Wall St week ahead: 

Rising REITs back bets on stronger economy Investors puzzled over whether US interest rates are rising due to a stronger economy or because of fears about inflation might want to look at the recent gains in REITs for some useful guidance. Wall St week ahead: Rising REITs back bets on stronger economy Investors puzzled over whether US interest rates are rising due to a stronger economy or because of fears about inflation might want to look at theent  recgains in REITs for some useful guidance.

 Real estate investment trusts typically perform poorly in an environment of rising interest rates, as they are used by some investors as a proxy for bonds when fixed income returns pale. Thus, when yields turn higher, REITs are sold among other reasons on expectations of a higher cost for financing real estate acquisitions, and as their dividend yield becomes less competitive against the risk-free return of Treasuries. In the period between the bottoming of the 10-year Treasury note yield near 1.3 percent in early July and the US election four months later, the vanguard REIT exchange-traded fund -- a popular way for investors to get exposure to the sector -- fell nearly 10 percent.

 The benchmark S&P 500 index gained almost 2 percent during the same time period. But since the November 8 election of President-elect Donald Trump, and despite a rapid increase in the 10-year yield from about 1.8 percent to near 2.4 percent, the REITs ETF has gained 4.8 percent and the S&P added 6.5 percent. "REITs are a derivative of credit and the economy so as long as one of those is doing well, REITs will do well," said Alex Goldfarb, the senior REIT analyst at Sandler O’Neill Partners in New York. "If there’s a view that rents will improve, as long as the move in interest rates is not too significant REITs will still perform." Stocks on Wall Street have rallied since Trump's surprise victory as economic indicators have improved and on bets that the incoming administration will lower taxes, slash regulations and introduce a fiscal stimulus in the form of a massive infrastructure plan. 

Trump's policies are also seen as likely to boost inflation, however, which could force the Federal Reserve to raise rates at a faster clip this year than previously expected. On Friday US Treasury debt yields rallied after data showed a rebound in U.S. wages last month. That may put more pressure on the Fed to consider raising interest rates as early as the first quarter. Among the REITs that have performed the worst through the election rally are those specializing in retail, as the sector continues to struggle against online stores. Earlier this week Kohl's and Macy's reported lower than expected holiday sales and cut their yearly forecasts. Kimco Realty and Kite realty , both retail-oriented REITs, are negative since Trump's election. The backdrop of rising rates could make it ideal for stock pickers within REITs, said Art Hogan, chief market strategist at Wunderlich Securities in New York. Vornado Realty Trust , with office and rental exposure in the high-end markets of New York and Washington, has gained more than 20 percent since Nov. 8. Said Hogan: "To say REITs are going to do poorly in a rising rate environment is true simplistically, but if the economy is improving that's going to be cash flow generating for REITs in the right place."

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Only 4% of employees on H1B Visa; Bill not a big hit on co:

TechM Nayyar is of the opinion that everyone acts for their self-interests, and, this move may not be in the interest of US companies. So its approval for now seems difficult. Vineet Nayyar (more) Vice Chairman, Tech Mahindra | The Protect and Grow American Jobs Bill has been re-introduced in the US Congress by two Republicans. But Vineet Nayyar, Vice Chairman of Tech Mahindra   says there is nothing to be overly concerned about. Nayyar says the company has only 4,000 employees, which is around 4 percent of the workforce in the US, working on an H1-B visa. So he feels the Bill will not have a major impact on the company and it will be able to absorb the pain. 

