Stocks
Nifty, Sensex to move sideways to down – Weekly closing report
We had mentioned in last week’s closing report that Sensex, Nifty were vulnerable to a short-term decline. The major indices in the Indian stock markets were trading listlessly through the week. On a weekly basis, the markets ended flat with the Sensex and Nifty marginally lower and the Bank Nifty marginally higher than last week’s close. The trends of the major indices in the course of the week’s trading are given in the table below:
 
 
On Monday, positive global cues, along with higher crude oil prices and firm rupee buoyed the Indian equity markets for the sixth consecutive session on Monday. The key indices traded with appreciable gains to reach their new 2016 intra-day high levels, as healthy buying was witnessed in capital goods, oil and gas, and metal stocks. The BSE market breadth was skewed in favour of the bulls -- with 1,724 advances and 1,016 declines.
 
Even though Indian commercial banks' shares have moved higher, ignoring Brexit (Britain exiting European Union), the currency volatility risks have to be understood, said US investment banking firm Jefferies in a report. Banks need to make provisions for their exposures to corporate with unhedged foreign currency exposure (UFC) and additional capital buffer for high risk UFCEs, the report said. Jefferies estimate the risk exposure at 1.7% of gross credit exposure for banking system. Banks have built Rs13 billion in provisions and Rs29 billion in additional capital as of FY16. According to the report, Bank of Baroda (BOB) is the only to report Liquidity Coverage Ratio (LCR) in British pound implying five per cent plus of liability in that currency. “This may result in higher hedge costs going forward -- marginal NIM (net interest margin) negative. This of course depends on the currency composition on the asset side -- unfortunately we don't have sufficient public data to delve deeper," the report said. Bank Nifty closed at 18,097.65, up 0.62%.
 
On Tuesday, bearish global cues, subdued the Indian equity markets. Consequently, the key indices traded in the red during the late-afternoon session. Heavy selling pressure was witnessed in automobile, banking and information technology (IT) stocks. The BSE market breadth was tilted in favour of the bears -- with 1,277 advances and 1,476 declines.
 
China is highly concerned with Indian trade remedy measures against Chinese steel products, the Ministry of Commerce said. The Indian government has launched an anti-dumping investigation into colour-coated steel sheets imported from China. It is the fifth such probe against China from India this year, the highest record among WTO members, according to a statement on the ministry's website. The global steel industry was experiencing difficulties due to sluggish economic growth and weak demand, but abuse of trade remedy measures would not help resolve industrial overcapacity but hamper normal trade, the statement said. SAIL shares closed at Rs47.50, up 1.50% on the BSE on Tuesday.
 
Wednesday was a market holiday on account of the Muslim festival Eid-ul-Fitr. On Thursday, the major indices of the Indian markets ended flat compared to Tuesday’s close and there were just marginal gains. Technology stocks, including those in media and entertainment space, came under selling pressure with their sectoral indices losing over 1.5%, even as the indices for fast-moving consumer goods, healthcare and banking sectors closed with gains.
 
Negative global cues and profit booking dragged the key Indian equity markets lower on Friday. The equity markets traded flat and ended marginally in the red, as heavy selling pressure was witnessed in capital goods, banking and oil and gas stocks. Midcap and smallcap indices traded lower. Pharma, auto and IT indices traded with gains. PSU bank, FMCG (fast moving consumer goods), realty and metal indices traded in the red.

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Indian kitchens demand oil; production declines, imports soar
Pushed by the rising use of oil as a medium for cooking in rural areas and the falling production of oilseeds, India’s edible oil imports more than doubled in the decade to 2015, according to ministry of consumer affairs data.
 
Consumption in rural households rose 40% and urban 29% between 2004 and 2012, and oilseed production declined seven per cent between 2005 and 2012, according to a August 2015 report from the ministry’s department of food and public distribution.
 
Indian use of edible oil has varied based on prices and availability, but demand appears uninterrupted, a likely consequence or rising population and growing prosperity.
 
“Growth has also been driven by government policies relating to oilseeds production, domestic processing and imports, all of which have affected the edible oil price and demand in the country,” said a May 2016 report by management consultancy ICRA.
 
“With India’s population increasing from 541 million in 1971 to 1.02 billion in 2001, and to 1.28 billion at present; and per capita income growth rising throughout the last three decades, consumption growth in India has been almost uninterrupted till recently. Consumption growth has been variable in recent years, primarily because of sharply higher product prices,” the report added.
 
Indian oilseed production cannot cope.
 
Edible oil is produced from oilseeds, and the department of food and public distribution report suggests that their production fell by a million tonnes over a decade ending 2015.
 
Some reasons proffered for stagnant production of oilseeds:
 
* Erratic rainfall is the main reason, according to the government
 
* Farmers are losing interest in oilseeds; yield not worth the cost
 
* Farms producing oilseeds have moved to rice and wheat, according to November 2014 report from the Indian Institute of Management-Ahmedabad.
 
As demand rises, imports are taxed to protect domestic manufacturers
 
The government hiked import duties on edible oils to protect the domestic industry, the Times of India reported in September 2015, from 7.5% to 12.5% on crude edible oil and from 15% to 20% in 2014-2015 on refined oil.
 
Imports now account for two-thirds of the India’s edible oil demand, which is unlikely to reduce as the population grows and incomes continue to increase. The consumer is likely to pay for taxes imposed on imports.
 
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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US taxmen sue Facebook on transferred assets to Ireland
The US Internal Revenue Service has sued social networking giant Facebook for the delay in sharing documents related to transferring its assets to Ireland in 2010 to cut corporate taxes.
 
Ireland’s top corporate tax rate is 12.5%, much lower than the US 35%, the Wall Street Journal reported on Friday.
 
The lawsuit is part of an investigation into whether some of those assets were undervalued “by billions of dollars,” the report added.
 
In 2010, Facebook entered into agreements with Facebook Ireland Holdings Unlimited to transfer the rights to its “online platform” and its “marketing intangibles” outside the US and Canada, said the lawsuit filed in US District Court in San Francisco this week.
 
The company also entered into a cost-sharing agreement with the Irish subsidiary to cover future development.
 
Facebook, however, rejected the lawsuit, saying that “Facebook complies with all applicable rules and regulations in the countries where we operate.”
 
According to the tax authorities, they went to court because Facebook has not responded to its requests and the statute of limitations on its probe which expires on July 31.
 
Facebook was ordered to produce the records on June 17 but “failed to appear.”
 
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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