Investors should be cautious on gold after recent rally: Tradebulls Sec

The US non-farm payroll data later in the day could either make gold break the $1,800 level and start fresh momentum on the upside or make the intermediate top.

Gold is the one of the only major asset class to have a positive year-to-date return of around 25 per cent. This quarter has been one of the best quarters for gold after 2009. Gold market continues to go from strength to strength but at around $1,800, it is facing stiff resistance. Today’s non-farm payroll data could either make gold break the $1,800 level and start fresh momentum on the upside or make the intermediate top. The underlying fundamentals are bullish as there are chances of the second wave in China and cases are increasing worldwide. We might see gold prices retrace after a sharp rally in a couple of trading sessions. So, we would advise investors to be cautious at the current juncture.

Silver is around 4 week-high and on the verge of a breakout from sideways trending. In COMEX, it was stuck in the range of $18.20 to $17.30 and now is near the upper end of the range, waiting for a breakout. In MCX, since June 12, it was stuck in the range of 50,450-48,000, and now it is near its upper end of the range. The key for silver is a close above $18.20 September futures and once that happens, we can see silver rally till $19.

Crude Oil jumped after US API reported another crude draw this year. Crude oil is bouncing between 50 DMA and 200 DMA and is in a tug of war between accelerating Covid-19 cases and demand recovery. There is also the possibility of Libyan oil 

coming into the market which was halted due to civil unrest since January. We believe the bulk of the recovery has been played out and now we might see a modest recovery in Q3 and strong recovery towards the end of 2021 when aviation travelling will be in full swing. Market might consolidate around current levels as there are still high levels of inventory and many of the economies are facing a second round of infections.

The rally in Natural Gas has played out as we had predicted last week. We did suggest that prices are at attractive levels and one can go long around 120 with a target of 135. Now that prices have jumped, we expect consolidation going forward. The expectation of hotter weather has played out and prices have jumped 10 per cent. If the economy improves, then from September, we might see LNG exports increase from the US and now two factors are essential for natural gas to go further: hotter weather and lower production.

Emerging market FX pickup exposed to reversal after new virus surge: Report

The real, the rouble and the rupee are on the spot as infections of Covid-19, the illness caused by the virus, pile up in Brazil, Russia and India.

Emerging market currencies will likely give back recent gains if a resurgence of the coronavirus pandemic continues in the second half of the year, driving foreign exchange flows to the safer US dollar, a Reuters poll of market strategists showed.
The real, the rouble and the rupee are on the spot as infections of Covid-19, the illness caused by the virus, pile up in Brazil, Russia and India, the nations with the highest case counts in the world after the United States.

The outlook for these emerging economies keeps worsening due to the unrelenting health crisis, with Brasilia engulfed in political rows, the Kremlin tightening its grip and Indian cities suffering from a lack of adequate infrastructure.

Over 90%, 63 of 68 respondents in the June 25-July 1 Reuters poll said a second shock from the pandemic would boost the dollar, as in March, when anxious investors dashing for the greenback dealt EM FX its steepest loss since May 2012, according to an MSCI index.

"A second wave of the Covid-19 pandemic represents the major risk," said Roberto Mialich, FX strategist at UniCredit. "If so, we can expect investors to stay in the greenback or even increase their long exposure."

He added emerging market currencies would bear most of the brunt in the event that investors and traders became defensive once again. But he said global conditions would gradually improve, meaning less exposure to the dollar.

Covid-19 fallout: Airbus, Boeing results show turbulent times for aviation

Given the nationwide lockdown and weak travel sentiment, global aviation consultancy CAPA revised downwards estimates for India's air traffic for the for FY21 from 80 to 90 million to 55-70 million

The skies are far from clear for the Indian aviation sector as the Covid-19 pandemic continues to withhold airlines such as IndiGo and SpiceJet from flying. A recent government suggestion to begin operation between green zones has been shot down by the airlines, calling it commercially unviable. Amid this, US-based aircraft manufacturer Boeing has now said that air travel could take at least 3 years to recover to 2019 levels.

“Fundamental growth drivers remain intact but it will take 2-3 years for air travel to return to 2019 levels and a few more years to return to long-term growth trends,” Dave Calhoun, chief executive officer of Boeing recently said.

