Slight upward bias: Friday Closing Report

If today’s gains hold, expect the Nifty to move up to 5,000-5,100

Optimism by European leaders to support the continent’s banks from collapsing in the ongoing debt crisis helped the market to close higher. In Wednesday’s closing report, we had mentioned that if the Nifty holds above the day’s lows, we may see a short-term bounce till 4,820. After opening much above the previous closing, the index traded well above the previous closing throughout today’s trading session. The trend is on the positive side, the index is now in the zone where we may see a move up to 5,000-5,100.  

Refreshed after a day’s break yesterday, the market snapped its four-day losing steak to open on a firm footing on the back of positive global cues following news that euro-zone policymakers moved to shore up struggling European banks. The Nifty opened trade at 4,884, a gain of 133 points over its previous close. The Sensex jumped 430 points to resume trade above its psychological level of 16,000, at 16,222. A rally in metals, banking and IT stocks supported the early gains.

The market was sideways in the morning session with the indices scaling their day’s high at around 10am with the Nifty rising to 4,923 and the Sensex topping 16,347. However, the market pared some of its gains in the noon session on news that global ratings agency Moody’s has downgraded the senior debt and deposit ratings of 12 banks in the UK and nine Portuguese banks.

The benchmarks fell to their intraday lows in post-noon trade with the Nifty down to 4,861 and the Sensex slipping to 16,149. However, the market recouped itself and closed off the lows, snapping its four-day losing streak. The Nifty gained 137 points to close the session at 4,888 and the Sensex settled at 16,233, up 440 points. The NSE (National Stock Exchange) saw a volume of 53.62 crore shares.

The advance-decline ratio on the NSE was 1170:468.

Among the broader indices, the BSE Mid-cap index rose 1.37% and the BSE Small-cap index gained 1.15%.

All sectoral indices settled higher with the BSE Metal index (up 5.39%) leading the pack. It was followed by BSE Bankex (up 3.88%), BSE Realty (up 3.44%), BSE Consumer Durables (up 3.37%) and BSE Capital Goods (up 2.93%).

Sterlite Industries (up 8.56%), Jindal Steel (up 8.22%), Tata Motors (up 7.73%), ICICI Bank (up 5.82%) and DLF (up 5.81%) were the top performers on the Sensex today. The main losers were Bharti Airtel (down 3.34%) and Hero MotoCorp (down 0.26%).

The Nifty gainers were led by Sterlite Ind (up 8.47%), Axis Bank (up 8.41%), Jindal Steel (up 7.70%), Tata Motors (up 7.23%) and Sesa Goa (up 5.86%). Bharti Airtel (down 3.46%), Ambuja Cement (down 2.78%), Tata Power (down 0.71%), Ranbaxy (down 0.55%) and Hero MotoCorp (down 0.21%) ended at the bottom of the index.

Markets in Asia settled mostly in the green after the European Central Bank (ECB) president Jean-Claude Trichet on Thursday said that the ECB will resume purchases of mortgage-backed securities and re-introduce year-long loans for banks. However, investors were awaiting the US September payroll report, due tonight.

The Hang Seng rallied 3.11%; the KLSE Composite gained 0.46%; the Nikkei 225 advanced 0.98%; the Straits Times surged 1.43%; the Seoul Composite jumped 2.89% and the Taiwan Weighted rose 1.12%. Bucking the trend, the Jakarta Composite lost 0.51%.

Back home, foreign institutional investors were net sellers of stocks worth Rs1,008.87 crore on Wednesday. On the other hand, domestic institutional investors were net buyers of stocks worth Rs322.40 crore.

Casual workers at Maruti Suzuki’s Manesar facility are protesting against the company’s decision to bar them from resuming duty after a 33-day-long stand-off between the company management and permanent employees was settled last week. According to worker sources, the company has not allowed casual workers—who had supported permanent workers during their standoff with the management over signing of a ‘good conduct bond’—to enter the factory since last week. Maruti Suzuki gained 2.81% to close at Rs1,116 on the NSE today.

Medium and heavy vehicles major Ashok Leyland is exploring technologies for launching electric buses and trucks. Though India is at the threshold of developing electric systems, electric vehicles have a “great future in the country.” There are also opportunities in developing software for electronic control units, said Dr V Sumantran, executive vice-chairman, Hinduja Automotive. The stock shed 0.20% to Rs24.55 on the NSE today.

Material handling equipments and transmission products major Elecon Engineering Company has received an order worth Rs33 crore from state-run BHEL for a project in Chhattisgarh. The order is for supply of four sets of wagon tippler for raw materials handling systems of NMDC steel plant at Nagarnar, Chhattisgarh. Elecon Engineering lost 0.07% to settle at Rs71.15 on the NSE.


