Sensex, Nifty may try to move up again

But Nifty’s resistance at 6,300-6,315 is quite strong

On Monday, we pointed out that as long as the NSE Nifty manages to keep itself above 6,250 on Tuesday, the upmove may continue, although it may be a very short rally. On Tuesday, the Nifty spent most of the day below 6,250. There is still a chance that the index may rally towards 6,300-6,315. However, it may be a short rally that may stall soon.


The indices opened lower today, following a decline in the US markets Monday and major Asian markets today and continued to fall gradually through out the session. The BSE 30-share Sensex opened at 21,115 while the Nifty opened at 6,260. Soon after hitting the day’s high of 21,155 and 6,280 the indices started their downward journey. The indices hit a low of 21,009 and 6,234 late in the session from where they recovered a bit.  The Sensex closed at 21,033 (down 101 points or 0.48%) and the Nifty closed at 6,242 (down 31 points or 0.49%). Today’s fall was on a lower volume of 50.14 crore shares.


Among the other indices on the NSE, the top four gainers were Pharma (0.72%); Nifty Midcap 50 (0.31%); Midcap (0.04%) and Nifty Junior (0.02%) while the top five losers were Media (2.55%); Metal (1.57%); Realty (1.53%); PSE (0.89%) and Commodities (0.88%).


Of the 50 stocks on the Nifty, 14 ended in the green. The top five gainers were Cipla (2.05%); Lupin (1.86%); Cairn (1.82%); IndusInd Bank (1.67%); Dr Reddy (0.79%) and Infosys (0.73%). The top five losers were Tata Steel (3.03%); DLF (2.51%); NMDC (2.51%); Jindal Steel (2.34%) and Ranbaxy (2.14%).


Of the 1,505 companies on the NSE, 599 companies closed in the green, 825 closed in the red while 81 closed flat.


The rate of inflation based on the combined consumer price index (CPI) of urban and rural India slowed to 9.87% in December 2013, from 11.16% in November 2013, according to the data released by the government after trading hours on Monday. The moderation was largely driven by a fall in vegetable prices, which cooled nearly 19% from November on improved supplies. That helped slow down annual food inflation to 12.16% last month from 14.72% in November.


The Reserve Bank of India on Monday said that it had eased rules for hedging foreign exchange exposures, allowing greater flexibility for cancelling and rebooking forward contracts. RBI is now allowing domestically-held forward contracts for all current as well as capital account transactions with a residual maturity of one year or less to be freely cancelled and taken out again, called rebooking. Before the changes, domestic exporters could cancel and rebook up to 50% of the contracts booked in a financial year for hedging their contracted export exposures. Importers were allowed to cancel and rebook up to 25% of contracts booked in a financial year. These limits have been dropped. Foreign investors will be allowed to rebook 10% of the value of cancelled contracts, up from nothing previously.


US indices closed in the negative on Monday. The weakness persisted as a batch of weak earnings pre-announcements in the United States sparked concerns that the upcoming reporting season may disappoint.


Lawmakers in the United States staved off another possible shutdown by agreeing to series of measure to decide on US spending before the deadline. Lawmakers agreed to $1.1 trillion of spending that will run up to September 2014. This is part of the bi-partisan deal that the Republicans and Democrats agreed upon during the US Government shutdown, to agree to fund US spending subject to certain conditions. Earlier, the US shutdown majority of its government services as parties could not decide on spending levels to pay the bills.


Asian indices closed mostly in the red. Shanghai Composite the lone gainer was up 0.86%. Nikkei 225 was the top loser which fell 3.08%.


European indices were trading in the negative while US Future were trading marginally higher.


UK inflation unexpectedly slowed in December, reaching the Bank of England’s 2% target for the first time in more than four years. Consumer-price growth slowed from 2.1% in November, the Office for National Statistics said today in London.


In a separate report, the statistics office said factory-gate prices were unchanged in December from November and were up 1% compared with a year earlier. Input prices increased 0.1% on the month and fell 1.2% from a year earlier. That’s the biggest annual decline since September 2012.


Equity mutual funds report another round of net inflows in December as Sensex inched higher

While equity mutual funds registered a net inflow for two consecutive months, in CY13, equity funds suffered a net outflow of over Rs10,000 crore

Equity mutual funds received a net inflow of Rs857 crore in December 2013 compared to an inflow of Rs699 crore in November 2013. In CY13, equity mutual funds suffered an exodus of Rs10,427 crore. In the year, equity mutual funds reported a net inflow in just five months of the year. Massive outflows were witnessed in the months of January, May, September and October, working out to a total outflow of Rs11,820 crore. In a period when the Sensex rose by nearly 9% to 21,170 as on 31 December 2013 from 19,426 on 31 December 2012, equity assets under management declined by 5% to Rs1.83 lakh crore from Rs1.92 lakh crore over the same period.

