VRITTAM (8 SEP 2013 - 14 SEP 2013)

THE WEEKLY FINANCIAL NEWS

Nokia raises tax issue with Commerce Minister Anand Sharma; will stay in India 

Nokia raised the Rs 2,080 cr tax dispute with Commerce Minister Anand Sharma, seeking his help for an early resolution of the matter.

Finnish mobile phone maker Nokia today raised the Rs 2,080 crore tax dispute with Commerce Minister Anand Sharma, seeking his help for an early resolution of the matter. Nokia India has been slapped with a tax demand notice of Rs 2,080 crore for the five years beginning 2006-07. The demand concerns the tax treatment of payments made for software supplied by Nokia's parent company for devices produced in India. Indian tax authorities consider the payments as royalties that are subject to taxation in India. 

Sebi to announce steps to improve debt market liquidity: UK Sinha 

With an aim to bolster the bond market, Sebi  said it will soon announce some measures to improve liquidity and trading mechanism for the debt market. Launching a Corporate Bond Information Database (CBID), prepared by top stock exchangeNSE and the Prime Database, he said it would help in dissemination of information in the bond market "that was one big hurdle till now". The new platform for this Corporate Bonds Information Database would provide comprehensive information on Corporate Bonds to market participants, to encourage the growth of the debt market in India. 

August exports bring some cheer

Up 13% and imports fall slightly but oil import rises 18%; govt hopes situation will improve Merchandise exports in August brought needed cheer to a gloomy economic environment, growing 13 per cent to $26.1 billion compared with $23.1 billion in the same month last year. Month-on-month, this is a second straight month that exports saw double-digit growth, due to improved demand in the US, Europe, Africa and the Asia-Pacific.
Imports in August contracted 0.7 per cent to $37.1 billion from $37.3 billion in August 2012. Trade deficit, which is part of the wider current account deficit (CAD), declined almost 23 per cent at $10.91 billion in August against $14.17 billion in the corresponding year-ago month.

Banks with 12% capital ratio can borrow more from abroad

The Reserve Bank of India (RBI) on Tuesday said only banks with a capital adequacy ratio (CAR) of at least 12 per cent could avail of the higher foreign borrowing facility. Last week, the central bank announced the current foreign borrowing limit for banks had been raised from 50 per cent of unimpaired Tier-I capital to 100 per cent. Banks were also given the option to swap such borrowing with RBI at a concessional rate of 100 basis points below the swap rate prevailing in the market. For the additional headroom, the borrowing period should be at least three years.

India keen on paying for oil imports from Iran only in rupees

India is keen to restart the system of paying crude oil it buys from Iran entirely in rupees to help stabilise the local currency and reduce the country's current-account deficit. Iran had in July agreed to take payments for oil it sells to India entirely in rupees after US and western sanctions blocked all other payment routes. However, shortly after a brief trial of the mechanism, it reverted to the old system of taking only 45 per cent of the payments due in rupees. 

India is keen to restart the system of paying crude oil it buys from Iran entirely in rupees to help stabilise the local currency and reduce the country's current-account deficit

Forex reserves may be used to secure World Bank loans

The government might dip into its foreign exchange reserves to continue getting loans from the World Bank beyond 2014-15. The Cabinet is expected to discuss a proposal to this effect on Thursday. For this, India will have to subscribe to a $4.3-billion special bond issued by the multilateral development bank. Senior officials said this would allow India to get an equal amount of loan from the World Bank, taking the country's net borrowing limit to $21.8 billion, against $17.5 billion at present.

Gold tumbles below Rs 30,000 mark as intense selloff continues

Gold prices tumbled to hit its lowest level in a month and closed below the key psychological Rs 30,000 per 10/gm mark on the domestic bullion market on the back of relentless speculative selling amid global meltdown. Silver also plummeted by over 4 per cent to revisit the key Rs 50,000 per kg level following frantic unwinding from stockists and savvy traders. 

Large-cap IT stocks can rally another 15-20% despite rising rupee

Most of the large-cap IT companies have rallied up to 30-70 per cent so far in 2013, supported by a nearly 15 per cent slip in the currency against the US dollar in the same period and signs of revival in global economies such as the US and Europe. If we look at data since January, the BSE IT Index has rallied nearly 40 per cent as compared to nearly 2 per cent rise in the S&P BSE Sensex in the same period.

Worst may be over for eurozone, recovery on the horizon

The skies above Europe are getting much brighter. Or at least investors seem to believe they are. A survey of investor sentiment in the eurozone this month moved into positive territory for the first time since the summer of 2011. European stocks have been rising for more than a year, with bank stocks leading the way. The yields on Spanish and Italian government bonds - which were more than 5 percentage points higher than German bonds' last summer - now have spreads half that level. 

FIIs can invest in government debt without auction

Purchase of Indian government bonds will get easier for foreign institutional investors as the regulator scrapped the rule that they purchase permits from the markets regulator in an auction before they actually buy bonds.Government bond purchases for foreigners will now be on par with corporate debt where they can buy freely up to 90% of the $51-billion limit. Once their holdings reach 90%, they have to buy permits from Sebi. Foreigners' ownership of Indian government bonds is capped at $25 billion.

A SNEAK PEAK INTO THE WORLD OF FINANCE

To know the impact of fuel hike on different sector click on the slide show below

EXPERT VIEW

Crude Imports: India must trade more with Iran to contain rupee crisis

By Rajeev Jayaswal

TERM OF THE WEEK

Forex Hedge

A transaction implemented by a forex trader to protect an existing or anticipated position from an unwanted move in exchange rates. By using a forex hedge properly, a trader who is long a foreign currency pair can be protected from downside risk, while the trader who is short a foreign currency pair can protect against upside risk