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Private sector will not kick-start investment cycle, says CRISIL
Promulgating ordinances, while showing the Narendra Modi government’s positive intent, are not enough for corporates and investors to commit big money, says the ratings agency
 
Debottlenecking steps taken by the new government at the Centre and tailwinds from the crash in crude oil prices have infused sanguinity into the economy, even pushing growth up mildly. In addition, with inflation hovering inside the Reserve Bank of India’s (RBI) target and current account deficit reined in, India is truly a bright spot among emerging markets. However, ratings agency CRISIL says domestic investments are not forthcoming.
 
"Without an upturn in capital investments, without job creation, without putting more money in people’s hands, and without expanding capacities to meet future demand, it is hard to see the current pace of economic growth increasing and sustaining. Promulgating ordinances, while showing the government’s positive intent, are not enough for corporates and investors to commit big money. The prognosis, thus, is clear. It is time to facilitate a revival in the investment cycle," the ratings agency said. 
 
CRISIL's survey of 192 listed, public and private sector companies -- from key sectors such as infrastructure, energy, metals, cement, auto, pharma and textiles -- showed a 4% decline in capex plans for 2015-16. Even more bothersome was an 11% year-on-year decline in the capex plans of private sector companies polled.  Notably, this will follow already subdued spending expected in 2014-15, it said in a report.
 
 
“If there is one thing corporates are looking for, it is better visibility in terms of a sharp improvement in demand. This seems to be the real reason behind the hesitation to commit larger monies,” says Prasad Koparkar, Senior Director, CRISIL Research.
 
CRISIL said its survey sample is fairly representative, as the polled companies accounted for about 45% of the capex undertaken by all National Stock Exchange-listed companies, excluding the banking, financial services and insurance sector, in 2013-14. 
 
"We believe till such time there is great improvement in demand visibility, the private sector will prefer to wait and watch than intrepidly commit more skin. In such a scenario, the ability of the government to kick-start investments through fiscal measures --especially given the additional elbow room afforded by falling crude prices – is crucial because that can initiate the demand cycle," it added.
 
Raman Uberoi, President for Ratings at CRISIL, said, “The message coming through is crystal clear: as things stand, there is only one way to kick-start the all-important investment cycle, and that is through public investment. The onus is on the government to do the initial heavy lifting.”
 
CRISIL said it believes this is where spending on infrastructure – specifically, roads, urban infrastructure and railways – is crucial because they have a significant multiplier effect of creating demand for steel, cement, capital goods and commercial vehicles, and spurring investments in the – manufacturing space as well.
 

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Nifty, Sensex, Bank Nifty continue to remain weak– Tuesday closing report

Chances of a further fall will reduce, if Nifty closes above 8,800 and Bank Nifty above 19,200

 

We had mentioned in Monday’s closing report that NSE’s CNX Nifty may go down a bit, while Bank Nifty may weaken further. Ahead of the February futures and options expiry on Thursday and the rail budget that will be placed on the same day, the 50-share benchmark witnessed a highly volatile session on Tuesday with the index making occasional plunges in the negative. However, it finally managed to close marginally higher.
 
S&P BSE Sensex opened at 29,017 while Nifty opened at 8,773. Sensex moved in the range of 28,876 and 29,131 and closed at 29,005 (up 30 points or 0.10%). Nifty moved between 8,727 and 8,801 and closed at 8,762 (up 7 points or 0.08%). NSE recorded a volume of 89.60 crore shares. India VIX fell 0.38% to close at 21.5500. Bank Nifty fell 0.16% to close at 18,884.
 
The Economic Survey will be tabled in the Parliament on Friday. The Telecom Regulatory Authority of India (TRAI) in a notification, on Monday, slashed domestic and international termination call charges.
 
Bharatiya Janata Party (BJP) has reportedly formed a committee to seek farmers' suggestion on land acquisition bill after the Narendra Modi-led government introduced the Land Acquisition (Amendment) Bill in the Lok Sabha Tuesday amid uproar by the Opposition.
 
