Stocks
Nifty, Sensex highly overbought – Monday closing report

While Nifty may move up higher on news, rallies will be met with strong selling

 

On Friday, we mentioned that the Indian benchmark may move ahead with an upward bias. The Indian indices opened Monday with a gap up and immediately jumped higher to hit their intra-day highs. This is also the new life time high of the benchmarks.

 

However, soon the indices lost strength and declined to lower levels. For the entire remaining session, the benchmarks moved in the negative with a repetitive effort to come back in the green. The volatile move on the bourse ended with the benchmark closing flat today.


The S&P BSE Sensex opened at 27,943 while the NSE’s CNX Nifty opened at 8,348.

 

Sensex moved from the high of 27,970 to the low of 27,785 and closed at 27,860 (down 5 points or 0.02%), while Nifty moved from the level of 8,351 to 8,298 and closed at 8,324 (up 2 points or 0.02%). NSE recorded a volume of 106.68 crore shares. India VIX rose 3.33% to close at 13.7375.


The growth rate of India's eight core industries, which have a combined weight of 37.9% in the Index of Industrial Production (IIP), slowed down to 1.9% in September 2014 due to fall in output of crude oil, natural gas, refinery products and fertiliser, data released by government on 31 October 2014 showed. The core sector had grown by 9% in September 2013.


Speaking at the first meeting of the consultative committee attached to the ministry of finance Arun Jaitley recently said that he foresees India’s GDP growth in the range of 5.5% to 5.9% for 2014-15.


Indian market looked ahead for HSBC Manufacturing Purchasing Managers' Index (PMI) for October 2014. Adjusted for seasonal influences, the headline HSBC India PMI rebounded from September's nine-month low of 51 to 51.6 in October. The latest reading was consistent with a moderate improvement in business conditions during the month, the survey showed. Manufacturing activity picked up modestly amid stronger output and new order flows, particularly from overseas clients. However, firms continued to trim purchases and refrained from aggressive inventory accumulation, according to the survey.


Indian stock markets will remain closed on Tuesday for Muharram and on Thursday for Guru Nanak Jayanti.


Today, Network18 Media (10.60%) was the top gainer in ‘A’ group on the BSE. Polaris Financial (10.19%) was among the top three gainers in the group. The stocks was recently in news as it informed BSE that the it had sought voluntary de-listing of equity shares from Madras Stock Exchange (MSE) on 24 September 2014 in terms of SEBI (Delisting of Securities) Regulations, 2009. Pursuant to this application MSE has vide its notice to members dated 14 October 2014 accorded its approval for delisting of equity shares of the company with effect from 15 October 2014.


State-run GAIL (5.70%) was among the top two losers in ‘A’ group on the BSE. It was also the top loser in the Sensex 30-stock. It has posted a net profit of Rs1,302.90 crore in September 2014 quarter as compared to Rs915.67 crore in same quarter last year.

 

GAIL’s revenues increased to Rs14,129.72 crore from Rs14,002.45 crore. The stock had hit its 52-week high on Friday.


Sesa Sterlite (2.17%) was the top gainer in the Sensex 30-pack followed by Axis Bank (1.34%) which hit its 52-week high today. Sesa Sterlite posted a net profit of Rs923.79 crore in September 2014 quarter as compared to a net profit of Rs737.63 crore in September 2013 quarter. Its revenues fell to Rs8,735.25 crore from Rs10,962.52 crore same period last year.


US indices closed Friday in the positive.


Data on Friday showed consumer spending in the US unexpectedly dropped in September as incomes rose at the slowest pace of the year. The Institute for Supply Management-Chicago Inc.'s business barometer rose to 66.2 in October from 60.5 in the prior month.
Asian indices showed mixed performance. Among the trading indices today NZSE 50 (0.56%) was the top gainer while Seoul Composite (0.58%) was the top loser.


The weak data released on Saturday showed that China's manufacturing slowing further in October. However, the data released on Monday showed that China's business activity outside of its factory floors dropped to a nine-month low in October, as a property market slowdown continued to drag on economic growth. China's official nonmanufacturing purchasing managers' index fell to 53.8 in October from 54.0 in September, data from the China Federation of Logistics and Purchasing showed.


European indices were trading in the red. US Futures too were trading lower.

