The RBI has kept the rates unchanged, considering its goal of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.
Projection for CPI inflation has been revised to 5.2% in Q4: 2020-21, 5.2% to 5.0% in H1:2021-22 and 4.3% in Q3: 2021-22.
Impact on Banks and Economy
This can be considered slightly positive news for banks and the economy, as the RBI didn’t increase the repo rate, with a view to infuse more liquidity in the market.
In yesterday’s trading session, Bank Nifty rose 1.43%, with PSU Banks gaining 2.61% and Private Banks gaining 1.70%.
We expect intraday range could be 34,723-35,976 with sideways to negative momentum & broader range could be expected between 34,438 to 36,282 zone for this week.
Nifty Intraday Outlook
In Thursday’s trading session, Nifty closed higher, supported by gains in banking stocks, ahead of RBI policy, which is scheduled for today.
We expect intraday range could be 14,652-15,146 with sideways to negative momentum while broader range could be 14,487 to 15,299.
In yesterday’s trading session, Bank Nifty rose 1.43%, with PSU Banks gaining 2.61% and Private Banks gaining 1.70%.
We expect intraday range could be 34,044-35,458 with sideways to negative momentum & broader range could be expected between 33,759 to 35,762 zone for this week.
Nifty Intraday Outlook
In yesterday’s trading session, Nifty closed in green for third consecutive trading session, after better than expected economic data of the country was released.
We expect intraday range could be 14,514-15,031 with sideways to negative momentum while broader range could be 14,363 to 15,217.
In Tuesday’s trading session, Bank Nifty rose 3.56%, with PSU Banks gaining 3.47% and Private Banks gaining 3.04%.
We expect intraday range could be 33,672-34,966 with sideways to negative momentum & broader range could be expected between 33,368 to 35,254 zone for this week.
Nifty Intraday Outlook
In yesterday’s trading session, Nifty closed in green for second consecutive trading session, after a bold budget presented by the Finance Minister.
Investors are now optimistic that the Indian economy will now revive after the stimulus infused by the government.
We expect intraday range could be 14,351-14,943 with sideways to negative momentum while broader range could be 14,199 to 15,098.
In union budget 2021-22, the FM has announced capital infusion for development of healthcare centres, healthcare institutions, swatch Bharat schemes, construction of National highways and highways and building 7 new textile parks among others.
Brookfield India Real Estate Trust is all set to hit the markets with its IPO. This will be the third REIT IPO after the successful listing of Blackstone Group Inc backed Mindspace Business Parks REIT last year and Embassy Office Parks REIT in 2019.
Brookfield
India is backed by Canadian asset manager – Brookfield Asset Management Inc and
is looking to raise INR 3,800 crores through this IPO.
BPG
Holdings Group Inc, a Brookfield entity, holds a 99% stake in the REIT.
Brookfield
India Real Estate Trust is managed by Brookprop Management Services Private
Limited.
Issue Details
Proportion For:
Institutional
Investors – 75%
Non Institutional Investors – 25%
Strengths
Global sponsorship with local expertise
Dominant & strategically located properties
Placemaking capabilities
Diversified blue chip tenant roster and cash flow stability
Significant identified internal and external growth opportunities
Experienced senior management team.
Institutional corporate governance framework & strong alignment of interests
Valuation
Brookfield India reported
its EPS at 15.1 for the year ended March 2020, bringing the IPO valuation to a
P/E of 18.2 at upper price band, against sector PE of 26.5.
However, it bears the
risk of high Debt to EBITDA ratio, which can be considered a negative point.
So, we stay neutral
on our views for the IPO.
Utilization of Funds
Background highlights of the company in brief
The Brookfield India Real Estate Trust is India’s only institutionally managed public commercial real estate vehicle. It is sponsored by an affiliate of Brookfield Asset Management (Brookprop Management Services Private Limited), one of the world’s largest alternative asset managers with approximately USD 575 billion in AUM, as of September 30, 2020, across real estate, infrastructure, renewable power, and private equity and credit strategies.
