The Week Ahead: Nifty All Set to Conquer 8,500 Peak

The Nifty could scale above 8,500 to new highs in the coming week as oil prices continue to tumble and the pace of reforms gathers momentum. Most fence sitters will now want to join in the stock market rally as India is seen as a long-term growth story.

With expiry of derivative contracts due on Thursday, market participants should brace themselves for higher volatility.

Last week saw the Nifty trade in a range till Thursday, but Friday witnessed a breakout on the merger announcement of ING Vyasa with Kotak Mahindra Bank. The $2.4-billion all-stock deal will result in Rs 1 lakh crore market capitalisation for Kotak Bank.

The merger deal sent banking stocks higher and undervalued PSU and quasi-PSU banks rose sharply. The CNX PSU bank index ended the week with gains of 5.7 per cent as State Bank of India led from the front with weekly gains of nearly 10 per cent.

Technically, the Nifty now is in unchartered territory and above 8,500 it sets itself up for a year-end move of 8800, which also means that the Sensex can hit 30,000 by the end of 2014.

Foreign flows have been slightly subdued as rupee weakness has led to selling by overseas investors. The strength in the greenback and buying of dollars by oil marketing companies have put pressure on the currency, which hit 62.22 before recovering to close the week at 61.75.

The sudden cut in interest rates by the People's Bank of China on Friday - the first after July 2012 - triggered a fresh wave of buying in most Asian and European markets. China's stimulus comes on the back of large liquidity infusion by Japan and indicates that 2015 could see further liquidity flows in the country.

This could see lead to continued outperformance by Indian equities even as domestic economy improves. Weakness in commodities and better governance coupled with strong domestic demand should see Indian stock indices outperform globally.

The top three Nifty gainers last week were: Kotak Bank, up 9.7 per cent, SBI, up 9.6 per cent, and Punjab National Bank, up 4.7 per cent. The top three losers were: JSPL, down 9.8 per cent, NMDC, down 5.7 per cent, and Sun Pharma, down 5.2 per cent.

Meanwhile, the Dow Jones index continues to hit new highs and ended above 17,800, while crude oil closed above $76 per barrel after hitting $74 per barrel last week.

Vistara Airlines launch held up due to flying permit delay

Tata-Singapore Airlines promoted full-service carrier Vistara will now be able to start operations only next year due to delay in grant of scheduled Air Operator Permit (AOP).
The airline had applied to the DGCA for the permit in April and had planned to launch services by September.
"Vistara has still not received the AOP and even if it gets it in the days to come, the airline will take at least a month to launch," industry sources told PTI.

"Besides, any airline looks for few initial bookings before the launch and as of now there is a total silence from the airline on this front," they said.
"We are in the final phase of securing the air operator's permit (AOP). We are working with the regulator to complete the remaining process expeditiously and look forward to launch our services soon after receiving the permission," a Vistara spokesperson said in a statement.
It will be all the more difficult for New Delhi-based Vistara to hit the skies after the arrival of winter season, which is known for thick foggy conditions in the north leading to flight delays and cancellations, according to sources.
The to-be-launched full service carrier, in which Tata Sons holds 51 per cent stake and Singapore Airlines the remaining 49 per cent, is also going slow on inducting aircraft due to the delay in flying permit.
Against its target of five aircraft by March, so far it has taken delivery of only two planes on lease. The airline was scheduled to take the third aircraft last month but has deferred it owing to the delay in the obtaining AOP.
 On a long-term basis, the airline has already decided to lease 20 Airbus A320s, including seven fuel-efficient A320 Neos.
 Once it launches, Vistara will be the third full service carrier after state-run Air India and Jet Airways.
Vistara will operate from its base Delhi and connect Mumbai, Bangalore, Hyderabad, Goa, Chandigarh, Srinagar, Jammu and Patna in the first year, as per the plan submitted to the regulator DGCA while applying for the air operator's permit. It plans to operate 87 flights in the first year, with five leased Airbus A320s, and then scale it up to 301 flights by the fourth year.
Apart from the delay in obtaining SOP, the airline is also facing legal hurdles as the previous UPA government's decision to approve the joint venture has been challenged in the Delhi High Court saying the 49 per cent FDI rule in aviation does not allow a new airline with FDI, but only to existing airlines.

