A bull case for investing in gold

Gold prices have touched a six-month high on account of changing structural dynamics

Just when everyone thought that investment in gold is unlikely to give positive returns the yellow metal has surprised by rising to a six-month high. Gold is trading near a key technical level of $1,300 per ounce in the international market.

Traditionally considered a safe haven, gold was ignored for most of 2018 despite a number of negative events affecting global markets. They key factor was a strong US dollar.

In 2018, the strength of the US dollar came from rising interest rates in the US. The year saw aggressive monetary tightening by the Federal Reserve. It was the first time that the Fed raised rates on four separate occasions during a calendar year. The hikes were in addition to liquidity tightening to the tune of $50 billion every month.

But by the end of 2018, it was clear that the interest rate hikes by the Federal Reserve were tapering off mainly on account of growth concerns. Fresh data accentuate these concerns. For instance, US treasury yields accelerated their decline on Thursday after a weaker-than-expected manufacturing index number from The Institute for Supply Management (ISM) for December. The index fell to 54.1 percent for December as against an expectation of 57 percent, and much lower than the 59.3 percent in November. A weakness in the index indicates a slowing economy.

On Thursday, the 10-year treasury yield plunged 10.2 basis points to 2.557 percent, its lowest since January 16, 2018, to mark its biggest one-day decline since May.

Goldmoney, a world leader in precious money investment services in its December 2018 Gold outlook said, “The world is awash with dollars at a time when markets act as if there is a shortage. When the truth emerges, the dollar has the potential to fall substantially against other currencies, leading to a rise in the price of gold.”

Further, the ongoing trade war between the US and China has now reached the US shores. Earlier China was taking the blows on account of the restrictions imposed by the US but now Chinese consumers have hit back. A surprising warning from Apple about slowing sales, especially in China, has delivered the message home to US President Donald Trump about slowing growth.

Building a case for gold investment, Goldmoney’s head of research Alasdair Macleod said that the great dollar unwind is now the overhang on markets. The move towards gold and against the dollar in Asia accelerated in end-2018, with Russia having replaced the dollar with gold as its principal reserve currency. Further, China has laid the foundation with an oil-yuan futures contract, which can be a bridge to yuan-gold contracts in both Hong Kong and Dubai. This is a direct challenge to the dollar as a reserve currency, Macleod noted.

Finally, gold prices are also reacting to the increased demand for the precious metal from various quarters. 2019 is expected to see a balancing of gold supply and demand. Central banks are accumulating bullion; they added 425 tonnes in the year to September 2018.

Moreover, the Chinese private sector continues to hoard gold as seen in the withdrawals from the Shanghai Gold Exchange. India’s total gold imports are not showing any signs of slowing and were at 919 tonnes in the year to September, according to the World Gold Council.  These three sources of demand alone add up to 3,344 tonnes annually, which is the same as global mine supply. If you add supply restriction like those imposed by China on exporting gold, then there is a solid bull case for gold as an investment vehicle in 2019.

Source: https://www. moneycontrol.com/news/business/markets/quick-take-a-bull-case-for-investing-in-gold-3354481.html

If you want more information regarding the Market News & many other tips like Intraday Tips , MCX Normal Calls, Bullion Market Tips , Share Market Services , NSE & BSE Market Tips , Free MCX Market Tips , MCX Premium Tips , Bullion Energy Tips , commodity market tips.

Visit: http://www.tradeindiaresearch.com

Whatsapp User Join Our Group: 9300421111

For Warren Buffett, sinking Apple shares a wish come true

Buffett sees Apple more as a consumer stock than a tech stock, reflecting the iPhone's status as a must-have possession for so many people.

Billionaire Warren Buffett has said he would love to see Apple Inc shares decline in price so he could buy more. He is getting his wish.

Apple's warning on Wednesday about weak iPhone demand in the holiday quarter due to slower sales in China sent its stock down 7.5 percent during after-hours trading. Class B shares of Buffett's Berkshire Hathaway Inc traded down 2 percent in the same session on Wall Street.

