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Thursday, 22 June 2017

GST likely to prop operating margins of multiplex players by 250 bps: ICRA:- 22 June, 2017


The Goods and Services Tax (GST) is expected to be positive for multiplexes

The Goods and Services Tax (GST) is expected to be positive for multiplexes. This is primarily owing to the input tax credit (ITC) expected on the fixed costs that a multiplex incurs like rental, CAM, electricity, etc., says an ICRA note. GST has been fixed at the rate of 28% for tickets priced over Rs. 100 and 18% for tickets priced less than Rs. 100 for the movie exhibition industry. Though it is higher than the industry’s expectation of a standard rate of 18%, thereby toning down the previously expected positive impact on the industry’s margins, on a net level, the impact still is expected to be positive.

According to Mr. Shubham Jain, Vice President and Sector Head, ICRA “The new simplified GST for the multiplex industry will facilitate players to conduct their business. So far, the industry has been operating under differential tax regimes across states. Overall, we expect the impact of GST to be positive, which is; however, lower than the expectation of the industry players. Further, the expected gains will also leave room for passing on the benefits to the end customer that will improve footfalls and occupancy levels, thereby further aiding the profitability of the players in the medium term.”

The current entertainment tax paid by multiplexes ranges from nil to as high as 66% and varies from state to state. Apart from this, some screens also pay local duties to bodies like municipalities. Under GST only entertainment tax is to be subsumed thereby leaving a cushion for the local bodies to levy additional taxes to cover for potential revenue loss. Additionally, currently around 12-16% of the multiplex screens are partially/fully exempted from entertainment tax. On an average, entertainment tax is around 29% of net box office collections for the domestic industry. With GST being applied for all screens, without any exemptions and assuming no change in the local taxes being levied, the impact on net box office collections is expected to be overall neutral.

Secondly, the food and beverages (F&B) segment, which contributes significantly to multiplexes revenues has been recognised net after VAT charges. Under GST, F&B rates will vary from 12%-40% depending upon the composition of the F&B items with the majority expected to be falling within the 18% category. This is likely to negatively impact the multiplex industry as currently the tax is around 11% of the net F&B segment revenues. Players whose proportion of F&B revenues are high will have a higher negative impact. Multiplexes may resort to price hike in F&B to offset the impact.

Nevertheless, the industry will benefit from ITC on the various input costs like rental, common area maintenance (CAM), electricity. This, along with benefits derived through the supply chain, will have a positive impact on the operating margins.

The multiplex industry has a high degree of operational leverage. Its fixed cost primarily comprises of rentals, CAM and power costs. ICRA estimates ITC will be available on 33% of the total operating expenses, which is likely to translate in expansion of the operating margins by around 3.0-3.5%. Therefore, at an aggregate level, the negative impact of GST on F&B will be more than offset by the ITC thereby resulting in an expansion of the operating margin of the industry players by 2.5-2.8%.


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RBI Governor Cited 'High Uncertainty' On Inflation For June 7 Policy Review:- 22 June, 2017


At its policy review on June 7, the RBI maintained status quo on its repo rate, or short-term rate for lending to commercial banks, at 6.25 per cent.

Reserve Bank of India Governor Urjit Patel cited "high uncertainty" on inflation while holding the key interest rate for a fourth successive policy review, according to minutes of the June 7 meeting of Monetary Policy Committee released on Wednesday. It was the first time that a Monetary Policy Committee (MPC) member had voted against the majority decision. At its second bi-monthly monetary policy review of the fiscal year on June 7, the RBI maintained status quo on its repo rate, or short-term rate for lending to commercial banks, at 6.25 per cent. In doing so, the policy statement said the six-member MPC was guided by the risks to inflation.

"As the year progresses, underlying inflation pressures, especially input costs, wages and imported inflation, will have to be closely and continuously monitored," Mr Patel said, as per minutes of the the MPC meeting.

"The risk of fiscal slippages, which, by and large, can entail inflationary spillovers, has risen with the announcements of large farm loan waivers," he said.  

"At the current juncture, global political and financial risks materialising into imported inflation and the disbursement of allowances under the 7th central pay commission's award are upside risks," he added.

The RBI governor argued for avoiding premature policy action.

"Considering the high uncertainty clouding the near-term inflation outlook, there is a need to avoid premature policy action at this stage. I, therefore, vote for holding the policy repo rate at the current level of 6.25 per cent and maintaining the neutral stance of monetary policy," Mr Patel said.

"Premature action at this stage risks disruptive policy reversals later and the loss of credibility."

"The current state of the economy underscores the need to revive private investment, restore banking sector health and remove infrastructural bottlenecks. Monetary policy can play a more effective role only when these factors are in place," he added.

Instead, the sole dissenting external member and IIM-Ahmedabad faculty Ravindra Dholakia voted for a minimum a 50 basis point cut in the repo rate.

According to the minutes, Mr Dholakia said there were several noteworthy recent developments on the prices and output fronts that warrant a decisive policy action by the MPC.

"In my opinion, this is the most opportune time for the MPC to effect a major cut of 50 basis points in the policy rate to bring it down from 6.25 per cent to 5.75 per cent," he said.

