list of top 10 stocks to buy with a market capitalisation of more than $1 billion:

Research Firm: Centrum Wealth Research

Aditya Birla Capital Ltd (ABCL): Market Cap Rs 39,660 crore

Aditya Birla Capital Ltd (ABCL) is the holding company of all the financial services businesses of the Aditya Birla Group. It has a presence in segments like life insurance, asset management, private equity, corporate lending, structured finance, project finance, general insurance broking, wealth management, equity, currency and commodity broking.

The loan book in the housing finance business under Aditya Birla Housing Finance Ltd (ABHFL), has grown at an exponential rate of 29x over FY15-17 to Rs4,136 crore and stood at Rs4,816 crore as of 30 Jun’17.

Of the total ABHFL’s loan portfolio, 56 percent is individual housing loans, 32 percent LAP, and 12 percent corporate finance. The business has healthy NIM of 3.2 percent as on 31 Mar’17.

Aegis Logistics Ltd: Market Cap Rs7841 crore

Aegis Logistics Ltd (ALL) is India’s leading Oil, Gas, and Chemical logistics company. The company operates through two segments – liquid division (37 percent of FY17 revenue) and gas division (63 percent of FY17 revenue).

The Liquid Terminal Division undertakes storage and terminalling facility of oil and chemical products. Its Gas Terminal Division relates to imports, storage, and distribution of petroleum products, such as LPG and propane.

It is one of the largest bulk liquid and LPG terminal operators in India providing third-party supply chain management solutions to oil, gas, and chemical industries.

For Q1FY18, on a consolidated basis, revenue grew by 16 percent YoY to a Rs856 crore. EBITDA grew 19 percent to Rs58 crore, with margins expanding by 21bps to 6.8 percent. The net profit grew 47 percent to Rs40 crore. Debt to equity as of Mar’17 stood at 0.4x.

ICICI Lombard General Insurance Co. Ltd: Market Cap Rs31,036 crore

ICICI Lombard General Insurance Co. Ltd (ICICI Lombard) was formed as a joint venture between ICICI Bank Ltd and Fairfax Financial Holdings Ltd. It is the largest private-sector non-life insurer in India based on gross direct premium income (GDPI) in FY17.

The company has an extensive distribution reach through 51 corporate agents as on 30 Jun’17, including ICICI Bank, which provides access to its 4,850 branches along with 20,775 individual agents.

ICICI Lombard has a diversified composition of insurance products with major contribution coming from three major categories – Motor Insurance (36.5% of Q1FY18 GDPI), Crop Insurance (21.8%) and Health Insurance (18.2%). Over FY15-17, the GDPI witnessed 26.7% CAGR thus exceeding the Rs10,000 crore mark in FY17.

Over FY13-17, the net premium earned witnessed a 12.3 percent CAGR to Rs6,158 crore. The operating profit and profit before tax also grew at a healthy pace of 17.3 percent p.a. and 18.2 percent p.a., respectively. The net profit grew 5.2 percent. For Q1FY18, the net premium earned grew 10.1 percent.

Lupin: Market Cap Rs46,970 crore

Lupin Ltd. is the 4th largest generic pharmaceutical company by market capitalisation globally, as of Mar’17. It is the 6th largest by sales, 2nd largest Indian pharm company by global sales, and ranks 1st in Anti-TB ailment globally.

The company has global revenue of $255 million in FY17. Over the last 10 years (FY07-17), the company’s revenue and EBITDA grew 8.5x and 9.6x, respectively.

EBITDA margins also have improved over the years by 200bps to 27 percent. Further, the R&D spends of the company have increased 16.3x to 13.5 percent of sales in FY17 vs. mere 7 percent of sales in FY07. Thus, giving a boost to newer product launches along with growth in revenue and profits.

Manappuram Finance Ltd: Market Cap Rs8769 crore

Manappuram Finance Ltd (MFL), incorporated in 1992, is one of India’s leading gold loans NBFCs engaged in providing finance against used household gold ornaments. It has established a pan-India presence, with a strong distribution network of 3,293 branches across 23 states and 4 union territories, with a live customer base of 2.25 million.

The promoters of the company have been involved in the business of gold loans since 1949. It’s total AUM has grown from Rs7,549 crore in FY11 to Rs13,380 crore as of 30 Jun’17. Of the current AUM, gold loan business accounts for 80% as of 30 Jun’17.

MFL has strategically forayed into non-gold businesses - microfinance, home loans, CV loans and loan against property (LAP) to reduce dependence on the gold loan business. The share of new business currently stands at 16 percent of AUM (vs 12% in FY16).

