Nifty, Sensex, delicately poised in the Budget week: Weekly Market Report

If the Nifty stays above 5,820, it will try to head for 5,950. A fall below 5,820 could be disastrous for the bulls

The market settled lower for the fourth week in a row, this time on cautiousness ahead of the Union Budget and negative sentiments from the US. Key events to be watched next week would the Railway Budget (26th February), Economic Survey (27th February) and the Union Budget (28th February).


The Sensex declined 151 points (0.78%) to settle at 19,317 and the Nifty closed the week at 5,850, a cut of 37 points (0.63%). The market is delicately poised in the Budget week. If the Nifty stays above 5,820, it will try to head for 5,950. A fall below 5,820 could be disastrous for the bulls.


The market settled in the positive on Monday on gains in capital intensive sectors and the broader markets. Across-the-board buying helped the benchmarks recover from their lows and close higher on Tuesday. The market managed to settle in the green on Wednesday as cautiousness prevailed ahead of the Union Budget.


The market closed down over 1.5% on Thursday on selling in heavyweights after the release of the January meeting of the US Federal Reserve, which suggested that the central bank might withdraw the bond buying initiative sooner than expected. The indices closed flat with a negative bias amid highly volatile trade on cautiousness ahead of the Union Budget and sluggish global cues.


BSE Realty (up 4%) and BSE IT (up 2%) were the top sectoral gainers in the week while BSE Metal (down 3%) and BSE Fast Moving Consumer Goods (down 2%) emerged as the top losers.


The major gainers on the Sensex were Wipro (up 4%), Sun Pharmaceutical Industries (up 3%), Reliance Industries, Infosys (up 2% each) and GAIL India (up 1%). Jindal Steel & Power (down 7%); Coal India (down 5%), Tata Power (down 4%), Tata Steel and ITC (down 3% each) were the key losers on the index.


The top performers on the Nifty were DLF (up 13%), Wipro (up 4%), ACC, HCL Technologies and Ambuja Cements (up 3% each). The main losers were JSPL (down 7%), Coal India (down 5%), Tata Motors, Siemens (down 4% each) and Tata Steel (down 3%).


President Pranab Mukherjee, addressing a joint sitting of Parliament on the first day of the Budget session, set the tone for an austere Budget 2013-14, saying that the past year had been financially difficult for the country, with the Indian economy experiencing slower growth.


Finance minister P Chidambaram, on his part, is reportedly planning to slash public spending by up to 10% from this year’s original target.


The Reserve Bank of India (RBI) on Friday announced the much-awaited guidelines for new bank licences, allowing corporates and public sector entities with sound credentials and a minimum track record of 10 years to foray into the banking business.


Close on the heels of ordering attachment of bank accounts, investments and all other assets of two Sahara group companies and their promoters, including group chief Subrata Roy, the Securities and Exchange Board of India (SEBI) on Friday cautioned the investors and general public against transacting with these companies and persons. On 13th February, SEBI passed two separate orders, together running into 160 pages, directing attachment of properties and freezing of accounts.


In international news, next week’s 1st March deadline to circumvent automatic US spending cuts marks another fiscal showdown between President Barack Obama and Congressional Republicans. If Congress doesn’t act, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years.


Minutes of the January meeting of the Federal Reserve announced earlier this week ignited concerns that the policymakers could withdraw the bond buying programme and US central bank said that it would review the program in March.


Need to institutionalize behaviour or service audit

Several incidents and controversies in the recent past point to a missing link or a loop which allows miscreants in several fields to circumvent the rule of law and ethics even when they give an impression that everything they do is legally correct. This can be rectified by introducing “service audit”

Presently, there are institutional arrangements for audit of accounts which ensure vouching of items of expenditure in government and both public and private sectors, which responsibility is mainly shared between the Comptroller and Auditor General of India (CAG) and chartered accountants. The CAG, regulators and supervisors do take care of the need for post-expenditure performance audit of end-use of funds by selective performance audit of fund flow to projects and services.


Judiciary, the likely falling in place of the much debated ‘Lokpal’, ombudsmen and arrangements for redressal of customer grievances and a host of other institutional arrangements are also expected to handle their responsibilities in respective areas within their mandates. But, unfortunately, several incidents and controversies in the recent past point to a missing link or a loop which allows miscreants in several fields to circumvent the rule of law and ethics even when they give an impression that everything they do is legally correct.


