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SEBI mulls new norms
to curb ‘conflict of interest’ in market
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SAARC should focus on bilateral trade: CII
Govt to invest Rs 578k crore on widening highways
Tax Advice
Inflation to ‘drop considerably’ by March: Nomura
TV digitisation to involve investment of Rs 40k crore
FDI dips 16.5% to $1.76 billion
in September
Top 7 cos lose over Rs 28k crore in market cap
Cairn India world’s fastest growing energy firm: Platts
Fixed Deposit Interest Rates (up to Rs 15 lakh as on November 4, 2011)
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SEBI mulls new norms to curb ‘conflict of interest’ in market
New Delhi, November 6 The new rules would also look at discouraging misaligned employee incentives — a practice prevalent among the capital market entities for rewarding their staff purely on the basis of business generated by them and irrespective of the interest of customers or investors being safeguarded. The market regulator is framing these rules in accordance with a new set of initiatives proposed by the International Organization of Securities Commissions (IOSCO) to safeguard the markets across the world from any irregularities. IOSCO, a global cooperative of market regulatory agencies from across the world, including India, has called for effective steps by the regulators against conflict of interest and misalignment of incentives in securities market. The new rules, to be called “Guidelines for dealing with conflicts of interest in securities market”, would apply to all the entities present in the Indian capital market, directly or indirectly, as also their employees. These would include all participants in Indian securities market, associated persons, investment vehicles, collective pools of capital, institutional investors and stock exchanges. An official said that 'conflict of interests' has emerged as a major area of concern for regulators across the world, including in India, and the new rules would look at removing the loopholes that allow irregularities like insider trading, front-running and misaligned employee incentives. The aim is to check those actions of the market entities, as also of their employees, where interest of investors could be compromised to promote the business interests, he said. Currently, SEBI has prescribed codes of conduct for market intermediaries to deal with the conflicts of interests in the market, while there are also regulations with penal provisions for insider trading and unfair practices. But, there are no guidelines to identify and deal with conflict of interests by associated market entities such as research analysts, investment advisors and employees of market intermediaries, etc, which are are not registered and regulated by SEBI at present. SEBI is of the view that the absence of a general and comprehensive principle to deal with conflict of interests poses regulatory gaps in oversight and mitigation of possible conflicts of interest that may arise in the activities of these associated entities. — PTI Closing regulatory gaps in oversight
SEBI has previously said conflicts of interest also arise where market participants, who are supposed to act in the interests of customers or investors, use their authority or information to instead advance their own interests. Such motives could be achieved through bad financial advice, inappropriate margin lending, misleading disclosure and reporting, front running and front loading, among others. |
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SAARC should focus on bilateral trade: CII
New Delhi, November 6 “CII is encouraged by Pakistan’s decision to grant MFN status to India, which can transform the trading environment of the region as a whole. With proper implementation of SAFTA, South Asian nations can leverage regional dynamics for economic growth through dedicated efforts to facilitate trade and economic cooperation,” he added. Currently, intraregional trade stands at around 5% in South Asia, compared to over 50% in East Asia and about 20% in Latin America. India’s trade with SAARC countries has gone up from $6.9 billion in 2005-06 to $15 billion in 2010-11. However, trade is highly skewed in favour of India, and India needs to examine the goods it can import from its neighbours, a statement said. Much of the intraregional trade gain is seen in intermediates, which indicates scope for vertical integration. Since, countries in this region specialize in similar goods, lower border costs and reducing NTBs will allow them to more easily obtain raw materials and intermediate inputs from their South Asian neighbours. Greater economic integration would not only enhance the attractiveness of the region to foreign investors, but also address inter and intra country inequalities. CII has recommended that new areas of economic cooperation be explored. It has identified services, energy and electricity, and logistical connectivity as areas to be addressed by SAARC members. The services component of SAFTA should be made a priority, bringing many more services under its ambit, said the statement. While many South Asian economies source services such as education and healthcare in other member nations, crossborder services consumption is expensive. CII suggests that an improved FDI regime and business environment would help South Asian firms to provide services directly to other South Asian countries. This could be in the form of direct investment in hospitals, schools, transport services. The apex chamber has also urged SAARC leaders to consider integration of electricity grids across South Asia to reduce costs and enhance manufacturing competitiveness. The vast hydro-electric potential of Nepal, Bhutan, Afghanistan and India could be tapped. Natural gas reserves in Bangladesh and Pakistan could also be included. |
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Govt to invest Rs 578k crore on widening highways