FDI dips 16% to $2.45 billion in September

NEW DELHI: Foreign direct investments coming to India declined by about 16% to $2.45 billion in September, registering a fall for the second month in a row.

The inflows had declined by about 10% to $1.27 billion in August. In September last year, the country had received foreign direct investments (FDI) worth $2.91 billion.

Foreign investments showed a growth of 15% to $14.47 billion during April-September period of this fiscal, as compared to $12.59 in the same period last year, according to the latest data of the department of industrial policy and promotion.

Healthy inflows in May ($3.60 billion) and July ($3.50 billion) have helped in registering a positive growth during the first half of the current fiscal.

Amongst the top 10 sectors, telecom received the maximum FDI of $2.46 billion in the six months, followed by services ($1.22 billion), pharmaceuticals ($1.09 billion) and automobile ($1.03 billion).

During the period, India received maximum FDI from Mauritius at $4.19 billion, followed by Singapore ($2.41 billion), the Netherlands ($1.97 billion), the US ($1.19 billion), Japan ($937 million) and UK ($842 million).

In 2013-14, FDI inflows were $24.29 billion as against $22.42 billion in 2012-13.

Decline in foreign investments could put pressure on the country's balance of payments and may also impact the value of the rupee.

The Indian rupee on Friday ended at 61.31 against the US dollar.

India requires around $1 trillion in the next five years to overhaul its infrastructure sector, including ports, airports and highways to boost growth.

The government is taking several steps to boost FDI. It has raised the foreign investment limit to 49% in defence manufacturing and relaxed the policy in construction sector. The government has also proposed to increase the FDI cap in insurance to 49%.

SpiceJet's sudden flight cancellations earn travellers' ire

MUMBAI | NEW DELHI: After bringing cheer to a dispirited travel market with flash sales this year, SpiceJet's sudden spate of flight cancellations have earned it the ire of the passengers. The airline's call centre and travel companies selling its tickets have been inundated with calls from angry passengers who have received text messages informing them that their flights have been cancelled.

"The calls have increased manifold in the last one week.We are trying our best but have had to abandon some of them. The network has been jammed too," said a SpiceJetBSE 14.96 % customer care executive.

Anand Murthy, a journalist in Chennai booked a flight to Guwahati in September to attend his friend's wedding.Three days prior, Murthy got a text message on his phone saying the flight had been cancelled and he should contact the customer care to re-book.

Murthy couldn't reach the customer care and posted it on the airline's Twitter page.He promptly got a call in two hours, but the next flight available for rebooking was a week after the wedding. "I opted for a refund but the amount wouldn't be a fourth of the price I would have to pay for the last-minute booking of an alternate flight. I had to cancel my trip," said Murthy.

The Kalanithi Maran-controlled airline has cancelled close to 40 flights in the past few months as it has cut its fleet size by returning planes to lessors. It has returned seven of its Boeing 737 planes since July , bringing its fleet size down to 43 currently.

Apart from cutting flights across the country, the airline has stopped flying to destinations such as Surat and Mysore, said a spokesperson.

"Customers are very, very angry with the airline. We have been getting a lot of calls. The refunds aren't always as quick as in the promised period of five days," said the general manager, sales at a major online portal.

"We get 1,200-1,300 calls from customers every day . We can't take 10%-12% of the calls and club them under abandoned calls. Because of SpiceJet's cancellations, the number of customer calls has increased so much, the chunk of abandoned calls as a percentage of the total has increased to 25%," said the executive director at an one of India's biggest offline travel agents.

Neither of the travel company executives wanted to be named for fear of spoiling ties with SpiceJet.

"Our concerns are two -the safety should not be compromised and passengers should not be inconvenienced. We are monitoring the situation to ensure the same," said a senior DGCA official.

The airline's chief operating officer Sanjiv Kapoor didn't respond to text queries.Meanwhile, rumours of an imminent investment in the airline shored its stocks up.

SpiceJet's share price closed up 14.9% at Rs 16.06 on media reports that the airline is close to announcing a share sale deal soon. The Sensex rose by less than 1%.

SpiceJet has desperately been looking for funds over the past one year and the market has been rife with names of potential investors.

