vox populiMagazine for Business & Consumers 3

facebook.com/navhindtimes ± navhindtimes.in/app @navhindtimesnavhindtimes.comThe Navhind Times I Monday June 13, 2016

If Britain leaves that will give other countries courage”

investor’s guide

scrip tipsector watchBuy on dips

Buy on dips till Nifty holds above 8000 levels. At the same time it is advisable to keep leveraged positions partially hedged considering the possibility of rise in volatility in days

to come. The India Meteorological Department last Wednesday an-nounced the arrival of the monsoon rains in Kerala. It marks the beginning of the four month June-September southwest monsoon season in the country. IMD has forecast above normal rains for 2016. The government is counting on above-normal precipitation this year to help control food prices and boost farm production. Meanwhile upcoming US Federal Reserve’s two-day policy meeting starting on Wednesday and followed by UK’s referendum on EU membership on June 23 have the potential to roil mar-kets. Brexit is weighing down on the markets globally and that’s pretty much weighing on the Indian markets as well. Until such time this event is behind us we will continue to see some kind of pressure on the market. Anxiety over the outcome of upcoming global events will keep our markets on the edge. Among key macro economic data next week, the release of consumer price index (CPI) data for the month of May 2016 is on Monday while inflation based on wholesale price index (WPI) for the month of May 2016 is scheduled to be released on Tuesday. Apart from macroeconomic data and trend in global markets, the movement of rupee against the dollar and crude oil price movement will dictate market trend in the near term. Other global events in the coming week includes Bank of Japan’s  monetary policy statement on the factors that affected the most recent interest rate decision and Bank of England’s monetary policy committee members vote on where to set the rate.

Vijay Singhania, Trade Smart Online

weekly market outlook

holD

Target Price` 700

Current Price` 674.00

Grindwell Norton

buy

Target Price` 285

Current Price` 212.10

Eros International Media

sell

Target Price` 59

Current Price` 70.90

Crompton Greaves

Sales set to plateau

Grindwell Norton’s (GWN) fourth quarter revenues and gross profit sur-passed estimates riding on robust ceramics sales. However abrasives segment that comprises 65 per cent of sales continued to underper-

form. As such the sales growth of the company is tapered due to peaking of market share in certain segment, pricing pressure and double digit fall in exports. GWN is well placed structurally in the long term with capacity utilisation at 65 per cent and robust new product portfolio which is 30 per cent of sales. However on account of delayed cycle uptick the growth potential of the company is limited. Edelweiss

Picture perfect

EROS International’s fourth quarter performance is better than expecta-tions. It has substantially brought down receivables due to realignment of catalogue. In the current year the company is confident of containing

receivables days at current levels. EROS has healthy movie slate for 2017 of Hindi and regional movies which is expected to be strengthened further during the year. Importantly EROS has been able to pre-sell satellite rights for most of its key movies. EROS: US would now pay EROS 40 per cent of the production cost of a movie and a 20 per cent mark-up on the same as against 30 per cent of the cost and 30 per cent mark-up earlier). EROS will also take stake in EROS: US’s global digital business at a nominal value. Higher revenue from catalogue sales, new content sharing agreement with EROS:US, lower interest cost will result in higher earnings. The best period for content monetization for EROS is yet to come. IDBI Capital

Restricted upside

Crompton Greaves (CG) fourth quarter performance was marred with multiple write-offs from sale of overseas subsidiaries and demerger-related adjustments. Though discontinuation of loss-making overseas

business is seen as a near-term positive trigger in the long-term the stock will be impacted by delayed recovery in power system business and low margin profile. Reliance Securities

Full-scale recovery to take time 

Weak consumer demand in the FMCG sector has bottomed out. However full-scale recovery

is still several quarters away. Prohibi-tive valuations are also a deterrent to investing in FMCG stocks. During the latest quarter companies like Asian Paints, Marico and Godrej Consumer Products reported strong volume growth. On the other hand Hindustan Unilever’s faced marginal increase in volumes while GSK Consumer reported flat business. Bajaj Corp’s also disap-pointed with drop in volumes and Titan’s watch business plunged by 19 per cent. Looking ahead improved operating leverage is expected to drive profit margins in future. Monsoons are vital for demand in FMCG goods but re-vival in rural demand is of paramount importance to the industry. India is expected to receive excess rainfall especially in September and so the agriculture sector will certainly get the much needed solace. Recovery in rural consumer demand remains the key to growth for FMCG players. But they will have to strive to ensure fair share of rural markets after consumer demand picks up. As of now the rural consumer wallet is mostly deployed towards loan repayment, ensuring food security and other discretionary spending.