New Delhi, November 6 This would be to widen about 55,000 kilometres of highways as barely 23% of the total national highways in the country are four/six laned and foreign companies would be encouraged to invest here. "Only about 23% of the highways in India are 4/6 laned and the sheer potential for investment in this sector is likely to create opportunities, which may also be attractive to foreign players. Investment in next five years is likely to be $120 billion (Rs 5.78 lakh crore)," the official said. Last month, during his China visit, Highways Minister CP Joshi had invited Chinese investors to participate in the country's mega road projects, each entailing an investment of about Rs 4,900 crore ($1 billion). As of August 2011, out of 214 projects under implementation with the National Highways Authority of India (NHAI), 40 are being implemented with participation from foreign firms. "Indian-Russian firms are implementing a maximum nine projects, at present, followed by five each by Indian-Chinese and Indian-Spanish firms," the official said. South Korean firms are executing four projects, while Indian-Dubai and Malaysian-Indian firms are implementing three each projects, besides two projects by South Korean-Indian joint ventures. Apart from this, foreign firms have also extended consultancy in 64 projects. The country has a road network of 3,300,000 km, of which national highways constitute only 2 per cent (about 71,000 kilometres) but carry about 40 per cent of the total road traffic. Prime Minister Manmohan Singh too has raised concerns over highways deficit in the country, which led to the road ministry seeking enhanced private participation to augment the sector. "We’ve to make an intense and sustained effort to ensure that this deficit is bridged," Singh had said recently. The transport ministry has set a target of awarding 7,300 km of roads in the current fiscal. — PTI |
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Disability pension exempted from tax
by SC Vasudeva Q: I'm an ex-serviceman with 50 per cent disability and drawing a disability pension. Earlier I was having 20 per cent disability and now the central government has increased the disability percentage, that is, those who with 20% disability will be considered equal to those with 50% disability. In other words, the disability percentage has been raised from 20% to 50% and the disability pension amount has been hiked accordingly. Is there any rebate on income tax for ex-serviceman drawing disability pension. If so, how much exemption is granted and under which section of the Income Tax Act? Also, have you earlier referred to this matter in this column? — Ravindera Randhawa A: A disability pension drawn by an ex-serviceman is exempt from tax, according to Samar Bhadra, undersecretary to Sudhakar Shukla, director (pensions), ministry of defence, government of India, vide letter No F No 200/51/99-ITA-I dated May 6, 2000. Q: I'm a senior citizen and drawing government pension My total annual pension will be Rs 280,000 during fiscal 2011-12. I pay an annual premium of Rs 12,000 for my life insurance cover. I've been filing my income tax returns by depositing advance tax payable on my pension. Can my bank deduct tax at source from the pension? — RS Chauhan A: Banks are required to deduct tax at source in case the payment of pension is above the maximum limit on which tax is not payable by a senior citizen. Such deduction of tax at source would enable you to reduce your advance tax liability and therefore should not make any difference as to the amount of tax payable on your total income. Q: The Haryana government pays one month's pension as leave travel concession, once in a block of four years, to its pensioners. I had received Rs 36,896 as LTC in February this year for the period of 2008-11. I've already spent that amount on travelling to various places. A sum of Rs 7,600 in tax was deducted at source from the LTC amount. Is the amount received as LTC taxable? If not, should I submit a revised income tax return to get a refund? Also, should I give an undertaking to the bank (where my pension is deposited) or to the income tax department for utilizing the LTC money? — H Raj A: The amount of leave travel allowance received by an ex-employee is exempt from tax provided the same has actually been utilized towards the cost of travel in accordance with specified rules. You can submit a revised return to claim refund of tax deducted on the amount of leave travel allowance provided you comply with the requirements specified in the rules and the time limit for filing the revised return has not expired. The assessing officer may require you to submit proof for utilization of the amount so received in accordance with the rules. You should keep such evidence ready for being filed with the tax department. The assessing officer, if he so desires, may also ask for the undertaking referred to by you. |
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Inflation to ‘drop considerably’ by March: Nomura
New Delhi, November 6 "We share the view with the RBI that inflation will likely drop considerably as we approach March 2012, due to lagged effects of past monetary actions and the recent moderation in commodity prices. "Further, as growth prospects appear to be weakening ... we expect no further rate hikes by the RBI in the current cycle," Nomura said in its Asia Economic Alert. The Reserve Bank has hiked its key policy rates 13 times, totalling 350 basis points, since March 2010 to tame demand and curb inflation. The rate of price rise has been above the 9 per cent mark since December last year. At its second quarterly review of credit policy last month, RBI projected inflation to moderate from December onwards and touch 7 per cent by end of the financial year. Economic growth slowed to 7.7 per cent in April-June, lowest in six quarters. Growth in industrial production stood at 4.1 per cent in August. Experts have blamed the repeated rate hikes, which has led to increase in the cost of borrowing, for slowdown in fresh investments and industrial growth. In its review, the apex bank said that notwithstanding current rate of inflation the likelihood of a rate action in the December midquarter review is relatively low. "Beyond that, if the inflation trajectory conforms to projections, further rate hikes may not be warranted," RBI had said. Commenting on RBI's forward guidance, Nomura said: "This, in our view, is a very strong statement indicating that there will be no rate hikes in December and beyond, so long as inflation moderates as expected". — PTI |