According to rating agency Crisil, the aviation industry will crash-land this fiscal with a revenue loss of Rs 24,000–25,000 crore with airlines contributing more than 70 per cent of the losses, or nearly Rs 17,000 crore.

“What’s worse, the losses will climb if travel restrictions last longer in hubs such as Mumbai, Delhi, Chennai and Kolkata. We expect the aviation sector will take at least 6-8 quarters to reach pre-pandemic levels,” it said in a recent report.

Given the nationwide lockdown – in place at least till May 17 -- and weak travel sentiment, global aviation consultancy CAPA, too, recently revised downwards estimates for India’s air traffic for the current financial year from 80 to 90 million domestic passengers to just 55-70 million, while international traffic could decline from 35-40 million to 20-27 million.

Crisil expects the Covid-19-led slowdown to reverse the growth trend of 11 per cent annum the industry has logged over the past ten years. Domestic air travel in the month of March declined 33 per cent month-on-month (MoM) to 7.76 million passengers from 11.59 million passengers in February, 2020, data provided by Directorate General for Civil Aviation (DGCA) shows.

How will the Covid-19 pandemic impact Nifty companies' earnings in Q4FY20?

Margins in some sectors could improve due to soft raw material prices.

In Q4FY19 Nifty sales/EBITDA/PAT grew nearly 10 per cent/6 per cent/16 per cent year-on-year (YoY), respectively. Hence, the base as far as earnings before interest, taxes, depreciation, and amortisation (EBITDA) and profit after tax (PAT) is concerned, is high in Q4FY20. However in Q4FY19, profitability was driven largely by banks. Excluding banks, the PAT growth was slow at <2 per cent. The topline growth for Nifty companies in Q4FY19 was the slowest since Q3FY17.

COVID 19 would impact the performance of Nifty companies and overall corporate sector in Q4FY20 and Q1FY21. In Q4FY20, we could see a decline in both the topline and bottomline in Nifty companies on a YoY basis. Analysts will rework their FY21 estimates lower after Q4FY20 results and management commentary.

Will margins benefit from lower input costs?

Margins in some sectors could improve due to soft raw material prices. However, this advantage could be partly nullified by lower operating leverage, especially due to lockdown in the last 10-11 days of March.

Which sectors may be relatively better, which will be worst affected?

Telecom would report better performance due to tariff hike wef December and higher data usage in March, both of which could pull up the average revenue per users (ARPUs) of telecom companies. FMCG (essential categories) could do well, aided by lower input costs. Pharma companies could report better numbers but their Q1FY21 performance could get impacted due to lack of patient visits to doctors and delayed surgeries and also disruption in manufacturing. City Gas distribution companies could do well, especially those who are less dependent on CNG volumes.

Will the RBI cut interest rates today? Here's what top brokerages expect

While the Monetary Policy Committee (MPC) of the RBI originally was slated to meet in the first week of April, the central bank in a surprise move is holding a briefing today.

The government provided Rs 1.7 trillion package aimed at providing relief to the poor and marginalized sections of society. Most experts have termed it as the first tranche of the relief measures from the authorities and expect the Reserve Bank of India (RBI) to follow it up with a cut in interest rates besides announcing other liquidity support measures.

While the Monetary Policy Committee (MPC) of the RBI originally was slated to meet in the first week of April, the central bank in a surprise move is holding a briefing today. Here is what leading brokerages expect from the central bank.

Brickwork Ratings

In keeping with the promise of the RBI Governor that the RBI will do whatever it takes, it is reasonable to expect a sharp reduction in the borrowing costs. We expect the RBI to continue with its liquidity infusing tools such as open market operations (OMOs), forex swaps and long-term refinance options (LTROs), but also to announce measures to support corporates suffering from business losses due to the pandemic outbreak.

As the ongoing slowdown will drastically impact the financial health of many sectors, we expect the RBI to introduce forbearance measures towards the most affected or stressed sectors, and extend the repayment schedule and moratorium, along with implementing other measures, to avoid large NPAs and reduce risk weights. We expect the RBI to continue with accommodative monetary policy actions and stance; and cut the repo rate by 50 basis points.

Nomura

We believe the RBI is running the risk of falling behind in terms of proactive policy intervention, especially with the magnitude of shocks currently hitting the Indian economy and the financial system. So far, the measures have been on increasing domestic and dollar liquidity to ease financial conditions.