As many as four new fund offers (NFOs) were launched in the month of December—Birla Sun Life Banking & Financial Services, Pramerica Midcap Opportunities, ICICI Prudential Value and Reliance Close Ended Equity—bringing in a total of Rs849 crore. Total sales of equity schemes in December 2013 increased to Rs5,508 crore compared to Rs5,414 crore in November. This is the highest sales recorded in two consecutive months. The previous best was reported in the months of February 2011 and March 2011, where the total sales amounted to Rs6,038 crore and Rs5,367 crore respectively.

In an earlier article we mentioned how investors and mutual fund houses rush in when the market is rising. (Read: Equity mutual funds register highest sales in November as market hovers near all-time high) In December, once again as the markets inched higher, inflows increased and new mutual funds were launched.

Despite the positive inflow in December, the total number of equity folios fell by 0.35 million to 29.89 million from 30.24 million in November. In CY13, equity fund folios fell by 12% to 29.89 million from 33.98 million, i.e. a loss of over 4 million folios.



Book Review: Kanga & Palkhivala’s ‘The Law & Practice of Income-Tax’ 10th Edition

Launching the 10th edition of Kanga & Palkhivala’s ‘The Law & Practice of Income-Tax’ at Moneylife Foundation event, noted income tax jurist Soli Dastur reviewed the book orally

The classics Kanga & Palkhivala’s ‘The Law & Practice of income-tax’ has been updated by prolific writer and Supreme Court advocate and expert in tax and constitutional law Arvind Datar.


Renowned tax jurist Sohrab Erach Dastur, popularly known as Soli Dastur, while speaking at a Moneylife Foundation event to launch 10th edition of Kanga & Palkhivala’s ‘The Law & Practice of income-tax’, talked about the book and Nani Palkhivala. In his oral review, Mr Dastur mentioned some important cases and facts from the book and new features of the book, which is updated by Mr Datar.


The 10th Edition has several new and innovative features. Mr Dastur recommends reading the preface by Mr Datar and said, “He (Mr Datar) broaches out all the issues which are very relevant today, and will continue to be relevant in the future as well.  In the 10th edition, what was previously relegated to additional cases is now being incorporated in the main book itself. This gives the reader all the cases and the subjects in one place, so that there is no need to refer to another part of the two volume book.”


While telling about the features of the book, Mr Dastur said, “One of the important features of this massive book is to give you food for thought. It is not to be just a compendium of cases, one has to be forthright in his view, express them regardless of whether they are right or wrong. Mr Datar’s views are mainly right but nevertheless one has to express. Mr Datar never hesitated to comment adversely on decided cases or on certain provisions in the Income Tax Act.


Mr Datar has condemned the views taken by the Supreme Court in connection with the scope of Section 147 of the Income Tax Act. He has also, in very bold and strong language, condemned the decision of the Full Bench of the Kerala High Court in select cases. Arvind Datar has not hesitated to dish out on how the Supreme Court was wrong in its interpretation of income derived from an undertaking. Also, there are select decisions that Arvind Datar has dealt with, and has condemned certain notions and interpretations which have been taken by the Supreme Court over the years, said Soli Dastur.


Mr Datar has condemned the decision of the Supreme Court, which has been quoted so often today in Azadi Bachav and in Turk war, where the Supreme Court gave a revolutionary meaning to the world, “Maybe Taxed,” appearing in the Double Taxation Avoidance Agreement, said Mr Dastur.


Mr Dastur brings attention on what the Supreme Court says, that if a power to tax is given to an outside country to tax income, it means the residence country has given up his power to tax that. Mr Datar disagrees with this view in the book. “However, we need to remember that this gives us the real meaning to avoidance of double tax as contrasted with relief from double taxation,” Mr Dastur said.


In the book, Mr Datar refers to the Direct Tax Code or DTC and wishes that it will never become the law. Echoing the same, Mr Dastur said, “There are various provisions in the Code, which has been interpreted word-by-word and given meaning by the various courts. Therefore, when one tries to express the same intent in the court, the language is changed. So, this gives rise to the possibility of litigation simply because of the wording.”


While ending his speech and review, Mr Dastur said, if one wants to know about the modern position of the tax law and practice, this book is an essential part of anyone’s bookshelf, especially budding lawyers, tax practitioners, chartered accountants and even the lay public who has an interest in income tax.


The first edition of Kanga & Palkhivala’s ‘The Law & Practice of Income-Tax’ was released in 1950, when Mr Palkhivala was just 30 years old and five years into practice at the bar. Mr Dastur said, “Very few other books go on to become a classic, written by a person at a tender young age.”


Mr Dastur, while talking on popularity of book, said, “There were two supplements in between, the supplements of the 6th and 7th edition and there were also reprints of the book on two occasions, reprints in the same year. This shows the popularity of book and there is likely to be a reprint of 10th edition of book well before 2015. It would be good if Mr Datar comes out with an updated edition of the book on 16 January 2020, the birth centenary of Nani Palkhivala.”


Author: Arvind Datar

Publisher: LexisNexis

Price: MRP Rs4,995 (Vol. I & II combined)



nagesh kini

3 years ago

As an addendum to the book review I'd like to suggest a must read. Mr. Palkhivala's Foreward to the very first edition is a classic piece of English literature. He explains the distinction between 'tax planning' and 'tax evasion'.

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