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TV digitisation to involve investment of Rs 40k crore
New Delhi, November 6 "It’s generally a very big reform of the Broadcasting industry," Information & Broadcasting Minister Ambika Soni told PTI in an interview. She said the entire process of digitisation, that is to be implemented in phases, will be completed by December 31, 2014. In the first step, the digitisation will be conducted in four metro cities by June 1, next year, two months after the target date set for it in a proposal approved by the cabinet. Explaining this delay, she said there was a provision for giving a six-month notice (after the cabinet decision). "So we’re having to change it from March 31, which was the time the metros had to [do], to June 1. But it doesn't disturb the rest of the schedule," the minister said. The current analog cable system offers consumers no choice of channels they can select. Generally, single rate is charged from customers and the package is mostly of 80-90 channels. Digital platforms will carry more channels and offer better quality. Digital cables have the capacity to carry up to 1,000 channels. The move is expected to benefit broadcasters also as it will remove the need for paying carriage fee to cable operators, bringing down the cost of operations. At present, carriage and placement fee contribute nearly 20% of the total cost of running a channel. After digitisation, all satellite channels will be beamed to houses through settop boxes. "Earlier it was that the cable operators, those who had analog systems, were not always onboard," Soni said, adding it was "not an addressable system" as the government was losing out on revenue. Soni said digitisation would lead to an "addressable system" and that digital signals can be routed through cable operators who would have to go for the maximum investment of Rs 3 lakh each for it. — PTI |
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FDI dips 16.5% to $1.76 billion
in September
New Delhi, November 6 While in August foreign investment inflows had increased over two-fold to $2.83 billion, year-on-year, in July they declined after a significant jump for
two consecutive months — May and June. During the April-September period, the FDI went up by about 74 per cent to $19.13 billion, from $11 billion in the year-ago period as inflows were robust in the initial months, a senior official in the department of industrial policy & promotion said. Despite uncertainties in the global economy, FDI may touch $35 billion in 2011-12, as against $19.4 billion in the last fiscal on account of major deals like RIL-BP and Posco, the official added.
— PTI |
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Top 7 cos lose over Rs 28k crore in market cap
Mumbai, November 6 The seven companies witnessed whopping drop of Rs 28,960 crore in their combined valuations amid a weak market which saw the 30-scrip benchmark BSE Sensex losing 1.36 per cent. "It’s a highly volatile market because of eurozone crises. Stocks are reacting to their September quarter numbers and on any negative cue stocks are getting hammered, which in turn is impacting their market capitalisation," Ashika Stock Brokers research head Paras Bothra said. However, three firms — Bharti, NTPC and SBI — defied the broader market
trend. — PTI |
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Cairn India world’s fastest growing energy firm: Platts
New Delhi, November 6 With a three-year compounded growth rate (CGR) of 116.5%, Cairn was ranked by energy information provider Platts as the fastest growing E&P company in 2010. It was also named the fastest growing Asian company ahead of Reliance (ranked 18th in Asia) and state-owned GAIL India Ltd (ranked 20th) in the Platts Top 250 Global Energy Company Rankings. Cairn made its maiden entry at 120th rank in the overall global energy company list, which was
topped by US giant Exxon Mobil Corp. — PTI |
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MF equity schemes a safer bet in
choppy markets
Investing in equity schemes of mutual funds is a better option than directly investing in stocks, maintains RK Gupta. Mutual funds allow investment through either lump sump payment or a systematic investment plan. One could follow either route depending on availability of funds. Financial experts are unanimous on the importance of a reasonable presence of equity investment in the portfolio of an investor. However, for most people this suggestion looks stupid when the market is so volatile that even the best fund managers in the world are not in a position to predict market behaviour. For equity investors the past twelve months have been forgettable. The smart ones have, however, switched from equity to debt in the last one to two years to protect their capital. Investment in equity is, therefore, altogether a different ball game where lot of analysis is needed, particularly, at the present juncture when the domestic market has been impacted on account of not only local issues but also the global scenario. Hence, choosing a good equity share requires broad understanding of the economy, the sector concerned and the company itself. It is also a fact that in this volatile market, when the entire world is passing through an