Reliance Securities

Taking serious note of the indiscrimi-nate policies of domestic airlines on flight cancellations and refunds, the Civil Aviation Ministry proposed a number of steps to rein them in.

Civil aviation minister, P Ashok Gajapathi Raju said that the proposals, which will be finalised soon. “The proposal will be put up on the ministry’s website for 15 days dur-ing which stakeholders are free to give their suggestions and comments. After this, the ministry will finalize the proposed amend-ments and implement them very soon,” an official statement said. The minister outlined the proposals. All taxes, levies and user and airport develop-ment fees shall be refunded in case of no-show and cancellations. The compensation has also been significantly enhanced to up to Rs 20,000, in case of denied boarding due to over-booking.In case of flight cancellations announced

within 24 hours of departure the compensa-tion amount has been enhanced to up to Rs 10,000. This apart refunds will also be appli-cable on all fares including promotional and special rates. It shall also be the prerogative of passenger to decide whether to get cash refund or hold the amount in credit. Also taking note of ar-bitrary levy on excess baggage, the charges for up to 5 kg beyond the 15 kg limit can be no more than Rs 100 per kg, it is proposed. The regulations are also being amended to ensure significant improvement in the facili-ties to persons with disabilities. The proposals evoked mixed reactions. “It is not a good idea for the government to get into the pricing mechanism of an industry which is already very competitive,” said Amrit Pandurangi, senior director, Deloitte in India. “These are positive proposals, but they are expected to impact very few passengers only.

These might also lead to overall ticket price increase as airlines will seek to compensate this loss of revenue by passing it on,” told Sharat Dhall, president of Yatra.com. Though the steps are well meaning, the government should rather focus on long term objectives like development of infrastructure and re-gional connectivity -- to give a boost to pas-senger traffic and expand the market which is still hugely under-penetrated, he said. A look at the terms of flag carrier Air India revealed that the airline, on a one-way ticket to Mumbai with a base fare of Rs 2,527 charges Rs.2000 towards cancellation if made more than 24 hours before departure. But if it is within 24 hours, the levy compris-es basic fare plus airline fuel charge. IANS

Airlines wings cropped

farm proDuce prices

hLadyfinger 34.80

hCabbage 34.70

hCluster Beans 33.00

hFrench Beans 52.00

hCarrot 37.00

hCauliflower (piece) 30.80

hChilly 62.00

hOnion 17.80

hPotato 26.90

hTomato 57.50

Vegetables Retail rates at Goa State Horticulture Corporation Ltd. outlets (Rs per kg)

*Rate as on June 11, 2016

Latest BSE Sensex 26,635.75

Nifty 8,170.05Re/ US $ 66.96Rs/ UK Pound 95.46

�By Adv. JAtin RAmAiyA

The Consumer Disputes Redressal Forum, North Goa, recently awarded costs, compensation and refund to Vishal Gaonkar,

aspiring law student. Gaonkar had gathered from various sources that Engineers Learning Institute was offering law degree courses and hence approached its office at Miramar for admissions. How-ever despite paying the entire fees to the institute no study material was provided to him. The representative of the institute asked him to prepare for exam to be held in the month of June 2013 without pro-viding adequate support. However no exams were conducted which led Gaonkar to approach the insti-tute several times.

Due to the delay tactics and false assurances from the institute, Goankar lost hopes and addressed a legal notice to them to recover fees amounting to Rs 46,800. It was submitted by him that the institute is functioning as a infor-mation centre for Apex Learning Technology Ltd who is affiliated to CMJ University in Meghalaya. Furthermore the reply by Engi-neers Learning Institute stated that they are only authorized to collect the fees of the courses from the prospective students and then to deposit the same with Apex Learning Technology Ltd.

Further Gaonkar was informed that somewhere in the month of May 2013 the government of Meghalaya noticed some irregularities in the function-ing of the CMJ University had asked it to stop operations and therefore the exam could not be conducted. CMJ University thereafter challenged the order

of the Governor of Meghalaya by filing a writ Petition in the High Court of Meghalaya and by filing as special leave petition in the Supreme Court of India. Moreo-ver they said that they are in constant touch with Apex Learn-ing Technology to get the issue resolved.

