|
|
|
|
|
IMF: Global economy in
a dangerous phase
Corporates defer investment plans due to uncertain outlook
Central Bank to launch e-lobby service
China to cut reserve requirement ratio further
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Forex reserves dip by $4.67 bn
Tax Advice
personal finance
Bearish trend to continue
|
|
IMF: Global economy in
a dangerous phase
New York, December 25 Against the backdrop of spiralling European debt contagion and leadership lacunae, the very existence of their common currency euro - a symbol of regional unity - was seen at the stake. At the same time, the Americans were seen facing their own set of woes, as the political brinkmanship over debt ceiling kept the US economy on tenterhooks. A slew of rating downgrades, including that of the US as a sovereign entity, as well as slowing growth prospects in emerging economies such as China and India, worsened the investor sentiments worldwide. Reflecting the overall sluggishness, the International Monetary Fund (IMF) says it expects the global economy to grow by around four per cent in 2011 and 2012, much lower than over five per cent expansion seen in 2010. "Because of threats of (further) faulty policy responses in the euro area, the global economy will likely enter 2012 on a weak note. A mild recession may not be such a bad draw after all," Bank of America Merrill Lynch said in a report. Grappling with severe credit crunch, massive protests against austerity measures and political transition, Greece continued to remain in the headlines. The financial instability across the region also saw change of guard at least in three nations - Greece, Italy and Spain. The persisting euro-zone crisis not only caused cracks in the European unity, but has also hurt the growth trajectory of emerging nations such as India and China. As debt ceiling drama and downgrade played out, the greenback took a severe beating for a few weeks and strengthened the calls for a global currency alternative for US dollar. All through the year, rating agencies including S&P, Moody's and Fitch kept issuing warnings, negative outlooks and downgrades and, towards the year-end, placed 15 euro-zone nations under watch for possible downgrades. "Against a backdrop of unresolved structural fragilities, a barrage of shocks hit the international economy this year," the IMF said in a report. In the second half of 2011, the fabled growth stories of Chinese and Indian economies seemed to unravel under slumping overseas demand as well as intense inflationary pressures.
China and India - once tipped as growth engines for the global economy - are staring at slowdown. As the IMF put it, "the global economy is in a dangerous new phase". — PTI |
||
|
Corporates defer investment plans due to uncertain outlook
New Delhi, December 25 Around 83 per cent of the respondents to a Ficci survey feel that the global crisis will get worse and persevere till end of next year. Interestingly, a small section of people felt that the current crisis is far deep-rooted and may last well into the next couple of years, possibly till 2014. The Ficci survey on the Global Meltdown and its Impact on Indian Industry reveals the uncertain economic outlook has also resulted in Indian corporates (50 per cent of the respondents) holding on to higher cash balances. An increase in cash balances typically implies that corporates are deferring their investment plans for better future opportunities. Alternatively, when credit is scarce, or expected to be scarce firms hold on to more cash to meet any potential eventualities. Interestingly, nearly 82 per cent of the 50 per cent respondents were large corporates. This trend is akin to FY2003, when also the economic outlook was uncertain aftermath the 2000 dotcom bust and the WTC attack. Within the sample, sectors like metals, cement, food and beverages, reported the maximum increase in cash balances. It is also possible that monetary tightening cycle that started in March 2010 has resulted in sectors like construction beginning to feel the pinch. Apart from conserving cash, a quarter of the respondents have shifted/contemplating a shift to domestic market because of increasing risk. Reflecting the uncertain global environment, coupled with a deteriorating domestic environment, a half of the corporates are using incremental funds purely for working capital purposes.