CAG Vinod Rai recently chaired Moneylife Foundations 3rd Anniversary and spoke on “Government Accountability is the key to a Vibrant Democracy”.

To access the event report, please click here.


Performance Audit involves assessing whether government policies, programmes and institutions are well managed and are being run economically, efficiently and effectively. This is a task of potentially great significance—at a practical level for citizens and at a more abstract level for the health and vitality of democratic governance.

For performance auditing to focus on citizen trust in government, government audit organizations should be equipped to design their audits to focus on equity as well as efficiency, and effectiveness. They need to provide work that allows citizens and elected officials to exercise accountability for the use of authority as well as the use of funds. When selecting and designing audits, audit organizations should consider at least the following types of equity: costs, services, access and coercion. It is a matter of comfort that in the Indian context, the CAG has evolved a system of Performance Audit which can meet these challenges effectively. But neither the present audit arrangement nor the regulatory and supervisory framework, go beyond ‘compliance’ issues. When lawyers take charge of governance, laws get manipulated to suit the convenience of the masters who put them in charge of governance.  It is in this context the concept of ‘Service Audit’ or behaviour audit’ becomes relevant.


Long back, Kiran Bedi told an interviewer that everyday, before going to sleep, she used to ‘audit’ her own interactions and activities during the day and satisfy herself that she was on the right track. This, she said, helped her to make necessary and appropriate corrections, where necessary, quickly. The service audit discussed here is expected to help institutions and through them the society to make online corrections in policy formulation and implementation. Two recent incidents shocked those who took those in authority when they said ‘let law take its course’ seriously. One, the reported revelation that there was an apparent conspiracy between the CBI prosecutor in the 2G scam investigation and one of the accused in the scam. Two, in Kerala, the Director General of Prosecutions advised the state government against reinvestigation of a sex scandal, despite the Supreme Court having recommitted the main case to the high court, rejecting a state government appeal. In both the cases, the public feeling is that individuals who took quasi-judicial/ judicial decisions or gave opinion were guided by the support the accused garnered from the powers that be.


CAG Vinod Rai at Moneylife Foundation: “Our report on VVIP helicopter deal will be out soon”.


The institution of service audit should be responsible

  • To take cognizance of biased decisions by public servants including those in the private sector who either handle public funds, like banks which accept public deposits, or corporates which mobilize capital and funds from public.
  • To provide broad guidelines for formulating appropriate norms for a “code of conduct” for such public servants.
  • To conduct selective audits and bring out reports for government to frame appropriate policies to ensure that service providers and public servants do not hijack the law of the land.


The above suggestions are illustrative and once accepted “in principle”, the government may have to cause a comprehensive study before considering an appropriate legislative framework to support introduction of service audit.


Other stories by MG Warrier


(M G Warrier is a freelancer based in Thiruvananthapuram.)




4 years ago

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Mumbai terror attack: Four disturbing questions about the Pakistan connection

Despite extensive evidence and a US indictment, Pakistani authorities haven't moved to arrest accused masterminds in the 2008 massacre or explain the alleged involvement of officers in Pakistan's spy agency

The 35-year prison sentence imposed on David Coleman Headley, a terrorist scout and Pakistani spy convicted in the 2008 Mumbai attacks, has closed the U.S. chapter of a case with explosive international implications.


But justice remains elusive. Neither the U.S. nor Pakistani governments have fully answered critical questions about the case — including why most of the accused masterminds remain at large in Pakistan despite evidence implicating them.

Headley, 52, pleaded guilty to doing surveillance for the three-day terrorist rampage in Mumbai that killed six Americans and 160 others. His sentencing last month in Chicago made the Pakistani-American businessman the highest-ranking conspirator to be punished. Last year, India executed the surviving gunman of the attack squad sent by Pakistan's Lashkar-e-Taiba militant group.