Buffett, the folksy Nebraska investor known more for buying railroads, energy firms and classic American corporate brands than for his acumen picking tech stocks, in recent years has lamented missing the boat on buying shares in US technology giants. He admitted an earlier investment in IBM Corp was not one of his best.

Yet Buffett has made Apple a centerpiece of his portfolio of other company's stocks, touting his own use of the Cupertino, California-based company's products and saying at his annual shareholders' meeting in Omaha last May, "We would love to see Apple go down in price," so he could buy more at a bargain.

Buffett sees Apple more as a consumer stock than a tech stock, reflecting the iPhone's status as a must-have possession for so many people.

Including its after-hours drop on Wednesday, Apple's stock market value has tumbled to below $700 billion from over $1.1 trillion at its peak in October. Although Apple has fallen behind Amazon.com Inc and Microsoft Corp in value, it remains one of Wall Street's most widely held companies.

Shares of Berkshire itself have held up well even as the broader market sank last quarter. Last year, Berkshire returned 2.8 percent, while the S&P 500 fell 4.4 percent, including reinvested dividends.

But the $3 billion hit to Berkshire's Apple shares in evening trading on Wednesday could show in future reported earnings. Those figures do not reflect any long-term gains on Berkshire's investments, and Buffett has encouraged investors to ignore the profit statistic mandated by US accounting practices.

Source: https://www .moneycontrol.com/news/business/for-warren-buffett-sinking-apple-shares-a-wish-come-true-3349221.html

If you want more information regarding the Market News & many other tips like Intraday Tips , MCX Normal Calls, Bullion Market Tips , Share Market Services , NSE & BSE Market Tips , Free MCX Market Tips , MCX Premium Tips , Bullion Energy Tips , commodity market tips.

Visit: http://www.tradeindiaresearch.com

Whatsapp User Join Our Group: 9300421111

Eicher Motors falls 5% on weak December motor cycle sales; Motilal Oswal maintains buy

The company's December total motor cycles sales were down 13 percent at 58,278 units against 66,968 units, YoY.

Shares of Eicher Motors slipped 5.6 percent intraday Wednesday after company reported weak motor cycle numbers for the month December 2018.

The company's December total motor cycles sales were down 13 percent at 58,278 units against 66,968 units, YoY.

Meanwhile, its CV sales for the month was up 2.4 percent at 6,236 units versus 6,087 units. Its exports went up 41 percent at 2,252 units against 1,601 units, YoY.

According to Motilal Oswal Royal Enfield is a big disappointment; lower Royal Enfield volume estimates for the current and the next financial year by 46,000 and 89,000 respectively.

It cuts EPS estimates by 6 percent and 9 percent for the current and the next financial year respectively.

Meanwhile brokerage house maintained buy call on share with target of Rs 24,760 per share.

According to Morgan Stanley, auto sales end the year on a weak note. Year-end inventory clearance & weak consumer sentiment lead to another month of muted volumes.

It prefers OEMs that have support ahead from model launches like Maruti Suzuki, M&M & Eicher Motors.

At 09:35 hrs Eicher Motors was quoting at Rs 22,000, down Rs 1,184.05, or 5.11 percent on the BSE.

Source: https://www .moneycontrol.com/news/business/stocks/eicher-motors-falls-5-on-weak-december-motor-cycle-sales-motilal-oswal-maintains-buy-3344761.html 

If you want more information regarding the Market News & many other tips like Intraday Tips , MCX Normal Calls, Bullion Market Tips , Share Market Services , NSE & BSE Market Tips , Free MCX Market Tips , MCX Premium Tips , Bullion Energy Tips , commodity market tips.

Visit: http://www.tradeindiaresearch.com

Whatsapp User Join Our Group: 9300421111

Banks recover Rs 40,400 crore from defaulters: RBI report

The various channels through which lenders recovered their bad loans include the Insolvency and Bankruptcy Code (IBC), SARFAESI Act, debt recovery tribunals (DRTs) and Lok Adalats.

Banks have seen a significant improvement in recovery of stressed assets helped by the Insolvency and Bankruptcy Code (IBC) and amendments in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, during FY18, according to the RBI data.

