Goodwill  Investor Education Initiative:         3rd Aug 2020

GoodWill  Eagle’s Eyes !

Indian economy could revive sooner than we expect, says Finance Secretary- This optimism to impact Bourses soon!

Yes-there is really a turnaround in the behaviour of our economic matrix. It is true that there is light at the end of the tunnel as revealed by the statements of the Union Finance Secretary. Says, “.Tax Collections- both Direct and Indirect- are moving up fast”.

If the current uptick continues without any new additional shocks, the sharp contraction forecast by several agencies for the current fiscal won’t come to pass, said economic affairs secretary Tarun Bajaj. While direct and indirect tax collections in the June quarter were encouraging, daily e-way bill data also showed a positive trend, raising hopes of a sharp turnaround.
India’s economy shows abundant signs of recovery -back to normal sooner than expected and may even make a sharp V-shaped recovery in the next financial year, two top Finance ministry officials said, dismissing forecasts of a sharp contraction in GDP in the current fiscal. Monetising of the fiscal deficit by the RBI was not currently on the table, one of them said.
Direct and indirect tax collections in the June quarter were encouraging and daily e-way bill data was also showing a positive trend, finance secretary Ajay Bhushan Pandey said.
“All these things are actually giving an encouraging signal that the economy is coming back to the rate sooner than what was being anticipated,” Pandey said at an event of the Federation of Indian Chambers of Commerce & Industry (Ficci) on Thursday by video conference.
“June and July have been more promising than we initially thought… If we continue in this manner, and we are not saddled with any more shocks, it may not be as bad as the outside world thinks or we were thinking,” Bajaj said. “Unless Covid hits us very badly and we have to change our strategy in the middle, which seems very unlikely now, I am expecting a V-shaped recovery.”

One of the inputs in reckoning the GDP is the Government spending which would boost the consumption and liquidity and the Govt. is all out to unleash its funds on various projects. Given the prevailing liquidity  ease,  the consumption is pickingup as evidenced by the matrix of FMCG and auto sectors and the Government is open to borrowing more in case of need to boost spending on infrastructure but without monetising the fiscal deficit which of course causes concern.

“The revenues are going up and we also mobilised some extra revenues through excise duty. So that is going to help us this year.” says Pandey.
Income tax collections for the first quarter of the ongoing fiscal, which includes advance tax and tax deducted at source, were 80% of the year-ago level, Pandey said. These numbers should be seen in the context of corporate tax being cut to 22% from 30%,’ he said.

Goods and services tax (GST) collections of Rs 91,000 crore in May were at about 70% of the year earlier. This is expected to have improved in June, Pandey said, adding that the pace of transactions had risen compared to the previous months of lockdown. India’s nationwide shutdown began on March 25 and was progressively eased in May.

“Financial sector on a broader basis, without getting into the public sector or private sector, is heading for greater co . consolidation because of asset risk which it is carrying and over time capital is going to be critical,” Uday Kotak said.

So in all we find that the hitherto sagging economic indicators have  started reversing to green shoots and the volume of trades in NSE and BSE goes to prove that the Investors are back with a bang and the no. of new investors,as evidenced by opening of substantial new D-mat accounts with DP- all these go to prove that the markets will reach the pre-covid levels soon.

So smart investors will seize this unique opportunity to do value-investing and make a killing in the short-term.

Pharma & I.T firm Stocks are on fast track and on Expressway!

FMCG firms to stay in the slow lane this year. A study by Nielsen.

As predicted by us earlier a couple of days ago in our blog communication, the markets today were highly volatile due to many factors. Some pulling the index up and some pulling them down.

The results of some of the Investors savvy shares like Reliance, Maruti, SBI, SunPharma and all had their own share of push and pull game in the bourses today.

SBI Chairman was highly critical of the media misinterpreting the data to the disadvantage of the  bank and added that the Bank has done well in all reckoning parameters although the covid ‘ 19 and the Govt and RBI announced moratorium were pinching their performance figures. The NPA provision was less. Nonetheless the share did not go up as expected although slight upward march was there but subsequently started sliding down.

As opined by us all these days since last month, in our blog, all the Pharma shares started hitting the roof ansome like Torrent Pharma, Cipla and even Sun Pharma climbed up and touched 52 week highs! Sunpharma has clarified that the profits would have been much better but for the one time penalty payment made. So the script jumped two steps together!

But the FMCG sector – like India’s packaged consumer goods sales to shrink or remain little changed from last year, slashing its rather optimistic 5-6% growth estimate made on 30 April on hopes that the sector would better withstand the fallout from the coronavirus pandemic says Nielsen -market research study/

The fast-moving consumer goods (FMCG) sector, considered relatively immune to economic recessions, in India is now expected to shrink 1% in the worst-case scenario, Nielsen said on Thursday. At best, it will grow 1% in 2020 as the coronavirus lockdown has crimped demand and severely disrupted trade channels.

Nielsen expects the festive season to boost demand and help FMCG companies report better growth in the December quarter. But the outlook for these companies remains dim as widespread unemployment and a depressed economy may weaken consumer demand, it added.

“The bellwether FMCG industry, which was trying to revive from a difficult 2019, had a significant hit in the April-June quarter, with a 17% decline in sales value as compared to the same quarter of 2019,” Nielsen said in its FMCG Q2 report on Thursday.

“Severe and extended lockdowns, restrictions on manufacturing units and movement of people and goods, social distancing norms and store closures, among others, have had a significant impact on the FMCG industry, so much so that industry growth went to a negative zone in the first half of 2020 (6% decline in January-June period),” it added.

“Despite increased household consumption, even in the dairy sector, overall growth would remain flat for the year as out-of-home consumption including in hotels, restaurants and cafes remains nil,” said R.S. Sodhi, managing director, Gujarat Co-operative Milk Marketing Federation, the owner of dairy brand Amul.

However, some early green shoots were visible in June when India eased lockdown restrictions. FMCG sales registered 4.5% year-on-year value growth in June, suggesting that shoppers stepped out to buy more goods.

Nonetheless India’s largest packaged consumer goods firm Hindustan Unilever Ltd reported a 51% jump in its foods and refreshment business in the June quarter driven by demand.

Nielsen said an improvement in demand will hinge on how India tackles the surge in covid cases. “We are expecting some growth in the third quarter, but we are expecting faster growth in the fourth quarter as the festive season will fall more in the December quarter. I wouldn’t be surprised if the third quarter delivered similar growth to that seen in June,” said Prasun Basu, South Asia zone president, Nielsen Global Connect.

“Looking at the way things were seen, food stuff  was definitely driving growth, unlock onwards non-food FMCG has also bounced back. FMCG would grow at mid-high single digit,” said Mayank Shah, senior category head, Parle Products.

In the three months to June, growth in rural markets and small towns outpaced that of metros.

It is also estimated that the rural will continue to outperform large cities driven by multiple factors, including government welfare schemes. and the revocation of lock down by many States which would enable people to come out and do their  purchases more freely than ever.

So investors are advised to tune in their  investment decisions in tandem with market news and sentiment rather than on emotionally driven moves!

Wish you all informed investment decisions in the days to come !

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