|
||
|
Central Bank to launch e-lobby service
Chandigarh, December 25 B Akbaraly, Zonal Manager of the bank, disclosed that these centres would be opened at Chandigarh, Ludhiana, Jalandhar, Amritsar and Rohtak. He said the bank would open 10 more branches in the North zone (comprising Punjab, Haryana, Himachal, Jammu and Kashmir and Chandigarh) by the end of this fiscal, taking the total number of branches here to 324. He further said the bank was targeting a total business of R 20,000 crore from this zone this year. “We have already achieved a business of Rs 17,000 crore so far. The growth drivers for the business this year will be agriculture lending and retail lending. This year, we are looking at doubling our agriculture portfolio in North Zone, from Rs 760 crore to Rs 1,500 crore. Other than farmers, we will also be lending to agri entrepreneurs for construction of warehouses and other agriculture-based infrastructure, besides the rice shelling units, ” he added. |
||
|
China to cut reserve requirement ratio further
Beijing, December 25 As of the end of November, the nation's total yuan funds outstanding for foreign exchanges stood at 25.46 trillion yuan ($4 trillion), down 27.9 billion yuan in comparison to the end of October, central bank data showed. — PTI |
||
|
Forex reserves dip by $4.67 bn
New Delhi, December 25 Foreign currency assets, the biggest component of the forex reserves, fell by $4.668 billion to $266.968 billion for the reporting week, the Reserve Bank India said in its weekly statistical supplement report. Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies, such as the euro, pound and yen, held in the reserves, the apex bank said. The country's gold reserves remained unchanged at $28.041 billion, it added. — PTI |
||
|
No IT return if salary income less than
Rs 5 lakh
by SC Vasudeva Q. I am a senior citizen aged 77 years. I have read in a newspaper that a person having total income less than Rs 5 lakh for the assessment year 2011-12 need not file the income tax return. My income for the assessment year 2011-12 is as under: From pension: Rs 2,15,000 House property: Rs 30,000 Interest from FDs: Rs 61,000 (10 per cent TDS deducted by the bank) As my taxable income was nil, I did not file the return for the year 2011-12. Is it essential to file the return or not? If yes, can I file it now? Will there be any penalty? — Resham Singh A. The notification regarding non-filing of income-tax return is applicable to an individual whose total income does not exceed Rs 5,00,000 and consists of only income chargeable to income-tax under the following heads:- (A) Salaries (B) “Income from other sources” by way of interest from a savings account in a bank not exceeding Rs 10,000. You have income from property and the interest income is not from savings bank account. You are, therefore, required to file the return. You can file the return for the assessment year 2011-12 before 31st March 2012. No penalty would be leviable if the return is filed by the said date. Senior citizen
Q. My date of birth is March 10, 1952. Kindly advise from which financial/assessment year I am entitled to claim tax exemption allowed for senior citizens as per the Income-tax Act and under which Rule(s). — RB Singh A. You would be entitled to claim the status of senior citizen for the financial year 2011-12 (Assessment year 2012-13) as you would complete age of 60 years by March 10, 2012. Section 44AA
Q. Under Sec. 44AA of the Income Tax Act an assessee is bound to maintain accounts if his income during the year exceeds Rs 1,20,000. However, the exemption for filing income tax return is up to Rs 1,60,000. It, therefore, implies that every assessee is bound to maintain accounts if he is to file his return which is a big burden on small assesses. To encourage filing of IT return and payment of tax, the limit u/s 44AA should be increased from Rs 1,20,000 to Rs 2,00,000. This will enable small assesses to file their returns and pay tax without maintaining the accounts. — HS Ghai A. The provisions of Section 44AA of the Income-tax Act 1961 (The Act) regarding the maintenance of accounts are applicable to a person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Central Board of Direct Taxes, if the income from such profession exceeds Rs 1,20,000 and the total gross receipts from the profession exceed Rs 10 lakh in any one of the three years immediately preceding the previous year. In view of the above it is not every assessee who is required to maintain such accounts but only such category of professionals whose gross receipts from profession exceed Rs 10 lakh. Any suggestion to increase the income limit specified in Section 44AA of the Act may please be made to the Central Board of Direct Taxes. Professional fee
