The home ministry had on 25th November pointed to eight instances of the mining group or its affiliates being involved in cases of default of payment, human rights violations or environmental damage. This has led the oil ministry to seek a fresh Cabinet nod for the deal
New Delhi: The $8.48-billion Cairn-Vedanta deal may have concluded and all government pre-conditions met, but the oil ministry has approached the Cabinet again for a fresh approval in view of the home ministry pointing to the alleged global and domestic ‘transgressions’ by the Vedanta group, reports PTI.
The home ministry, giving its security clearance for Vedanta buying majority stake in Cairn India, had on 25th November pointed to eight instances of the mining group or its affiliates being involved in cases of default of payment, human rights violations or environmental damage.
Sources said the oil ministry approached the Cabinet Committee on Economic Affairs (CCEA) “to bring on record” the transgressions pointed by the home ministry.
“The material provided by the ministry of home affairs has no bearing whatsoever on the security aspects,” the note to the CCEA states.
Sources said the ministries of finance and law, in their comments on the note, have given a no-objection to the deal.
Comments of ministries of corporate affairs and environment as well as Planning Commission are still awaited, they said adding the issue may come up before the CCEA later this month.
The planned sale of 40% shares held by Cairn Energy Plc in Cairn India to Vedanta was first considered by the CCEA in April last year and approved in June, 2011 with certain conditions.
Cairn and Vedanta complied with all the pre-conditions and concluded the transaction last month.
The CCEA note points out that all approvals and pre-conditions for the share transfer had been achieved with the last one from state-owned Oil and Natural Gas Corporation (ONGC) on 1st December.
ONGC, which holds stake in eight out of the 10 properties of Cairn India, conveyed its ‘no-objection’ to the deal after Cairn agreed to include royalty payment in Rajasthan oil block as “a cost recoverable item since commencement of production” and to pay the cess “in proportion to their respective participating holdings”.
Cost recovery of royalty and cess payments were among the pre-conditions that the government had set for giving clearance to the transaction.
Nifty to move sideways in a tight range of 4,705 and 4,765 with an upward bias. A sharp move may be in the offing
The market, which made a decent recovery from the day’s low, couldn’t sustain the gains and settled flat as concerns about domestic growth, highlighted by the prime minister on Sunday, worried investors. From here we may see the Nifty moving sideways in the range of 4,705 and 4,765 with an upward bias. Further, the next resistance would be at 4,835. However, after this level we may see a major reversal. The National Stock Exchange witnessed a trading volume of 58.12 crore shares.
The market opened flat on negative global cues and concerns that tensions with Iran would flare up oil prices. Also, remarks by prime minister Manmohan Singh over the weekend that the economy would grow at 7% this fiscal weighed on investors. The Nifty opened higher by one point at 4,748 and the Sensex lost nine points to start the day at 15,840.
Capital goods, metal and banking stocks witnessed selling pressure, pushing the indices to their intraday lows in early trade. At the lows, the Nifty fell to 4,695 and the Sensex went back to 15,678.
After touching the day’s low, the market embarked on a strenuous northward journey to emerge into the green in post-noon trade, supported by a positive opening of the key European indices.
The gains led the benchmarks touch their day’s high around 2.20pm. At the highs, the Nifty rose to 4,759 and the Sensex advanced to 15,872. However, profit booking at higher levels pushed the indices lower once again. The market closed trade on a flat note with the Nifty down four points at 4,743 and the Sensex losing 34 points to settle at 15,815.
The advance-decline ratio on the NSE was positive at 1099:612.
The broader indices outperformed the Sensex today as the BSE Mid-cap index surged 0.64% and the BSE Small-cap index climbed 1.40%.
The sectoral toppers were BSE Power (up 1.57%); BSE Realty (up 1.48%); BSE Capital Goods (up 1.33%); BSE Healthcare (up 0.86%) and BSE Consumer Durables (up 0.78%). The top losers were BSE Oil & Gas (down 0.71%); BSE Auto, BSE TECk (down 0.47% each); BSE Fast Moving Consumer Goods (down 0.34%) and BSE IT (down 0.10%).
The top performers on the Sensex were BHEL (up 3.15%); Jindal Steel (up 2.88%); Cipla (up 2.50%); Maruti Suzuki (up 1.80%) and Tata Power (up 1.69%). The top draggers were Bharti Airtel (down 2.93%); Coal India (down 1.59%); Tata Motors (down 1.52%) and Bajaj Auto (down 1.49%).
