Weekly Business Roundup - Lowest WPI in April 2015March WPI Inflation Drops to -2.33 Percent

Inflation rates fell for the fifth straight month as wholesale price index (WPI) based inflation for the month of March registered an all-time low of – 2.33 percent. Falling food and fuel prices seem to have triggered this phenomenally low WPI rate. A fall in the prices of manufactured items also played a part, economists say. Inflation measured on WPI was pegged at -2.06 percent in February 2015, and – 0.39 percent in the first month of this calendar year. The drop is a spectacular one judging by the WPI-based inflation figures of March 2014 (about 6 percent). This is the lowest WPI inflation rate recorded since parameters such as manufacturing products and cooking oil were introduced in April 2005.

Indian economists, however, remain uncertain that this trend will continue. Unseasonal rain and hailstorms have already affected crops in March and April and the effect of this is yet to be seen. Apart from this, the risk of El Nino unsettling the monsoon of 2015 has gone up (70 percent risk – a 20 percent over the 50 percent risk for 2014) causing concerns that summer crops may be affected. Corporate India, however, remains hopeful that this record low WPI inflation may trigger a rate cut by the RBI.

Markets This Week

The equity markets broke their upward trajectory and closed in the red this week. The 30-stock S&P BSE Sensex closed the week at 28,442.10 points (down 437.28 points or 1.51 points from the last weekly close of 28,879.38 points). The 50-stock NSE CNX Nifty, similarly, registered its weekly close at 8,606 points (down 174.35 points or 1.99 percent from the last weekly close of 8,780.35 points). The first three days, however, saw the Sensex reclaim the 29000 level before two days of a downtrend preceded the close of the week. Market watchers, however, believe that this may be a temporary trend and that markets may soon pick up.

Two important companies that declared their Q4 (2014-15) results this week were TCS and RIL. TCS disappointed investors as operating profit fell by 37 percent. Tata Consultancy Services shares declined about 4.2 percent on Friday following the declaration of quarterly results. Reliance Industries, on the other hand, impressed the equity markets by declaring a standalone net profit of INR 6,243 crore for the same quarter – its biggest quarterly profits in 7 years. This is a 22.8 percent rise over the previous quarter (10.9 percent rise on yearly basis).

Gold buying activities in India slowed down this week with premiums on physical gold showing a slight decline. Gold imports, however, have shown no sign of slump. Data released this week shows that bullion imports grew by about 93.86 percent year-on year in March 2015 to reach USD 4.98 billion. Gold retailers and jewelers are all geared up for a frenzied week with Akshay Tritiya coming up on April 21. Both, the BSE and the NSE have announced extended trading hours for Gold Exchange Traded Funds (ETFs) on Akshaya Tritiya. Trading may go on till 7 pm only on 21 April. Furthermore, the BSE has announced that all transaction charges for trade in EFT for that day shall be waived off.

Disinvestment Plans in a Dozen PSUs

Following a 5 percent stake sale in REC (Rural Electrification Corporation) the government has lined up about 12 other PSUs and state-owned companies for disinvestment in an effort to meet the targeted INR 41000 crore selloff for this fiscal year. The companies shortlisted for the stake sale by the government include Bharat Heavy Electricals (BHEL), Hindustan Copper, Indian Oil Corporation (IOC), Metals and Minerals Trading Corporation of India (MMTC), National Aluminium Company Limited (NALCO), National Fertilisers limited (NFL), and India Tourism and Development Corp (ITDC). The government raised about INR 1,550 crore from the REC stake sale last week and intends to schedule the others in a phased manner. The other stake sale may not, however, be free from hassles. Employees of PSUs such as NALCO are protesting the disinvestment in these companies.

Simpler IT Filing for Aadhar Card Holders

Making income tax filing system easier for Aadhar Card holders, the Central Board of Direct Taxes (CBDT) will now introduce a linking system by which IT filed will be electronically verified and sent to the Income Tax Department. Hitherto, despite filing returns online, taxpayers are required to send in a signed physical copy of the ITR – 5 to the department by regular or speed post. Postal failure has caused much trouble for taxpayers over the past years. Putting those days behind, the CBDT has announced that the new Aadhar-linked forms will be available for FY 2014-15 (assessment year 2015-16). Taxpayers using the new form will mandatorily need to produce tax residency certificate (TRC). All details of foreign travel will also need to be disclosed in the new forms.

Snapdeal in FDA Dragnet

The Maharashtra Food & Drugs Administration (FDA) has raided the offices of the major e-commerce websites, Snapdeal for selling prescription drugs online. The FDA claims that it had information regarding the sale of prescription drugs including cough syrups and Viagra on the site. Apart from removing these listings from the site, the FDA sealed the retailer’s Goregaon and Bhiwandi offices. Snapdeal has been asked for an explanation and details of any transactions related to the drugs. As per Section 18 (c) of Drugs and Cosmetics Act, 1940, the sale of these medicines by an unauthorised retailer or without a doctor’s prescription is deemed an offence. The FDA shall now launch a full-scale probe into other e-commerce sites such as Amazon and Flipkart to detect such illegal sales of drugs and medicines.