Sunday, August 20, 2017

Weekly Review - 21st August, 2017

Dear All,

Almost seven months to the day President Donald Trump took office, his “Make America Great Again” agenda has been eclipsed by political turmoil that is threatening to unravel a record-breaking rally in stocks. After a chaotic few days that culminated with the resignation of White House strategist Stephen Bannon, doubts over whether the embattled president will be able to deliver on his business-friendly policies have started to seep into the market.

Much of the market’s gains since Trump’s election win have been underpinned by hopes that the president will push through tax cuts and roll back regulations that had hobbled U.S. corporations. But that all changed as Trump’s combative style increasingly alienated those within his own party, making it more difficult for the president to secure legislative support for something as complex as tax reforms.

Key Important Data :-

Markit Economics will announce Nikkei Flash Japan Manufacturing PMI for August. The Nikkei Japan Final Manufacturing PMI fell to 52.1 in July 2017, compared to a preliminary reading of 52.2 and a final print of 52.4 in June.Markit Economics will announce Nikkei Flash Japan Manufacturing PMI for August. The Nikkei Japan Final Manufacturing PMI fell to 52.1 in July 2017, compared to a preliminary reading of 52.2 and a final print of 52.4 in June.

Cues from Jackson Hole :-

Top central bankers, including US Federal Reserve's Janet Yellen and ECB's Mario Draghi, will meet for their annual get-together at Jackson Hole, Wyoming, to discuss everything that matters to the global economy. Several of the developed world's central banks appear to be on the cusp of beginning a windback of the massive monetary stimulus injected into their economies since the global financial crisis. Proceedings and outcome of the summit will be watched closely by investors across the globe.

Trump policy agenda :-

The resignation of a number of top CEOs from US President Donald Trump's manufacturing council following weak initial response to the Charlottesville White Nationalism March and the sudden ouster of White House Chief Strategist Steve Bannon have ignited fresh tensions in the US political environment. These developments have raised more questions about the Trump administration's ability to implement its pro-growth agenda. Markets across the globe, including India, are likely to see an impact from any significant developments in the US.

RBI on PSU Banks :-

RBI Governor Urjit Patel on Saturday said state-run banks need more capital to resolve bad loan problems weighing on their balance sheets. He said the regulatory challenges of tackling bad loans were compounded by weak capital positions of some banks, particularly those owned by the government. Finance Minister Arun Jaitley on Saturday said the new insolvency law now sides more with the lenders, as the slew of changes in the existing laws are aimed at speeding up NPA resolution. This is definitely going to boost banks, which are reeling under Rs 8 lakh crore of non- performing assets (NPAs) or bad loans. PSU banks alone account for about 75 per cent of total bad loans.

>>> Nifty Daily Chart - Posted on Last Weekly Review <<<

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Wrote last weekly review - Channel support to help bulls.

>>> Nifty Daily Chart <<<

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Price resisted near 9930 or 9950 - may find its support @ 9780 and 9740.

>>> Nifty Hourly Chart <<<

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Support @ 9780 & 9740.

>>> BankNiftyDaily - Posted Last Weekly Review <<<

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Posted on Last Weekly review - Chanel Support to help Bull.

>>> Bank Nifty Daily Chart <<<

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Price managed to raise from the channel - resisted near 24500. Support @ 23980 & 23830.

>>> Bank Nifty Hourly Chart <<<

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Resisted @ 24500. Support @ 23980 & 23830 - 23800.

>>> CNXPharma - Daily - Posted Last Weekly Review <<<

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Posted on last weekly review - If the trend line support holds, Expect more rally.


The government has proposed dramatic changes to regulations that keep a check on prices of medicines and medical devices in order to prevent profiteering and deliver affordable healthcare to patients. The Department of Pharmaceuticals has drafted a new pharmaceutical policy that proposes to balance the need for price control over medicines with the Union government’s push for ease of business and “Make in India” programme – this time for the domestic pharmaceutical industry.

If the draft is accepted, the National Pharmaceutical Pricing Authority, which on Wednesday capped the prices of orthopedic knee implants bringing costs of the basic model down 65% from current market prices, will lose substantial powers and heft. In its place, the Union government will gain a greater role in deciding prices of medicines and medical devices. The likelihood of price caps being imposed on patented medicines will go down.

At the same time, the draft policy requires pharmaceutical manufacturers to sell their medicines under generic names and not under differently-priced brands. The policy also proposes that illegitimate promotion of medicines would attract legal action and will not be left to self-regulation by industry.

The authority has the powers to fix the maximum price at which medicines and several medical devices can be sold to patients. These include medicines and devices that have been specifically listed by the Union government for price control. But, the authority also has discretion to put a cap on the price of any medicine or medical equipment under extraordinary circumstances for public interest.The draft does clarify that the ceiling price of regulated medicines will be linked to changes in the wholesale price index.