RBI asks banks to be cautious on inoperative account payments

NEW DELHI: The Reserve Bank has asked banks to exercise caution before making payments to customers claiming funds lying idle in inoperative accounts. "Banks are advised to invariably verify the genuineness of the transactions and ensure that the amounts paid to the customers are properly audited by the internal auditors / statutory auditors," RBI said in a communique to banks. It also asked banks to carry out proper due diligence in accordance with risk category of the customers before making any such payments. The RBI directive came in the wake of rising cases where banks claimed substantial refunds from the Depositor Education and Awareness Fund, soon after transferring the amounts in the fund. RBI said it was not clear as to how the customers or claimants, who did not operate the account for ten years or more, approached the banks for repayment immediately after the balances in their inoperative accounts were transferred to the fund. "Banks should, therefore, follow all instructions meticulously in respect of inoperative accounts," RBI said. As per the RBI directive, banks have been advised to carry out special efforts to trace the customers in respect of inoperative accounts. As per the RBI guidelines, banks are required to pay back the amounts laying in inoperative accounts for ten years or more, along with interest. They later can lodge a claim for refund from the Depositor Education and Awareness Fund for an equivalent amount paid to the customer/depositor.

Peugeot Scooters spotted at Mahindra's plant

Recently, Mahindra bought shares in the renowned French company Peugeot. The 49 percent stake they bought in Peugeot ensures that the brand image is not fettered while it remains a profitable deal to Mahindra. The deal will be seen through over the next 2-3 months. Though there are no confirmations of plans, pricing or launches, there are rumors flying all around town about the new models that will be coming up with a creative blend of the styles of both of these companies.

                                            Peugeot Scooters spotted at Mahindra's plant

Peugeot offers a varied range of scooters with engine capacities starting at as low as 50 cc, going up to 400 cc. The engines have different cooling systems, liquid based or air based, depending on the capacity they provide. Some of the models have been spotted at the Mahindra facilities.

                                     Peugeot Scooters spotted at Mahindra's plant

Peugeot Satelis is a model that is powered by a 4 stroke 125 cc engine. The Streetzone is another model with a lower capacity. It is powered by a 2 stroke 50 cc engine. The Speedfight is yet another model powered by a 2 stroke 50 cc horizontal engine while CityStar150 is the one with the highest capacity among those spotted. As the name suggests, it has an engine with the capacity of 150 cc.

Peugeot has been ruling the European two-wheeler market since a long time now, dating back to around a century. Hence, it is preserving its name by holding a 51 percent stake in the company. It is being learned that the merger will have no effects on the branding of products of either company. However, it is still unclear as to what brand the products will be carrying. The Mahindra scooters will be priced in such a way that they are easily affordable by masses while the Peugeot scooters will be priced slightly higher. It must be noted that currently, Vespa is the only premium scooter brand available in the Indian market.

Big retail stores in India won’t touch Google’s Android One handsets with a 10-foot pole

In more bad news for Google’s Android One phones this month, leading retail stores across India are apparently refusing to sell these handsets. Big brands like Future Group, Croma, Reliance Retail, Lot Mobiles and Next Retail have been named amongst those hellbent on boycotting such devices.
When Spice, Micromax and Karbonn decided to launch Android One handsets in India, they chose to go the online way. A lot of brick-and-mortar businesses were miffed by this move which exacerbated the already rising tension between e-commerce sites and physical stores, according to a post on The Economic Times.

Counting the various stores under each retail brand, 1800 of these have not started stocking the three Android One smartphones introduced by Google in September. The Micromax Canvas A1, Karbonn Sparkle V, and Spice Dream Uno Mi-498 were supposedly readied for offline sales only due to the flagging enthusiasm for the program.
Also see: Google Android One should know that slow and steady does not win the device race
Devices released under the aforesaid Google initiative are based on Android itself. What makes them special is the fact that software updates will be beamed to them directly by the maker of the OS and not by the company manufacturing them. This would have served to their advantage had the Indian market been less competitive.

But smartphones cheaper than the Android One options are a dime a dozen here. So paying a price above Rs 6000 for a low-end handset just because it will get software updates regularly, may not have felt like an attractive idea to many. What’s more, there’s too much rivalry in that cost bracket to guarantee a warm reception for new products.
Perhaps the enthusiasm enjoyed by the Moto E mislead Micromax, Spice and Karbonn to believe that similar success stories could be repeated. To make things worse for Google’s Android One phones, retail stores have little incentive to stock them since the profit margins are not enough to line their pockets comfortably.