Coronavirus pandemic burns Rs 1.9 trillion hole in LIC's investments

The value of insurer's holdings in listed companies at the end of December 2019 quarter stood at Rs 6.02 trillion.

A 30 per cent drop in the S&P BSE Sensex and the Nifty 50 thus far in the calendar year 2020 (CY20) has weighed heavily on the fortunes of state-owned life insurer, Life Insurance Corporation of India (LIC), which has suffered a notional loss of about Rs 1.9 trillion in the past two-and-half months. The insurer, known for making large equity investments, has substantial holdings in many listed companies. The dent comes at a time when the government is drawing up plans of listing LIC at the bourses, subject to legislative changes and regulatory approvals.

The value of insurer’s holdings in listed companies at the end of December 2019 quarter stood at Rs 6.02 trillion, which is valued at Rs 4.14 trillion now, translating into a mark-to-market hit of Rs 1.88 trillion, or 31 per cent. The study is based on 209 companies from the S&P BSE 500 index where LIC held over 1 percentage point stake in the December 2019 quarter. These companies accounted 65 per cent of total market capitalisation of BSE-listed companies.

Among sectors, financials including banks, non-banking financial companies (NBFCs) and insurance companies, the top value destroyers, accounted 30 per cent or Rs 56,810 crore of total LIC value erosion during the period. Oil & Gas (Rs 36,020 crore), cigarettes makers (Rs 17,374 crore), information technology (Rs 15,826 crore), metals (Rs 12,045 crore), automobiles (Rs 11,329 crore) and infrastructure (Rs 10,669 crore) are other sectors, in which LIC lost a more than Rs 10,000 crore values during the period.

“Services-related sectors will be the worst hit due to Covid-19. Agri will largely remain unaffected, while manufacturing will be hit to the extent that there will be a supply-side issue. Within the services, too, there are sub-divisions for the impact. While telecom may largely remain unaffected, hotels, travel & tourism will bear the brunt. All this will continue to impact investors’ fortunes, including LIC. This is a systemic issue,” explains G Chokkalingam, founder and managing director at Equinomics Research.

Over the next few months – at least till there is clarity on the impact of Covid-19 on the economy and the fortunes of India Inc – analysts at Credit Suisse Wealth Management expect fund flows into equities – both domestic and foreign – to taper off, which again will put the Indian markets under pressure.

IndusInd Bank says it is financially strong amid speculation around stock

On Wednesday, the bank's stock on the BSE fell by Rs. 61.10 or 9.20 per cent to close at Rs. 603.05 from its previous close.

Moneylender IndusInd Bank on Wednesday emphasized that it is "monetarily solid, all around promoted, productive, and a developing substance with solid administration". The bank's announcement comes in the wake of altogether more elevated level of hypothesis around its stock.

On Wednesday, the bank's stock on the BSE fell by Rs. 61.10 or 9.20 percent to close at Rs. 603.05 from its past close.

"Market bits of gossip about individual exposures doing the rounds are enlarged and amazing and not even close to reality," the moneylender said in an announcement.

"The Bank makes full divulgences each quarter on its advance book profile."

As indicated by the bank, in the last quarter its Gross NPA remained at 2.18 percent which was the second most reduced in the business among enormous private part moneylenders.

"We expect current quarter Gross NPA to be essentially in accordance with that of last quarter," the announcement said.

"We expect our Net NPA of 1.05 percent as at the last quarter to fall underneath 1 percent, in accordance with our aspiration to take arrangement spread past 60 percent."

According to the announcement, the bank's advertiser has looked for RBI endorsement to expand shareholding to 26 percent.

"Advertiser has just educated the trade about the concurrent arrival of non-removal undertaking with the making of a promise corresponding to 23.8mn portions of the Bank," the announcement included.

"No new getting was embraced and was just a formalization of a multi year old game plan. The cash was initially raised to make an abroad obtaining which didn't fructify - the vow is a little part of Promoter holding in the Bank."

Good time to start SIP in this market mayhem

The entire panic has been initiated by fears that the system to curtail the Coronavirus (COVID-19), across the globe, is misplaced.

The way markets crashed on Friday, with the Nifty hitting the 10 per cent lower circuit is a global market -led panic.

