Weekly Business Roundup: Markets Pick Up and Gold Bond Policy FloatedMarkets This Week

Indian equity markets seem to have regained their good cheer with the onset of the monsoons. A narrowing trade deficit, robust monsoon, and cheery wholesale price index (WPI) seem to have brought back some life into the markets. The 30-scrip BSE S&P Sensex closed the week at 27,316.17 points, a weekly gain of 3.37 per cent or 890.87 points over 12 June closing at 26,425.30 points – one of the index’s biggest weekly gains this calendar year. The CNX Nifty – NSE’s 50-stock benchmark index – also registered a similar rise of 242.05 points or 3.03 per cent by closing the week at 8224.95 points (up from last week’s closing at 7982.90 points). Despite the gains, Nifty remains about 10 per cent below its record high levels, last reached in March.

Other major equity markets in the continent also closed the week in the green, bolstering sentiments back home. The Sensex top gainers for the week were Reliance Industries (gain of 12 percent), ONGC (gain of 6.2 percent), Maruti Suzuki (gain of 5.4 percent) and Hindustan Unilever (gain of 5.3 percent). The top losers were BHEL, DLF, Tata Power, NTPC and Reliance Power.

 SBI Launches New Online Forex Platform

On Friday, India’s leading public sector bank, State Bank of India launched a new online platform to facilitate foreign exchange transactions through Internet. This new platform is for SBI customers who wish to check current forex rates and conduct transactions online without having to visit a branch. The new platform is called ‘SBI eforex’.

“The SBI eforex is an innovative platform incorporating robust security features and is designed to be user-friendly, fast and convenient…It is a highly flexible product offering the facility to the customers to customise and set their own limits for deal size and daily transaction limits. Details of all deals done are made available to the users on a real-time basis”, said the bank in a statement. Previously, the State Bank of India had launched SBI Fx Out to facilitate remittances from its NRI customers.

 Sun TV Gets a Respite

On Friday, Sun TV was granted a breather by Attorney General (AG) Mukul Rohatgi who directed the government to grant all 33 channels of the network security clearance. Sun TV and a number of such networks require a security clearance every decade. Earlier on, the Home Ministry had remained poised to turn down Sun TV network’s security clearance on the grounds that former Union Telecom Minister and his brother Kalanithi Maran had used corrupt practices to sustain operations. The Information and Broadcasting Ministry approached the AG following Home Ministry’s decision to deny the clearance. Sun TV shares picked up by 2 per cent after the AG’s decision was reported.

 Black Money Compliance Window to be Announced

Since his budget speech, Finance Minister Arun Jaitley has been keen on tightening the dragnet around tax evaders in the country. This week, he announced that efforts to bring black money out into the open are on and that the government may soon announce a compliance window – an opportunity for evaders to come clean, reveal stashes of black money and pay up any due tax/penalty in the meantime.

In a talk organized by the Columbia Business School, the FM said, “The law has been passed…and we are going to announce the compliance period”. Mr. Jaitley also said that this compliance window would be allowed under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, and those who failed to make use of it would have to face a penalty of about 90 per cent and tax of 30 per cent, when caught. This means, a total 120 per cent will be paid by the defaulter. It translates into the loss of asset and more. “Within the compliance period you will have to declare the asset and then you will get a time period to pay your taxation plus penalty which is 30 plus 30 of (asset at the market value)”, said the FM. He also clarified that this is not an amnesty scheme since both tax and penalty shall be charged.

 Draft Policy for Gold-linked Bonds Floated

On 19 June, the government of India came up with the draft outline for the sovereign gold bond scheme – a promise made by the Finance Minister in his budget speech. With the issue of these sovereign gold bonds, the government aims at curbing imports and diverting the demand for around 300 tonnes of gold bars and coins. The scheme, tentatively, suggests a 2 per cent annual interest on these gold bonds with maturity ranging between five and seven years. According to early impressions from news reports, the policy is appreciated by economists all over. The government has invited criticism and suggestions by early July.

 Guarantor Pulls Out; Subrata Roy’s Troubles Deepen

In an ongoing spate of deepening troubles, Sahara Group Chief Subrata Roy’s lawyer Kapil Sibal informed the Supreme Court that Roy’s INR 5000 crore guarantor had backed out. A financial institution that had agreed to act as the bank guarantor for Roy pulled out of negotiations. Roy has been asked by the Supreme Court to furnish INR 5000 crore in cash and find a bank guarantor for the same amount to be able to secure his release. Once freed, Roy will need to pay INR 36,000 crore in 9 installments (spanning across 18 months) to SEBI.