The Bill also asks the minimum wages to be increased to USD 100,000. The average wage of employees working for Tech Mahindra, says Nayyar, is around USD 60,000. Nayyar is of the opinion that everyone acts for their self-interest, and, this move may not be in keeping with US companies. So, its approval for now seems difficult. Even if it is passed, he feels the US may take more than a year to pass the Immigration Bill. The IT stocks hold enough strength to withstand this shock, says Sudip Bandyopadhyay of Inditrade Capital. It would be best though, to pick up stocks that are focussing on new and innovative technologies like artificial intelligence and cloud computing. The passage of this Bill through both the Houses of the Congress seems unlikely as it affects the business of American companies as much as Indian 

IT firms, he adds. Below is the verbatim transcript of Vineet Nayyar’s interview to Nigel D’Souza and Reema Tendulkar  Nigel: Wanted to understand for Tech Mahindra what is the average wages for employees who are on the H1B visa; that is the first point and secondly, what is the percentage of your total employees that are on H1B visa if you could give us both those two details? A: I think we have about 6,000 employees in US and 2,000 of them are US citizens and about 4,000 of them are on H1B visa at this point of time. Nigel: Your wage per employee? A: It is about USD 60,000. Reema: 65 percent of your US employees would be on visa, right, roughly? 

A: Yes, roughly that is right. Reema: What percentage would that 4,000 be of your overall employee base and if the minimum wages are increased from USD 60,000 to USD 1,00,000 could you give us a rough estimate of what the impact on the company’s margins would be? A: Our total employees are over a lakh, so in a sense yes it is an issue but it is not an issue which will in any fashion debilitate us. We will always be doing certain amount of readjustments in terms of work which is being done in India and work which is being done in US because I don't think anyone can stop American companies to outsourcing here to India. So I don't see it as a disaster or something to be overly concerned with. Concern, yes, all of us are concerned about it because it is symptomatic of a state of mind of bringing in everything but this has happened multiple times

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Sebi bars Life Care Infratech from selling assets 

The entities have now been barred from disposing of four immovable properties in UP and Bihar as well as other movable assets, according to an order passed by Sebi's Recovery Officer Mohammad Atif Alvi. | Market regulator Sebi has prohibited Life Care Infratech and its six directors from selling various movable and immovable properties as part of its efforts to recover nearly Rs 5 crore of dues. After finding that the company and its directors illegally raised funds from the public, the watchdog had last year asked them to refund over Rs 4.89 crore to investors, which they have failed to do.

The entities have now been barred from disposing of four immovable properties in UP and Bihar as well as other movable assets, according to an order passed by Sebi's Recovery Officer Mohammad Atif Alvi. Besides, the company has been restrained from taking any benefit from the disposal, transfer, alienation or charge in respect of the prohibited properties. The regulator has already initiated the recovery process as part of which various bank accounts and mutual fund folios of the company have been attached. In its latest order, the regulator said the defaulters "may dispose of or transfer or alienate the assets with a view to obstructing or delaying the recovery proceedings, which needs to be prevented immediately by attaching the said assets". Sebi has also asked the entities to furnish complete details of all movable and immovable properties, among others, held by the company within two weeks. 

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Bajaj Auto Dec sales fall 22% to 2.25 lk units, exports down 27% 

Two-wheeler maker Bajaj Auto   sales decelerated sharply for the second consecutive month in December, impacted by the currency demonetisation. The Pune-based auto company sold 2.25 lakh units in the month gone by, down 22 percent compared with 2.89 lakh units sold in year-ago period. Sales also fell more than 16 percent compared with previous month. Exports dropped, too, by 27 percent to 1.05 lakh units from 1.45 lakh units while domestic sales declined 17 percent to 1.19 lakh units on yearly basis. 

Bajaj Auto said motorcycle sales were down 18 percent year-on-year at 2.03 lakh units and 3-wheeler sales fell 46 percent to 22,217 units in December. For the nine months period ended December 2016, its sales slipped 5 percent to 28.78 lakh units due to a 23 percent degrowth in exports. However, domestic sales grew by 11 percent year-to-date. Its sales in November month were also down by 13 percent YoY. IST, the stock was quoting at Rs 2,603.00, down Rs 30.85, or 1.17 percent on the BSE

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India allows 8,424 tonne raw sugar exports 

To US TRQ is a quota for a volume of exports that enter the US at relatively low tariffs. After the quota is reached, a higher tariff applies on additional imports.  The government has permitted export of 8,424 tonne raw sugar under its tariff-rate quota (TRQ) to the US, S, which enables shipments to enjoy relatively low tariff. 

