Stocks
Nifty, Sensex looking weak – Thursday closing report
We had mentioned in Wednesday’s closing report that Nifty, Sensex might rally higher. The major indices of the Indian stock markets suffered a correction and fell by upto 0.80%. The trends of the major indices in the course of Thursday’s trading are given in the table below:
 
 
Negative global cues spooked key Indian equity markets on Thursday. Heavy selling pressure was witnessed in banking, automobile and capital goods stocks. The cautiousness showed by the Fed chairperson on keeping the key interest rates unchanged have depressed the global markets, pointed out market analysts. The BSE market breadth was skewed in favour of the bears -- with 1,633 declines and 965 advances.
 
The US Federal Reserve left interest rates unchanged on Wednesday, but signalled it still plans two rate increases this year. "The (Federal Open Market) Committee continues to closely monitor inflation indicators and global economic and financial developments" in its process to foster maximum employment and price stability, the Fed said in a statement. The Fed raised its target range for the federal funds rate to 0.25% to 0.50% in December last year, the first rate hike in nearly a decade, marking the end of an era of extraordinary easing monetary policy. But the turmoil in financial markets and a slowdown in global economy since the start of the year have raised increased concerns about the strength of the US economy, forcing Fed policymakers to hold off on any further rate hikes since then. In Wednesday's statement, Fed officials gave a mixed assessment about the US economy, saying that the labour market has slowed its improvement pace, while growth in economic activity appeared to have picked up since April. The central bank's updated projections released on Wednesday showed that policymakers expected the federal funds rate to rise to 0.9% at the end of 2016, the same forecast as they did in March. This implies two quarter-percentage-point rate increases this year. But they expected a lower rate path in 2017 and 2018, and their forecast for longer run interest rates was 3%, lower than their March forecast of 3.3%.
 
Even as the central government announced increase in buffer stock for pulses to eight lakh tonnes, escalating prices of Urad, Tur, gram and Kabli gram remained a cause for its concern. After a high-powered ministerial team headed by union Finance Minister Arun Jaitley met in the capital on Wednesday, the government decided to increase the buffer stocks to eight lakh tonnes as against original target of 1.5 lakh tonnes to control the prices. The government has also decided to import pulses from Myanmar and some African countries. However, the Food Ministry was sceptical even on Thursday about immediate relief from the skyrocketing prices as the states are not showing much enthusiasm for procuring pulses from the buffer stock. The government has so far prepared a stock of 1.15 lakh tonnes and is also offloading pulses to the states for retail distribution at a cheaper rate. The Centre has urged states to procure pulses from the buffer stock at a subsidised rate of Rs66 per kg and sell in retail markets at Rs120 per kg. With inflation and shortages starting again, government preparedness will be important for rural purchasing power to remain high. The markets will be bullish when rural purchasing power is good.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

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Securitisation market in India grew 45% in FY 2016
The Securitisation Summit held in Mumbai witnessed a gathering of the market players; brain storming the prospects, challenges, issues, concerns and way forward of the securitisation industry in India. The Summit, witnessed one of the critical rendezvous of the stakeholders in the securitisation industry in India.
 
The Indian securitization market is poised to be looking up this year and hereafter, as the tax issues concerning securitization have largely been addressed. Also, foreign portfolio investors have been permitted (notification may be out soon, while the draft notification is out in the public domain) to invest in securitized debt instruments. The option for foreign investors to invest in securitization allows overseas financial entities to take a share of the lucrative, fast expanding retail borrowing space in India, without having to formally get into business in India. Public sector banks have not been active in the securitization space, except as buyers of priority sector receivables. 
 
All these were discussed at length at this one-day program, the key highlights of which have been presented below:
  • The securitisation market in India grew by 45% in the FY 2016.
  • Volumes of Asset Backed Securitisation increased by 51%.
  • MFI’s continue to dominate the ABS originations.
  • Priority sector lending continues to be the major driver for securitisation volumes in India.
  • The tax issues which was major hurdle for securitisation in India has been taken care off under the Union Budget 2016.
  • With the ease in the taxation norms, the demand for Non Priority Sector Lending portfolios is likely to rise.
  • Pricing of instruments will be the determining factor between PSLCs and securitisation.
  • The main reason for lagging behind of RMBS happens to be stamp duty and registration of documents.
  • The full report can be viewed here.
The event was organised by Vinod Kothari Consultants in association with the Indian Securitisation Foundation. 

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COMMENTS

Paddy Nair

8 months ago

Bad debts are not due to Raghuram Rajan.We need professional technocrats like him NOT bureaucrats if we are to manage our monetary policy well.The world is to complex now and bilateral & multilateral agreements may mess up our inflation,currency management & deficits

Ramesh Poapt

8 months ago

NPA,Bad debts, curse for banks but.......... windfall gain/ blessings/profit/growth for securitisation co.s! like sickness treatment for
doctors!

Modi calls for 10 crore people to be drawn into tax net
Prime Minister Narendra Modi on Thursday called for 10 crore people to be brought into the tax net, up from the current 5.3 crore, in a bid to expand the revenue base.
 
"There are a total of 25 crore households in the country, out of which 10 crore have non-agricultural income. The Prime Minister, in his address, called for the expansion of the tax net to 10 crore people," said Revenue Secretary Hasmukh Adhia.
 
Adhia, however, did not give any timeline to reach the 10 crore tax payers base.
 
The Prime Minister also asked the taxmen to remove the fear of harassment from the minds of people and advocated what he termed as RAPID -- revenue, accountability, probity, information and digitisation.
 
"The Prime Minister gave the RAPID formula, which he said are the five pillars of tax administration," Minister of State Jayant Sinha told reporters.
 
The Prime Minister also called for bridging the trust deficit between the taxpayer and tax department, he said.
 
Sinha and Adhia were briefing the media after an address by Modi at the two-day Rajasva Gyan Sangam - Annual Conference of Tax Administrators 2016 of top officials with the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC). The conference will prepare a roadmap for tax officials for the current fiscal.
 
The revenue secretary said that Modi heard various suggestions from officials of CBDT and CBEC. The officials suggested formulation of a tax facilitation act and also conveyed their dilemma between tax enforcement and tax friendly measures, he said.
 
Sinha however clarified that the tax officials should not see any trade-off between the two.
 
In his address, the Prime Minister also emphasised on the CBDT and CBEC moving towards digitisation.
 
"Out of the total returns, 90% returns are filed through e-filing. And out of that 67%  income tax returns happen via the online route," Sinha said.
 
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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