Markets close week on a low note
The stock markets closed a 4 day week (Monday closed due to Bakri-Id) on a low note. Equity benchmark indices slipped following global growth worries and uncertainties despite a rally of about 7 percent by Infosys on Friday. Weak global markets triggered concerns over the investment potential of foreign investors. The 30-share S&P benchmark index BSE Sensex closed at 26297 points (down 1.28 percent) while the 50-share CNX NIFTY closed at 7859.9 points (down 1.26 percent). The close came as an acute disappointment after a buoyant Thursday when Sensex closed at 26,627 and Nifty closed at 7,961.
Experts predict that the equity market is likely to remain contained between 7,800 and 8,200 till the next Union Budget. Analysts believe that volatility shall remain a key feature of the equity market given the concerns over global growth, triggered by the IMF’s slowdown warning.
Brent crude dropped to its lowest level in about 4 years as it slipped to USD 89.46 a barrel for November settlement. This is likely to bode well for India as about 80 percent of the national crude requirement comes from imports. Lower crude oil prices should translate into a lower fiscal deficit and current account deficit and help curtail inflation.
Infosys was the hero of the equity markets on Friday as the company announced a growth of net profit by 7.3 percent in the September quarter. CEO Vishal Sikka revealed long term revenue growth to 15 percent. Infosys stock hit a record high in Friday’s trading session, reaching about INR 3,908.6 before closing at INR 3,888.95. The company announced a 1:1 bonus for shareholders.
Metals saw major selling pressure and gold and silver sagged on global cues and with indications of increase in supply. Both the Nifty and the Sensex fell about 1 percent over the previous week’s close – capital goods, healthcare, FMCG, and metal lost out while the Bank Nifty picked almost 1 percent over the previous week.
SEBI to revise norms
SEBI (Securities and Exchange Board of India) the securities market regulator may soon overhaul existing norms and regulations in an effort to curb malpractices, especially insider trading, according to news sources. The market defender claims to have come across numerous instances of insider trading in small, medium, and big companies alike and feels the need to protect the interests of the stakeholders. The revisions shall be based on the recommendations of a panel headed by former Chief Justice of Karnataka and Kerala High Courts, Mr. K Sodhi. The panel had reviewed SEBI’s (Prohibition of Insider Trading) Regulations, 1992 and submitted extensive revisions in December 2013. Apart from the Sodhi panel, SEBI’s International Advisory Board (IAB) has suggested a number of changes to the insider trading regulations as well. In 2013-14, SEBI had initiated probes into about 108 cases out of which almost 12 percent related to insider trading activities.
August IIP comes as a disappointment
The index of industrial production (IIP) for the month of August was pegged at 0.4 percent. This news came in as a huge disappointment since economists had started to expect a number close to 2.4 percent. This indicates a shrinking of the manufacturing output especially in the consumer goods sector. The Central Statistics Office also revised the IIP for July to 0.41 percent from a provisional estimate of 0.5 percent announced last month. Manufacturing constitutes almost 75 percent of the IIP and is estimated to have contracted by about 1.4 percent in August. The cumulative growth between April and August 2014-15 over the corresponding period of the previous year was estimated at about 2.8 percent. After a strong first quarter of economic expansion, July and August have recorded weak levels indicating that the NDA government will need to step up efforts to maintain a strong GDP growth. Estimates of a 2.4 percent rise in August IIP had followed a strong car sales figure for the month and a seeming revival in the core sectors.
Fortune‘s “40 under 40” includes 4 Indians
In what Fortune calls a list of “young hotshots who are rocking business – the “40 under 40” – Indians may look out for four names. Harvard professor of Economics Raj Chetty (Rank 16), Micromax co-founder and CEO Rahul Sharma (Rank 21), Snapdeal Co-Founder and CEO Kunal Bahl (Rank 25) and Twitter’s executive team member Vijaya Gadde (Rank 28) have made the nation proud indeed. The list was announced on Thursday morning and features some of the most accomplished young people including Facebook Founder and CEO Mark Zuckerberg, Yahoo CEO Marissa Mayer, NYSE President Tom Farley, and Italy’s Prime Minister Matteo Renzi.
Vodafone wins tax dispute
India’s biggest foreign corporate investor and second largest telecom operator, Vodafone won a historic USD 490 million (INR 3200 crore) tax dispute at the Bombay High Court. Vodafone India had been accused of violating transfer pricing regulations in India. Vodafore India is believed to have issued stake to its UK- based parent company, Vodafone Group Plc, at a lower cost by under-pricing its shares. This means Vodafone Plc acquired a higher stake in Vodafone India for a lower cost also evading the consequent taxes. The transaction was made in FY 2010 and has been a subject of debate for almost 4 years now.
A Bombay High Court Division Bench headed by Chief Justice Mohit Shah and Justice M Sanklecha opined that “there is no taxable income on share premium received on the issue of shares.” This comes as a big relief to Vodafone which is already locked in a major tax battle with the government of India. In a separate case, Vodafone is contesting a tax claim of about USD billion over its 2007 acquisition of Hutchison Whampoa’s Indian operations. Shell India is involved in a similar transfer pricing tax law case with the Income Tax department of India. The ruling shall also be an incentive for foreign investors to enter the Indian markets, experts believe.