Brookfield Asset Management has a global presence of over 150,000 operating employees across more than 30 countries, as of September 30, 2020.
As of September 30, 2020, Brookfield Asset Management has over USD 200 billion of real estate AUM, and over 500 Msf across multiple real estate asset classes, with strong real estate capabilities in leasing, financing, development, design, construction and property management.
In India, the company has a decade-long presence and manages a portfolio of approximately USD 17 billion across real estate (USD 4.6 billion), infrastructure (USD 9.7 billion), renewable power (USD 0.6 billion) and private equity (USD 2.1 billion) as of September 30, 2020.
The Brookfield India Real Estate Trust comprises of grade-A commercial assets located in four major cities – Mumbai, Gurgaon, Noida and Kolkata.
Multi-national corporations like Barclays, Bank of America Continuum, RBS, TCS, Cognizant, and Accenture are some of the clients of Brookfield India Real Estate Trust.
The company’s initial portfolio of four large campus-format office parks, which are “business-critical” totals to 14.0 M sf, comprising 10.3 M sf of Completed Area, 0.1 M sf of under construction area and 3.7 M sf of Future Development Potential and comprises of Kensington, Candor Techspace, Sector 21, Gurugram, Candor Techspace, Sector 62, Noida and Candor Techspace, Rajarhat, Kolkata.
The competitive strengths of the company has translated into the office parks outperforming in their micro-markets through a marquee tenant roster, high and consistent occupancy levels, strong renewal and expansion history with existing tenants and outsized rental growth.
The company’s strategy is to address the real estate demand by owning and operating large “fully-integrated”, “campus style” office parks in established locations, and providing a complete ecosystem to its tenants and their employees.
Briefing about directors & key managerial personnel
(Board of Directors – Brookprop Management Services Private Limited)
During the previous week in the COMEX market, base
metals such as Aluminum, Zinc and Iron Ore witnessed low volatility, closing lower
by more than 1%. Lead prices stayed unchanged for almost whole week, again
closing almost at par. However, Silver continued to fall in the start of the
week, but started its uptrend journey Thursday onwards. Whereas, Gold traded in
the range of 1,853 to 1,856, ending the week unchanged.
During the week, Silver made a tragic comeback,
gaining more than 8% after the prices rallied on Friday, as the traders piled
into silver on short squeeze sparked by Reddit posters call. The entire market
– from miners’ shares to exchange-traded funds and even the physical metal –
has emerged as one of the latest targets of investors. Posts encouraged people
to pile into IShares Silver Trust, the largest silver exchange-traded fund, and
one described it as “THE BIGGEST SHORT SQUEEZE IN THE WORLD.”
Prices of gold inched higher a bit during the
week after the Finance Minister Nirmala Sitharaman in Budget 2021 proposals
said that the government will rationalize customs duty on gold and silver.
Currently, gold attracts 12.5% import duty. The government announced cut in
customs duty on gold and silver to 7.5% from 12.5%. Indian imports bulk of its
gold and silver requirements.
The precious metals were also supported as the
European equities witnessed a retreat as the region fight over COVID-19 vaccine
supply, alongside increasing number of COVID-19 cases. However, the gains in
the precious metals was capped after the release of better than expected
economic data of UK, France, Germany and Spain.
For the current week, investors needs to keep a
watch on economic data such as Eurozone’s Final Manufacturing PMI, UK’s Final
Manufacturing PMI, US’ Final Manufacturing PMI, ISM Manufacturing PMI, on 1st
February, US’, Eurozone’s and UK’s Final Services PMI, Eurozone’s PPI, US’ Crude
Oil Inventories on 2nd February, UK’s Asset Purchase Facility, BOE
Monetary Policy Report, BOE Gov Bailey’s speech on 4th February and
US’s unemployment rate on 5th February.
