Stocks
Nifty, Sensex headed higher – Weekly closing report
As long as Nifty stays above 7,800, it will be bullish
 
We had mentioned in last week’s closing report that Nifty, Sensex will struggle but if Nifty does not breach 7,700, it is likely to head higher. The major indices in the Indian stock markets were in the red on Monday and Tuesday, but rallied on Thursday and Friday, after a holiday on Wednesday. The central government's efforts to get a key economic legislation passed during the winter session of parliament cheered the Indian equity markets on Friday. The government’s initiatives in economic reforms have been keeping the markets stable for around two weeks. The weekly trends of the major indices through the week’s trading are given in the table below:
 
 
Heightened chances of a US rate hike coupled with the upcoming stormy winter session of parliament and derivatives expiry subdued Indian equity markets on Monday. The upcoming winter session of parliament and derivatives expiry subdued Indian equity markets on Tuesday. The government needs to get the Goods and Services Tax (GST) bill passed in the Winter session to meet the 1 April 2016, roll-out deadline. The US Fed held an 'unscheduled' meet on Monday. The meet precedes the Federal Reserve policy meet in December, when a rate hike is expected to be announced. The US central bank has given signs that it might go in for a series of gradual rate hikes starting from December. However, in the short term, higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India.
 
Japanese life insurer Nippon Life Insurance will increase its stake in Reliance Life Insurance to 49%  by acquiring 23% stake from Reliance Capital for Rs2,265 crore, the two groups said on Tuesday. In line with the new shareholding structure, the name of the company will also be changed to Reliance Nippon Life Insurance Company Ltd. 
 
 Admitting that there were still a number of regulatory and taxation issues in India, Prime Minister Narendra Modi on Tuesday tried to hard sell the country's business potential to Singapore's corporate community and assured that he will do the hand-holding when they come to India. Wednesday was a market holiday for the Indian stock markets. Moody's Investors Service on Wednesday said the failure to implement reforms by passing the GST and land bills in parliament could potentially hurt investments amid weak global growth and prove to be a "downside factor" for Indian companies. "It seems highly unlikely that the major reforms will get enacted by the upper house of the Indian parliament where the ruling coalition is in minority. A failure to implement these reforms could hamper investment amid weak global growth," Moody's vice president Vikas Halan said in a report. "The government is unlikely to win a majority in the upper house if it keeps losing state elections like it did recently in Delhi and Bihar. Opposition parties are unlikely to allow key reforms to go through," he added. The constitution amendment bill for Goods and Services Tax (GST) has been passed by Lok Sabha, and is pending in the Rajya Sabha, where the ruling NDA does not have majority. Minister of State for Finance Jayant Sinha told reporters on Monday that the government is making efforts to convince the opposition about the GST bill.
 
Heightened chances of key economic legislations getting passed during Parliament's winter session coupled with hopes of a stimulus package in European Union buoyed the Indian equity markets on Thursday. Initially, both the bellwether indices of the Indian equity markets opened on a weak footing but gained strength in line with their Asian and European peers. Furthermore, better-than-expected outcome of the derivatives expiry cheered investors. 
 
The government on Thursday announced indirect tax incentives for India's stressed shipbuilding industry in a bid to give a push to the sector. The finance ministry notified it had exempted all raw material parts used in the manufacture of ships, vessels, tugs and pusher crafts and the like from customs and central excise duties. The export oriented units (EOUs) too will be eligible for this incentive. These benefits were earlier available if the manufacture was in a customs bonded warehouse, which condition is being withdrawn, the statement said. "Instead, these exemptions will now be subject to actual user conditions," the ministry said. The shipping ministry told parliament late last year that it had asked the Reserve Bank of India and the finance ministry to relax some of the financial regulations on banks engaged in corporate debt restructuring (CDR) of shipyards. Shipping is highly capital intensive and depends largely on the debt market to finance its acquisitions.
 