Q. A civil lawyer has submitted a bill to the PSEB for rendering professional services. The bill includes professional fee and miscellaneous expenses incurred by him. I understand that TDS is payable on professional fee income and not on miscellaneous expenses. Am I correct? — BS Madahar A. I agree with you that TDS should not be deducted from the amount of expenses incurred by the lawyer for which a reimbursement has been sought by him. It would, however, be advisable to make a separate bill for professional fee and the amount claimed for the reimbursement of expenses incurred by him. This would also avoid any confusion with regard to the payment of Service Tax in case the lawyer comes within the purview of the Service Tax provisions. Pin money
Q. My wife maintains her own separate joint SB account in a bank where her name comes first and mine as second. She is a senior citizen aged above 70 years. She gets money from me from time to time and has saved about Rs 4.5 lakh over the years. She has also been getting money from her late father, elder brothers and other relatives. My query is if she gets the FDs made in the bank by putting her name first and my name as second holder, will the interest income of the FDs be clubbed my income or not? Kindly advise. — Kewal Krishan Sanon A. The interest earned on fixed deposit made by your wife should not be included in your income as any amount received by her as “Pin Money” is considered to be “streedhan” and therefore belongs to her. The amount of interest earned should be taxable in her hands. |
||
|
Best time to invest in
Bonds As inflation is easing and economy slowing down, interest rates are expected to come down sharply in the next two years. Since interest rates are at their peak now, this is the time to lock your money in bonds because as rates fall, bonds that have a higher interest rate will ensure higher returns Krishnamurthy Vijayan In the years 2001 to 2003, savvy investors made a killing on the Indian Bond market, either directly or via funds. In July 2000, on the back of rising oil prices and eroding rupee, the RBI had pushed up interest rates dramatically, and as Mutual Funds, we faced a lot of flak as investors came in contact with negative returns on bond funds. The six months thereafter were perhaps the toughest as we went about meeting large investors who had lost money in our funds…but the bond markets came to the rescue, as economic reality and government policy converged to drive down interest rates, giving investors equity-like returns from bond funds.
A decade later, the optics of handling the soaring food-price inflation has led the RBI to once again try to snatch economic defeat from the jaws of the India growth story. Food price inflation, a cash economy phenomenon has been driven by three factors: The Good The MGNREGA, employment creation through infrastructure projects and a burgeoning private sector have put more money into the hands of the poorest of the poor than ever before. For these people, it has meant the ability to buy more food, vegetables and milk. This is a short-term phenomenon, till supplies catch up. The Bad Our Public Distribution System, hog tied by bad roads, poor warehousing/storage facilities and immense wastage and “process leakage”, adds to the supply-side problems. The Ugly Our electoral events have become more regular and cash is needed to woo voters, print posters and provide biryani and “quarter”. The wholesaler and the cash-based agri-economy are natural sources of such funds. By increasing interest rates in a bid to pander to the elite and the media, RBI has created a near-2000 like situation; besides bringing our economy to a grinding halt. The global recession and our 8 per cent growth rate provided a historic opportunity to attract cheap and plentiful international liquidity into our economy…but in this historic opportunity loss, lays a historic investment opportunity for you. Its turnaround time Inflation is slowing down, so is the economy. Capital investments have practically stopped, real estate deals and automobile sales are at an all-time low and jobs…the less said the better. International investors have begun to express loss of faith in the India story. The interest burden on the Government is beginning to look Kingfisher-like. I believe the Government will do the right thing and bring interest rates down rapidly in the next two years. Investment strategy during the turnaround: Let us look at the opportunities for you as a saver/investor: l
The interest rates you are getting now are the highest in a decade. Lock into them through bonds where you have an option to exit in 3 to 5 years and fixed deposits. In the next 3 years, equity markets are likely to be very volatile and range-bound, given global conditions, and the time it takes for our economy to revive even after the government policy changes. Locking in some of your money for 3 to 5 years is not much of an opportunity loss. l
Invest in Bond Funds if your money cannot be locked away for 3 to 5 years and you don’t mind a bit of short-term volatility. As interest rates fall, fund managers who have bought long- term bonds with your money will be able to trade them for capital gains and mark-to-market gains will also flow to the NAV. In simple terms, as interest rates fall, bonds that have a higher interest rate appreciate in value as people try to buy them by splitting the difference between their interest rates and the market rate of interest. l
