Stocks
Nifty, Sensex in no man’s land – Tuesday closing report
We had mentioned in Friday’s closing report that Nifty, Sensex were still on an uptrend but risks were also rising.  The major indices of the Indian stock markets were range-bound on Tuesday and closed with small losses over Friday’s close. The stock markets were closed for trading on Monday. The trends of the major indices in the course of Tuesday’s trading are given in the table below:
 
 
Negative global cues depressed the Indian equity markets on Tuesday. Consequently, both the key equity indices closed in the red, as selling pressure was witnessed in IT (information technology) and automobile stocks. The BSE market breadth was tilted in favour of the bears -- with 1,634 declines and 1,095 advances. On the NSE, on Tuesday, there were 604 advances, 988 declines and 68 unchanged.
 
Consumer goods company Unilever on Tuesday announced the acquisition of air purifying solutions company Blueair for an undisclosed sum. "Blueair will be geared to help potentially billions of people rather than millions to create safer, healthier indoor environments as air pollution rises worldwide," said Bengt Rittri, Founder, Blueair, in a statement. According to a recent World Health Organisation (WHO) report, air pollution is now the world's largest single environmental health risk that "Killed around seven million people in 2012 alone,” Rittri added. Blueair will continue to operate under its existing brand name in all its markets, including India, Sweden, China, the US, Japan and South Korea. Hindustan Unilever shares closed at Rs921.65, down 0.97% on the BSE.
 
Cipla announced an improvement of around 200 basis points in base business EBITDA (earnings before interest, depreciation and taxes) margin. The recent acquisitions of InvaGen Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc. are EBITDA margin-accretive at a consolidated level with the integration plans progressing smoothly, Cipla said in a press release. The company’s consolidated EBITDA margin stood at 17% for the quarter ended June 30, 2016 (Q1FY17) against 6.7% in March quarter. Cipla shares closed at Rs553.55, up 7.14% on the BSE. 
 
India's annual rate of inflation based on wholesale prices shot up to 3.55% for July from 1.62% in the previous month, due to an 11.82% jump in prices of food articles, official data showed on Tuesday. The prices of potatoes continued to pinch with an annual rise of 58.78%, pulses were dearer by 35.76%, while fruit were 17.30% costlier over the same month of the previous year, as per the Wholesale Price Index (WPI) data of the Commerce Ministry. Data released last week showed that the country's annual retail inflation shot up to a 23-month high of 6.07% for July and beyond the official tolerance level of 6%, again due to higher prices for food articles. The July WPI index at 3.55% marks a two-year high.
 
Global software major Infosys Ltd. will soon lay off about 3,000 techies since the Royal Bank of Scotland (RBS) has cancelled the contract for setting up a new bank (Williams & Glyn). "Subsequent to this (RBS) decision, we will carry out an orderly ramp-down of about 3,000 persons, primarily in India, over the next few months," the city-based IT major disclosed on its website but did not share details with the media. Infosys shares closed at Rs1,050.95, down 1.16% on the BSE.
 
US stocks rallied on Monday, with all three major indices setting new closing records, as investors focused on a rebound in oil prices while waiting for the minutes of the US Federal Reserve. Oil prices kept rising on Monday, with both US oil and Brent crude jumping nearly 3%, as speculation intensified about potential producer action to support prices in an oversupplied market. Investors were also waiting for the minutes of the Fed's July policy meeting scheduled for release on Wednesday, for more indications on the timing of the next interest rate hike.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 
 

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Piramal Enterprises enters into an agreement to acquire Ash Stevens Inc in USA
Piramal Enterprises Limited (PEL) announced that its wholly owned subsidiary in the US has entered into an agreement to acquire 100% stake in Ash Stevens Inc., a US based Contract Development and Manufacturing Organization (CDMO), in an all cash deal for a consideration of USD 42.95 million plus an earn-out consideration capped at $10 million, according to a release from PEL. Located in Riverview, Michigan, Ash Stevens has over 50 years of experience in contract manufacturing, and serves several biotech, mid-size pharma, and large pharmaceutical clients worldwide. 
 
With over 60,000 sq. ft. of facilities, eight chemical drug development and production laboratories, and six full-scale production areas, Ash Stevens has a reputation for scientific research and operational excellence. As one of the leaders in HPAPI (high potency active pharmaceutical ingredient) manufacture, Ash Stevens has a safety record of working with high potency anti-cancer agents and other highly potent therapeutics. 
 
“The acquisition of Ash Stevens fits well with our strategy to build an asset platform that offers value to our partners and collaborators. Currently, around 25% of the molecules in clinical development are potent. Our clients are looking for reliable partners that can assist them in advancing these programs forward,” said Vivek Sharma, CEO of Piramal Pharma Solutions.  He further adds, “North America is a key market that we can now service with our three local facilities - the Coldstream Labs in Kentucky for fill finish needs, the Torcan facility in Toronto for complex high value API’s and now, Ash Stevens in Michigan for HPAPIs. We can now fulfil client requirements for a single source of supply for both high potent APIs and drug products.”
 