On Friday, GST hopes buoyed the stock markets and there is a feeling that the winter session of Parliament will be productive for legislation related to economic reforms. The stock markets promptly rallied and the gains of the indices on a daily basis were around 0.65%-1.96%.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 

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HSBC exits private banking business in India
Multinational banking major HSBC on Friday announced its decision to exit private banking business in India while offering its existing clients the HSBC Premier, a global retail banking and wealth management proposition.
 
There will be no loss of jobs because of the closure decision, said a bank spokesman.
 
"After strategic review of global private banking operations in India, we have decided to close down the business," the spokesman told IANS, adding HSBC will be closely working with its clients to minimise the impact of the decision on them.
 
The closure of private banking business is not related to the controversy of black money accounts of over 1,000 Indians in HSBC Geneva.
 
The spokesperson said HSBC is investing in its HSBC Premier product in India to enhance its range of products and services.
 
The organisation is silent on the size of portfolio handled by its private banking division in India or the number of people employed in the division.
 
HSBC now joins Morgan Stanley and Royal Bank of Scotland in exiting the private banking space as a part of the business rejig process.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Chandragupta Acharya

1 year ago

The reason for closing the business appears vague and unconvincing, though HSBC has clarified that this is not related to the now famous “HSBC list”. Bloomberg reports that this was a profit-making business, whereas the HSBC’s Retail and Wealth Management businesses in India are loss making. Since there would be no job losses, this is not a cost cutting exercise either. One may recall that Income Tax had conducted a “survey” of the bank in February this year, seized some documents and called senior executives for questioning. Though there was no follow up reporting about this in media later, given the notoriety of the bank in question, one wonders whether there is more to it than meets the eye.

Gold Bond scheme gets good response: Government
The first tranche of the Sovereign Gold Bond scheme has received an excellent response, garnering over Rs.240 crore, an official said on Friday.
 
"Gold Bond Scheme: 63000 applications for 917 kgs. gold amounting to Rs.246 cr in first tranche. Excellent response for an innovative product," tweeted Economic Affairs Secretary Shaktikanta Das.
 
The government, on Wednesday, had extended the issue date of the scheme's first tranche by four days to November 30 to enable proper processing.
 
A finance ministry statement said a large number of applications had been received by banks and post offices, which were designated sale points, and the date was extended from November 26 to November 30 "to enable smooth uploading of applications into RBI's E-kuber system, particularly by the post offices".
 
Subscription for the bonds, announced by Finance Minister Arun Jaitley in the 2015-16 budget as a financial asset serving as an alternative to the precious metal, was open from November 5 to 20.
 
Denominated in multiples of gram(s) of gold with minimum investment of two grams and maximum of 500 grams per person per fiscal, the bonds were to be sold only to resident Indian entities including individuals, Hindu undivided families, trusts, universities, and charitable institutions. For joint holders, the limit will be applied on the first holder.
 
The issue and redemption price are in Indian rupees fixed on the basis of the previous week's (Monday-Friday) simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd.
 
Having an eight year tenure with exit option beginning the fifth year onwards, the bonds will also be tradable in the bourses. The rate of interest will be 2.75 percent per annum payable semi-annually on the initial value of investment.
 
They can be used as collateral for loans, with the loan-to-value (LTV) ratio to be set equal to ordinary gold loan mandated by the RBI from time to time.
 
Interest on gold bonds will be taxable as per the provision of Income Tax Act, 1961 and capital gains tax shall also remain same as in the case of physical gold.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

MG Warrier

1 year ago

Happy to know. This could be a trend-setter. Gold Deposit Scheme will also take off, once an awareness is created about the benefits among the prospective investors. I understand that the authorities are trying to convince Trusts and charitable organisations including places of worship holding huge quantity of gold to deposit part of it to earn income. Slowly all the three schemes will pick up and I am optimistic about GOLD playing an important role in economic growth in the near future.

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