Black money stashed abroad: How can we get it back?

A number of countries have put in place amnesty schemes—with harsh penalties for any violations. It is high time India follows suit

A report from Vienna on 6 October 2011 quotes a Ministry of External Affairs Secretary—“The new tax information exchange treaty is ratified by the Swiss Parliament paving way for obtaining data on black money stashed in Switzerland. It will take effect from 1 January 2012 for Switzerland and 1 April 2012 in India, the respective fiscal year commencements. The protocol amending the Indo-Swiss Double Taxation Avoidance Agreement was earlier concluded in New Delhi on 30th August this year. The revised treaty now allows India access (to) tax-related information from Switzerland with prospective effect.” Now that an official mechanism is in place, it is all the more reason that Indian authorities go out rigorously ferreting out tax evaders.

Innumerable committees have gone into the issue from time to time. Even recently, another extremely high-level committee has been appointed and separately, a Special Investigation Team headed by a retired Judge has been appointed by the Supreme Court. Also presently being heard in the apex court is a high-profile PIL (Public Interest Litigation), filed by Senior Counsel Ram Jethmalani, an MP, with KVM Pai, a former Chief Commissioner of Income-Tax joining in as an intervener. Mr Pai has a lot to say.

Yet not one, including the government and taxation mandarins nor the Planning Commission or RBI (Reserve Bank of India) or financial wizards, is in a position to come out—even with any degree of reasonable certainty— the estimates, or even guesses, of the quantum of black money in circulation in the parallel economy in India and the volumes/extent of monies stashed abroad. So much so, that the numbers range anywhere from thousands of billions—to trillions of dollars. No one even has contested their veracity or accuracy!

The Swiss authorities and their highly-secretive bankers through this year have had to provide data by meekly succumbing to the pressures from the G-20 governments, the OECD, the powerful US Federal Reserve, Her Majesty’s Treasury and the French, German and Dutch governments.

Earlier, through their diplomatic representatives at New Delhi, the Swiss had indicated their willingness to furnish the information on a request through proper channels. They very rightly refused to accede to roving enquiries—calling them “throwing phone books of vague names without any specific charges against designated individuals.”

Against the prevailing slowdown in the US, which is also observed in Portugal, Italy, Greece, Spain, and Iceland along with France and the UK to a certain extent, it should not be difficult to weed out the illegally-stashed money, given India has the political will.

With the fall in the values of world currencies, most jittery Indians with monies abroad must be itching to get their hoarded wealth to safer conditions back home—at any cost. This is the right time for the Government of India to cash in on the opportunity to arm-twist the offenders using the carrot & stick approach. This ought to be a last one-time ‘amnesty’ to be kicked in by imposing penalties strong enough to deter future wrongful acts of  violations of tax and exchange laws, by conveying a strong message that such acts will result in dire consequences. The final offer should come at a cost that must be severe enough to hurt, if the amnesty scheme is not availed of by defaulters—this should be the price for legitimising past tax-evasion criminal acts.

The UK Treasury envisages bulk deals involving flat 50% levy on assets as ‘retrospective’ fees on unpaid taxes to legitimise Swiss accounts by calling on the Swiss to tax the bank accounts of British nationals and pass on the money so collected to the UK Treasury without disclosure of names. Her Majesty’s Treasury conservatively estimates it to be in the region of up to 9 billion pounds. It has introduced a 200% penalty for offshore tax evasion to punish the use of jurisdictions that do not share tax information. Even before this, the UK had schemes for undisclosed earnings in foreign bank accounts. Recently, there has been a proposal which will enable a defaulter to avoid penal action by paying a penalty of 100% by way of a simple declaration.

The French demanded and collected data from offshore banking headquarters of HSBC in Germany. This data to be made use of in the French Revenue initiative is expected to garner additional revenue of 500 million pounds from approximately 300 billion is to be repatriated to France.

The Italians are reported to have disclosed 95 billion pounds held in previously undeclared assets under recent amnesties. Over 98% was repatriated from assets held offshore that included works of art, sculpture, jewellery, cars and yachts. The Italian tax authorities, in the last 8 years alone, launched three schemes levying tax rates varying from 5% to 7% of the value of assets. The sources were not sought but the authorities made it clear that this was a definitive one-time clemency law, which would not be repeated. It was expected to net further 30 billion pounds by way of additional revenues and the money repatriated from Switzerland alone was estimated at over 40 billion.