In the current week, we expect gold in COMEX
market to be in the range of $1,799 to $1,908, while silver is expected to be
in the range of $24.5 to $31.5. Whereas, as per our prediction for bullion
market traders, gold futures will trade in the range of 47,007 to 51,714.
Today, the Finance Minister of our Country, Nirmala Sitharaman presented the Union Budget for the year 2021. After an adverse effect of COVID-19 pandemic on the economy during the past year, the FM stated that Indian economy has witnessed a revival.
Major Allocation
Summary
No Changes in personal income tax slab or rates
Senior Citizen over 75 years of age, with no income other than pension and interest, exempt from filing returns
FDI in insurance to increase from 49% to 74%
LIC IPO would be introduced this year
Government to launch vehicle scrappage policy
Gold and silver to become cheaper as government reduced customs duty
Iron, steel, copper items, nylon clothes to get cheaper
Mobile Phones and charger, leather shoes, imported auto parts, alcoholic beverages, raw silk, solar lanterns, imported products like compressors of refrigerators and ACs with get expensive.
More metro rail projects to be undertaken under PPP model
Additional highways and national highways to be constructed
Measures for clean air to be taken
Made in India COVID-19 vaccine to be made available across the country
Some ongoing divestment transactions will be completed this year
One Nation One Ration Card scheme for migrant workers and laborers
100 new Sainik Schools
will be set up in partnership with NGOs/private schools/states
Proposed to set up a
Central University in Leh.
Allocated INR 3,768
crores in the year 2021-2022 for the upcoming digital censes
The capital
expenditure, estimated in RE is INR 4.39 lakh crores in 2020-2021 as against INR
4.12 lakh crores in BE 2020-21.
The fiscal deficit in
RE 2020-21 is pegged at 9.5% of GDP. Additional INR 80,000 crores will be
required.
Plan and intend to
reach a fiscal deficit level below 4.5% of GDP by 2025-2026.
Will allow a normal
ceiling of net borrowing for the states at 4% of GSDP for the year 2021-2022
Proposed to increase
limit for tax audit for those who carry out 95% of their transactions digitally
from turnover of INR 5 crore to INR 10 crore.
Simplified GST filing
Budget in Detail
PART A
Part A has been focused on AtmaNirbhar
Bharat. The FM mentioned the six pillars of this budget:
1.
Health
and Wellbeing
2.
Physical
and Financial Capital and Infrastructure
3.
Inclusive
Development for Aspirational India
4.
Reinvigorating
Human Capital
5.
Innovation
and R&D
6.
Minimum
Government, Maximum Governance
Health and Wellbeing
PM AtmaNirbhar Swasth Bharat Yojana Scheme
Outlay of INR 64,180 crores over 6 years
Will develop capacities of primary, secondary, and tertiary care Health Systems
Strengthen existing national institutions
Create new institutions
Support for 17,788 rural and 11,024 urban Health and Wellness Centers
Setting up integrated public health labs in all districts and 3382 block public health units in 11 states
Establishing critical care hospital blocks in 602 districts and 12 central institutions;
Strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units
Expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs
Operationalization of 17 new Public Health Units and strengthening of 33 existing Public Health Units at Points of Entry, that is at 32 Airports, 11 Seaports and 7 land crossings
Setting up of 15 Health Emergency Operation Centers and 2 mobile hospitals
Setting up of a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional National Institutes for Virology.
Water Supply
Jal Jeevan Mission (Urban) will be launched with an outlay of INR 2,87,000 crores over 5 years
Aims to supply water in all 4,378 Urban Local Bodies with 2.86 crores household tap connections, as well as liquid waste management in 500 AMRUT cities.
Swachch Bharat, Swasth Bharat
The
Urban Swachh Bharat Mission 2.0 will be implemented with a total financial
allocation of INR 1,41,678 crores
over a period of 5 years from 2021-2026.
Clean Air
Provided
an amount of INR 2,217 crores for 42
urban centres with a million-plus population.
Vaccines
Made in India vaccine is currently present to only 5 states and will be rolled out across the country.