"All in all, the prevailing inflation and output conditions and prospects are such that there is enough space for a substantial rate cut of 50 basis points if not more," he added.

Meanwhile, India's annual retail inflation eased to a record low of 2.18 per cent in May on lower food prices. The wholesale price index (WPI), with the revised base year of 2011-12, also decelerated further in May 2017 to 2.17 per cent from 3.85 per cent in April as food prices eased.

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HDFC Bank's Aditya Puri Exercises Rs. 57-Crore Stock Options In FY17:- 22 June, 2017


Aditya Puri had exercised stock options worth Rs. 21.8 crore in 2015-16.

HDFC Bank's Managing Director Aditya Puri saw his remuneration rise marginally to Rs. 10 crore and exercised stock options worth over Rs. 57 crore during the last fiscal.

His remuneration was Rs. 9.73 crore in 2015-16.

Out of the total remuneration of Rs. 10.05 crore in the last financial year, gross salary accounted for little over Rs. 9.5 crore.

As per the bank's annual report for 2016-17, stock options exercised by Puri was Rs. 57.42 crore.

"This includes stock options granted and vested over several previous years, but exercised during the last financial year," it said.

Puri had exercised stock options worth Rs. 21.8 crore in 2015-16.

The increase in remuneration as well as higher value of stock options followed HDFC Bank's net profit increasing over 18 per cent to Rs. 14,549.7 crore in the last fiscal.

Return on Average Net Worth was 18 per cent while the Basic Earnings Per Share was Rs. 57.2 up from Rs. 48.8.

The bank had increased its customer base to 4.05 crore from 3.77 crore with focus on semi-urban and rural markets that accounted for more than 52 per cent of its branches.

Referring to the macroeconomic and industry developments, the report said while the cash-squeeze in the third quarter of 2016-17 had an impact on private consumption, there has been a speedy recovery in consumer demand since then.

"Going forward, weakness in private investment cycle and asset quality strain in the banking sector could prevent a full-fledged recovery though some improvement in the growth rate is quite likely.

"Risks on the external front continue to loom on account of policy uncertainty in the US and a slew of impending elections in Europe," the report said.

As per the HDFC Bank, the headline GDP growth is likely to increase to 7.5 per cent in 2017-18 from 7.1 per cent in 2016-17.

The report also said that demonetisation and the advent of the next-generation of entrepreneurs has seen a steady shift towards digital transactions.

CapitalStars is trusted for providing advice pertaining to the needs of investors and their financial situation.It has a strong grip on Indian Stock Market as well as Commodity Market. They provide expert technical analysis and information of stocks.On the other hand, our Company advises the investors to invest their money in the right direction which can provide them great value for their money.

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Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.CapitalStars Investment Adviser: SEBI Registration Number: INA000001647

INDIAN EQUITY MARKET OUTLOOK:- 22 June, 2017

Markets may see flat start; SGX Nifty up 5 pts @9667;


Indian Indices:

Indian shares are likely to witness flat trade in morning deals as the global markets look subdued with SGX Nifty trading 5 points higher @9667
Indian equities are likely to open flat with negative bias on Thursday, tracking muted cues from Nifty futures on the Singapore Stock Exchange and mixed trend from global markets.

Back home, muted trend in the SGX Nifty Index Futures for June delivery, which were trading at 9,666.00, up by 04.00 points or 0.04 per cent, at 10:54 AM Singapore time, also signaled a flat opening for local bourses.On Wednesday, the Indian equities ended in negative terrain for the second straight session, tracking weak cues from Asian peers and slump in crude oil prices, as investors remained wary ahead of the release of minutes of a policy meet held by the Reserve Bank earlier this month.

On the economy front, RBI policy minutes showed that five of the six members had voted in favour of status quo on rates, citing risks to inflation.
RBI's Monetary Policy Committee (MPC), which met on June 6-7, revealed that it was for the first time that the decision of the MPC, constituted last September, was not unanimous as Ravindra Dholakia had pitched for a 50 basis point cut in the repo rate, saying several noteworthy developments recently on prices and output fronts warrant a decisive policy action.

Global Market:

Asian markets were trading mixed, with Hang Seng and Shanghai were up, while Nikkei was marginally down, as rebound in crude prices ease investor sentiment which slipped to 10-month low in overnight trade which dragged US and European markets.

U.S. financial regulators could ease rules that keep taxpayer-backed banks out of some risky investments, according to testimony released on Wednesday ahead of a Senate hearing.

In the overnight trade, Wall Street ended mostly lower, dragged by decline in bank and energy stocks, as investors weighed persistent slump in oil prices.

Major Headlines of the day:

·        Tata Trent raises Rs 100 crore to refinance upcoming repayments.
·        USFDA audit finds no flaws in Cadila Healthcare Moraiya unit.
·        GTPL Hathway IPO subscribed 27% on Day 1.
·        CDSL's Rs 524-cr IPO a massive hit; gets oversubscribed 169 times.
·        SBI ETF pips HDFC Equity to become country's largest equity scheme.

Trend in FII flows: The FIIs were net buyers of Rs -152.82 the cash segment on Wednesday while the DIIs were net sellers of Rs -41.39 as per the provisional figures.