The Dutch voluntary disclosure initiative for undisclosed foreign accounts has reportedly netted in disclosures of one billion pounds. Over the years, Ireland and Columbia are also stated to have tax-amnesty success stories.
The Indian CBDT (Central Board of Direct Taxes) ought to draw from the experiences listed above and from other countries to kick in effective measures to forestall further tax evasion and avoidance, subject incomes and wealth to intense scrutiny to reduce tax haven attractiveness. There is a need to bring in the increase in the cost for non-compliance, by levy of higher fines and penalties and stricter audit scrutiny for the delinquent taxpayer, by an increased sustained enforcement activity. The punishment ought to be imprisonment, in addition to monetary penalty, as in the USA. The fear of the devil is enough deterrent to avoid such crimes.

Looking at the state of the global economy—and those economies of ‘developed’ countries, it would make imminent sense if defaulters coughed up the requisite penalty and bring back the illegal money which they had siphoned off from India and stashed away in foreign ‘safe’ havens. Will the government have the foresight to act in time?

(Nagesh Kini is a Mumbai based chartered accountant turned activist.)




5 years ago

Amnesty schemes are positive ways to get the black money back to India. NHAI, REC, RBI all have the technical knowhow to deal with large finds to be diverted to infrastructure development.
Hence "Infrastructure Bonds" with a ten year tenure and 6% coupon rate(paid annually) should be attractive enough for black money holders to invest. As the list is going to be available the Govt should start prodding the offenders with notices for compliance. Penalty should not only be imprisonment but also the confiscation of all assets gained out of the black money. But one very important question that begs answer is whether the politician who is the kingpin behind this ailment ,would permit a treatment for cure?


Vikas Gupta

In Reply to RNandakumar 5 years ago

Yes, u r right that could this happen in India too where most of our Politicians & Bureaucreats are the most Corrupt persons?

Casual workers protest at Maruti’s Manesar plant

The group of casual workers have not been allowed to resume duty as they had supported permanent workers during their standoff with the management over signing of a ‘good conduct bond’

Manesar (Haryana): Casual workers at Maruti Suzuki India’s (MSI) Manesar facility are protesting against the company’s decision to bar them from resuming duty after a 33-day-long stand-off between the company management and permanent employees was settled last week, reports PTI.

A group of casual workers have been sitting in front of the Manesar plant, asking the company to let them rejoin work.

According to worker sources, the company has not allowed casual workers—who had supported permanent workers during their standoff with the management over signing of a ‘good conduct bond’—to enter the factory since last week.

“The company has let in only a few casual workers, who had not supported the agitation of the permanent workers,” a worker said.

When contacted, a company spokesperson said: “We are gradually ramping up our production at Manesar, including our new 2.5 lakh capacity Manesar B assembly plant. Most of the contract workers are likely to be absorbed in the expanded operations.”

The company had started partial operations of the second unit at Manesar on 2nd September as it was trying to normalise production at its first plant amid the labour problem.

On 1st October, the management of MSI and workers at the Manesar plant reached an agreement, ending the over one-month-long standoff that arose after the company prevented workers from entering the plant without signing a ‘good conduct bond’.

While the management had alleged sabotage and deliberate compromise on the quality of cars being produced, the workers at the plant said the company's motive was ‘revenge’ for a 13-day strike in June demanding the recognition of a new labour union—the Maruti Suzuki Employees Union (MSEU).

As per the agreement, the company agreed to conditionally take back 18 trainees that were suspended. However, it refused to take back 44 regular employees against whom disciplinary action was taken and who remain under suspension.

The agreement was brokered by the Haryana government, whose officials, including deputy labour commissioner JP Mann, assistant labour commissioner Nitin Yadav and Gurgaon district commissioner PC Meena, were involved in the hectic negotiations. Haryana minister for labour and employment Shiv Charan Lal Sharma had also involved himself with the negotiations.

Earlier, in June, the company had witnessed a 13-day-long strike by the workers at the plant, who were demanding the recognition of the MSEU. The stir had resulted in a production loss of 12,600 cars, which were valued at about Rs630 crore.




5 years ago

""Even the common property public roads about 1000 metres away from the Maruti-Suzuki plant at Manesar have been barricaded with metal stakes and barriers which have been dug into the ground and are manned by what appear to be private guards in civilian clothes with policement standing nearby. It is not advisable to even try to take a camera out to take photos and further progress by vehicle or by foot is simply rudely denied. I have dealt with heavy handedness in the past but am not willing to risk broken bones, vehicle or equipment for this, especially if the story itself will be a non-starter.""

(Feedback from a friend in the media who tried to go there, and these are hard-headed media people . . .)

There is something very drastically wrong at Manesar Maruti Suzuki and it is not getting reported.

We are listening!

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