INR 35,000 crores is provided for Covid-19 vaccine in BE 2021-22 and will provide further funds if required.
Total allocation for
Health and Wellbeing is INR 2,23,846 crores in BE 2021-22 as against this
year’s BE of INR 94,452 crores an increase of 137%.
Physical and Financial Capital and Infrastructure
AtmaNirbhar Bharat – Production Linked Incentive scheme (PLI)
AtmaNirbhar
Bharat have been announced for 13 sectors with an outlay of around INR 1.97 lakh crores, over 5 years
starting FY 2021-22.
Textiles
Mega Investment Textiles Parks (MITRA) scheme will be launched in addition to the PLI scheme.
7 Textile Parks will be established over 3 years.
Infrastructure
The National Infrastructure Pipeline (NIP), which was announced in December 2019, was launched with 6835 projects; the project pipeline has now expanded to 7,400 projects.
Around 217 projects worth INR 1.10 lakh crores under some key infrastructure Ministries have been completed.
Infrastructure financing – Development Financial Institution (DFI)
Introduced a bill to set up a DFI with an outlay of INR 20,000 crores to capitalise the institution.
The ambition is to have a lending portfolio of at least INR 5 lakh crores for this DFI in three years’ time.
Asset Monetization
A “National Monetization Pipeline” of potential brownfield infrastructure assets will be launched.
An Asset Monetization dashboard will also be created for tracking the progress and to provide visibility to investors.
NHAI and PGCIL each have sponsored one InvIT that will attract international and DIIs.
Five operational roads with an estimated enterprise value of INR 5,000 crores are being transferred to the NHAI InvIT.
Similarly, transmission assets worth INR 7,000 crores will be transferred to the PGCIL InvIT
The next lot of Airports will be monetized for operations and management concession.
Sharp Increase in Capital Budget
In the BE 2020-21, INR 4.12 lakh crores was provided for Capital Expenditure.
For 2021-22, INR 5.54 lakh crs has been provided, which is 34.5% more on YoY basis
Of this, more than INR 44,000 crores to be provided for projects / programs.
More than INR 2 lakh crores to States and Autonomous Bodies for their Capital Expenditure has been provided.
Roads and Highways Infrastructure
More than 13,000 km length of roads, at a cost of INR 3.3 lakh crores, has already been awarded under the INR 5.35 lakh crores Bharatmala Pariyojana project of which 3,800 kms have been constructed.
By March 2022, another 8,500 kms will be awarded and complete an additional 11,000 kms of national highway corridor.
Provided an enhanced outlay of INR 1,18,101 lakh crores for Ministry of Road Transport and Highways, of which INR 1,08,230 crores is for capital, the highest ever.
Railway Infrastructure
Indian Railways have prepared a National Rail Plan for India – 2030. The Plan is to create a ‘future ready’ Railway system by 2030.
Has providing a record sum of INR 1,10,055 crores for Railways, of which, INR 1,07,100 crores is for capital expenditure.
Urban Infrastructure
A new scheme will be launched at a cost of INR 18,000 crores to support augmentation of public bus transport services.
The scheme will facilitate deployment of innovative PPP models for over 20,000 buses.
A total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities.
Metro Rail Project:
Kochi Metro Railway Phase-II – 11.5 Km – INR 1957.05 crores
Chennai Metro Railway Phase-II – 118.9 km – INR 63,246 crores.
Bengaluru Metro Railway Project Phase 2A and 2B – 58.19 km – INR 14,788 crores.
Nagpur Metro Rail Project Phase-II – INR 5,976 crores
Nashik Metro – INR 2,092 crores
Power Infrastructure
A
revamped reforms-based result-linked power distribution sector scheme will be
launched with an outlay of INR 3,05,984
crores over 5 years.
Ports, Shipping, Waterways
7 projects worth more than INR 2,000 crores will be offered by the Major Ports on Public Private Partnership mode in FY21-22
A scheme for merchant ships in India will be launched with an outlay of INR 1624 crores over 5 years.
