Rose Valley Chit Fund Scam

- Rose Valley a Chit Fund company has gone for a toss which cheated thousands of gullible investors from West Bengal and Odisha

- Enforcement Directorate (ED) passed the latest order on firm's assets worth Rs. 293 crore (market value) attaching Six hotels in Assam, Bihar and West Bengal along with 17-acre amusement park in Tripura at prime location

- However, the criminal case was filed against the firm in 2014 by ED and in March 2015 it's chairman Gautam Kundu was arrested by agency

- The group had promised huge returns of 8% - 27% on its floated scheme to its investors on investment or on bookings in real estate sector

- As per provisions of Prevention of Money Laundering Act (PMLA), central probe agency has issued a provisional attachment order and ED has freezed total alleged irregularities at Rs. 8600 crore

Regards
CA Pankaj Chhabra

Equity capital preferred by residential property developers through PE

- Residential property developers are now taking a broad chunk of equity capital through (PE) private equity funds

- Real estate firms are in greater need for equity capital in the post-RERA (Real Estate Regulation and Development) Act scenario

- Borrowing money will not be easy for everyone as investors will ask for higher collateral and will prefer those developers who have a good track record and strong pipeline of projects

- Asset Management Firms are now planning to invest across residential projects after the announcement of RERA

- Most of the Asset Management Firms will not prefer investing in financing greenfield projects and we will prefer to invest in under-construction residential and office projects

- Structured debt deals have reduced significantly this year compared to last year, with PE managers and NBFC(Non-banking financial corporations) do not want to take higher risk by lending for over-leveraged balance sheets of developers

- A sharp drop in the Debt Transactions this year can easily be seen as  $305 million in equity and $1,417 million in debt financing was invested in projects in the corresponding period in 2016

Regards
CA PANKAJ CHHABRA

RBI unlikely to ease Provisioning load for Banks

*RBI unlikely to ease Provisioning load for Banks* 🏦

- Banks are hoping to escape from hard provisioning norms by RBI on its stressed assets

- However, RBI shall soon direct lenders to set aside 50% provision on Stressed Loans and 100% where National Company Law Tribunal (NCLT) offers for insolvency proceedings

- 50 Stressed companies which account for 4 Lakh crore stressed load are from Metal, Construction and Power Industries

What do u understand by Stressed Assets?

- Stressed Assets includes NPAs + Restructured Loans + Written off Assets

- NPAs in context to Bank means any credit facility on which borrower is unable to repay back principal and interest installment and remain unpaid for specific time period

- NPAs are further categorized to Standard, Sub-Standard, Doubtfully and Bad Assets accordingly

Regards
CA PANKAJ CHHABRA

NAMN FINANCIAL ADVISORY - MARKET OUTLOOK

NAMN FINANCIAL ADVISORY - MARKET OUTLOOK

View on Nifty 🖊🔎

- On a Technical front, Nifty has formed a bullish candle and has given breakout from the consolidating range of last 7 trading sessions & closed above 9950 mark for the first time in life.

- Nifty is just shying to touch 10000 historical mark for the first time and further, the ongoing bullish momentum, positive investor sentiments & options data suggests Nifty shall easily break this level & likely to move till 10200-10300 level within August Expiry

- On a Fundamental front, good quarterly results by Heavyweights like Reliance, HDFC Bank, expectations from RBI Credit Policy & progressing monsoon has lifted the market to the new highs

View on USD/INR 🖊🔎

- USD/INR continue to be range bound within 64.00 - 64.70 levels in the near term

Sectors with Positive Outlook 🖊🔎

- IT & Banks
- Auto

Stocks with positive outlook 🖊🔎

- TCS, INFY
- Yes Bank, Kotak Bank

Regards
CA PANKAJ CHHABRA

ASSET RECONSTRUCTION BUSINESS IN INDIA

Blackstone Group plans to set up an ARC in India

- Blackstone, a Global PE firm is looking out to set up an Asset Reconstruction Company (ARC) in India, anticipating a growing opportunity due to increasing Bad Loans in the country

- In June itself RBI has named some large defaulters & asked banks to initiate Insolvency proceedings against them and such names include Alok Industries Ltd, Essar Steel Ltd., Monnet Ispat etc.

What do ARCs Do?

- For e.g. if a Bank lends money to any person (includes company), it expects to receive periodic payments of principal and interest. However, when the bank does not receive those periodic payments for a specific of time, (let’s say 90 days) these loans are classified as nonperforming assets. If these NPA’s are allowed to stay on the bank’s balance sheet, it will affect public image and stakeholder's confidence in bank

- Hence, banks sell these bad loans to specialists called Asset Reconstruction Companies. The business of these companies is to buy bad loans from banks at a steep discount. These companies then take special measures to recover the money owed. If they are able to recover the money, they make a profit, if not they lose the money.

Regards
CA PANKAJ CHHABRA

NAMN FINANCIAL ADVISORY - MARKET OUTLOOK

*View on Nifty* 🖊🔎

- On a Technical front, Nifty has recovered marginally well from its lower levels post correction of 100-120 points from life time high of 9928.

- On a daily scale, it has formed a green candle with long lower shadow, which indicates bullishness in the near term would be headed towards 9950-10000 levels

- On a Weekly scale, it has formed a Dragon Fly candle which further suggests that overall market is in control of Bulls and likely to remain in an uptrend for near term future

- However, some sector & stock specific action shall be witnessed majorly in Banks, NBFCs & Auto stocks particularly in Axis Bank, Tata Motors, Maruti, Kotak Bank, Bajaj Finance etc.

*View on USD/INR* 🖊🔎

- USD/INR continue to be range bound within 64.00 - 64.70 levels in the near term

*Sectors with Positive Outlook* 🖊🔎

- Banks & Pharma
- Auto

*Stocks with positive outlook* 🖊🔎

- Tata Motors, Maruti
- Axis Bank, Federal Bank

Regards
CA PANKAJ CHHABRA

NAMN FINANCIAL ADVISORY  - MARKET OUTLOOK

- On the Technical front, After a gap up opening Nifty had failed to hold 9900 decisively and profit booking action dragged Nifty down & it closed below 9900 level. On a daily scale, it has formed a normal sized Red candle which implies bears are fighting hard to bring Nifty down to more lower levels

- On the Options front, significant call writing at 9900 & 10000 strikes was observed & put unwinding at the same strikes supported the bearish move yesterday

- After a bullish rally of 450-500 points, Nifty is likely to consolidate between 9800 & 10000 mark till July Expiry. However, some stock specific action shall be witnessed

*View on USD/INR* 🔎

- USD/INR continue to be range bound within 64.00 - 64.70 levels in the near term

*Sectors with Positive Outlook* 🔎

- NBFCs, Banks
- Oil & Gas

*Stocks with positive outlook*🔎

- Reliance Industries, Axis Bank
- Voltas, ONGC

Regards
CA PANKAJ CHHABRA