economic crisis, considering the investment - particularly in equity - needs not only courage but also a lot of time and energy to understand the right kind of investment. For the large number of the investors who do not have the facility to track the market on a regular basis investing in equity directly is, therefore, a difficult choice. As an alternate investment option, investment in equity schemes of mutual funds is considered to be a better route. This is, however, a loaded question, particularly, looking at the performance of various equity schemes of mutual funds. In last one year, though, none of the equity schemes have shown positive returns. However, compared to the movement of the BSE-200, which is a broadbased index, the performance of a number of equity schemes is much better. Taking the clue from the above it can be concluded investment in equity schemes of mutual funds is a better option than making direct investment in equity. Mutual Funds allow investment through either lump sump payment or systematic investment plan (SIPs). One could follow either of the systems depending on the funds availability. It has, however, been observed that since the last couple of years most financial advisors have suggested investment in mutual fund equity schemes through a systematic investment plan whereby a fixed amount is invested regularly by the investor on a predetermined date. It is the simplest way of making an investment on an ongoing basis, which takes care of market volatility to some extent. According to rough estimates about Rs 1,300 crore is coming to mutual funds through SIPs every month even in the present volatile market. Therefore, this route is still being followed by a large number of investors. For investors who have lump sump funds for investment and are uncomfortable in making investment in equity schemes of mutual funds even through SIP on account of market volatility, the global scenario, etc, another option is suggested. The modality of this option is explained through the following ten steps.
The above strategy can be useful to protect downside risks up to a large extent and can be modified depending upon individual requirement as well as understanding of the market. In a nutshell this is another way to hedge your portfolio and contain losses. The author is managing director of Taurus Mutual Fund. The views expressed are his own |
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Markets set to stay range bound this week
The euphoria witnessed in the Diwali week seemed to have just disappeared last week. The high of 17,908.13 posted by the Bombay Stock Exchange Sensex on Friday, October 28 was not seen during the entire week. The markets continued to be extremely volatile and choppy throughout the week. As expected the markets opened weak and recovered towards the end of the week. The Sensex lost 242.19 points or 1.36% to close at 17,562.61 points. The National Stock Exchange Nifty lost 76.50 points or 1.43% to close at 5,284.20 points. The broader indices like the BSE 100, BSE 200 and BSE 500 lost much less at 0.84%, 0.69% and 0.59%, respectively. The BSE Smallcap lost a marginal 0.02% while the BSE Midcap was in positive territory gaining 0.37% for the week. The BSE Metal index was a big loser with losses of 2.47% while the BSE IT index lost 1.17%. In individual stocks, Tata Motors lost 8.83%, Sterlite lost 7.34% and ICICI Bank lost 5.14%. Hindustan Unilever gained 8.41%, REC gained 5.58%, PFC gained 5.51% and SBI gained 2.99%. The results from state-owned banks have shown pressure from higher provisioning on account of NPAs and that has affected the overall performance of these banks. Results by and large are showing stress on account of rising input costs and also higher financial charges. Most of the companies reporting results have shown pressure on margins and they have dropped across sectors and companies. Hindustan Unilever and Nestle India were exceptions and have reported an excellent set of numbers. The Greek prime minister called for a referendum to discuss the EU debt bailout package that became a contentious issue and was under terrific pressure from the European community was called off. He later survived a confidence vote on Friday night and has for the time being salvaged default. The ECB lowered interest rates by 25 basis points in a surprise move which helped markets recover some ground. The G20 summit held in France has not come to any positive conclusion on the euro crisis and things remain at best hopeful without a timeframe. Everybody wants the crisis to be resolved but the funds required for the bailout are simply not there. The markets are tentative and would look at global cues for further movement. The petrol price hike on Thursday and the government's reluctance to increase diesel prices are not helping matters as the subsidy on account of diesel has put the balance sheet and functioning of state-owned fuel retailers under severe pressure and those which have reported results have posted big losses. The Sensex looks vulnerable in the coming week and will find it difficult to cross the previous week's high of 17,900. It appears as giving up some ground in the coming week and the level of 17,275 would a crucial support and key level to watch out for. The Sensex has support at 17,457, then at 17,289, then at 17,229, then at 17,054 and finally at 16,754 points. It has resistance at 17,685, then at 17,824, then at 17,912, then at 18,032 and finally at 18,359 points. The NSE Nifty has support at 5,251, then at 5,203, then at 5,182, then at 5,085 and finally at 5,045 points. It has resistance at 5,321, then at 5,362, then at 5,391, then at 5,434 and finally at 5,520 points. In a week which that is likely to be dominated by global developments it would be prudent to be cautious. The author is founder of KRIS, an investment advisory firm. The views expressed are his own. |
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