Petroleum & Natural Gas
Schemes
will be launched to add more cities in Gas distribution Network
Non-conventional energy sector
Additional
capital infusion of INR 1,000 crores
to Solar Energy Corporation of India and INR
1,500 crores to Indian Renewable Energy Development Agency
Insurance Sector
Proposed to increase the permissible FDI limit from 49% to 74% in Insurance Companies and allow foreign ownership and control with safeguards
Stressed Assets
An Asset Reconstruction Company Limited and Asset Management Company would be set up to clean banks’ Balance Sheet.
Recapitalization of PSBs
To consolidate the financial capacity of PSBs, recapitalization of INR 20,000 crores is proposed in 2021-22.
Deposit Insurance
To improve credit discipline for NBFCs with minimum asset size of INR 100 crores, the minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 is proposed to be reduced from the existing level of INR 50 lakhs to INR 20 lakhs.
Company Matters
Proposed to revise the definition under the Companies Act, 2013 for Small Companies by increasing their thresholds for Paid up capital from maximum INR 50 Lakh to INR 2 Crore and turnover from maximum INR 2 Crore to INR 20 Crore.
Disinvestment and Strategic Sale
Strategic disinvestment transactions for BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22.
IPO of LIC will be launched in this year
INR 1,75,000 crores as receipts from disinvestment in BE 2021-22.
Inclusive Development for Aspirational India
Agriculture
Enhanced the agricultural credit target to INR 16.5 lakh crores in FY22
Enhanced the allocation to the Rural Infrastructure Development Fund from INR 30,000 crores to INR 40,000 crores
Propose to double a corpus created under NABARD by augmenting it by another INR 5,000 crores
Around 1.68 crores farmers are registered and INR 1.14 lakh crores of trade value has been carried out through e-NAMs
One Nation One Ration Card scheme for migrant workers and laborers
Financial Inclusion
Have provided INR 15,700 crores to MSME sector, more than double of this year’s BE.
Reinvigorating Human
Capital
School Education
100 new Sainik Schools will be set up in partnership with NGOs/private schools/states
Higher Education
100 new Sainik Schools will be set up in partnership with NGOs/private schools/states
Proposed to set up a Central University in Leh
PART B
Relief to Senior Citizens
Senior Citizen over 75 years of age, with no income other than pension and interest, exempt from filing returns
Exemption from Audit
Proposed to increase limit for tax audit for those who carry out 95% of their transactions digitally from turnover of INR 5 crore to INR 10 crore.
Affordable Housing/Rental Housing
Additional tax deduction of INR 1.5 lakh for interest on home loan for affordable housing extended for additional one year
Incentives for Start-ups
Proposed to extend the capital gains exemption for investment in start-ups by one more year – till 31st March, 2022.
Custom Duty
Source: Union Budget 2021 PDF provided by the government
In the Union Budget 2021, the government might give some relaxation in income tax on income of more than INR 5,00,000 for individuals in lower income group. It might also increase the limits for deduction u/s 80C so, that more savings and ultimately more funds are available with the government. Long Term Capital Gains (LTCG) tax, which is at 10% currently, is expected to be waved off. Main sectors in focus might be Defense, Pharma, Healthcare and Auto.
In Friday’s trading session, Bank Nifty gained 0.68%. Private Banks gained 1.12% and PSU banks rose 1.69%.
We expect intraday range could be 29,623-31,566 with sideways to negative momentum & broader range could be expected between 29,057 to 32,061 zone for this week.
Bank Nifty Daily Chart
Nifty Intraday Outlook
In Friday’s trading session, Nifty closed in red again due to monthly F/O expiry and ahead of Union Budget.
Nifty fluctuated between gains and loss during the session as the FM Nirmala Sitharaman tabled Economic Survey 2020-21 in the Lok Sabha.
We expect intraday range could be 13,167-14,159 with sideways to negative momentum while broader range could be 12,919 to 14,411.