The transaction is not subject to any regulatory approvals. No related party of PEL has any interest in Ash Stevens.
 

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Savings in LPG subsidy: Now, CAG says 92% claimed saving due to crude price drop
The claims by the Central government on so-called savings due to implementation of direct benefits transfer on liquid petroleum gas (LPG), or the PAHAL scheme have been debatable all this while. Now the country's auditor has exposed that very little savings can be attributed to overhauling the scheme. Most of the savings was due to a drop in oil prices. In a report, the Comptroller and Auditor General of India (CAG), said, 92% of the Rs23,316.21 crore the government saved in subsidy payout in 2015-16 occurred due to a drop in crude oil prices and both the government and oil marketing companies had overstated savings under the scheme.
 
"There was a significant reduction of Rs23,316.21 crore in the LPG subsidy payout due to a combined effect of a decrease in offtake of subsidised cylinders by consumers and lower subsidy rates arising from the sharp fall in crude oil prices during the first three quarters of 2015-16," the CAG said in its report.
 
The actual subsidy payout during April-December 2015 was Rs12,084.24 crore against Rs35,400.46 crore during the same period in 2014.
 
Moneylife had reported that Aadhaar and DBTL savings for FY2016 were less than 1% or Rs121 crore, excluding the costs of implementation, as against Finance Minister Arun Jaitley's claim of an estimated saving of Rs15,000 crore. The news report was based on a revelation by the International Institute for Sustainable Development (IISD) based on publicly available information. (Read: Ghost Savings in DBTL: 99% gap between Jaitley’s claims and actual savings)
 
Coming back to the CAG report, the auditor also pulled up the government and oil marketing companies (OMCs) for inconsistencies in the estimates for DBTL savings. The government estimates savings from PAHAL at Rs9,211 crore, while OMCs estimate it to be about Rs5,107.48 crore in 2015-16. 
 
"The difference came about because the Ministry of Petroleum and Natural Gas (MoPNG) assumed that blocked consumers, who were not eligible for subsidy, would have availed their entire quota of 12 cylinders against the national per capita average of 6.27 cylinders in 2014-15. Considering the national average offtake of 6.27 cylinders, the estimated savings in subsidy for the year 2015-16 would be Rs 4,813 crore," the report said.
 
According to CAG, based on an average of Rs169.45 per cylinder, and after considering the savings due to the 'Give It Up' scheme in which 6.72 million consumers gave up their subsidy voluntarily, the savings would reduce to Rs3,473 crore instead of Rs5,107.48 crore estimated by OMCs.
 
PAHAL was expected to weed out fake connections, address concerns over diversion of LPG cylinders for commercial use, decrease the subsidy outgo and generate savings for the government. The scheme was launched in November 2014 in 54 districts and was subsequently extended to the country's remaining 622 districts on January 2015.
 
In its report, IISD, which analysed the impact of Aadhaar integration into PAHAL and the savings, using publicly available information, and applying the same methodology as adopted to calculate additionality in FY2014-15, it is possible to provide an estimate of the fiscal impact of integrating Aadhaar within the DBTL programme in FY2015-16. 
 
It said, "Assuming an average enrolment cost of Rs120 per person, the marginal cost of enrolling just those customers with Aadhaar-seeded LPG connections as of 1 March 2016 (i.e., not including the costs of non-LPG linked enrolment, or any of the costs associated with implementing and operating the DBTL programme itself) was approximately Rs1,343 crore – 20 times greater than the fiscal saving from integration into DBTL in FY2015-16. An accurate cost-benefit appraisal would also include the direct and indirect costs imposed on beneficiaries."
 
"Putting aside the relative merits of Aadhaar as a public policy tool, our calculations indicate that, instead of resulting in significant savings, the net fiscal impact of integrating Aadhaar into DBTL in the current financial year was likely to be minimal, and that expectations of substantial net savings in subsidy expenditure from the introduction of the Aadhaar scheme may be misplaced," IISD had said.
 
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COMMENTS

Mahesh S Bhatt

9 months ago

Nita Ambani is now Y class security after Reliance Petroleum idea after Dr Rangarjan's changed rang of pricing Oil at International level of $ 8-$10 production costs was approved & Modi raised it to $5.62 after Deora/Thomas raised to $ 4.69 from $ 1.32 gas price of Anil & Mukesh war.

So Modinama is now making Modimama for public Jaitley anyway has not clue of Economics or Law.God Bless Mukeshbhai Mahesh

Anil Kumar

9 months ago

Great work - going behind the big figures / achievement tom-tommed by government.

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