This week focus on quarterly earnings, debate in parliament on Finance Bill 2012
Last week Sensex lost 303 points or
-1.77% to 16831 and Nifty lost -104 points or -2.00% to 5086 in the
week ended 04-05-2012. Looking to weekly chart of nifty future, since
last 8 weeks we can see in the chart nifty was trying to break the trend
line towards down side. But bulls came and gave support to nifty and at
the end of week again bears are coming to drag down the nifty.
On last Friday we saw that heavy
selling pressure came due to GAAR and BASEL III guidelines, and nifty
closed below 5100 level. Now nifty stands on the border of the trend
breaking line. If nifty breaks this level for two days then we may see
4950-4900 in coming days. On clsoing basis nifty is having good support
at 5050 & 4982 and resistance at 5189.
KEEP STRICT SL IN EVERY TRADE NOW FOR NEW POSITIONS AND KEEP SL IN SYSTEM NOT IN YOUR MIND. BEFORE YOU TRADE ON SYSTEM FIRST DECIDE THE SL AND THEN TRADE.
WEEKLY INDEX SUMMARY
INDEX |
LAST WEEK 04-05-2012 |
PREVIOUS WEEK 27-4-2012 |
PERCENTAGE % (+/-) |
POINTS (+/-) |
|---|---|---|---|---|
| SENSEX | 16831.08 | 17134.25 | -1.77% | -303 |
| NIFTY | 5086.85 | 5190.60 | -2.00% | -104 |
Investors are closely watching India
Inc’s Q4 March 2012 and year ending March 2012 (FY 2012) earnings. Focus
is on the guidance provided by the management for the year ending March
2013 (FY 2013) to gauge the earnings outlook. The results announced so
far have been mixed.
Housing finance major HDFC announces FY 2012 results on Monday, 7 May
2012. Hindalco and Asian Paints unveil Q4 results on Tuesday, 8 May
2012. Kotak Mahindra Bank and Infrastructure Development Finance Company
(IDFC) unveil FY 2012 results on the same day. Punjab National Bank and
Ranbaxy Laboratories unveil quarterly results on Wednesday, 9 May 2012.
NTPC announces FY 2012 results on Thursday, 10 May 2012. Cipla
announces Q4 results on the same day. Dr Reddy’s Laboratories announces
FY 2012 results on Friday, 11 May 2012.
The current weakness of the rupee against the dollar will benefit
exporters and impact importers adversely — a weak rupee makes imports
costlier. A weak rupee boosts revenue of IT firms in rupee terms as the
sector derives a lion’s share of revenue from exports. A weak rupee will
increase the competitiveness of Indian merchandise exports.
The Finance Bill 2012 is scheduled to be debated and passed in
Parliament next week. In his Budget 2012-13, Finance Minister Pranab
Mukherjee proposed tax-avoidance legislation viz. General Anti-Avoidance
Rules (GAAR). He also has proposed to amend the Income Tax Act, 1961
with retrospective effect to bring into tax net overseas mergers and
acquisitions involving domestic assets.
India Inc. and multinational companies alike have been complaining
about the provision in GAAR that puts the onus of proof that a
transaction was not undertaken to avoid tax on the company or investor
concerned. GAAR is aimed at curbing tax avoidance by structuring a
business or effecting a transaction with the objective of avoiding the
tax liability instead of rational commercial considerations. For
instance, the creation of a shell company in a tax haven like Mauritius
to invest in India will come under the provisions of GAAR. It empowers
the tax authorities to distinguish transactions aimed at avoiding tax
from those driven by commercial consideration. Foreign institutional
investors are also worried that GAAR will override India’s tax treaty
with Mauritius, which exempts capital gains from being doubly taxed.
Most foreign funds invest in the Indian stock markets through the
Mauritius route.
The Indian government is considering a review of its tax avoidance
treaty with Mauritius as it looks to boost revenue, junior Finance
Minister S.S. Palanimanickam said Friday, 4 May 2012. There has been
unwillingness on the part of Mauritius to cooperate in addressing this
problem, he said. Palanimanickam said that consistent efforts are being
made by the Indian government to find mutually acceptable solutions for
addressing India’s concerns.
The Finance Bill 2012 has also proposed retrospective changes that
will empower the government to tax transactions that have taken place
outside the country, but involve underlying assets located in India, a
move prompted by a Supreme Court verdict that went against the
government. The proposal will have the power to tax retroactively. If
this retroactive tax is approved, it would hurt the sentiment of foreign
investors toward India.
Worried over the impact of the proposed retrospective tax amendment
in Finance Bill 2012, Dutch unit of Vodafone has served a legal notice
to the Indian government threatening to drag India to international
arbitration on the issue.
On the macro front, the government will unveil industrial production
data for March 2012 on Friday, 11 May 2012. Industrial production rose
4.1% in February 2012. (Data Source: Capitalmarket)
NIFTY WEEKLY CHART
WEEKLY NIFTY SUPPORT 5050-4982 AND RESISTANCE 5189
NIFTY FUT. (5097)
Buy above 5140 Target 5182-5229-5277
Sell below 5045 Target 5002-4949-4903
- Always Remember, put SL in your every trade.
- Weekly Levels are Closing Basis, so follow on closing time.
- Weekly Levels are Closing Basis, so follow on closing time.
Rupesh Yatesh Dalal
Head Research Department
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