In the fiscal ended March 2018, banks recovered Rs 40,400 crore worth of bad loans as against Rs 38,500 crore recovered in FY17.

The various channels through which lenders recovered their bad loans include the Insolvency and Bankruptcy Code (IBC), SARFAESI Act, debt recovery tribunals (DRTs) and Lok Adalats.

While banks recovered Rs 4,900 crore of bad loans through the IBC, the amount recovered through SARFAESI was Rs 26,500 crore in FY18, the RBI said in its annual report on Trends and Progress of Banking in 2017-18, released to over the weekend. "Apart from vigorous efforts by banks for speedier recovery, amending the SARFAESI Act to bring in a provision of three months' imprisonment in case the borrower does not provide asset details and for the lender to get possession of the mortgaged property within 30 days, may have contributed to better recovery," the report highlighted.

During the year, recovery through Lok Adalats and DRTs declined alongside the number of cases referred, partly indicative of the growing clout of the IBC mechanism for resolution of stressed assets, the monetary authority noted.

The average recovery through IBC is greater than other mechanisms (SARFAESI, DRTs and Lok Adalats) and is also improving gradually, pointing to the need and efficiency of such a channel, the report said.

"Strengthening the infrastructure of the insolvency resolution process, including the proposed increase in the number of benches of the National Company Law Tribunals (NCLTs), should help reduce the overall time currently being taken for resolution under the IBC," the RBI said.

Besides recovery through various resolution mechanisms, banks are also cleaning up theirs balance sheets through sale of doubtful/ loss assets to assets reconstruction companies (ARCs) and other banks/NBFCs/financial institutions by taking haircuts, the report said.

During 2017-18, the acquisition cost of ARCs as a proportion to the book value of assets, has gone up, indicating better realisations by banks on sale of stressed assets.

While private sector banks have been most aggressive on asset sales, state-run lenders lagged, mainly owing to large haircuts and various management issues, the report said.

Source: https://www .moneycontrol.com/news/business/banks-recover-rs-40400-crore-from-defaulters-rbi-report-3337351.html

If you want more information regarding the Market News & many other tips like Intraday Tips , MCX Normal Calls, Bullion Market Tips , Share Market Services, NSE & BSE Market Tips , Free MCX Market Tips , MCX Premium Tips , Bullion Energy Tips , commodity market tips.

Visit: http://www.tradeindiaresearch.com

Whatsapp User Join Our Group: 9300421111

Shanthi Gears: Buyback to drive earnings and improve capital efficiency

Shanthi Gears, a leading supplier of industrial gears, is going through a difficult period as a result of low demand.

For a company, sitting on idle cash could be detrimental to shareholders' wealth. One alternative could be buyback of shares, if it's attractively priced.

A similar logic applies to Shanthi Gears' buyback announcement. Industrial gears, which find wide applications in almost all manufacturing activities, are in low demand as a result of the subdued capex cycle. A company such as Shanthi Gears, a leading supplier of industrial gears, is going through a difficult period as a result of low demand. Consequently, its stock has corrected by around 25 percent from its high in January 2018.

Rectifying capital allocation

At the same time, Shanthi Gears is sitting on cash and investments of close to Rs 150 crore, almost 46 percent of its net worth of Rs 335 crore. This depresses its overall return ratios. In the last fiscal, the company generated 11 percent return on capital despite having an extremely efficient business with a fixed asset to turnover ratio standing at 2.37 times and generating strong 22 percent operating margins.

In these circumstances, a buyback could prove to be a shot in the arm for the company. Shanthi Gears intends to buy back close to 50 lakh shares at Rs 140 a share costing it about Rs 70 crore. Moreover, because of the reduction in equity capital, close to 21 percent of its networth, its return on equity would improve. Besides, buying back shares at a time when earnings are depressed because of the external demand environment would mean a higher share of future earnings for existing shareholders when the earnings cycle recovers.

Over the last three years the company has delivered 11 percent compounded annual growth in sales. However, growth is likely to be higher in future as a result of the expected pick up in the private capex cycle and recovery in the manufacturing sector.