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Black Money: Probe finds large-scale account inheritance

The probe has found that many such accounts have been 'inherited' by their current owners from their parents, other family members or now-defunct trusts and companies that were set up years ago

 

Accounts inherited from family members as also from previously-constituted trusts or companies have come to the fore in a big way, as India seeks further details from Switzerland about those suspected to have 'unaccounted' wealth parked in the Swiss banks.

 

Hundreds of individuals and entities, including 627 names mentioned in a list submitted by the government to the Supreme Court, are facing probe for allegedly having black money in foreign banks including in a Swiss branch of HSBC bank.

 

While Switzerland has agreed to provide 'prompt' assistance to India and reply to information requests in a time-bound manner, the Indian authorities are conducting their own probes before approaching the Swiss government.

 

The due diligence of names accessed by Indian government through various sources, including the so-called HSBC list shared by the French government, has found that many such accounts have been 'inherited' by their current owners from their parents, other family members or now-defunct trusts and companies that were set up years ago.

 

While the exact number of such accounts could not be ascertained, sources said that there are 'quite a few' such accounts on which India is seeking further details from the Swiss authorities.

 

Switzerland, long accused of being a safe haven for illicit funds, last month promised to extend all necessary assistance to India and reply to requests for information in a 'time-bound' manner, or at least provide a reason for denial.

 

Explaining the treaty provisions about disclosure of such 'secret' information, a Swiss Finance Ministry spokesperson had said that authorities from the two countries are having 'regular contacts on bilateral tax matters', but refused to comment on particular cases citing 'confidentiality' clause of the Swiss-India tax treaty.

 

The government last week gave to the Supreme Court a list of 627 Indians with accounts in a Swiss branch of HSBC bank, on which probe for suspected black money is underway.

 

While this list was given in 'sealed envelopes', three other names were made public a day earlier as prosecution had been launched against those persons.

 

There has been a debate on whether disclosure of names, without prosecution, could violate tax treaties under which these names and other details are shared by foreign countries.

 

The exchange of information on tax matters between India and Switzerland is based on the double taxation agreement (DTA) and the protocol that was signed in 2010 between the two countries. It has been in force since October 2011.

 

This agreement is in line with international standards and provides for exchange of information on request.

 

The list of 627 persons with accounts in a Swiss branch of HSBC bank was received by India from the French government, while it had earlier got another list of Indians with suspected black money accounts from Germany.

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COMMENTS

Chandragupta Acharya

2 years ago

Here, a distinction needs to be made between money where tax has not been paid but which is otherwise legitimate, and money which in itself is illegitimate (i.e. proceeds of crime) such as bribe money. I believe in the latter case, such accounts would not be covered under DTAA and the entire money is liable for confiscation. Most of the discussion on this issue seems to presume that tax is the only liability on these sums, which is not the case.

Chandragupta Acharya

2 years ago

Here, a distinction needs to be made between money where tax has not been paid but which is otherwise legitimate, and money which in itself is illegitimate (i.e. proceeds of crime) such as bribe money. I believe in the latter case, such accounts would not be covered under DTAA and the entire money is liable for confiscation. Most of the discussion on this issue seems to presume that tax is the only liability on these sums, which is not the case.

National Herald Case: HC extends stay on summons against Sonia, Rahul

BJP leader Subramanian Swamy had alleged cheating and misappropriation of funds by the Congress leaders in the acquisition of National Herald by Young Indian

 

The Delhi High Court on Monday extended till 2nd December, the stay on the trial court order summoning Congress President Sonia Gandhi, Rahul Gandhi and three others in the National Herald case.

 

Justice VP Vaish extended the interim order after lawyers appearing for the Gandhis and others said their arguments cannot be concluded today.

 

The High Court, while listing the matter for further hearing on 2nd December, said the pleas before it require a regular hearing over two-three days and it can't hear arguments in the next few days due to holidays and a lot of transfer cases listed before it.

 

BJP leader Subramanian Swamy said that arguments need to be concluded before the next date of hearing in the matter before the trial court, which is scheduled to hear it on 9th December.

 

Swamy, in his complaint before the trial court, had alleged cheating and misappropriation of funds by the Congress leaders in the acquisition of the daily by Young Indian (YI).

 

Besides Sonia and Rahul, Congress Treasurer Moti Lal Vora, General Secretary Oscar Fernandes and Suman Dubey had moved the High Court on 30th July against the trial court order summoning them in the case.

 

The trial court had on 26th June summoned Sonia, Rahul, Vora, Fernandes, Suman Dubey and Sam Pitroda to appear before it on 7th August.

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