The rout was triggered by the sell-off in the global markets, initiated by a 10 per cent crash in Dow Jones Industrial Average, followed by the Korean markets freezing in the lower circuit.

The entire panic has been initiated by fears that the system to curtail the Coronavirus (COVID-19), across the globe, is misplaced.

Truth be told, we don’t know when will this chaos will ease. Over 100,000 people across the globe have been infected by the virus and nearly 5,000 have died. India, too, is seeing a consistent rise in the number of cases.

However, this doesn’t mean that we can’t control the outbreak. We need to put in stringent restrictions, possibly a lockdown, to curtail the spread.

However, investors must realise that this is a very short-term phase, and normalcy should come back to markets soon.

Right now, investors should be inactive and should avoid any sort of buying or selling. For long-term investing, it is a precise time to wait and watch and start accumulating quality stocks via the systematic investment plan (SIP) route.

YES Bank fallout: SBI Cards may see some negative impact on listing

A plan to infuse capital in YES Bank where it continues to function as a separate entity just like LIC investing in IDBI Bank, would be a big positive for all the concerned stakeholders, analysts say.

Newsflow around State Bank of India (SBI) stepping in to rescue the cash-starved YES Bank has triggered a fresh sell-off in the state-owned bank's counter. While YES Bank tanked 80 per cent in intra-day deals, SBI lost over 10 per cent.

The developments have also cast a shadow on the listing of the bank's credit card arm - SBI Cards & Payment Services - which was expected to list at up to 50 per cent premium against the issue price.

ALSO READ: Taxpayers will be 'big casualty' if govt bails out Yes Bank: Macquarie

While analysts continue to remain bullish on SBI Cards from a long-term perspective given its healthy business outlook and huge penetration scope, the recent developments may have an impact on SBI Cards' listing. That said, they advise using the overhang to buy the stock for the long-term.

"If YES Bank gets amalagamated with SBI, just like Global Trust Bank (GTB) with Oriental Bank of Commerce (OBC) back in 2004, then it will be negative for both YES Bank shareholders as well as SBI shareholders. SBI then would have to take charge of all the liabilities of YES Bank. It will be negative for YES Bank shareholders as they would be left with nothing. However, it would be too early to jump the gun and conclude anything right now," explains Ambareesh Baliga, an independent market analyst.

On the other hand, a plan to infuse capital in YES Bank where it continues to function as a separate entity just like LIC investing in IDBI Bank, would be a big positive for all the concerned stakeholders, the analyst says.

Why the Sensex has rallied 600 pts today and will the up move sustain?

Last week, Indian bourses saw their worst weekly fall in a decade with the S&P BSE Sensex and the Nifty50 tumbling nearly 7 per cent each during this period.

A drop of nearly 3 per cent on Friday amid a global sell-off on coronavirus health scare and fears that weak economic data from China over the weekend ticked most of the checkboxes that could have sent the markets spiraling down further as they opened for trade on Monday. However, the over 600-point up move intra-day caught many by surprise.

The markets, analysts say, over-reacted to the developments and sold-off in a panic mode on Friday. The rally on Monday, according to them, could also be on account of short-covering. Most global markets suffered their worst weekly fall since the 2008 global financial crisis last week. The velocity of the fall in stocks was sharp across markets in Asia, Europe, and America. Indian bourses, too, saw their worst weekly fall in a decade with the S&P BSE Sensex and the Nifty50 tumbling nearly 7 per cent each during this period.

“The markets now seem to have realised that coronavirus may not be as bad a scare as it was made out to be. The only way it can spread is via physical contact amid conducive temperature / climate. India, though not completely insulated from the global meltdown in financial markets, is still relatively safer as regards this health scare. I don’t see the markets selling-off in a way they did on Friday. There can be intermittent corrections but quality stocks will start to perform now,” says A K Prabhakar, head of research at IDBI Capital.

Another reason is the hope of a fiscal stimulus by global central banks to prop-up growth, which was already hit by US China trade spat, till the onset of coronavirus made things worse. The developments, according to experts, are enough reasons for central banks to cut rates and inject liquidity into the system to aid growth. This, in turn, will benefit most asset classes.

“The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy,” Fed Chairman Jerome Powell said over the weekend.

In 120 years, equity returns have outpaced bonds & bills: Credit Suisse

In all, Credit Suisse has included 26 countries for the study as a part of this Yearbook.