The investigation of Headley revealed evidence that Pakistani security forces played a direct role in terrorism against the West. His testimony at the trial of an accomplice gave an unprecedented look inside operations of Pakistan's Inter-Services Intelligence Directorate (ISI), Lashkar and al-Qaida. Yet the U.S. and Pakistan have been relentlessly secretive about Headley, who had worked as an informant for the U.S. Drug Enforcement Administration.


What follows is an analysis of four major questions about the Mumbai plot that includes new information and material ProPublica has not yet published in the three years we have spent examining the attack and its aftermath.

Sources include court files, investigative documents and interviews with witnesses, victims, experts and others in the United States, Europe, India and Pakistan, as well as law enforcement and intelligence officials whom we agreed not to identify because they were not cleared to speak publicly about the case.

Q. Why doesn't Pakistan capture Sajid Mir?

A. U.S. prosecutors indicted Mir, a Lashkar chief and the accused lead planner of the Mumbai plot. But despite overwhelming evidence — notably phone intercepts that recorded Mir directing the slaughter — Pakistani authorities have not pursued him.


Some investigators believe he is or was an ISI officer. Others think he merely works with the ISI and has powerful protectors. Nonetheless, his trajectory confirms a former French operative's comment that he is "untouchable in Pakistan."

Information recently obtained by ProPublica reveals that Pakistani authorities questioned and released Mir after the Mumbai attacks in late November 2008. Mir spent three days in a Karachi command post overseeing the attacks by phone, then returned to a Lashkar compound of residences, offices and training areas in Muzaffarabad, according to a captured Indian militant who assisted at the command post.

On Dec. 1, a team from Pakistan's Federal Investigative Agency (FIA) showed up at the compound known as Beit-ul-Muhajadeen. The investigators arrested Zaki-ur-Rehman Lakhvi, the group's military chief, and a few others. But they did not arrest Mir, another mastermind named Abu Qahafa or the Indian militant, 31-year-old Syed Zabiuddin. The three militants slipped out a back gate, according to Zabuiddin's confession after his arrest last summer.

In mid-December, FIA investigators questioned Mir and Qahafa in Islamabad. But the two Lashkar chiefs "were let off two days later," Zabiuddin told Indian investigators. It is not clear why the Pakistani investigators released Mir, the most-wanted accused mastermind, while keeping other suspects in custody.

In the months after Mumbai, Mir worked on new plots against India and sent Headley to do reconnaissance for an attack on a Danish newspaper that had published cartoons of the Prophet Muhammad. In spite of his wanted status, Mir was so sure of his clout that he visited Lakhvi at least twice at the Adiala jail in Rawalpindi.

Headley told Indian and U.S. interrogators about a jailhouse visit by Mir in early 2009. Zabiuddin has revealed a second visit. He said that in September 2009 he accompanied Mir to the jail, where the Lashkar defendants are housed together in comfortable quarters, according to Indian counterterror officials. The militants ate sweets while Lakhvi told them "he had struck a deal with the government and as such no further arrests ought to be made," Zabiuddin later told investigators.

Mir survived Headley's arrest in Chicago in late 2009. Headley told FBI agents all about his Lashkar handler and even helped in a failed bid to lure Mir out of Pakistan. In 2010, Mir began another bold plot: a plan to attack the Nashik Police Academy about 120 miles east of Mumbai, Indian counterterror officials said. Mir cultivated at least two operatives, one of whom was arrested in Nashik that October, according to the Indian counterterror officials.

"I believed [Mir] was constantly making efforts to station (Lashkar) cadres to target Nashik Police Academy," Zabiuddin said.

In November 2010, a two-part ProPublica series put Mir on the front page of The Washington Post. Weeks later, he again consulted the Indian militant about the Nashik plot, according to Indian counterterror officials. Mir asked if he thought a Pakistani named Hafiz Usman could function undercover in India effectively enough to strike the police academy, the counterterror officials said.

Today, investigators say Mir remains operational and that his whereabouts are known to Pakistani security. They say his alliance with the ISI and his determination to kill Indians, Americans, Europeans, Jews and other Westerners make him a threat.

Q. What was the full extent of the role of Pakistani intelligence in Mumbai?

A. The case marks the first time U.S. prosecutors have charged a serving Pakistani intelligence officer in a terrorist attack.

