Stocks finished in the positive domain on Wednesday supported by the rate-touchy realty and managing an account shares after the Reserve Bank of India (RBI) chose to hold rates.
Local institutional speculators (DIIs) played sheet-grapple for the market, which energized for the fourth straight session. As indicated by dealers, the RBI’s choice to keep the loan fee on hold is in a state of harmony with financial specialists’ desires.
A fortifying rupee, which broke the 65-level against the dollar amid the day, pepped up the state of mind. The BSE Sensex wound up 174.33 focuses, or 0.55 for each penny, at 31,671.71. The gage had increased 337.57 focuses in the past three sessions. The NSE Nifty took action accordingly and recovered the key 9,900-check before shutting everything down focuses, or 0.56 for each penny, at 9,914.90.
The RBI, in its fourth bi-month to month approach survey for 2017-18, kept the repo rate unaltered at six for every penny. Turn around repo has been held at 5.75 for each penny. “Other than recapitalization of open part banks, there was just the same old thing new in the RBI arrangement, as opposed to affirmation of decrease in GVA (net esteem included) and increment in swelling. Be that as it may, this time, the critique isn’t as hawkish, which gives space to a rate cut before the year’s over,” said Vinod Nair, head of… .Read More
The U.S. and China seem to be on the verge of a costly trade war.Most recently, the Trump administration announced that Chinese shipments of aluminum foil will now face a hefty import tax, a decision that is intended to offset what the administration believes are unfair Chinese subsidies of its aluminum industry.
What this means in practice is that a handful of Chinese companies will now face “countervailing duties” ranging from 17 percent to 81 percent on their exports of aluminum to the U.S.
And a trade war may also be brewing between the U.S. and several Asian countries in the solar industry.It is not unusual for the U.S. to punish businesses it deems to be “cheating” on global trade rules, and one should not be too quick to judge any specific punitive measure taken. But the fear is that we are now on a slippery slope toward a trade war, as China is certain to respond by taxing U.S. sales of goods in China.
This latest action comes on the heels of a breakdown in talks between the two countries over trade last month. More generally it is consistent with President Donald Trump repeated promises to protect U.S. companies from what he perceives to be unfair competition from China. In addition, there is a strong chance that the administration will soon enact additional policies to limit the entry of Chinese products into U.S.
1.1 million permanent account numbers (PAN) that the government deactivated last month, Income-tax (I-T) sources say a majority were duplicates and were being used to open share-trading and demat accounts, transact on the stock markets, and operate in shell firms. The I-T department has discovered one individual could have five to seven PAN cards, each with a slightly different spelling of the holder’s name.
According to I-T officials, such people, who have been identified as small- and medium-sized stock brokers, sub-brokers and their clients, have evaded taxes.They could have evaded so by using one card for filing tax returns, and others for investing in financial instruments or making high-value transactions, said a senior tax official.
High-value transactions of more than Rs 50,000 and above require PAN details. During demonetisation, PAN was required to be quoted in the case of cash deposits of more than Rs 2 lakh in savings accounts.Sources said that the tax department had used data analytics to track down evaders by collecting information such as common addresses, mobile numbers, and emails to establish the relationship among multiple PANs.
The exercise is continuing since Demonetisation, at the time of which the department matched the databases of third parties such as banks and financial institutions with its own database and other details like know your customer (KYC), Tax deducted at source (TDS), and payments made overseas. This is how it got a comprehensive profile of taxpayers. A senior tax official said the department identified the link between PAN holders through their business associations, assets and associated transactions, and compliance history in the various databases.
Markets have been on a downward spiral since August 2 when the Nifty50 hit a high of 10,137 levels in intra-day deals. Since then, the index has tanked nearly 4%, or around 400 points to 9,737 levels in intra-day deals on Friday.
The recent fall has been triggered by rising geopolitical tension across the globe – one, between India and China on the Doklam standoff, and two the developments with North Korea and the United States. That apart, Sebi’s order to ban trade in 331 suspectedshell companies also dented sentiment, as did sub-par second quarter results of select companies.
Given the developments, analysts say there could be more pain in store for the markets that have recently taken cognizance of the developing geopolitical situation. Though they do not wish to predict how deep and long this correction could last, experts do caution that the fall is beyond anyone’s control as it is driven by geopolitical reasons.
“Global events that are beyond market control have triggered the recently fall. If there is more action over the weekend, the markets will continue to fall in the coming week as well. A lot depends on the geopolitical front and to that extent predicting the road ahead for specific index levels is risky,” says Jayant Manglik, president retail distribution at Religare Securities.
Since its recent high on August 2,investor wealth as measured by market-capitalisation (market-cap) of the Nifty 50 companies till August 10 has dipped by over Rs 1,47,600 crore, ACE Equity data show.
The government announced Bharat 22, an exchange traded fund of 22 large cap shares. While the composition includes mostly profit-making, dividend paying public sector companies, the government is also including some shares of blue chip companies like ITC, Larsen & Toubro and Axis Bank held under the Special Undertaking of Unit Trust of India or SUUTI.
The government observed in the release that over the past 3 years to June 2017, assets under management of exchange traded funds in India surged five times to just under Rs 54,000 crore. The release also emphasized that exchange traded funds or ETFs are a popular class of funds globally. Assets under management are expected to grow to $7 trillion by 2021 from $4 trillion today. There is merit in the argument the government has made in the press release.
ETFs have become a preferred vehicle for parking the long-term money. Sovereign Wealth Funds and Pension Funds worldwide love them. While the average cost of fund management is high in active funds, it is much lower in exchange-traded funds. At the same time, they are relatively less risky with well-defined assets under management. The liquidity of these funds is also high since they are listed on stock exchanges.
As many as 12 public sector banks including PNB, Bank of India and Indian Bank have lined up plans for raising funds from markets to shore up their capital base to meet global risk norm, Basel III.
About 6-7 lenders including Andhra Bank expect to close their capital raising plan by the end of the current fiscal, sources said.The remaining would raise funds through follow on public offer (FPO) or Qualified Institutional Placement(QIP) from the market during course of the next fiscal, they added.
Lenders including Allahabad Bank, Andhra Bank, Bank of India, Central Bank of India, Dena Bank, IDBI Bank, Indian Bank and Punjab National Bank (PNB) have already got permission from the government to raise capital from the market through QIP or FPO or preferential allotment.
Similarly, Syndicate Bank, UCO Bank, United Bank of India, Vijaya Bank also got approval from the government and some of them have already started the process. Board of PNB has given its approval for raising equity capital to the tune of Rs 3,000 crore through FPO, QIP or rights issue.
China Market valuations have risen considerably over the past few quarters both in the frontline indices like Sensex or Nifty and in the midcap smallcap indices. The current equity market valuations are factoring in a robust recovery in earnings growth. Retail investors are worried whether the valuations would sustain at current levels. This depends on how soon and robust the earnings recovery is and how sustainable it will be.
While optically,the markets may seem to be expensive going by historical standards, bulls say that price-to-earnings (P/E) multiples are inversely correlated with the cost of capital.
Further, markets typically top out at times the economy is overheated and there is a general euphoria in the markets.
Index composition/changes and index earnings composition are other parameters to check whether the markets are really overvalued or not.The truth lies somewhere in between. If the economy is close to a bottom and corporate earnings are slated to recover soon, then the P/E ratios will look reasonable going forward.
However, in the case of earnings recovery being delayed, the markets may be expensive and may remain sideways for an extended Read More