Market News : Adjusted for inflation, equities as an asset class have returned 5.2 per cent on an annualised basis over the past 120 years (since 1900), outpacing the returns by bonds at 2 per cent and bills at 0.8 per cent, says the latest Credit Suisse Global Investment Returns Yearbook 2020.

The countries included in the Yearbook represented 98 per cent of the global equity market in 1900 and still represent over 91 per cent of the investable universe at the start of 2020. In all, Credit Suisse has included 26 countries for the study as a part of this Yearbook.

Over the past 120 years (since 1900), equities have outperformed bonds, bills and inflation in 21 countries. For the world as a whole, equities outperformed bills by 4.3 per cent per year and outperformed bonds by 3.1 per cent per year.

However, over the last decade, global equities performed well with an annualised real return of 7.6 per cent, as compared to real return of 3.6 per cent from bonds, Credit Suisse says. As regards bonds, Sweden has been the best-performing country in terms of real bond returns, with an annualized return of 2.7 per cent since 1900, followed by Switzerland, New Zealand and Canada with annualized returns of 2.4 per cent, 2.3 per cent and 2.2 per cent, respectively, the Credit Suisse study says.

“2019 was a superb year for equities, with the Yearbook world index returning 28 per cent (measured in US dollar terms). The best performing market was Russia, with a return of 56 per cent (in US dollar terms), followed by Switzerland at 33 per cent. The US equity market gave a return of 30 per cent. Despite very low start-year yields, bonds also performed well in 2019, with returns of 12 per cent in the US, 9 per cent in the UK and Switzerland, and just over 10 per cent (in US dollar terms) on the world index,” wrote Richard Kersley, head of global thematic research at Credit Suisse in the Yearbook 2020 co-authored with Nannette Hechler-Fayd'herbe, their chief investment officer for International Wealth Management.

Coronavirus impact: Experts see weakest quarter for global growth since GFC

The main channel of economic disruption at this stage, according to UBS, is largely via reduced tourism flows (in/out of China), and reduced import demand from China.

With coronavirus getting a tighter grip on the China and impacting world trade, most analysts have started lowering global growth forecasts as measured by the gross domestic product (GDP) for the first quarter of calendar year 2020 (Q1-2020). Those at UBS, for instance, expect this would be the weakest quarter for global growth since the global financial crisis (GFC) and on par with the Asian crisis in the late 1990s.

Global GDP, according to Arend Kapteyn, global head of economic research at UBS, will take a serious knock and slip to 0.7 per cent in the January 2020 quarter (Q1-2020) from 3.2 per cent in the December 2019 quarter (Q4-2019). Though he expects growth to rebound in the April – June 2020 quarter, the impact could slow the overall 2020 GDP growth by 20 basis points (bps) to 2.9 per cent.

The main channel of economic disruption at this stage, according to UBS, is largely via reduced tourism flows (in/out of China), reduced import demand from China — particularly of consumption goods — and restrictions imposed by third countries to avoid the virus spreading.

“We expect import growth in China to fall from 3.2 per cent in Q4 to a negative 4 per cent in Q1. The rebound we hope for in Q2 largely reflects delayed consumption effects in China, while the improvement in Q3 reflects the lagged impact of stimulus coming on line, particularly in China,” the UBS report says.

With the number of suspected/confirmed cases rising at an alarming rate, close to 99 per cent of those are in China, reports suggest. The economic impact, experts say, will also be magnified this time around compared to the SARS outbreak as Asia's weight in the global economy has risen from 21 per cent in 2003 to 37 per cent now.

Market News

China moves to limit short selling to ease market panic over coronavirus

China Securities Regulatory Commission (CSRC) has issued a verbal directive to brokerages to bar their clients from selling borrowed stocks on February 3.

China has taken steps to limit short-selling activities as the country's financial markets prepare to reopen on Monday amid an outbreak of a new coronavirus, three sources with direct knowledge of the matter told Reuters.

The sources said China Securities Regulatory Commission (CSRC) had issued a verbal directive to brokerages including Citic Securities Co. and China International Capital Corp. to bar their clients from selling borrowed stocks on February 3.

It was not clear if the suspension -- which was first reported on Sunday by Chinese media outlet 21st Century Business Herald -- would be extended beyond Monday, one of the sources said.

