Stocks
Industrial stocks to do well
Stable government mandate is good news for Indian industrial stocks, says Nomura in a research note
 
A clear majority to the BJP-led NDA coalition – highlights development as India’s sole agenda item and that is relevant for the political class too. It is time for a structural return to a focus on investment. India’s requirement for infrastructure investment is beyond doubt, and thus a stable government at the centre could maximise this opportunity. These are the observations made by Nomura in a research note in the post-election scenario.
 
While Nomura has been positive on short-cycle industrial names for a while, today’s mandate makes a solid case for a further re-rating for the sector's valuation multiples until fundamentals catch up. Nomura believes an earnings revival may remain gradual as execution may still take some time. 
 
Nomura reiterates its preference for fundamentally strong short-cycle companies with solid business franchises as they will likely be the early beneficiaries of any macro improvement in the near term. Nomura retains its preference for Voltas and Crompton Greaves, while it adds Cummins India to the list. 
 
With railway and logistic reform as one of the key agenda items for the BJP, Nomura believes that the new government will be instrumental in expediting major infrastructure projects such as the Dedicated Freight Corridors (DFC) and Delhi Mumbai Industrial Corridors (DMIC). Against this backdrop, Nomura continues to prefer companies such asConcor and Adani Port. 
 
In the stock market, Nomura's 'Buy' ideas are Voltas, Cummins India, and Crompton Greaves in the industrial space and Concor & Adani ports in the transport infrastructure space. Nomura maintains its 'Reduce' ratings on BHEL and Gujarat Pipavav Port.

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Sahara says willing to sell overseas hotels to raise Rs10,000 crore

The new bench of Justices TS Thakur and AK Sikri, however, refused to allow a plea for putting Roy under house arrest in Lucknow instead of keeping him in Tihar jail

 

The Sahara Group on Monday told the Supreme Court that it is willing to sell hotels located in New York and London to raise Rs10,000 crore.

 

The company said this in response to the apex court asking it to come out with a proposal which is logical and acceptable to it on payment of Rs10,000 crore for release of its chief Subrata Roy.

 

Meanwhile, the Supreme Court refused to allow a plea for putting Roy under house arrest in Lucknow instead of keeping him in Tihar jail.

 

The bench consisting of Justice TS Thakur and Justice AK Sikri heard Roy’s counsel Abhishek Manu Singhvi who sought 60 days time out to arrange the amount demanded by the court.

 

The Sahara group owns the hotel “Sahara Star” in Mumbai, a 5-star hotel spread over 7.42 acres adjacent to the Chhattrapati Shivaji International Airport. The group also owns the Grosvenor House Hotel in London (UK). Earlier in December 2012, it bought controlling stake in New York’s prestigious Plaza Hotel for $570 million.

 

According to a report from The Hindu, Justice KS Radhakrishnan, who retired last week and Justice JS Khehar, who recused himself from the case, made scathing comments and criticised Sahara group’s five lawyers of conscious snubs against the judges, bench hopping (avoiding), continuous adjournments and every other trick. "The judges in their 240-page order, said they were intimidated by the company’s lawyers, who wanted them to recuse. In their order, the justices lambasted senior advocates Ram Jethmalani, Rajeev Dhawan, Rakesh Dwivedi, S Ganesh and Ravi Shankar Prasad for 'arm-twisting the bench', " the report says.

 

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Indian economy is at an inflection point
Growth has bottomed out and better exports and a pickup in investment should drive a recovery from 2015 onwards, says Nomura in a research note
 
Nomura sees the election outcome as further strengthening the view that India is at an inflection point. Growth has bottomed out and better exports and a pickup in investment should drive a recovery from 2015 onwards. These are the observations made by Nomura in its research note in the post-election scenario.
 
Nomura is revising up the FY16 (year ending March 2016) real GDP growth forecast from 5.7% year-on-year earlier to 6.5%, from 5.0% in FY15. Faster decision making and reforms, along with prudent monetary policy should gradually correct India's macroeconomic imbalances. Economic fundamentals change slowly, but as they do, they should feed off each other and unleash other positive indirect effects on the economy. 
 
Hence, India appears at the cusp of a revival of the multi-year growth cycle from 2015 onwards, forecasts Nomura.
 
According to Nomura, the pace of economic reforms is likely to pick up. In the immediate to short term, the government could announce a single-window clearance mechanism for investment projects, timebound environmental clearance, restructuring of exiting ministries and a focus on improving centre-state relations. In the medium term, Nomura expects reforms to focus on infrastructure development, boosting agriculture productivity, fiscal consolidation aided by tax reforms and urbanisation.
 
On equity, Nomura believes that a strong government will help mitigate bureaucratic risk aversion, reversing policy paralysis, in addition to jumpstarting the weak investment cycle. Nomura raises its December 2014-end Sensex target to 27,200 from 24,700, offering a potential of about 10% from current levels. Short-term catalysts for the market will be: 1) cabinet formation; 2) the budget; and 3) potential policy announcements.
 
On FX, Nomura believes that NDA's (National Democratic Alliance) landslide win has strengthened medium-term rupee appreciation prospects and recommend scaling into a medium-term long rupee position. Nomura forecasts USDINR to reach 57.0 by end-2014 and 55.5 by end-2015 as beyond the strong mandate for the new government, domestic growth momentum should continue. 
 
On rates, Nomura believes the election results are a medium-term positive for India rates. Nomura maintains remains bullish on bonds.

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