TRQ is a quota for a volume of exports that enter the US at relatively low tariffs. After the quota is reached, a higher tariff applies on additional imports. "The quantity of raw sugar (8,424 tonnes) to be exported to USA under TRQ up to September 30, 2017 has been notified," Directorate General of Foreign Trade (DGFT) said in a public notice. India enjoys duty-free sugar exports to the US for up to 10,000 tonnes annually under preferential quota arrangement. India, the world's second biggest producer and the largest consumer of sugar, has a preferential quota arrangement for sugar export with the European Union as well. The country had exported 1.1 million tonnes of sugar in the 2014-15 marketing year (October-September). Sugar production is estimated to decline to about 25 MT in 2015-16 marketing year, from 28.3 MT in the previous year.

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Banks sharply cut lending rates after low-cost deposits,

PM nudge SBI, the country's biggest lender by assets, said on Sunday it had cut its so-called marginal cost of funding-based lending rates (MCLR) by 90 basis points for maturities ranging from overnight to three-year tenures. Several banks, including top lender State Bank of India   , announced sharp cuts in lending rates after a surge in deposits following a government ban on high-value bank notes.

 SBI, the country's biggest lender by assets, said on Sunday it had cut its so-called marginal cost of funding-based lending rates (MCLR) by 90 basis points for maturities ranging from overnight to three-year tenures. Still, lenders also took steps to protect their margins. SBI, for example, raised the premium it charges on home loans to 65 basis points above the reduced one-year MCLR of 8 percent, according to details released on Monday. The lender did not specify why it raised the premium. 

Banks have received an estimated Rs 14.9 trillion (USD 219.30 billion) in old 500, and 1,000 rupees notes from depositors since the government on Nov. 8 unexpectedly banned the banknotes in a bid to fight counterfeiting and bring unaccounted cash to the economy. That had raised expectations banks would have room to cut lending rates, which is seen as vital to increase credit growth and spark a revival in private investments.

 Although India's gross domestic product grew 7.3 percent in the July-September quarter from a year earlier, the fastest pace of growth among large economies, much of that has been led by consumer demand. Lower lending rates will be welcome by the Reserve Bank of India, which has cut the policy rate by 175 bps since the start of 2015 but has felt banks were being too slow in cutting their lending rates. SBI's move comes after Prime Minister Narendra Modi on Saturday admonished banks to "keep the poor, the lower middle class, and the middle class at the focus of their activities," and to act with the "public interest" in mind.

 Modi's comments were made in a special New Year's eve speech in which he defended his ban on higher-value cash notes and announced a slew of incentives including channelling more credit to the poor and the middle class. Among others, state-run Punjab National Bank   cut its MCLR rates by 70 basis points, Union Bank of India   cut its MCLR rates by 65 to 90 basis points, while Dena Bank   cut its one-year MCLR rate by 75 basis points. Private sector lender Kotak Mahindra Bank   cut rates by up to 45 basis points.

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Ashok Leyland sales fall 12% in December but grows 1% in 9MFY17 

 India's second largest commercial vehicle maker Ashok Leyland said it sold 10,731 units in the month of December, registering a 12 percent degrowth compared with 12,154 units sold in year-ago period. However, on month-on-month basis, the sales growth was 12 percent. 

 India's second largest commercial vehicle maker Ashok Leyland said it sold 10,731 units in the month of December, registering a 12 percent degrowth compared with 12,154 units sold in year-ago period. However, on month-on-month basis, the sales growth was 12 percent. Sales were much better-than-expected. Motilal Oswal had estimated a 28 percent drop in sales to 8,700 units for the month. Medium & heavy commercial vehicle (MHCV) sales declined 9 percent year-on-year to 8,782 units and light commercial vehicle sales dropped 20 percent to 1,949 units in the month gone by. For the nine months period ending December 2016, sales increased 1 percent to 97,445 units compared to year-ago period. LCV sales grew by 4 percent and MHCV 0.2 percent. At 12:37 hours IST, the stock was quoting at Rs 80.50, up Rs 0.40, or 0.50 percent on the BSE.