In an internal memo sent to its branches, Citic called the move a "political task" aimed at helping stabilize the market on the first trading day of the stock market in the Lunar New Year of Rat as the coronavirus outbreak unsettles global markets.

Investors are bracing for a volatile session in Chinese markets when onshore trades resume on Monday after a break for the Lunar New Year which was extended by the government.

China's policy makers have taken various of measures to protect the financial system from the fallout due to the outbreak. The central bank said it will inject 1.2 trillion yuan ($174 billion) worth of liquidity into the markets via reverse repo operations on Monday.

The CSRC is also considering launching hedging tools for the A-share market to help alleviate market panic and will suspend evening sessions of futures trading starting from Monday, it said.

Business Standard

Use volatility in markets to book profit in global funds, say advisors

Experts say investors can use this opportunity to re-balance their portfolio.

Market News : International funds — which have been the top performing ones over the last one year with gains of over 20 per cent — are being recommended by advisors for booking partial profits, with escalating tensions between the US and Iran threatening to spill over to and also impact global indices. “Investors can use this volatility in global markets to take some profits off the table, especially those investors that are close to their investment horizon,” said Amol Joshi, founder of Plan Rupee Investment Services. In the last one-year period, international funds have delivered returns of 25.49 per cent, outperforming large-cap funds by a wide margin. The latter has delivered returns of 10.63 per cent, thanks to polarisation in markets that favoured large-cap stocks.

Experts say investors can use this opportunity to re-balance their portfolio.

“Investors can re-align their portfolio, in-line with their original allocations. With value of investments in international funds going up, investor allocations are likely to have also gone higher to these funds,” said Vidya Bala, co-founder at Primeinvestor.in. According to industry observers, international funds had been attracting investor interest as domestic-focused funds have struggled to beat their benchmark returns.

According to a study, around 50 per cent of 200 actively-managed equity schemes had underperformed their benchmarks in CY19. Mid-cap and small-cap schemes — where retail investors had expected to make robust returns — have been the worst of the lot. The mid-cap and small-cap funds have delivered 3.5 per cent and 0.08 per cent returns in one year.

Advisors say that while investors can book partial profits in these schemes, they should continue to maintain some allocation. “International funds help from the point of view of diversification. Investors get exposure to different markets, rather just being exposed to domestic markets. Second, it also gives currency hedge, if the investor has dollar expenditure for foreign travel or for higher education of children,” Bala added.

According to experts, a weaker rupee and strong dollar is also a factor that can benefit international funds.

“International funds largely invest in companies that earn their revenues in dollar terms. This works favourably when rupee is seeing a depreciation,” said a fund manager. The rupee is expected to depreciate further as tension brewing between US and Iran can lead to spike in oil prices, and lead to further widening of current account deficit. Amid fears of spike in oil, the rupee breached the 72-mark against the dollar this week

Broadcasters, channels decline after Trai caps MRP on individual channels

Sun TV Network slipped over 6 per cent, while Balaji Telefilms and Sahara One Media dipped over 4 per cent.

Market News : Shares of channels and operators declined on Thursday after Telecom Regulatory Authority of India (Trai) made amendments to the new regulatory frameworks to allow TV users access to more channels at lower subscription price.

Among individual stocks, Sun TV Network slipped over 6 per cent, while Balaji Telefilms and Sahara One Media dipped over 4 per cent each, and Zee Entertainment and Den Networks both slid over 3 per cent in early morning trade today. The Nifty Media index dipped over 1.4 per cent as compared to the benchmark Nifty50 index's gain of 0.3 per cent.

However, most of these stocks recovered from their intra-day low and were trading in green by 10:30 AM. On the other hand, Sun TV Network and Zee Entertainment were trading lower by 3 per cent and 1 per cent, respectively.

The Trai has made the amendments to the New Tariff Order (NTO) according to which cable operators will have to provide 200 channels for Rs 153. The regulatory authority has also reviewed the pricing of channel bouquets compared to a la carte ones. The regulator has now set January 15 as the deadline for broadcasters to announce their new pricing structure.

At present, direct-to-home (DTH) or cable TV operators provide only 100 channels for a network capacity fee (NCF) levy of Rs 153 (Rs 130 excluding taxes).