The Finance Commission has suggested raising share of states in central taxes to 42% from current 32%. As per the increased devolution suggested in the report of the 14th Finance Commission, the states will get Rs3.48 lakh crore in 2014-15 and Rs5.26 lakh crore in 2015-16.
 
The proceedings for the second phase of the auction of Schedule III coal blocks have been postponed till 2nd March. The auction proceedings were supposed to begin on 25th February.
 
Gold prices dipped below the Rs27,000-mark by losing another Rs100 to trade at a 10-week low of Rs26,970 per 10 gram.
 
The government is considering direct transfer of fertiliser subsidy to farmers on the lines of LPG, Chemicals and Fertilisers Minister Ananth Kumar told Parliament. He said that any issues related to distribution of fertilisers will be the responsibility of respective states.
 
The union government said that it was hopeful that the much-delayed Goods and Services Tax (GST) bill will be passed during the ongoing budget session.
 
Coming back to stock markets, Central Bank of India (8.11%) was the top gainer in ‘A’ group on the BSE.  The stock hit its 52-week high today.
 
TVS Motor (6.77%) was the top loser in ‘A’ group on the BSE. Venu Srinivasan, chairman and managing director recently sold 1.5 million shares for about Rs45 crore.
 
Hindustan Unilever (3.15%) was the top gainer in the Sensex 30 pack while Sesa Sterlite (3.49%) was the top loser in the pack.
 
US indices had a mixed closing on Monday. The market awaits US Federal Reserve Chair Janet Yellen's semi-annual monetary policy testimony to the Congress.
 
Sales of previously owned US homes fell in January as a tight supply forced up prices, showing the residential real-estate market faces an uneven recovery. Purchases slowed 4.9% to a 4.82 million annualised rate, the least since April, according to figures from the National Association of Realtors yesterday, 23 February 2015.
Except for Hang Seng (0.35%) and NZSE 50 (0.55%), all the Asian indices which were trading today closed in the green. Taiwan Weighted (1.05%) was the top gainer.
 
Markit Economics will announce Wednesday preliminary reading of China's HSBC PMI index for February 2015, indicating the health of China's manufacturing activity for that month.
 
European indices were trading in the green. US Futures too were trading marginally in the positive.
 
Greece has unveiled an outline summary of reforms demanded by eurozone leaders in order to secure a bailout extension. The list must be approved by international creditors today to secure a four-month loan extension.
 

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SBI-led consortium to take over Mallya's 'crown jewel'
The move to take possession of 17,000-sqft Kingfisher House at Vile Parle, is part of the efforts by the consortium to recover Rs6,800 crore loan they had granted to long-grounded Kingfisher Airlines
 
Clamping down on Vijay Mallya-led United Breweries (UB) Group to recover loans, a 17-bank consortium led by State Bank of India (SBI) on Tuesday initiated process for taking over physical possession of the prized Kingfisher House, worth Rs100-crore.
 
The move to take possession of over this 17,000-sq ft Kingfisher House at Vile Parle, near the domestic airport in Mumbai, is part of the efforts by the bank consortium to recover the Rs6,800 crore loan they had granted to the long-grounded Kingfisher Airlines. The lenders had started the recovery process way back in February 2013 after the airline stopped servicing the debt.
 
Kingfisher House is one of the prime real estates of the airline, which was once touted as the most luxurious carrier in the country and one of the crown jewels of Mallya-led UB Group. The airline was grounded in October 2012 while its flying permit was cancelled in December that year.
 
When contacted, a senior SBI official confirmed the development.
 
“On behalf of the lenders’ consortium, we were supposed to take possession of Kingfisher House today... We will be taking physical possession of the property,” SBI’s Deputy Managing Director & Group Executive for Stressed Assets Management Parveen Kumar Malhotra had said.
 
When asked about the status of the Income Tax (I-T) and Service Tax Departments’ claim on the same property, Malhotra said they have to discuss that with the tax authorities and any decision will be taken only after that.
 
In December 2013, the I-T Department had moved a Bangalore court seeking to direct banks to first settle its dues of Rs350 crore after the lenders sought to take possession of Kingfisher House citing that the property was attached by the department under the IT Act.
 
 

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