Goankar in his complaint said that he was kept in dark about all the above issues and there-fore, the act of the institute per se constitutes deficiency in service. He accused the institute of mental agonies, inconvenience, travelling

expenses and irreparable loss for which he deserves to be compen-sated. After perusing the records and evidence the members of the Forum observed that the opposite Parties have not appeared to con-test the claim of the complainant. Hence, the deficiency in service on their part is proved. While allowing the complaint the Forum observed that due to the cancellation of ex-amination, the complainant could not complete his studies and ful-fill his dreams.”

A student’s hopes dashed �By tensing RodRigues

Three days from now, on June 23 2016 Brits are going to decide whether they wish to continue to remain in EU or leave it.

The polls are showing a marginal tilt in favour of leave. A poll con-ducted for the Observer put Brexit ahead by three points. Another poll by YouGov, puts Brexit four points ahead. Leave at 45 per cent, remain at 41 per cent and unde-cided at 11 per cent. It is this last that could swing the result either way.

“Add those things together, the shock impact, the uncertainty impact, the trade impact, and Brexit would detonate a bomb under the British economy from which it would take years to re-cover,” warned PM David Cameron. Britain is already feeling the heat of a possible exit from EU. The pound has been swinging sharply against the dollar, buoyed by the uncertainty. It lost as much as 1.1 per cent against the US dollar last week, falling to a three-week low, even in the face of weak economic data in the US.

One-month volatility of the pound versus the other currencies jumped to 21.9 the highest since the depths of the financial crisis in February 2009. The worst part of Brexit is that it could be just the first straw on the camel’s back. It could trigger a cascade of events that could fling Western Europe and then the global economy into a crisis.

Today I want to look at just one aspect of the problem, viz. the

possible effect of Brexit on gold price. Economists had predicted that gold could rise as high as Rs 46,000/10gms if the Grexit had occurred. Similar could be likely in the event of a Brexit when gold could easily touch Rs 32,000 per 10 gms and possibly go beyond. With US rate hike not likely to hap-pen any time soon prob-ably nothing could stop gold’s ascent.

Metals analyst James Steel at HSBC feels that gold prices could explode if Britons decide to vote for leaving the EU. Gold has already rallied mas-sively this year given the uncer-tainties of the global economy; the first quarter of the year has been its best in nearly three decades, gaining around 18 per cent to the end of March. Steel feels that the uncertainty surrounding the refer-endum could push the rally even further. A falling dollar and only a modest recovery in oil prices could add further to the sheen of gold.

The outcome of the referendum

is difficult to predict. Britain is caught between the deep sea and the devil. That is between econom-ic consequences of leaving EU and the mounting pressure of immigra-tion on public services.

George Osborne, the British Chancellor of the Exchequer has been an outspoken critic of Brexit.

He feels Britain would “lose control” of its economy if it left the European Union. Analysis from the OECD, International Monetary Fund, Institute for Fiscal Studies, National Institute for Economic and Social Re-search and Bank of England

have all warned that Brexit would have a negative effect on Britain’s economy. Essentially, it would put away the biggest slice of Britain’s export and tourism market hurting incomes and employment.

The EU is the UK’s most im-portant trade partner, accounting for half of all British exports and imports. EU membership ensures lower trade barriers, which makes goods and services cheaper for

British consumers and boosts its exports. According to a London School of Economics study in 2015 the Brexit could reduce Britain’s income by anything between 1.1 per cent and 3.1 per cent by about £50 billion per year.

But that seems to be a distant problem in the face of the im-migration threat, which hurts the common voter day in and day out. According to a report by Migration Advisory Committee the arrival of one million low-skilled workers in a decade has increased pressure on public services such as the NHS, schools and transport. The report also found that the British educa-tion system has failed to prepare children for low-skilled jobs, plac-ing them at a disadvantage against foreign workers. Employers prefer to hire immigrants because their literacy and numeracy is better than British candidates.

And the latest bolt from the blue. Whopping 88 per cent of people in Holland polled by a Dutch newspaper said they would be in favour of an in or out vote along British lines. They hope ‘Nexit’ will follow Brexit. Accord-ing to Harry van Bommel, MP for Holland’s Socialist Party, “If Britain leaves that will give other countries courage. We cannot go on the way we are. The eurozone will break up eventually. People distrust Europe and some people even hate Europe. It is an exis-tential crisis.” Is it time already to grab the gold?

(The author is an investment consultant. Readers can send their

comments and queries to invest-ment.ideas.shop@gmail.com}

The Brexit shock