According to the NTO that was released last year, consumers were given the option to pay only for the channels that they chose to watch, at the maximum retail price (MRP). Earlier, they were offered pre-set channel bouquets. The NTO was expected to bring monthly bills down, but it was the opposite that happened.

In order to address the huge discounts offered for bouquets, vis-a-vis the sum of a la carte channels, Trai has set two conditions to ensure the pricing of a-la carte channels does not become illusionary. First, the sum of the a la carte rates of pay channels forming part of a bouquet is not to exceed 1.5x the rate of the bouquet of which such channels are a part.

Rise in defaults could make things even worse for India, China in 2020

Defaults in China will likely rise in both the onshore and offshore bond markets next year amid a tightening in funding.

Market News : Defaults across Asia may be headed even higher next year, with trouble seen especially in China and India. Many investors expect fewer bailouts by the Chinese government after it recently let commodities trader Tewoo Group default in the biggest failure on a dollar bond by a state-owned firm in two decades.

Companies in the region have been on a buying spree fueled by debt. Those factors could make things even worse in 2020 after China onshore defaults rose to a record in 2019.

As some economies in Asia slow, companies are left vulnerable to any tightening in liquidity. A rise in defaults would likely further weigh on investor sentiment, and raise the cost of borrowing for the riskiest firms.

Defaults in China will likely rise in both the onshore and offshore bond markets next year amid a tightening in funding, and weaker state-owned firms and local government financing vehicles may be at risk, according to Monica Hsiao, chief investment officer at hedge fund Triada Capital. The nation’s real estate firms, traditionally seen as the bulwark of the economy, could also be vulnerable.

“We should not assume that the China property sector is immune if conditions continue to tighten for small over-levered developers that do not have stakeholders with strong political ties, for example,” said Hsiao.

A wave of acquisitions has also prompted companies with overextended balance sheets to stumble. Shandong Ruyi Technology Group Co., which made a string of overseas purchases, including U.K. trench coat maker Aquascutum, has been struggling to repay debt. Singapore-headquartered MMI International Ltd., which was sold to a Chinese buyout group, has missed loan repayments.

Why India's asset managers are trouncing their global peers this year

Industry bulls say domestic asset managers' profits are growing as they expand. That's in contrast with many global peers.

Market News : Indian asset managers’ shares are trouncing global peers this year as domestic money managers benefit from the tectonic shift in savings from gold and real estate to stocks and bonds.

Reliance Nippon Life Asset Management Ltd. and HDFC Asset Management Co., whose shares have more than doubled in 2019, are the third- and fourth-best performers among 36 peers with a market value of at least $2 billion, data compiled by Bloomberg show.

Retail investors piled into mutual funds after the government ban on high-value currency bills in 2016 hurt returns from gold and property. While total assets have more than tripled to $382 billion in the past five years, only 1.5% of Indians own funds, suggesting a long runway for growth. And passive investing that’s decimated fees for U.S. managers is still to take hold in India.

“Mutual funds have become an asset class of choice with policy makers pushing for the formalization of savings,” Sundeep Sikka, chief executive officer of Reliance Nippon, said in an interview. The decline in deposit rates has also made funds more popular than other financial products, he said.

The parabolic surge in Reliance Nippon and HDFC Asset is also down to the fact that the duo is India’s only listed fund houses. The shortage could ease after UTI Asset Management Co. goes public next year.

To be sure, the two stocks have come off their peaks in recent days as above-average valuations deterred buyers. Problem is, they’re still expensive relative to history and trade at prices slightly above their 12-month targets, data compiled by Bloomberg show.

That’s as inflows to equity funds, the most profitable category for asset mangers, shrank to the lowest in over three years in November even as the main indexes hit new highs. The S&P BSE Sensex held at a record on Wednesday, and is set for the biggest annual gain since 2017.

“We are watching to see whether the slowdown continues for the next few months,” said Sikka. “If the manager has scale and sticky investors, this can be ridden out like in the previous cycles.”

Industry bulls say domestic asset managers’ profits are growing as they expand. That’s in contrast with many global peers, many of whom could become “zombie firms” unable to attract new flows, according to PGIM chief executive officer David Hunt.

Gold's impressive performance in 2019 may spill into the new decade

Spot gold -- which last traded at about $1,461 an ounce -- is up 14 per cent this year.

