Regulations
NSEL Scam: SEBI appoints auditor panel to inspect books of five brokers
The Department of Economic Affairs (DEA) under the Ministry of Finance says it continues to monitor progress of investigation in the Rs5,600 crore National Spot Exchange Ltd (NSEL) scam through Review Meetings. During the recently concluded meeting, it was informed that the SEBI has appointed empanelled auditors to conduct detailed inspection of books of five brokers of the erstwhile Forward Markets Commission (FMC) whose names figure in the list of offenders received from the EOW. SEBI was asked to get the audit of the books of brokers carried out in a comprehensive manner and expedite necessary action under law. 
 
Several agencies, like Economic Offences Wing (EOW) of Mumbai Police, Enforcement Directorate (ED), Securities and Exchange Board of India (SEBI), Financial Intelligence Unit – India (FIU-IND) and Ministry of Corporate Affairs (MCA) are looking in to the criminal offences and default in payments to investors on the platform of NSEL.
 
Maharashtra government has initiated process to auction attached properties in the NSEL scam. During the review meeting, Shaktikanta Das, Secretary for Economic Affairs advised the state government to expedite the auction of attached properties so that the money realised can be returned to the investors at the earliest following the due procedure. 
 
Here are the updates and decisions taken in the review meeting hold on 6 June 2016...
• Government of Maharashtra has issued fifth Gazette notification on 17 March 2016 for attachment of 151 properties worth Rs358.46 crore. Till date, five Gazette notifications have been issued in respect of attachment of assets worth Rs6,115.25 crores approximately.
 
• MCA is working on the merger / amalgamation of NSEL with Financial Technologies (India) Ltd (FTIL). The Bombay High Court had granted extension of time up to 15 February 2016 to MCA for taking final view on the draft order of the amalgamation. The MCA issued the final Order on 12 February 2016 for the merger of NSEL with FTIL. The Bombay HC, however, has restrained the Government from notifying the final Order dated 12 February 2016 in the Gazette. In the review meeting, MCA was requested to take quick action and ensure that the case is handled on priority. Further, it was advised that a senior officer should visit Mumbai to follow up on the Court case.
 
• The Enforcement Directorate (ED) had filed a prosecution complaint before the City Civil Court And Additional Sessions Judge, Greater Bombay on 30 March 2015 against NSEL and 67 other accused persons under the Prevention of Money Laundering Act, 2002 (PMLA). The prosecution complaint details money trail amounting to Rs3,721.22 crore. The next date of hearing is on 7 July 2016. It was pointed out to the Directorate that the violation of PMLA is a serious offence and therefore, the Directorate should be more proactive and take effective action quickly.
 
• FIU-IND passed an Order on 4 November 2015 under section 13 of the PMLA imposing a penalty of Rs1.66 crores on the NSEL for non-compliance of the Act. NSEL has gone in appeal in the PMLA Tribunal against the Order passed by Director, FIU-IND. Besides this, Show Cause Notices have been issued to officials / Directors concerned of NSEL. FIU-IND was advised that all out efforts may be made to ensure realisation of the penalty at the earliest.
 
• As decided in the previous review meeting, Government of Maharashtra is working on proposals for providing additional manpower for EOW of Mumbai Police, which is investigating the NSEL case on an urgent basis; augmenting the number of Designated Courts under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999; and deployment of full time competent authorities for dealing exclusively with NSEL related work.  

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Nifty, Sensex is trendless – Weekly closing report
We had mentioned in last week’s closing report that Nifty, Sensex might struggle to go up. The major indices were trading flat on a weekly basis with minor gains/ losses on account of a wait and watch attitude on the part of investors. The markets were waiting for clarity on interest rates from the Federal Reserve and global cues. The weekly trends of the major indices are given in the table below:
 
 
Bearish global cues, along with disappointing domestic macro-economic data and a weak rupee, dragged the key Indian equity markets lower on Monday. Consequently, the key indices traded in the red during the mid-afternoon session, as heavy selling pressure was witnessed in banking, automobile and capital goods stocks. Initially, on Monday, the key indices opened on a weak note, in sync with their Asian peers and a lower close of the US stock on last Friday. Asian stocks receded as investors were cautious ahead of the US FOMC's (Federal Open Market Committee) rate setting meeting which is slated to start on Tuesday. Further, lower crude oil prices and a weak rupee dented key indices. Besides, the upcoming domestic macro-economic inflation data -- Consumer Price Index (CPI) -- stroked volatility. A rise in CPI inflation may further reduce chances of a future rate cut by the Reserve Bank of India (RBI). In addition, poor data on industrial production which was released after market hours on Friday last week weighed heavy on sentiments.
 
