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Market Review: Inflation rate, no-turst vote keep equity indices subdued

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Sensex Nifty Equity

Mumbai, July 21: Weak global cues, along with higher inflation and a no-trust vote in Parliament, subdued the key Indian indices in the week ended Friday.

Weakening of the Indian rupee to fresh lows during the week also eroded investor sentiments in the Indian equity market, analysts said.

However, the Indian currency recovered and appreciated on Friday, thereby lifting the indices on a daily basis and restricting further decline in the equity market compared to the previous week’s close.

Significantly, on Wednesday the benchmark BSE Sensex hit a fresh record high of 36,747.87 points, but could not hold on to the gains.

On a weekly basis, Sensex closed at 36,496.37 points — down 45.26 points or 0.12 per cent from the previous close.

The wider Nifty50 on the National Stock Exchange (NSE) settled at 11,010.20 points, down just 8.7 points or 0.08 per cent — from its previous week’s close.

The market breadth was negative in four out of the five trading sessions of the week, according to Deepak Jasani, Head of Retail Research at HDFC Securities.

“Weak global cues and the no-confidence motion in the monsoon session of Parliament dented the sentiment across the street,” said Parteek Jain, Director of Hem Securities.

Moreover, ahead of the F&O expiry in the coming week, traders were seen squaring off their positions, Jain added.

Rahul Sharma, Senior Research Analyst at Equity99 noted: “Stock-specific action continued as sentiment was partially hit after index heavy-weight like Bajaj Auto and Kotak Mahindra Bank missed market expectations.”

The no-confidence motion vote had a limited impact on market sentiments as the ruling party was sure of its majority in Parliament, he said.

Earlier in the week, the rise in the wholesale inflation rate for June depressed the equity indices.

The wholesale inflation rate for June was recorded at 5.77 per cent, compared to 4.43 per cent in the previous month, according to data released on Monday.

On the currency front, the rupee closed at 68.85 on Friday, strengthening by just 3 paise from its previous week’s close of 68.88 per greenback.

On Thursday, the rupee touched a fresh closing low of 69.05 per dollar. Minutes into the trade on Friday, it hit an all-time low of 69.12 against the greenback but eventually bounced back sharply and helped end the currency trade with appreciation on a weekly basis.

According to Jasani: “Strengthening US dollar, weakening Chinese yuan, domestic political uncertainty, buoyant crude prices and capital outflows have all resulted in pressurizing the rupee lately.”

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 1,209.41 crore, while the domestic institutional investors purchased stocks worth Rs 1,300.06 crore in the week bygone.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested Rs 888.70 crore, or $129.80 million from the equities segment on stock exchanges during the week ended on July 20.

Sector-wise the major gainers in the week were energy, public sector banks and IT, while metals, realty, pharma and auto were among the major losers, HDFC Securities’ Jasani told IANS.

The top weekly Sensex gainers were Infosys (up 3 per cent at Rs 1,348.35); Reliance Industries (up 2.90 per cent at Rs 1,128.55); Yes Bank (up 2.72 per cent at Rs 386.65); ONGC (up 2.10 per cent at Rs 157.85); and Asian Paints (up 2.08 per cent at Rs 1,396.90 per share).

The major losers were Tata Steel (down 9.80 per cent at Rs 503.45); Bajaj Auto (down 9.35 per cent at Rs 2,841.10); Tata Motors (DVR) (down 6.32 per cent at Rs 140.80); Kotak Mahindra Bank (down 5.08 per cent at Rs 1,333.45); and Hindustan Unilever (down 4.88 per cent at Rs 1,656.20 per share).

IANS

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Oil Ministry yet to recover $510 mn from contractors under PSC: CAG

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Dharmendra Pradhan

New Delhi, Sep 23 : The Comptroller and Auditor General (CAG) has said that the Ministry of Petroleum and Natural Gas has not recovered $510 million as cost of unfinished minimum work programme (CoUMWP) from contractors in respect of 45 blocks.

The CAG report on Union Government (Economic & Service Ministries-Civil) – Compliance Audit Observations, which includes important audit findings, was presented in the Parliament on Wednesday.

It noted that the government awarded 254 blocks during the New Exploration and Licensing Policy’s (NELP) I to IX rounds for exploration of oil and gas. As per the terms and conditions of Production Sharing Contracts (PSC), contractors are required to pay the cost of unfinished minimum work programme, if the block is relinquished or terminated by government.

However, contractors of 54 relinquished blocks failed to pay the CoUMWP as specified in the PSCs.

“An amount of $510.79 million (Rs 3,652.64 crore), which was 77 per cent of the Ministry of Petroleum and Natural Gas’s (MoPNG) approved amount of $664.67 million (Rs 4,753.03 crore) on account of CoUMWP in respect of 45 blocks still remained unrecovered (September 2019),” the report said.

It added that the CoUMWP for nine blocks is yet to be worked out by Directorate General of Hydrocarbons (DGH) or yet to be approved by the ministry.

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IT Dept ignored land/flat sellers as ‘potential assessees’: CAG

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real estate

New Delhi, Sep 23 : The Comptroller and Auditor General (CAG) has said that during financial years 2014-15 to 2017-18, the IT Department did not initiate any action regarding land and flat sellers who could be potential assessees.

The Performance Audit on ‘Search and Seizure Assessments in Income Tax Department’, tabled in the Parliament on Wednesday, said: “The Department did not initiate any action in respect of sellers of land/flat/ commodities pointed out in the respective Appraisal Report, who could be potential assessees. The department also did not confirm whether these were in the tax net of the department and regularly filing returns.”

It also said that there were loopholes and deficiencies in the provisions of the Act in respect of search assessments, mainly relating to absence of specific provisions in the Act and Rules, the report said.

“In respect of certain Groups, 76.5 per cent of additions made in search assessments did not stand the test of judicial scrutiny in appeals at the level of CIT (A)/ITAT,” it said.

The report found that assessing officers (AOs), while finalising the assessments, did not take a uniform stand in making additions on account of bogus purchases, accommodation entries and in adoption of figures of assessed income or revised income.

“The additions were made arbitrarily either on lump sum amount basis or different percentage ranging from five per cent to 50 per cent under similar circumstances without proper justification,” the report said.

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IT Dept computed interests wrongly in most assessment cases: CAG

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Direct tax Incom

New Delhi, Sep 23 : The Comptroller and Auditor General of India has said that the Income Tax Department computed interests wrongly in about 77 per cent of the assessment cases it had audited.

In its report on “Direct Taxes of the Union Government for the year ended March 2019”, tabled in the Parliament on Wednesday, the government auditor said that it had audited 6,217 assessment cases which were processed or completed through the AST module and examined the correctness of interest, calculated through the system and modified by assessing officers (AO) with respect to Sections 234A, 234B, 234C and 244A of the Income Tax Act.

The report said that interest was calculated incorrectly through the AST system, despite the fact that the system was designed, inter alia, to undertake assessment functions of calculation of interest under various sections of the Income Tax Act.

“The interest was wrongly computed by the ITD, in 76.68 per cent of cases of the sample of 6,217 selected out of a population of 8,35,727 records, either due to systemic deficiencies or due to incorrect interventions by the AOs,” it said.

Assessing officers also did not take any step to rectify the incorrect interest, under Sections 234A, 234B, 234C and 244A of the Act, calculated through the system, even though the AST system allowed them to modify the value of interest in accordance with the provisions of the Act, thereby leading to either short levy excess levy of interest.

The CAG recommended that the Central Board of Direct Taxies may institute appropriate checks and balances in the Income Tax Business Application (ITBA) to prevent recurrence of error in computation of tax and interest.

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