People who watch in awe when stocks at 60-70 multiples see a rush of investors, Saurabh Mukherjea has a one-sentence retort: Nestle was quoting similar PE multiples 20 years ago and the stock has compounded around 20 per cent ever since. He says a lot of investors and fund managers are not realising how quickly the Indian economy is formalising and where it is accruing the benefits. As the economy gets formalised, it handing over the 30-40 per cent that was in the informal sector over to the likes of Titan, Pidilite, Asian Paints, Nestle or a stock like Britannia. That's the story which is going to play out in the market over the next few years.
STREET PULSE: Where we stand Nifty futures on the Singapore Exchange traded 25.50 points, or 0.21 per cent, lower at 12,074.50, indicating a weak start for Dalal Street. Asian stocks edged up, a day after US S&P500 index hit a record peak following encouraging economic data, while investors keep a wary eye on the impact of the coronavirus outbreak.
HERE'S WHAT TO WATCH  | MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.39 per cent while Japan's Nikkei rose 1.63 per cent. |
| In overnight trade, the S&P500 index gained 1.13 per cent to a record close of 3,334 while Nasdaq added 0.43 per cent to 9,508, also a record high. Dow rallied 483 points. The ADP National Employment Report showed private payrolls jumped 291,000 jobs in January, the most since May 2015 |
| Oil futures rose for a second day on Thursday as investors took optimism around unconfirmed reports of possible medical advances to combat the coronavirus outbreak in China. Brent futures rose by 62 cents, or 1.1 per cent, to $55.90 a barrel, having risen 2.4 per cent in the last session.. |
| The rupee pared initial gains to settle nearly flat at 71.24 against the US dollar on Wednesday, as market participants await fresh cues from the RBI''s monetary policy. |
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Most Stocks Above 200 DMAs… The recent pullback rally in the market has brought most of the top stocks above their 200-day moving averages — a long-term trend indicator. As many as 300 of the BSE-500 stocks are currently trading above their 200-DMAs. In comparison, 300 stocks in the index were trading below their 200-DMAs two months ago. After declining more than 5% between January 15 and February 1, the Sensex has jumped 3.5% in the last three trading sessions. On Wednesday, the Sensex and Nifty rose 0.9%, while the BSE-500 index gained 1%. Nearly 40 of the BSE-500 stocks have erased all their 2019 losses and gained 15-50% just in a month.
Read More Rosneft Sets Sights on BPCL… Russia's largest oil producer Rosneft is keen to bid for acquisition of BPCL, sources said after the Russian firm's CEO Igor Sechin met oil minister Dharmendra Pradhan on Wednesday. Rosneft, which is the majority owner of India's second-biggest private oil refinery, is keen to expand in the world's thirdlargest and the fastestgrowing energy market. Sechin first met Pradhan over breakfast, and then in delegation-level talks expressed interest in bidding for the acquisition of government stake in BPCL, officials privy to the discussions said.
Read More Services PMI at 7-Year High… India's service sector output growth hit a seven-year high in January on the back of strong domestic demand, a private survey showed on Wednesday. The IHS Markit India Services Purchasing Managers' Index rose to 55.5 in January from 53.3 of the previous month, signalling the strongest upturn in output in seven years. The upswing resulted from favourable market conditions and better underlying demand, survey participants said. A reading above 50 on the index means expansion.
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Tax Settlement Scheme Not for Launderers… The new direct tax dispute settlement scheme will not cover cases related to undisclosed overseas assets initiated on the basis of information from another country. Neither will it apply to prosecutions under the Prevention of Money Laundering Act (PMLA), the Benami Transactions (Prohibition) Act and the income tax Act. Those applying for the scheme can't appeal against the decision of the tax authorities and liability computations will be final.
Read More Voda Plea for Interest Waiver… Vodafone Group CEO Nick Read said Wednesday the UK telco's Indian JV has sought waiver of interest and penalties on its AGR dues and wants to pay the principal over 10 years with a two-year moratorium. Read reiterated that his company won't infuse any fresh capital into loss-making Vodafone Idea, and once again described the situation in India as critical. The delay in providing relief on AGR dues, combined with the delay in government's nod to the Bharti Infratel and Indus Tower merger was "putting Vodafone idea under incredible strain," Read said.
Read More India Inc Gets Virus Chill… The coronavirus outbreak is giving industry the jitters, especially sectors heavily dependent on Chinese imports such as consumer electronics, automobiles and pharmaceuticals. Seafood and spices exports are also vulnerable as Beijing absorbs a big chunk of the $10-billion these shipments bring in every year. Industry officials say trade has already been affected and unless Chinese supplies bounce back quickly, it would lead to scarcity and higher prices in a few weeks. Looking for alternatives to China is time-consuming and costly.
Read More Meanwhile... Startups Seek Esop Relief... Startups are leading efforts to lobby the Prime Minister's Office to broaden the criteria for deferring tax on employee stock options (Esops) as defined in the budget as this restricts the incentive to about 250 companies. The February 1 budget said the measure applies to startups that qualify under Section 80-IAC of the Income Tax Act. These number 200-250 ventures launched after 2016 and recognised by the Inter-Ministerial Board.
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