Markets await the new budget for 2018-19. BJP-led NDA government is to present the budget to the parliament on February 1. This is the last budget before the 2019 general elections. The fifth budget from Finance Minister Arun Jaitley that has to consider the assembly elections in eight states in 2018 apart from the next year’s general elections is expected to be a populist one. The fund-allocations in the budget will be done aiming the rural development and infrastructure creation. The government that implemented path-breaking reforms such as demonetisation and GST will take no decision that hurts investors and capital markets.
Having big targets such as PSU disinvestments with a hefty premium, long-term capital infusion into government-owned banks and mobilisation of large sums for infrastructure creation from foreign markets by issuing equity and bonds, the government will only make proposals that cheer the capital markets. There is no scope for imposing long-term capital gains. One must take note that there is no long-term capital gains tax in the developed countries. Finance Minister can’t ignore this norm.
Out of the 23 industrial sectors, 15 registered encouraging growth in November 2017. Industrial growth in November 2017 on YoY basis was at 8.4% that is the highest month wise growth since July 2016.
“Share Guru” grasped the steel boom in its very beginning and introduced stocks like SAIL, Sunflag Iron, Jindal Steel & Power, Prakash Industries, KIOCL (Kudremukh Iron Ore Company Ltd), IMFA at lowest prices ahead of others just as it did in the case of the sugar sector. These shares already showered wonderful gains on investors and will give much more gains in the next two years. Share Guru is suggesting a similar opportunity in the paper industry. A boom is now going to happen in the paper stocks. The factors such as the ban on waste paper consumption in China and the disruption in imports of wood pulp from Chile help the Indian paper companies that are subdued for the last five years to get rid of the stagnation. They entered a golden era. JK Paper with capacity strength, West Coast Paper with a minuscule equity, N.R. Agarwal Industries that recycles waste paper into fine paper, Emami Paper with quality, Ruchira Paper that makes paper with agricultural waste materials… these companies will skyrocket in the coming days. Share Guru (October 23-29, 2017; Issue 9/30) introduced N R Agarwal Industries share at Rs 273.40 price. The stock in a very short period zoomed 100% to Rs 581.45 on January 12, 2018. The company may issue shares to foreign investors through a preferential offer after the stock breaks the Rs 1,000 level. Investors who bought it will soon get this golden chance.
China imposed restrictions on a number of dyes & chemicals companies as the pollution levels in the country reached an alarming level. President Xi Jinping stated that protecting the environment was more important to them than the GDP Growth. Following the curbs, some firms cut down their production by 50% while others shut down their plants. China, which is an aggressive exporter of chemicals, now turned an importer. As China began importing, the prices of all chemicals & dyes flared up in the international market. The prices will further surge in the coming days. It is a boon for Indian chemical companies.
Because of the stringent pollution control norms, Chinese caustic soda production declined by 50%. Europe also banned the use of old technologies in caustic soda industry from January 2018. It causes a production shortage of one million tonnes. As a consequence of these developments, all the shares of Indian caustic soda companies are set to flare up. Among them, GHCL is available at a very low price and it is an excellent opportunity for investment.
The final hearing in the Kiri case in the High Court of Singapore has been extended by 2 days. It will continue up to January 16, 2018. As per the Singapore statutes, the judgement shall come within 15 days after completion of the final hearing. Clarity in the Kiri case is possible by the month end.
Kiri Industries is expecting around Rs 4,000 crore for its stake in the Singapore subsidiary. However, the Chinese promoter is willing to pay only Rs 2,500 crore. If the Chinese promoter failed to acquire Kiri’s stake, then Kiri can sell its shares through a public offer.
Kiri Industries is set to buy several dyes & chemicals units in the Indian unorganised sector with the expected realisation. If everything goes as expected, it would be the world’s top company in the textile dyes industry. The completion of the hearing, the judgement thereafter, GST refund on exports, and the results of the third quarter will take the scrip to four digits level.