PNB Gilts will appreciate by 40% in three quarters

PNB Gilts will appreciate by 40% in three quarters

By Rajiv Kapoor | 24 June, 2017

PNB Gilts Limited is a subsidiary of Punjab National Bank, operating as a dealer for government securities. The company is a non-banking financial institution and is engaged in the services of National Securities Depository Limited as an agency to provide remote e-voting facilities. The company’s business segments are trading in treasury bills, commercial paper, certificate of deposits, corporate bonds and debentures, government securities and financial derivatives. As a dealer, the company’s activities include supporting government borrowing programme through underwriting of government securities issuances and trading in a gamut of fixed income instruments, such as government securities, treasury bills, state development loans, corporate bonds, interest rate swaps and various money market instruments, such as certificates of deposits and commercial papers. India has a diversified financial sector, which is undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. However, the financial sector in India is predominantly a banking sector, with commercial banks accounting for more than 64% of the total assets held by the financial system. Government of India and Reserve Bank of India have recently introduced several reforms to liberalise, regulate and enhance the financial sector. India is today one of the most vibrant global economies, with a robust banking and insurance sector and is projected to become the fifth largest banking sector globally by 2020, with bank credit to grow at a compound annual growth rate (CAGR) of 17% in the medium term, leading to better credit penetration. There has been a positive response with the relaxation of foreign investment rules pertaining to the insurance sector, with many companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the coming few quarters, there could be a series of joint venture deals between global insurance giants and local players. The relaxation in the foreign direct investment limit can also result in additional investments up to Rs 60,000 crore. The PNB Gilts stock, currently quoting at Rs 50 on the bourses, can appreciate by 40% in the next three quarters on the back of solid numbers.

Indian equity markets traded in green for most part of Friday, but ended the session on a flat note, with a negative bias. Many analysts expect subdued June quarter numbers for most businesses after the implementation of GST. The structural benefits of better tax compliance leading to higher tax-to-GDP ratio, seamless trade across the country and shift in business from unorganised to organised, will be visible only after three-four quarters. The CNX Nifty ended the week at 9,630, down by 3.20 points after trading in a range of 9,617 and 9,698 during the day.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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