Given the delicate U.S.-Pakistan relationship, the Justice Department and FBI did not reach the decision lightly. They were convinced that the ISI officer, known only as Major Iqbal, plotted in tandem with Mir. Pakistani officials deny that Major Iqbal is an ISI officer. But there is compelling evidence that Iqbal was Headley's ISI handler, that he provided direction, funding and training for the Mumbai attacks and that he helped launch the Denmark plot.

U.S. investigators have a good idea of who and where Iqbal is. He has rotated to a new ISI assignment, according to U.S. and Indian counterterror officials.

Zabiuddin's account offers further corroboration of Headley's story. Zabiuddin gave investigators the first look inside the operation's control room, according to Indian counterterror officials, and he linked the location to the ISI.

Lashkar militants set up the command post in a house in the Malir neighborhood of Karachi, according to Zabiuddin. Indian counterterror officials have obtained the GPS coordinates of the site. The house usually functioned as offices for a fishing business; the Indian saw life vests and fishing nets on the premises. The fishing business, a front, was run by the chief of Lashkar's air and sea operations, a militant named Yaqoob. An ISI officer named Major Sameer Ali worked with Yaqoob in the front company, according to Zabiuddin's account.

This echoes Headley's description of Yaqoob and ISI officers using fishing vessels for operations, including sea deployment of the 10-man Mumbai squad.

Headley identified Major Ali as a colleague of Major Iqbal and fellow liaison to Lashkar. On the afternoon of Nov. 26, 2008, Zabiuddin said he saw Major Ali arrive in a Toyota HiLux at the Lashkar command post just a few hours before the attackers landed ashore in Mumbai.
Major Ali met with Lakhvi, the Lashkar military chief, at the safe house for half an hour, according to Zabiuddin.

The ISI reassured militants they could rest easy after the attack, Zabiuddin told investigators. In January 2009, he said a high-ranking Lashkar boss named Muzzammil took him to a factory in Muzaffarabad, where they met with an ISI officer named Colonel Hamza and his personal assistant, Subeder Abdul Sabir.

"Both of us came out with assurances from Col. Hamza on my protection from arrest," Zabiuddin told Indian investigators.

U.S. and Indian investigators believe Col. Hamza is a spymaster whom Headley also met and identified as "Lt. Col. Hamza," Major Iqbal's commanding officer.

Indian leaders accuse the ISI leadership of direct involvement in Mumbai. In all, Headley and others implicated a brigadier, two colonels, at least three majors, a Pakistani Navy frogman and noncommissioned officers. Headley described an almost symbiotic bond between Lashkar and ISI chiefs, though he also said he did not think the ISI director knew about the plot.

Q. What risk does Lashkar-e-Taiba pose in the future?

A. Pakistani authorities insist they have cracked down on Lashkar. They have prosecuted suspects for Mumbai, shut down militant outposts and prevented major new attacks against India and the West.


Yet the crackdown has been a strange dance. It gives the sense of a deal negotiated in the shadows. The power of the ISI and of Lashkar, which is a military, political, social and religious force in Pakistan, has ensured impunity.

In contrast to al-Qaida trainers dodging U.S. drone strikes in remote secret compounds, Lashkar camps are large, well-appointed and well-known. Mountain training complexes have churned out thousands of fighters over the years. The group's air and sea wings display its ambitions. Zabiuddin said Lashkar stockpiled hundreds of cartons of paragliding kits and trained with the paragliders, which the militants "envisaged using in an attack," an Indian counterterror official said.

There were clearly tensions between elements of the Pakistani government and Lashkar after the Mumbai attacks. The FIA, a relatively small agency with the daunting task of investigating terrorism in Pakistan, showed aplomb in arresting Lakhvi and several others at their headquarters. Soon afterward, the Pakistani Army fired shells and rockets at the Bait-ul-Mujahadeen complex, wounding a Lashkar fighter and drawing retaliatory fire, according to the account of Zabiuddin. He said the Army occupied the complex for three months.

The crackdown only came, however, after Lashkar had been given advance warning and removed equipment from harm's way, the Indian militant told investigators. Zabiuddin described a methodical reaction: Lashkar operatives leased 10 or 12 acres and brought in excavation gear owned by the militant group to build a replacement