Trend continues to be down: Monday Closing Report

Nifty may find support at 5,230 and then at 5,180

The market witnessed a sharp fall today, extending last week’s losses as rising oil prices re-ignited fears of higher inflation. A sell-off in blue-chips by institutional investors also weighed on the market. Both the Sensex and the Nifty closed at their lowest since 2 February 2012 and logged their maximum percentage loss (2.67% on the Sensex and 2.73% on the Nifty) since 22nd September 2011. The fall on the Nifty was sharp with the index closing below its 20-day moving average of 5,385. We may now see the Nifty finding support between 5200-5230, after which there may be small bounce-back. However, if the benchmark continues making a lower low and lower high, we may see it going down to 5,180. The National Stock Exchange (NSE) saw a volume of 86.59 crore shares which is much lower than the 10-day average.

The domestic market opened with small gains on the back of high oil prices and weak cues from its Asian peers. Nymex crude for April delivery was being quoted at $109.54 a barrel in Singapore in early trade while Brent crude for April delivery was at $125.33 a dollar. Concern over Iran’s nuclear programme is putting pressure on oil prices. Back home, the Nifty rose 19 points to resume trade at 5,448 and the Sensex opened at 17,975, a gain of 51 points over its previous close.

The opening figures of the Nifty and Sensex were their intraday highs. The benchmarks soon drifted southwards on a sell-off in blue-chips. Capital goods and banking stocks pushed the benchmarks 1% lower in mid-morning trade.

The market continued its free-fall in the second half of trade as the key European markets were trading in the red on concerns that high oil prices would slow down growth across the globe.

The indices fell to their intraday lows in the last half hour with the Nifty dropping to 5,268 and the Sensex tumbling to 17,382. While the market closed marginally off the lows, it settled lower for the fourth consecutive day. The Nifty lost 148 points to settle at 5,281 and the Sensex dived 478 points to end the day at 17,446.

The advance-decline ratio on the NSE was tilted towards the losers at 260:1536.

The broader indices badly mauled in today’s decline and underperformed the Sensex. The BSE Mid-cap tanked 3.02% and the BSE Mid-cap index tumbled 3.26%.

With the exception of the BSE Fast Moving Consumer Goods index (up 0.29%), all other sectoral gauged settled in the red. The top losers were BSE Realty (down 5.29%); BSE Metal (down 4.86%); BSE Power (down 4.03%); BSE Bankex (down 3.97%) and BSE Capital Goods (down 3.56%).

ITC (up 1.36%) and Sun Pharma (up 0.02%) were the sole gainers on the Sensex today. The key losers were Tata Steel (down 7.03%); Hero MotoCorp (down 6.62%); Hindalco Industries (down 5.35%); DLF (down 5%) and Jindal Steel (down 4.93%).

The Nifty gainers were ITC (up 1.34%); ACC (up 0.17%); Dr Reddy’s (up 0.04%) and Cipla (up 0.03%). Sesa Goa (down 10.15%); SAIL (down 8.55%); Reliance Power (down 8.43%); Reliance Infrastructure (down 8.28%) and IDFC (down 7.49%) were the main losers on the index.

Markets in Asia settled mostly lower on worries that higher oil prices would stifle growth. South Korean finance minister last week said that oil costs would see inflation rising more than 3.2%, estimated for the entire year.

The Hang Seng dropped 0.88%; the Jakarta Composite declined 0.86%; the Nikkei 225 fell 0.49%; the Straits Times tanked 1.05% and the Seoul Composite tumbled 1.42%. On the other hand, the Shanghai Composite gained 0.30%; the KLSE Composite added 0.02% and the Taiwan Weighted rose 0.285. At the time of writing, the key European indices were trading with cuts of 0.62% to 1.09% and the US stock futures were in the negative.

Back home, foreign institutional investors were net buyers of shares totalling Rs8,955.30 crore on Friday while domestic institutional investors were net sellers of shares amounting to Rs836.71 crore.

Bharat Heavy Electricals (BHEL), the country's largest power equipment maker, today said it has secured a Rs774 crore order from oil exploration company ONGC to supply onshore drilling rigs. While the mechanical equipment will be manufactured by BHEL’s Hyderabad plant, electricals like motors will be manufactured by the company’s Bhopal plant. BHEL tanked 4.99% to close at Rs288.65 on the NSE.

Core Education & Technologies, a leading global education solutions provider, has marked its first international foray in higher education, by entering Middle East.

Core is establishing its academic learning centre at Ras Al Khaimah Free Trade Zone (RAK FTZ) in an agreement with Birla Institute of Technology, Ranchi, offering programs in engineering, architecture and business administration. The company also plans to launch an executive MBA programme in this academic year in collaboration with a leading international university at RAK campus. Core gained 0.24% at Rs271 on the NSE.

Infotech Enterprises has entered into a memorandum of understanding (MoU) with Health Awareness Promotion Project India (HAPPI), to create awareness amongst the associates regarding non communicable diseases (NCDs). HAPPI is a voluntary project of the Prevent NCD Foundation consisting of eminent cardiologists, entrepreneurs and fitness management experts. The stock fell 1.02% to close at Rs145 on the NSE.