The management expects this to increase to 25 percent of total AUM by FY18E. The diversification will enable faster utilisation of funds on the balance sheet and generate better return ratios going forward.

Brokerage Firms: Sharekhan Ltd

Aurobindo Pharma: Market Cap Rs43560 crore

Aurobindo Pharma Ltd (Aurobindo), headquartered at Hyderabad, manufactures generic pharmaceuticals and active pharmaceutical ingredients. The company’s manufacturing facilities are approved by several

Market leading regulatory agencies such as the USFDA, UK MHRA, among others. Its product portfolio encompasses leading regulatory agencies such as the USFDA, UK MHRA, among others. Its product portfolio encompasses antibiotics, anti‐retrovirals, CVS, CNS, gastroenterologicals, pain management drugs and anti‐allergics.

Management expects to launch over 25 products (more approvals of complex products) in the coming years, which will help Aurobindo to achieve higher growth and mitigate increasing pricing pressure in the US which will help Aurobindo to achieve higher growth and mitigate increasing pricing pressure in the US market.

Bajaj Finserv: Market Cap 84,255 crore

Bajaj Finserv (BFS) is the holding company comprising of lending business and insurance companies. Bajaj Finance Limited (BFL), subsidiary of BFS (58% stake), is the lending arm with a strong and well‐diversified loan book with niche segments.

Its strong operating performance with a healthy asset quality diversified loan book with niche segments. Its strong operating performance with a healthy asset quality, achieved on the back of a 38.9% y‐o‐y growth in assets under management (AUMs) indicates the strength of its business model.

We believe BFL, BAGIC, and BALIC have plenty of headroom to grow and can outperform the industry in terms of growth. Hence, we find significant long‐term value in BFS and expect its subsidiaries’ earnings momentum to continue.

Bata India: Market Cap Rs9505 crore

Bata India is the largest retailer and manufacturer of footwear in India with a network of over 1,300 stores; unmatched by any of its peers. The company has strong brands such as Bata, Hush Puppies and Power catering to varied strata of population in the Indian market.

With redefined strategies and senior management changes, Bata is transforming itself from a conventional footwear player to branded footwear player.

Sustained store expansion, premiumisation and steady same-store sales growth (SSSG) would help the company’s revenue and profit after tax (PAT) to clock CAGRs of 11 percent and 22 percent over FY17‐FY20, respectively.

IndusInd Bank: Market Cap Rs1,00,909 crore

IndusInd Bank (IndusInd) has been among the best‐performing private sector banks with its superior operating metrics. Its advances have recorded a 27.1% CAGR during FY14‐FY17, while net profit clocked a 26.8%. Net interest margin stood at a healthy 4.0% in FY17.

Currently, the bank is in merger talks with Bharat Financial Inclusion Ltd, which if successful, could bring in a lot of synergies for IndusInd.

These include the acquisition of high‐yielding loans, enhanced priority‐sector lending and capital release from Bharat Financial for the merged entity.

Mahindra & Mahindra: Market Cap Rs80,866 crore

Mahindra & Mahindra (M&M) benefits from the encouraging outlook for farm equipment segment, given the normal monsoon and higher minimum support prices (MSPs) that will boost farm incomes. Further, its focus on introducing new products will help it outpace industry growth.

M&M is the only Indian automobile company having a track record of manufacturing passenger electric vehicles (EVs).

Given the government’s push for EVs and M&M’s planned new launches in this space, it will clearly enjoy the first‐mover advantage and significantly benefit from the shift to EVs.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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IMF growth projections are 80% wrong: EAC-PM member Rathin Roy

Noted economist and member of the Economic Advisory Council to the Prime Minister (EAC-PM) Rathin Roy on Wednesday dismissed lowering of India's growth projections by the IMF and the World Bank, saying they often go 'wrong'.



While the International Monetary Fund (IMF) has lowered India's growth forecast for the current fiscal by 0.5 percentage points to 6.7 percent, the World Bank has pegged economic expansion at 7 percent, down from 7.2 percent projected earlier.



The Asian Development Bank too lowered India's current fiscal growth to 7 per cent from 7.4 per cent, while RBI cut economic growth forecast to 6.7 per cent from earlier projection of 7.3 per cent.



"IMF's growth projections are 80 percent wrong...World Bank's growth projections are 65 percent wrong," he said in a media interaction when asked to comment on lowering of growth projections by international multilateral lending agencies. Roy, who is also director of economic think-tank National Institute of Public Finance and Policy (NIPFP), however, said the council will examine causes of slowdown.



India's economic growth slipped to a three-year low of 5.7 percent in the first quarter of the current fiscal.



Replying queries at the same media interaction, Niti Aayog member and Chairman of the Council Bibek Debroy said: "whether we like it or not we don't have good data on employment".