Securities in Ban For Trade Date 22-JUN-2017:

1.ALBK
2.BANKINDIA
3.BEML
4.HDIL
5.IBREALEST
7.IFCI
9.INFIBEAM
10.JPASSOCIAT
11.KSCL
12.ORIENTBANK
13.RCOM
14.WOCKPHARMA

CapitalStars is trusted for providing advice pertaining to the needs of investors and their financial situation.It has a strong grip on Indian Stock Market as well as Commodity Market. They provide expert technical analysis and information of stocks.On the other hand, our Company advises the investors to invest their money in the right direction which can provide them great value for their money.

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Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.CapitalStars Investment Adviser: SEBI Registration Number: INA000001647

CS CALL : SELL GUARSEED JULY NCDEX BELOW 3250

CS CALL : 


SELL GUARSEED JULY NCDEX BELOW 3250 
TG 3230/3216/3190 
SL 3290 
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CapitalStars is trusted for providing advice pertaining to the needs of investors and their financial situation.It has a strong grip on Indian Stock Market as well as Commodity Market. They provide expert technical analysis and information of stocks.On the other hand, our Company advises the investors to invest their money in the right direction which can provide them great value for their money.

For More Details, You Can Call At- 0731-6669900, 6790000 
Or Visit Our Site: www.capitalstars.com

Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.CapitalStars Investment Adviser: SEBI Registration Number: INA000001647

Wednesday, 21 June 2017

Gold edges up on falling equities, easing dollar:- 21 June, 2017


Gold inched up on Wednesday after hitting its lowest in five weeks in the previous session, buoyed as equities fell and the U.S. dollar eased from one-month highs following a tumble in crude oil prices.

A renewed slump in oil markets to seven-month lows put Asian investors on edge, and pushed down U.S. Treasury yields and the dollar index against a basket of currencies.

"It's mostly the dollar (supporting gold). It is a little bit weaker than yesterday's closing," said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.

Spot gold had risen 0.3 percent to $1,246.25 per ounce by 0423 GMT, after dropping as far as $1,241 in the previous session.

U.S. gold futures for August delivery climbed 0.3 percent to $1,247.5 per ounce.

Gold is also being supported by a bout of short-covering following its recent weakness, said OCBC analyst Barnabas Gan.

However, the possibility of another interest rate hike by the U.S. Federal Reserve this year is underpinning the bearish outlook for the yellow metal, he added.

Meanwhile, the outlook for inflation and the future of financial stability are emerging as dueling concerns at the heart of a debate at the U.S. central bank over how fast to proceed on future interest-rate hikes.

Dallas Fed President Robert Kaplan on Tuesday expressed doubt that short-term interest rates are very accommodative and said he wants to wait for more data to understand whether recent weak inflation readings are transitory as he suspects.

Higher interest rates tend to boost the dollar and push bond yields up, pressuring gold prices by increasing the opportunity cost of holding non-yielding bullion.

Spot gold may break resistance at $1,248 per ounce and rise towards the next resistance level at $1,251, as it has managed to stabilize around support at $1,243, according to Reuters technical analyst Wang Tao.

CapitalStars is trusted for providing advice pertaining to the needs of investors and their financial situation.It has a strong grip on Indian Stock Market as well as Commodity Market. They provide expert technical analysis and information of stocks.On the other hand, our Company advises the investors to invest their money in the right direction which can provide them great value for their money.

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Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.CapitalStars Investment Adviser: SEBI Registration Number: INA000001647

World steel output jumps to 143 mt in May:- 21 June, 2017


"World crude steel production... was 143.3 million tonnes (mt) in May 2017, a 2 per cent increase compared to May 2016," said the World Steel Association (worldsteel).

World crude steel output in May increased marginally by 2 per cent to 143 million tonnes over the same month last year.

"World crude steel production... was 143.3 million tonnes (mt) in May 2017, a 2 per cent increase compared to May 2016," said the World Steel Association (worldsteel).

China's crude steel output was 72.3 mt, an increase of 1.8 per cent year on year, it said. Japan produced 9 mt crude steel, up 0.1 per cent.

In the EU bloc, Germany produced 3.8 mt of crude steel, registering a decline of 1.4 per cent from a year earlier.

"The US produced 7 mt of crude steel in May... an increase of 0. 2 per cent compared to May 2016. Brazil's crude steel production... was 2.9 mt, growing by 13.2 per cent," the association said.

The crude steel capacity utilisation ratio of 67 countries in May stood at 71.8 per cent, 0.5 percentage points higher than a year ago. Compared to April, it is 1. 8 percentage points down.

The World Steel Association is one of the largest industry bodies in the world. Its members represent approximately 85 per cent of the world's steel production, including over 160 steel producers.

CapitalStars is trusted for providing advice pertaining to the needs of investors and their financial situation.It has a strong grip on Indian Stock Market as well as Commodity Market. They provide expert technical analysis and information of stocks.On the other hand, our Company advises the investors to invest their money in the right direction which can provide them great value for their money.

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Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.CapitalStars Investment Adviser: SEBI Registration Number: INA000001647