What the new draft policy does not indicate is whether it will change it basic formula for fixing the prices of essential medicines and medical devices. At the moment the price cap is calculated on the basis of market prices of medicines being sold in the market. Earlier the cap was built on a cost plus model, in which the authority would calculate the costs incurred by the manufacturer and then put a cap above that to limit profits at all levels in the supply chain.

The authority was envisaged as a body of independent experts consisting of a Chairperson with the rank of a secretary to the government. Additionally it was to have members with expertise in the field of pharmaceuticals, economics and cost accountancy and a member secretary. The authority’s website says it currently has an IAS officer as chairperson and a member secretary as full time officials. The Drugs Controller General, an economic advisor from the department of economic affairs and an advisor from the department of expenditure as other members. If the policy is adopted, along with the chairman, the authority will have a member (enforcement) and a member (pricing), who will be selected by the government. Decisions of the authority will be made by consensus of these three members.

The policy also seeks to bring down the unreasonable trade margins offered by various stockists to hospitals.

As I Feel like the Pharma Sector may loose its shine - if the Policy gets implemented. Just like Sugar Industry - Govt. had the entire control of fixing prices and allowing the ceiling limit for Export, Pharma industry may fall in the same category. If so, It may lose its shine.

>>> CNXPharma = What's Next?? <<<

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Price started bouncing from the Trend line support, shows some more rally ahead.

>>> CNXIT - Daily Chart <<<

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Infosys: Vishal Sikka's resignation and a open war between board and a co-founder and promoter following a ‘misguided’ campaign – as the company’s board called it – by none other than the company’s co-founder NR Narayana Murthy, caused the stock to plunge 6.5 per cent for the week.

Once INFY was called for its best Corporate Governance Board, now in trouble. Many Rating agencies have or Might downgrade the stock in near future. Already the Entire IT Industry and Out Sourcing is in Deep trouble, INFY's Internal issue not good for the entire Industry as a whole. Currently risk facing for the company is the possible movement of clients and employees amid the uncertainties.

Previously the industry has gone through, and survived, trying times before, such as the dot-com crash of the early 2000s and the 2008 financial crisis. Same Optimism might work this time also. However, not all firms will do well, or even survive, in the new, hyper-competitive global business environment. Only firms that continually upgrade their capabilities and offerings in line with emerging technologies and market imperatives can hope to survive and even prosper in this environment.

>>> CNXPSUBanks - Daily Chart <<<

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Country's largest lender SBI accounts for over 27% of the total amount owed to public sector banks by wilful defaulters. As many as 1,762 wilful defaulters owed Rs25,104 crore to State Bank of India as on 31 March, putting pressure on its balance sheet.
Punjab National Bank (PNB) is next on the list with 1,120 wilful defaulters having outstanding non-performing assets (NPAs) or bad loans of Rs12,278 crore. Together these two banks account for Rs37,382 crore or 40% of the total outstanding loans. Total outstanding loans due to public sector banks by wilful defaulters amounted to Rs92,376 crore, according to the Finance Ministry data.

The total outstanding loans by wilful defaulters rose to Rs92,376 crore at the end of financial year 2016-17, from Rs76,685 crore at the end of last fiscal 2015-16 -- up 20.4%. At the same time, there has been close to 10% increase in the number of wilful defaulters on annual basis. It increased to 8,915 at the end of March as against 8,167 in the previous fiscal. Out of 8,915 cases of wilful defaults, banks have filed FIR (First Information Report) in 1,914 cases with outstanding loans of Rs32,484 crore. During 2016-17, 27 public sector banks, including SBI and its five associates had written off Rs81,683 crore, the highest in the last five fiscals.

The amount was 41% higher than that in the previous fiscal. Gross NPAs of the public sector banks rose to Rs6.41 lakh crore at the end of March 2017 as against Rs5.02 lakh crore a year ago.

Above data's doesn't sounds good for the entire PSU Banking Pack.

State-run banks will need more capital to resolve bad loan problems weighing on their balance sheets, Reserve Bank of India Governor Urjit Patel said on Saturday, adding his voice to calls for increased capital injections into lenders. More than $150 billion of bad debt is crimping credit growth in Asia's third-largest economy and the government and central bank have been trying to ease the burden on state-run lenders.

Extra capital could be raised either by getting funds from the market, through the government diluting its stake in state-run banks, through additional government capital infusions, or the sale of non-core assets and mergers among lenders, he said.

Moody's Investors Service said in June that the 11 Indian state-run banks that it rates could need up to 950 billion rupees ($14.8 billion) in equity capital by March 2019, far above the 200 billion rupees the government plans to inject into state banks by then.

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