"In a country like India, you cannot get good data on employment and jobs from enterprise surveys. The labour bureau enterprise surveys cover less than 1.5 percent of total employment," Debroy said.



Noting that we can get data on unemployment and employment in India is through household surveys, he said the last NSSO household survey was out in 2011-12 and the next results of NSSO household surveys will not be available till 2018.
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Exclusive: No respite for Indian banks as bad loans hit record $146 billion

Indian banks’ sour loans hit a record 9.5 trillion rupees ($145.56 billion) at the end of June, unpublished data shows, suggesting Asia’s third-largest economy is no nearer to bringing its bad debt problems under control.


A review of Reserve Bank of India (RBI) data obtained through right-to-information requests shows banks’ total stressed loans - including non-performing and restructured or rolled over loans - rose 4.5 percent in the six months to end-June. In the previous six months they had risen 5.8 percent.

While banks remain the main source of funding for India’s companies, the stubborn bad debt problem has eaten into bank profits and choked off new lending, especially to smaller firms, at a time when an economy that depends on them is stalling.

India grew at its slowest pace in three years in April-June - a concern for the government of Prime Minister Narendra Modi, who faces elections in 2019 and has pledged to create millions of new jobs before then.

Banks are having to take higher provisions to account for more defaulters being pushed into bankruptcy. And margins are likely to be squeezed further by proposed new rules to encourage commercial banks to pass on central bank interest rate cuts.

To be sure, the bulk of India’s sour loans are in the state banks and stem from lending to large conglomerates, especially in steel and infrastructure. But analysts say the rise in bad loans among small firms, and even retail borrowing, is worrying and will do little to encourage new loans to help fuel growth.

Anbarasu forecast weak quarters ahead for banks before profitability picks up, and several senior bankers from public sector lenders - which account for more than two-thirds of Indian banking assets - agreed the months ahead would be strained.

Stressed loans as a percentage of total loans reached 12.6 percent at end-June, according to the RBI data, the highest level in at least 15 years.

“We think capitalization is the biggest challenge for the banks at the moment, given that earnings will remain subdued and will not support any capital generation,” said Moody’s Anbarasu.
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China shares hit 21-month high; Turkish lira takes a dive

SYDNEY (Reuters) - Chinese shares climbed on Monday after a week-long break as a disappointing survey on the country's service sector did little to dent optimism on global growth, while political uncertainty caused turbulence for the Turkish and British currencies.

Liquidity was lacking with Japan and South Korea on holiday and a partial holiday in the United States. where stocks will be open but bonds will be closed.

The Chinese blue-chip CSI300 index rose 1.7 percent to heights not seen since late 2015, partly in a delayed reaction to a targeted easing by the country's central bank announced a week ago.

That helped offset a fall in the Caixin index of service sector activity to a 21-month trough of 50.6 in September, a contrast to healthier numbers in manufacturing.

Spreadbetters also pointed to opening gains for most major European bourses.

"The global economy continues its synchronized recovery, as evidenced by robust data across regions, including upside wage growth surprises in the U.S. and Japan," wrote analysts at Barclays (LON:BARC) in a note.

"At the same time, events in Spain and the UK also confirm a high level of political uncertainty. For now, the constructive economic developments seem to dominate political risks."

Australian stocks still managed to put on 0.5 percent, while Nikkei futures added 0.1 percent even though the cash market was shut.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.02 percent, having rebounded by 1.7 percent last week. E-Mini futures for the S&P 500 were trading 0.11 percent firmer, while futures for the Treasury 10-year note rose 1 tick.

Bond yields had initially spiked on Friday in reaction to firm U.S. wage numbers, only to retreat as fresh jitters over North Korea bolstered safe havens. [US/]

Annual growth in average hourly earnings accelerated to a relatively rapid 2.9 percent in September, outweighing a 33,000 drop in nonfarm payrolls.

The pick-up in wages boosted already high expectations that the U.S. central bank will raise rates at its December meeting, and that further hikes are likely in 2018.

Minutes of the Federal Reserve's last meeting are due on Wednesday and may well show enough support for a move by year-end. A host of Fed speeches are also due this week.

LIRA SLIDES

In currency markets, the dollar was a shade softer at 93.768 against a basket of competitors. It also edged down to 112.57 yen, having been as high as 113.43 on Friday.

The euro was a fraction firmer at $1.1737, aided by TV pictures of hundreds of thousands of people in Catalonia's capital Barcelona demonstrating against moves to declare independence from Spain.

Catalan leader Carles Puigdemont is expected to address the region's parliament on Tuesday, when he could unilaterally declare independence.

