Of India's Trade Deficit, Etihad Offer for Jet Airways, and Top Cues in Focus Today

Thu, 17 Jan Pre-Open | Monish Vora, TM Team

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On Wednesday, share markets in India traded on a volatile note throughout the day and ended on a flat note.

The BSE Sensex closed higher by 3 points to end the day at 36321. While the broader NSE Nifty ended the day up by 4 points to end at 10890.

Among BSE sectoral indices, IT stocks rose the most by 0.6%, followed by energy stocks and PSU banks.

Top Stocks in Focus Today

Vakrangee share price will be in focus today as the company yesterday said the Ministry of Corporate Affairs (MCA) has not found any irregularity regarding resignation of its auditors, abnormal trading of the company stock and consequent action taken by the stock exchanges, and the shareholding structure, among other issues.

The stock of the company is also witnessing buying interest this week on news that the company launched over 3,300 Nextgen Vakrangee Kendras across India.

These outlets are spread across 20 states, over 340 districts and more than 2,000 postal codes of the country, of which more than 70% outlets are from tier 5 and 6 cities.

Overall, in the pilot phase, the company plans to have over 4,000 Nextgen Vakrangee Kendra stores.

From the media sector, Zee Entertainment share price will be in focus today as the company reported 50.3% YoY rise in consolidated profit at Rs 5.6 billion as compared to 3.7 billion in the same period last year.

The company reported 18% YoY jump in revenue at 21.7 billion led by strong advertising growth,

The company's advertising revenues grew 21.7%, while subscription revenues too registered strong growth of 23.3%.

To know more about the company, you can read Zee Entertainment's latest result analysis and Zee Entertainment Annual Report analysis on our website.

From the banking space, market participants will also be tracking Yes Bank share price amid reports that Deutsche Bank's India CEO, Ravneet Singh Gill is the frontrunner for the CEO's post.

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Etihad Offers to Invest in Jet Airways

In the news from the aviation space, Jet Airways share price will be in focus today as Etihad has offered to invest in the domestic airline at discounted rate of Rs 150 per share.

Along with this, Etihad has also agreed to infuse US$ 35 million from Jet Privilege, where it owns majority shares but after the due diligence is completed.

Etihad Chief Executive Tony Douglas has written to State Bank of India on the restructuring plan for the airline.

As per an article in The Economic Times, Etihad has sought exemptions from the markets regulator from making an open offer and preferential pricing guidelines.

Here's an excerpt from the article:

• In addition, Etihad is also demanding that Mr. Goyal's future role as "Chairman Emeritus" should be "well defined," stressing that no board seat should be given for Mr. Goyal himself and no rights for him or his family and affiliates to act or represent the airline.

Shares of the company rallied around 18% in Monday's trading session on reports that the company is close to finalizing a resolution plan.

Last Friday, reports stated that the Tata-Jet Airways deal is back on the table.

The cash-strapped airline which had its credit rating cut to default this month is weighing a resumption of stake sale talks with Tata Group as the carrier is poised to run out of cash.

The creditors are open to lending US$ 500 million to Jet Airways if Goyal and Etihad inject a similar amount into the company. A decision will be made once a forensic examination being conducted into the airline's book is completed.

Jet's woes have worsened with higher oil prices and intense competition in 2018.

This would be the second time that the West Asian airline has come to the debt-laden carrier's rescue.

To know more about the company, you can access to Jet Airways' latest result analysis and Jet Airways' 2017-18 Annual Report Analysis on our website.

India's Trade Deficit Narrows in December; Exports Remain Flat

In the news from macroeconomic space, India's trade deficit narrowed to US$ 13.08 billion in December. This was the lowest in 10 months and was seen on the back of a fall in gold imports.

While this came in as a welcome breather, exports remained flat and further deepened concerns for Prime Minister Narendra Modi who wants to accelerate growth ahead of elections.

Note that Narendra Modi had promised to boost exports by easing administrative rules and building infrastructure for manufacturing in India. Currently, there's criticism on this point from businesses for not doing enough in the last five years.

India's annual goods exports have remained flat around US$ 300 billion. This compares to US$ 314.4 billion in 2013-14, since Modi took charge in May 2014.

What measures the government takes to address this remains to be seen. Meanwhile, we will keep you updated from all the updates from this space.

Speaking of exports, one of the major growth drivers for this month's Smart Money Secrets recommendation is the untapped export market.

In the last five years, the revenue from the export market for the company has grown at a CAGR of 33%.

In the coming years, the management is targeting to increase its overseas presence further.

The company is focusing on two major markets - Latin America and South-East Asia. These markets have similar characteristics to the Indian market.

The recent product launch will help the company target developed markets such as USA, Europe as well.

While the stock price has fallen recently due to short-term issues, the market is ignoring the huge export potential, the new product launch, and of course, the management's execution capabilities.

From the long-term perspective, this is the perfect time to enter.

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