Indeed this may be a good time to even take a SIP in a bond fund, if you don’t have lump sums to invest. The interest rate decline would normally be gradual, and a one-year SIP in a bond fund could help you accumulate a decent amount of money during the high interest rate regime. l
The National Highways Authority of India, HUDCO and others are coming out with long- term tax-free bonds. If you happen to be retiring in the next one year or so, lock in your retirement benefits here (of course after buying your house, providing for medical emergencies etc - the rules of prudent investing and asset allocation don’t change). These interest rates may not be available in 2014 to 2020! The historic opportunity for investors is, therefore, to invest in Bond Funds, NHAI tax-free Bonds, top-rated corporate bonds (ideally listed ones) and even 3 to 5 year fixed deposits, at the best rates you can get. There lies an opportunity in every adversity - and the recent food price inflation and slowdown have given you one, Bonds. The writer is Co-Chairman, Mi India Capital Consultancy |
||
|
Bearish trend to continue
The week gone by saw a new low on the indices and though we did end positive on the benchmark indices, overall it was a mixed week. The markets lost ground on the first two days followed by a strong recovery on the next two days and the week was signed off with a small dip on Friday. The BSE Sensex gained 247.35 points or 1.6% to close at 15,738.70 points, while the NSE Nifty gained 62.40 points or 1.34% to close at 4,714 points. The broader indices like the BSE100, BSE200 and BSE500 were all gainers but significantly less than the benchmark indices with gains of 0.83%, 0.57% and 0.38%. The breadth overall in the market was poor with the BSE Midcap and BSE Smallcap losing 1.74% and 1.29%, respectively. The top sector indices which gained were the FMCG up 3.20% and the Bankex which gained 1.16%. Capital Goods lost 3.18%, while Metals lost 1.56%. In individual stocks, SAIL gained 7.3%, Tata Motors gained 7.2% while ICICI Bank gained 6.8%. Among the losers was REC with losses of 14.78%, PFC (Power Finance) down 11.5% and L&T down 6.23%. The Rupee was weaker and closed at Rs 52.96. Foreign Institutional Investors were sellers to the tune of Rs 1,272 crore while domestic institutions were buyers of Rs 223 crore. The new lows made during the week on the 20th of December were 15,135.86 on the Sensex and 4,531.15 on the Nifty. The week saw a drop in trading volumes on the cash market and this is likely to drop further in the week ahead due to Christmas and New Year. Thursday, the 29th of December, will see the expiry of December series futures and there may be some action on account of this. The November series had expired at a level of 4,756.45 which means the present level of the Nifty is less than 1% of the previous expiry. Interest in the market has waned considerably and even die-hard investors are not inclined favourably towards the market. The so called darlings have fallen by the wayside and one such example is Larsen and Toubro. From a high of Rs 2,212 made on the 4th of November 2010, the share is now trading at less than half the price at Rs 1,009 while the BSE Sensex in the same period has fallen from 20,917 to the current level of 15,738. The fall in the Sensex is 24.76% while that in Larsen is a steep 54.70%. In the same period, Reliance has fallen from Rs 1,107 to Rs 746, a fall of 32.6% and Infosys has fallen from Rs 3,085 to Rs 2,695, a fall of 12.64%. When almost all the stalwarts of the market have failed to deliver the mood is bound to be bearish and people tend to lose hope. In such a scenario one needs to protect capital and look at avenues where there is safety rather than returns. The week ahead would see some volatility on account of expiry but the same may not be significant. There could be some attempt to prop up the NAV of mutual funds in the last week of the year, but investors are cautioned from buying into the market for this event as the same may not happen. The buzzword is caution and one needs to see the December quarter results before coming to any conclusion. The BSE Sensex has support at 15,636, then at 15,396, then at 15,279, then at 15,135 and finally at 14,875 points. It has resistance at 15,876, then at 16,068, then at 16,186, then at 16,382 and finally at 16,544 points. The NSE Nifty has support at 4,683, then at 4,613, then at 4,575, then at 4,531 and finally at 4,454 points. It has resistance at 4,753, then at 4,807, then at 4,841, then at 4,873 and finally at 4,925 points. The week is likely to be a quiet week with thinner volumes and would bring a quiet end to one of the worst performing years for the Indian stock markets in recent times. The author is founder of KRIS, an investment advisory firm. The views expressed are his own.
|
||
|
| HOME PAGE | |
Punjab | Haryana | Jammu & Kashmir |
Himachal Pradesh | Regional Briefs |
Nation | Opinions | | Business | Sports | World | Letters | Chandigarh | Ludhiana | Delhi | | Calendar | Weather | Archive | Subscribe | E-mail | |
History repeats itself