Telecom body asks TRAI to remove uncertainty in sector

“The current situation has put at risk the existing investment of billions of dollars in mobile network infrastructure, in a sector that either directly or indirectly employs almost 10 million people and serves more than 894 million consumers,” global telecom body GSM Association said in a letter to TRAI

New Delhi: Following the Supreme Court’s order quashing 122 telecom licences, global telecom body GSM Association (GSMA) has asked the Telecom Regulatory Authority of India (TRAI) to outline quickly the future course of action to bring in transparency and certainty to investments made in the sector, reports PTI.

In a letter to the TRAI, GSMA said, “it is important to now move quickly to outline the process that will provide a rapid resolution to this situation”.

“Key to this will be to ensure that the new process guarantees the principles of fairness, transparency and certainty, to all who have been investing in India in good faith,” GSMA said in the letter.

Earlier this month, the Supreme Court cancelled 122 licences allocated by the then telecom minister A Raja.

Since then, two foreign companies—Bahrain Telecom and Abu Dhabi-based Etisalat—have announced their exit from India.

Another operator Loop has written to prime minister Manmohan Singh, asking the government to return the licence fee paid by the company along with interest.

“The current situation has put at risk the existing investment of billions of dollars in mobile network infrastructure, in a sector that either directly or indirectly employs almost 10 million people and serves more than 894 million consumers,” GSMA said.

Since the deployment of mobile networks is capital intensive and the return is long-term, “uncertainty is particularly damaging to the future growth of India’s mobile sector”, it added.

GSMA said the uncertainty generated by the current legal situation also runs the risk of deterring the much-needed investment in 3G and 4G networks.

The GSMA has also extended its participation in an open dialogue on this situation with the government, to ensure fairness in the future auction process and maintain confidence in India's position as a secure place to do business.

Exuding confidence in the world’s second largest mobile market, GSMA said India is in a strong position to shape the mobile industry of the future.

“Unless the government moves swiftly to clarify the process of licence reallocation, further investment in India could be deferred,” it said.

It added that this will have a “knock-on impact” on a number of key sectors of the Indian economy.

According to a recent GSMA report, a 10% increase in broadband penetration in India would contribute a combined $80 billion (Rs3,50,600 crore) of net revenues across the country’s transport, healthcare and education sectors by 2015.

Operators have been seeking clarity in rules to safeguard the multi-crore investments made by these players.

The government has already made a few proposals like de-linking license from spectrum, tenure of new licenses at 10 years and market-linked pricing of spectrum to be a part of the new telecom policy.


Vodafone judgement fallout: I-T reviews probe in 2G case

The department, which has till now detected Rs1,500 crore of tax irregularities in its probe in this case, has found that telecom companies involved in the spectrum allocation had sold their controlling stakes to foreign firms through Mauritius and other foreign shores after the allotment of the spectrum

New Delhi: In an apparent fallout of the Supreme Court’s order in the Vodafone case, the Income Tax (I-T) department has started a review of its probe in the second generation (2G) spectrum scam which relied heavily on the premise of capital gains generated in overseas deals by telecom firms, reports PTI.

The department, which has till now detected Rs1,500 crore of tax irregularities in its probe in this case, has found that telecom companies involved in the spectrum allocation had sold their controlling stakes to foreign firms through Mauritius and other foreign shores after the allotment of the spectrum.

It had also issued notices to various firms asking them to pay tax on the capital gains from such transactions which include a recent Rs80 crore tax notice to a real estate development firm under the transfer pricing clause.

“The department is looking at strengthening the probe from various angles which can stand scrutiny during prosecution,” reliable sources said while refraining from elaborating further about the steps being taken.

The I-T department, in its status report filed in the Supreme Court last year, had said that while telecom companies were physically present here, the transactions and the beneficiaries were outside India, and that the department was following the same principles as were used in the Vodafone taxation case.

According to sources in the department, the I-T is now reviewing its strategy while taking forward the case and it is eagerly waiting for a decision on the review petition it has filed in the apex court which is listed to be heard on 27th February.

“In fact one of the main cases which will have the implication of the Vodafone tax case is the 2G spectrum,” the sources said.

The review petition settled by solicitor general Rohinton Nariman last week had contended that there was a need for re-considering the 20th January verdict of the apex court as the law on deciding the case has not been correctly interpreted.

The apex court had held that Vodafone’s transaction with Hong Kong-based Hutchison Group was a ‘bonafide’ FDI which fell outside the tax jurisdiction of Indian authorities and that I-T department does not have jurisdiction to levy Rs11,000 crore as tax on the overseas deal between Vodafone International Holdings and Hutchison Group.

The I-T department, in the 2G probe, has also used the provisions of the Double Taxation Avoidance Agreement (DTAA) with various countries including Mauritius for obtaining financial data of these firms.

Under the DTAA, if a firm pays tax in one nation then it is exempted from paying any tax here.

The department has found a number of instances of tax evasion during its 2G probe where firms and entities have not paid taxes under the garb of change of share holding patterns, extension or receipt of huge loans, and purchase of infrastructure.


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