The major gainers on the Nifty were BHEL (up 3.35%); Cipla (up 3.14%); Jaiprakash Associates (up 2.80%); Jindal Steel (up 2.56%) and IDFC (up 2.55%). Bharti Airtel (down 25%); Sesa Goa (down 2.29%); State Bank of India (down 2.07%); Coal India (down 1.72%) and Bajaj Auto (down 1.64%) ended as the top losers on the index.
Markets in Asia settled mixed on the unending concerns about the Eurozone debt crisis and the sanctions on Iran and its fallout on oil prices. German chancellor Angela Merkel and French president Nicolas Sarkozy are expected to meet today in Berlin to draft a plan to rescue the euro over the next three months. However, stocks in China and Hong Kong rose on speculations that the Chinese government come out with policy reforms to boost liquidity.
The Shanghai Composite jumped 2.89%; the Hang Seng surged 1.47%; the Jakarta Composite climbed 0.51% and the KLSE Composite gained 0.50%. On the other hand, the Straits Times and the Seoul Composite declined 0.90% each and the Taiwan Weighted fell by 0.39%. The Nikkei 225 was closed for trade today. At the time of writing, the European markets that had opened in the positive were trading mixed and US stock futures were trading higher.
Back home, institutional investors—both foreign and Indian—were net sellers in the equities segment on Friday. While foreign institutional investors pulled out funds worth Rs28.63 crore, domestic institutional investors withdrew Rs6.09 worth of shares.
State-run oil marketing and refining major BPCL has suspended crude oil purchase from Iran after Turkey refused to route its payments, sending India to scramble for alternative methods to pay its second largest oil supplier.
BPCL, which last year began buying 20,000 barrels a day of crude oil from Iran, was last month refused permission by Turkey’s state-controlled Halkbank to open an account similar to ones Indian refiners like Essar Oil and Mangalore Refinery use for paying to Iran. The stock settled 0.82% lower at Rs472.25 on the NSE.
IT firm Patni Computer Systems today said it has received shareholders’ approval for delisting the company from the Indian bourses and the New York Stock Exchange. As per the delisting proposal, equity shares of Patni would be delisted from the BSE as well as the NSE and its American Depository Receipts would be delisted from the New York Stock Exchange. The stock gained 0.24% to close at Rs464.90 on the NSE.
Aluminium refiner Sterlite Industries, belonging to the Vedanta Group, is expected to shortly make a formal proposal for acquiring the government’s residual stake in aluminium major Balco. The government has a 49% stake in Balco, while the balance is already held by Sterlite. Sterlite Ind gained 0.69% to close at Rs95.10 on the NSE.
SBI’s tax saving deposits advertisement claims to give you 17.77% return. While it assumes you are in the 30% tax bracket at the time of investment, it conveniently calculates the return without considering tax obligation on the interest generated at the time of exit
During the tax savings season, people are desperate to save Rs30,900 in taxes by investing their hard-earned Rs1 lakh in certain kinds of savings instruments. One such avenue is a tax-saving fixed deposit (FD) which is for a five-year term without option for premature withdrawal. SBI has put a front page advertisement in Times of India and other leading national dailies claiming to give 17.77% effective annual yield. It assumes you are in the 30% bracket (which may not be true) and it gives an effective annual yield without considering the tax on the interest generated, which could be up to 30%.
While your effective annual yield will vary based on your tax bracket at entry and exit, SBI’s calculations in the advertisement shows the slick marketing which wants to consider highest possible tax savings on entry and no tax liability on exit. It is misleading to an average investor who can get dazzled by the big returns claimed in the advertisement.
This kind of advertisement is usually seen with infrastructure bonds giving tax benefit under 80CCF for Rs20,000 investment. Last year, IDFC bond claimed a tax-adjusted yield of up to 17.85% to investors on buyback (after five years for 10-year bond), which was confusing to the average investor. The company was offering 8% return last financial year.
On a positive note, SBI’s rate of interest for tax savings five-year FD is 9.25% per annum (p.a.) which is also the same as it offers for regular FD. In the past, tax savings deposit FD used to offer a little lower rate than the regular FD. With tight liquidity for banks, they want to entice deposits with high interest rates.
It is important to note that there is no option for premature withdrawal even with penalty for tax savings FD and the interest is taxable. There are other better options for tax savings under 80C. Consider all the options before jumping in with tax savings FD.
SBI has been advertising heavily for attracting big deposits. It is giving 8.5% p.a. interest for deposit of Rs1 crore and above for only seven-day FD. This is a good option for high-net-worth individuals, who want good return as well as liquidity.