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RBI bonanza keeps fiscal deficit in check in August
The central government's net tax revenues in August 2019 were not only below what it managed to get in July, but it was also 10.5 percent below what it was in August last year. Gross tax revenues too were lower than last August. In fact, cumulative gross tax revenues till August this fiscal year were only 4.2 percent higher than over the same period last year, far lower than the budgeted increase of 18.3 percent. The fiscal deficit was kept in check with RBI's dividend payment. And now the government has said it will stick to its earlier announced borrowing plan. So how will it control the fiscal deficit for the rest of the year? Read more.
Bank advances to industry and services shrinks
The data on the deployment of bank credit this fiscal year till August-end are an eye-opener. It also makes amply clear why finance minister Nirmala Sitharaman is using every possible opportunity to push banks to lend. It is probable, however, that the contraction in credit is due to lack of genuine demand for loans, in which case any artificial push to bank credit is likely to lead to a rise in non-performing assets in future. Read more.
Ideas for profit: Atul Industries
Our in-house research team had recommended integrated chemical manufacturer Atul Industries as a tactical pick about a month back. Since then the stock has gained 17 percent. While the immediate attractiveness of its valuation has faded, there are reasons to believe that the stock can be accumulated for the long haul. These reasons stem from factors such as the China-US trade war, environmental compliance requirements and India's surprise corporate tax rate cuts. A somewhat related theme is Atul's competitive strength that is positioning it as a partner of choice for chemical majors from both developed and developing markets. Read more.
Chart of the Day: A core shock to the economy
The index of eight core industries for August 2019 fell by 0.47 percent from a year ago. This is the lowest growth, or rather the biggest contraction in output of the index since April 2015, indicating the severity of the slowdown that has gripped the economy. Read more. > Picks from our technical analysts
ONGC: The share price makes a classic hammer or a pin bar pattern right at the confluence of a rising trendline and at the support at Rs 129-130. Click here for a futures trading strategy.
SBI: SBI has broken down from a bearish flag that had supported it since mid-August. Click here for a futures trading strategy.