Market News : Gold’s impressive advance in 2019 -- aided by trade war frictions, easier monetary policy across the world’s leading economies and sustained central-bank buying -- may be set to spill into the new decade.

As 2020 looms, BlackRock Inc., the world’s largest money manager, remains constructive on bullion as a hedge, while Goldman Sachs Group Inc. and UBS Group AG see prices climbing to $1,600 an ounce -- a level last seen in 2013.

Bullion is heading for the biggest annual advance since 2010, outperforming the Bloomberg Commodity Spot Index, as a year dominated by trade war vicissitudes and a trio of Federal Reserve interest rate cuts propelled the traditional haven to the forefront. Still, with global equities remaining buoyant and the US labor market proving resilient, gold’s outlook isn’t clear cut due to uncertainty over what central banks will do in 2020.

“Economic growth and inflation remain moderate and central banks continue to lean toward accommodation,” said Russ Koesterich, portfolio manager at the $24 billion BlackRock Global Allocation Fund. “In this environment, any shocks to equities are likely to come from concerns over growth and, or geopolitics. In both scenarios, gold is likely to prove an effective hedge.”

Annual Advance

Spot gold -- which last traded at about $1,461 an ounce -- is up 14 per cent this year, on course for the third annual gain in the past four years, with the only backward step being 2018’s 1.6 per cent fall. In September, the metal hit $1,557.11, the highest since 2013. While holdings in bullion-backed exchange traded funds have eased, they remain near a record.

Geopolitical and economic risks are likely to feature in 2020 just as they did this year, which could support gold: a phase-one trade accord between the top two economies may be close, but the US has pledged to impose tariffs on more imports if a deal isn’t struck by Dec. 15.

The US presidential vote looms in November, and before that there is the possible impeachment of the incumbent. Donald Trump has said many different things on the trade war, his stance shifting week to week, including recent remarks he likes the idea of waiting until after the polls to sign a deal.

“Who knows what the US president does next, he has surprised us many times,” said Giovanni Staunovo, a commodity analyst at UBS Wealth Management. “We also have the presidential elections, so expect more volatility, more noise in the market.”

Analysts see Tata Steel stock rising in 2020 as firm revamps Europe biz

Tata Steel has been closing and selling plants in the UK since the 2008 financial crisis to make its business there more profitable.

Market News : A revamp of its European operations, an improved product mix and a ban on cheaper steel imports to India may bolster the fortunes of Tata Steel Ltd.’s shares, the least valued stock on the South Asian nation’s benchmark equities gauge.

Tata Steel shares have lost nearly half of their value since Jan. 2018 to trade at a price-to-earnings ratio of 4.7, the lowest on the S&P BSE Sensex Index. The company, which last year got more than 50 per cent of its sales abroad, last week outlined job cuts and other measures aimed at cutting costs in Europe, which it called a “dumping ground” for steel.

“Indian steel prices may have found a floor, thanks to the minimum import price, and have already started moving up,” said Siddharth Gadekar, an analyst at Equirus Securities Pvt., “That kind of stability in prices gives investors confidence.”

Tata Steel has been closing and selling plants in the UK since the 2008 financial crisis to make its business there more profitable.

It’s now focusing on India, and aims to ramp up capacity as demand is set to expand by as much as 7 per cent in 2020, according to the World Steel Association. That’s the most among the top 10 steel using countries.

While protection from cheaper shipments from abroad will also benefit Tata Steel’s domestic peers, its valuation advantage, product mix and debt reduction steps may increase its appeal to investors. India imposed a minimum import price for steel products in 2016.

“Tata’s volume of sales should beat the rest of the industry because of their value for money offering, and their entrance into the pipeline steel category,” said Richard Leung, an analyst with Bloomberg Intelligence, “The rest of the industry may see muted growth next year because of reliance on legacy demand like automobiles.”

To be sure, Tata Steel’s debt-to-equity ratio is higher than most local peers, largely due to its 2007 purchase of Corus Group Plc for about $13 billion and its acquisition of Bhushan Steel for about $5.3 billion last year. Still, Moody’s Investors Service said in a Nov. 25 note that the company’s European cost cuts will support a turnaround in less profitable operations that have hurt the company’s overall credit quality.

“In a down cycle the companies that have higher debt tend to trade at a discount,” said Equirus Securities’ Gadekar, “With their earnings profile and current steel prices, they can service their debt easily.”