In the near term, the share buyback would also mean higher earnings per share as a result of reduction in equity capital in the current fiscal. Our calculations suggest that a 6 per cent reduction in share capital as a result of the buyback could boost estimated earnings per share for FY19 by 5 percent.

Source: https://www .moneycontrol.com/news/business/moneycontrol-research/shanthi-gears-buyback-to-drive-earnings-and-improve-capital-efficiency-3334271.html

If you want more information regarding the Market News & many other tips like Intraday Tips, MCX Normal Calls, Bullion Market Tips, Share Market Services, NSE & BSE Market Tips, Free MCX Market Tips, MCX Premium Tips, Bullion Energy Tips, commodity market tips.

Visit: http://www.tradeindiaresearch.com

Whatsapp User Join Our Group: 9300421111

Bodal Chemicals benefits from favourable demand-supply dynamics

We remain positive on the traction towards vertical integration and capacity expansion.

Dyes and dyes intermediates major Bodal Chemicals posted a recovery in topline growth, in the quarter under review, aided by better realisations, volume and exports.

Bodal Chemicals: Q2 update – Margin expansion

Bodal Chemicals’ reported a 43 percent YoY sales growth in Q2FY19 driven by increase in volume, improved realizations, higher exports and better product mix. Dyestuff volume increased by 54 percent YoY on account of higher contribution from the new capacity commissioned last fiscal (12000 tonne in March’18). Blended capacity utilisation of dyestuff facility is now about 72 percent. Further, dyes intermediates volume increased as well by 12 percent (21 percent in Q1 FY19). Export sales (47 percent of sales), with 179 percent increase YoY, has been another strong lever for the company.

Raw material prices have remained elevated though management updates that most of the input prices have stabilized, particularly that of caustic soda and PNCB (Para-nitro chloro benzene).  Standalone operating profit, adjusting for forex, has improved by 250 bps YoY on account of both moderation in inputs and higher realizations.

Allied businesses on an improving track

The company expects improved performance for Trion Chemicals JV wherein operations started towards the end of Q1 FY19. Some of the raw material prices have softened and company expects business to break even by the end of fiscal year. In case of SPS Processors, subsidiary has witnessed considerable improvement in topline (2.3 times QoQ) and bottomline (1.8 times QoQ) on account of better realisations for dye intermediates.

However, thionyl chloride project completion has got delayed to Q4 FY19.

Acceleration in dyestuff share of sales

Product mix is improving. Dyestuff sales contribution has improved from 29 percent of sales to 35 percent of sales in Q2 FY19. Ramp up in utilization of new capacity is noteworthy, which is about ~60 percent in the second quarter after commissioning. Further dyestuff share is expected to improve, even more, as management has decided to increase dyestuff capacity by 6000 tonne by Q1 FY20 (estimated cost: Rs 26 crore). It is noteworthy that this expansion is ahead of the original schedule and would put the total dyestuff capacity to 35000 tonne after expansion.

In the near term, softening of product prices post quick surge in Q1FY19 can moderate revenue momentum. However, overall we remain positive on the traction towards vertical integration and capacity expansion. Also reiterate that ongoing environmental restrictions in both China and India is helpful is keeping a favourable supply-demand dynamics for the integrated players like Bodal Chemicals (7.9x FY20e).

Source: https://www .moneycontrol.com/news/business/moneycontrol-research/bodal-chemicals-benefits-from-favourable-demand-supply-dynamics-3097751.html

If you want more information regarding the Market News & many other tips like Intraday Tips, MCX Normal Calls, Bullion Market Tips, Share Market Services, NSE & BSE Market Tips, Free MCX Market Tips, MCX Premium Tips, Bullion Energy Tips, commodity market tips.

Visit: http://www.tradeindiaresearch.com

Whatsapp User Join Our Group: 9300421111

TradeIndia Research Investment adviser.

TradeIndia Research is India's one of the best stock advisory who caters & delivers best stock recommendation in Equity Market, Commodity Market & Forex Market. We give the most reliable advice for letting your money to flow in right.