With international oil prices climbing back to over $50 levels, driving around on cheap fuel seems to be a thing of the past though there is no danger of "hard times" as yet, Assocham said on Sunday. "While the crude oil prices have shot up by about 20% in the last few months, the auto fuel prices at the filling stations have increased between 12%-18% in different cities, depending on the state levies," said the Associated Chamber of Commerce and Industry of India. "A sharp increase in the retail prices of automobile fuel, particularly diesel, will have a cascading impact on the prices of a large number of consumer items, building the inflationary pressure and making the task of the Reserve Bank of India difficult in moderating the interest rates," it added.
 
Disappointing inflation data, along with negative global cues, depressed the Indian equity markets on Tuesday. Consequently, the key indices of the Indian equity markets traded in the red during the mid-afternoon session, as selling pressure was witnessed in information technology (IT), oil and gas, and automobile stocks. Investors were disappointed as Consumer Price Index (CPI) which was released after market hours on Monday showed an upward trajectory. Even the other major domestic macro-economic inflation data -- Wholesale Price Index (WPI) -- stroked volatility, as it showed a second month of rise. 
 
Further, investors were seen cautious ahead of the US FOMC's (Federal Open Market Committee) rate setting meet. A hike in the US interest rate is expected to lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India. Besides the US FOMC, the Bank of Japan (BoJ) and the Bank of England are slated to conduct their monetary policy meets this week. Lower crude oil prices and a weak rupee also dented key indices.
 
Value buying, key economic decisions and a strong rupee lifted the Indian equity markets on Wednesday as healthy buying was witnessed in capital goods, banking, and automobile stocks. In contrast, the BSE market breadth was skewed in favour of the bears -- with 1,546 declines and 952 advances. Value buying, after five consecutive days of falling share prices, triggered short covering which supported prices, point out market analysts.
 
Consumer electrical and electronics appliances maker V-Guard Industries Ltd is expanding its kitchen product range by launching gas stoves while its new voltage stabiliser factory at Sikkim will go on stream soon, said a senior company official. "We will soon launch gas stoves there by expanding our kitchen product range. Further, our new voltage stabiliser factory at Sikkim will go on stream soon. The expansion of our wire capacity at Coimbatore facility will also be completed soon," V Ramachandran, director and chief operating officer, told IANS on Wednesday. He was here to launch the Rs1,862-crore revenue company's new intelligent water heater branded Verano, that can be operated from anywhere in the world with a smart phone. Currently, the company sells kitchen items like induction cooktops and mixers. The company’s shares closed at Rs1,317.95, up 0.81% on the BSE.
 
Some policy decisions and a strong rupee lifted the Indian equity markets on Wednesday as healthy buying was witnessed in capital goods, banking, and automobile stocks. In contrast, the BSE market breadth was skewed in favour of the bears -- with 1,546 declines and 952 advances. Value buying, after five consecutive days of falling share prices, triggered short covering which supported prices, point out market analysts.
 
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.
 
On Friday, positive global cues, along with value buying and a strong rupee, buoyed the Indian equity markets. Consequently, the key indices closed in the green before which they had slipped into the negative territory due to selling pressure. Nonetheless, a relief rally in Europe, coupled with domestic short covering helped the benchmark indices to pare their losses in the last half an hour of the day's trade. Even healthy macro-economic data on current account deficit (CAD) lent support to the equity markets' upward movement. The CAD narrowed sharply to $0.3 billion or 0.1% of the GDP in the fourth quarter of 2015-16. Besides, higher global crude oil prices, value buying and short covering supported prices. 

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NDTV gets show cause notice from Income Tax Dept
Prannoy Roy-led New Delhi Television Ltd (NDTV) has informed the Bombay Stock Exchange (BSE) that it received a show cause notice from a Deputy Commissioner related with an assessment order (AO) passed by the Income Tax Department for assessment year 2009-10. Earlier in February 2014, the I-T Department had served a tax demand of Rs450 crore on the company for AY2009-10, which the company did not inform to exchanges at that time. 
 
In a regulatory filing, NTDV stated that the matters included in the show cause notice received by it are 'premature, arbitrary and unlikely to be sustained in law.' “The company's bonafide belief is that it will succeed in its appeal before Income Tax Appellate Tribunal (ITAT) and no penalty could be levied as alleged in the show cause notice,” it added.
 
The assessment of AY2009-10 is sub-judice before the ITAT. NDTV had appealed before the ITAT against the assessment order dated 21 February 2014. The ITAT had stayed the demand arising out of the assessment order on payment of Rs5 crore, as per NDTV's filing with the stock exchanges.  The appeal has been pending before the ITAT for more than two years. 
 
This show cause notice comes on the back of the show cause notice from Securities and Exchange Board of India (SEBI) against the company and its promoters for their failure to multiple disclosures information to exchanges. (Read: SEBI finally initiates action against NDTV, promoters)

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