need2know: A lowdown on what’s moving markets today




The investigation arm of the income tax department has sent notices to about 200 entities under Section 56(2)(vii)(b) of the Income Tax Act, 1961, in August NSEBSEITC LtdLoading data…

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    ChartsValuation & Peer ComparisonCommunity BuzzPEER COMPANIES Economic activity in the country lost some pace amid GST related disruptions but underlying growth momentum remains strong and the country may clock 6.7% growth this fiscal, says a Morgan Stanley report.

    Here’s a lowdown on eight macro triggers that are likely to impact the market on Thursday. This report was compiled from agency feeds.

    I-T Questions Deal Values
    Startups and unlisted subsidiaries of some major Indian companies and multinationals find themselves in the crosshairs of the income tax department for raising funds through preference shares in excess of what it considers the fair market value. The investigation arm of the income tax department has sent notices to about 200 entities under Section 56(2)(vii)(b) of the Income Tax Act, 1961, in August, reports ET. Fair market value is assessed by the tax department based on past transactions and the record of similar, comparable companies. The Section is often applied when it’s suspected that companies may be issuing shares at a premium over the fair value for laundering unaccounted cash.

    I TC’s Rs 1000-cr Defamation Suit against IiAS
    ITC Ltd has filed a Rs 1,000-crore defamation suit against Mumbai-based proxy advisory firm Institutional Investor Advisory Services India (IiAS) for allegedly making defamatory comments against the company and its directors. The suit has been filed before the Calcutta High Court. IiAS had published a report in July, questioning the monthly remuneration which would be paid to ITC’s non-executive chairman, YC Deveshwar. It had recommended voting against this. When contacted, an ITC spokesperson said the matter was sub judice and hence will not make a comment. Incidentally, 85.112% votes polled were in favour of Deveshwar’s monthly remuneration as non-executive chairman with effect from February 5, 2017.

    3 lakh Directors of Shell Cos Blacklisted
    Directors of shell companies which have not filed tax returns for three or more years will be barred from taking similar positions elsewhere or getting reappointed, the government said, as it intensified the crackdown on firms that exist only on paper. Directors of the companies that were struck off the RoC could face up to 10 years in jail if they were found siphoning off funds, the government said on Wednesday. The government said it is compiling the profiles of the directors at such companies in collaboration with enforcement agencies and expects the move to cover 2-3 lakh people. The Ministry of Corporate Affairs also decided to track down the beneficial owners of suspected shell companies and take penal action against those who divert funds from companies that are struck off the RoC records.

    Festive Sales Dampener
    Sales of televisions, refrigerators and washing machines dropped by 1-2% this year during Onam and Ganesh Chaturthi compared with last year, creating a flutter in the white goods industry as these two occasions set the tone for sales during the crucial festive season that ends with Diwali. Companies said the decline is due to consumers advancing purchases during the pre-GST sales in June with retailers in a hurry to liquidate stock on a huge discount to minimise losses on transition stock. There was no growth even during the Independence Day sales, which too had become a big shopping period for retailers and brands in the last few years. The companies also believe the 3-4% price hike from July due to GST may have dampened consumer sentiments.

    All Eyes on Smart Cities
    With two years to go for 2019 parliamentary elections, Prime Minister Narendra Modi has stepped in to ensure results can be seen on the ground. The Centre has asked states to focus on impactful and public-private-partnership based smart city projects, which would show results over the next one year and have a review mechanism in place. Ministry of housing and urban affairs, the nodal ministry for Smart Cities Mission has identified 261 impactful ventures worth Rs 31,000 crore and PPP projects worth Rs 32,000 crore for the states to work in. PM Modi had emphasised on early implementation of projects and suggested that the chief secretaries of all states should review the progress of the implementation.

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    FUNDAMENTALS
    Rupee Up : The rupee closed at 64.11 a dollar on Wednesday, up 0.04% from its Tuesday’s close of 64.13.

    Bonds Mixed: Government bonds (G-Secs) ended mixed trend in a quiet trade due to alternate bouts of buying and selling. The 6.79% 10-year benchmark bond maturing in 2027 were fell to Rs 102.00 from Rs 102.0650 yesterday, while its yield inched up to 6.51% from 6.50%. The 7.72% G-Secs maturing in 2025 were dipped to Rs 105.4850 from Rs 105.49 previously, while its yield ruled steady to 6.79%. The 7.68% G-Secs maturing in 2023 were weakened to Rs 105.3675 from Rs 105.40 previously, while its yield inched up to 6.62% from 6.61%. However, the 6.79% G-Secs maturing in 2029, the 6.68% G-Secs maturing in 2031 and the 6.57% G-Secs maturing in 2033 were quoted higher to Rs 99.7550, Rs 100.52 and Rs 97.24 respectively.

    Call Rates Down : The overnight call money rates ended lower to 5.75% from Tuesday’s close 5.80%. Its resumed higher to 6.00% and moved in a range of 6.00% and 5.65%.

    Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 17.90 billion in 3-bids at the overnight repo operation at a fixed rate of 6.00% as on today, while it sold securities worth Rs 43.18 billion in 36-bids at the overnight reverse repo auction at a fixed rate of 5.75% as on September 05.




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