Another early mover was the Turkish lira, where the dollar surged 4 percent at one point to the highest in seven months amid a diplomatic spat with Washington.

The U.S. mission in Turkey and subsequently the Turkish mission in Washington mutually reduced visa services after a U.S. mission employee was detained in Turkey last week.

The pound had popped higher on reports British Prime Minister Theresa May could sack Foreign Secretary Boris Johnson as she tries to reassert her authority after a series of political disasters.

Sterling had been undermined by speculation that May herself could be ousted ahead of crucial Brexit talks between Britain and the EU. The initial spike could not be maintained, however, and the pound soon steadied around $1.3090.

The New Zealand dollar hit a four-month low on Monday after a final vote count in the country's tight general election released over the weekend failed to identify a clear winner.

In commodity markets, gold gained 0.5 percent to $1,282.56 an ounce and off a two-month low touched on Friday.

Oil prices regained some ground on expectations that Saudi Arabia would continue to restrain its output in order to support prices, and as the amount of rigs drilling for new oil in the United States dipped. [O/R]

Brent futures gained 13 cents to $55.75 a barrel, while U.S. crude rose 17 cents to $49.46.

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Uday Kotak-led SEBI committee on corporate governance has submitted its report today. The committee has recommended splitting of roles of Chairman and MD-CEO for listed companies.

The rationale to split the post with the chairman as the leader of the board and chief executive or managing director as the leader of the management is to provide a better and a more balanced structure by enabling effective supervision of the management, said the Sebi panel on corporate governance.

“Corporate democracy is built into the interconnected arrangement amongst the board, the shareholders and the management, where the board supervises the management and reports to the shareholders,“ the Kotak committee report said.

“The issue of whether to separate the roles of the chairperson and the CEOMD, while not a recent phenomenon, is a growing concern in corporate governance worldwide,“ it said.

The panel said the separation of posts will be applicable to companies that have at least 40% shares owned by public shareholders.

The proposal can be extended to all listed entities from April 1, 2022, it said.

RC Bhargava, chairman at the county's largest car maker Maruti SuzukiBSE 0.45 %, said splitting the roles of chairman and CEO gives a company “two people who have a strong understanding of the organisation and are independent of each other“.

“So both can share their knowledge and take the best possible decision in the interests of the company ,“ he said. “Having that knowledge centralised in one person may not be the best optimal decision sometimes...that is in a way an extension of independent directors because not always do independent directors have complete knowledge of a company ,“ Bhargava said.

The panel said the new structure will help reduce an excessive concentration of authority to a single individual, clarify respective roles of the chairperson and CEOMD, ensure that the board tasks are not neglected by an individual due to lack of time, and allow to bring in experienced skills for the two positions.

India's richest businessman Mukesh Ambani holds the twin posts at the country's largest company by market value Reliance Industries. So do Pawan Munjal at India's largest motorcycle maker Hero MotoCorp and R D Shroff at the country's largest agrochemicals producer United Phosphorous.

All three will have to make changes if the market regulator Sebi accepts the panel recommendation after receiving public comments.

A Reliance spokesperson declined to comment.

Harsh Mariwala, chairman at consumer products maker Marico, said splitting the role of chairman and CEO is an international trend “so that the chairman focuses on board effectiveness and has an independent view point“.

“Ultimately who is the promoter and how much he or she believes in the spirit of corporate governance is critical," Mariwala said. “One individual can be a good chairman and CEO too and, therefore, it all depends on following the spirit of governance and not mere norms.“
& Also
Finance Minister Arun Jaitley expected to push for big tax rate cuts in the GST Council meeting on Friday as part of a broader strategy to help the economy claw out of a three-year growth slump.

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Sensex rises over 100 pts; Nifty50 reclaims 9,900; Shoppers Stop rallies 7%

NEW DELHI: Benchmark indices opened on a firm note on Friday, tracking positive cues from global markets. Stocks gained as US markets continued to close at record high levels, even as concerns remain over rising crude prices after Saudi Arabia and Russia decided to limit production through next year. 

At 9.23 am, the BSE Sensex was trading 144 points, or 0.45 per cent, higher at 31,736. The Nifty50 was ruling at 9,933, up 44.30 points, or 0.45 per cent.

The BSE midcap and smallcap indices rose up to 0.7 per cent.

"Traders are advised to stay light and avoid taking undue risk as we may see index correcting towards 9,550-9,500 levels in coming months. At current juncture, the immediate support for the Nifty is placed at 9850 and 9830 levels; while resistance can be seen at 9955 – 9992 levels," Jay Purohit, Technical & Derivatives Analyst at Centrum Broking said. 

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