Bond Yields Drop: 10-year bond yield at 8.80% vs 8.85% on Sept 23.— Bloomberg TV India (@BloombergTVInd) September 24, 2013
Tuesday, September 24, 2013
Most of the taxpayers know only about the type of deductions and the limit of deduction under Section 80Cbut there are few more deductions which taxpayer can claim to lower the amount of tax payable. Listed below is a comprehensive picture of tax deductions and exemptions that you are entitled to in various financial products.
|80CCG||Resident individual (Not for NRI)||New investors who invests under equity scheme if gross total income does not exceed Rs. 10 lakh||50% of amount invested in equity shares, restricted to Rs. 25,000|
|80D||Individual /HUF||Medical insurance premium paid for self, spouse or dependent children||Maximum Rs.15,000 and Rs.20,000 in case of senior citizen|
|80DD||Resident individual / resident HUF||For maintenance including treatment or insurance the lives of physical disable dependent relatives||Rs 50,000 flat andRs. 1 lakh in case of severe disability|
|80DDB||Resident individual / resident HUF||Medical treatment expenses for himself or dependent or a member of HUF (in case of HUF assessee)||Actual expense orRs. 40,000 (Rs. 60,000 in case of senior citizen)|
|80E||Individual||For interest payment on loan taken for Higher studies for self or education of spouse or children||Entire amount of interest (not principal) is deductible for maximum of 8 years|
|80G||All assessees||Donations to charitable institution||100% or 50% of amount of donation made. (ReferIncome Tax Site for Detailed Info)|
|80GG||Individual (who does not get HRA)||For rent paid||Least of the following:|
1). Rs. 2000 per month
2). 25% of total income
3). Rent paid less 10% of total income
|80GGC||All assessee other than Indian companies||Contribution give to political parties||Sum contributed to political parties|
|80TTA||Individual/HUF||Interest in savings account (Not time deposits or fixed deposits)||Maximum is Rs.10,000|
|80U||Individual/HUF||Only for taxpayer and not for any other i.e. spouse, children etc||Rs. 50,000 which goes to Rs. 1 lakh in case taxpayer is suffering from severe disability|
Hence, there are several sections apart from 80C that can help an individual benefit from tax exemptions. It is time to start looking beyond 80C for tax savings.
The writer is the CEO of IndianTaxUpdates.com.
Don’t put off today what you can’t afford to do tomorrow. In spite of the worldwide pension crisis and a growing acceptance that we must plan and save for our retirement, the harsh reality is we are actually not saving enough. Research reports reveal that only 15% of the individuals are saving sufficiently for their retired life. Here are a few tips on things to do before you retire so that your retired life is more comfortable and enjoyable.
Get rid of all your debts
If you are taking a housing loan, personal loan, car loan or any other loan make sure that you will be repaying them on or before your retirement. You need to choose the term of the loan in accordance with your retirement age. You can enjoy your retired life when you have 100% financial freedom, not when you have to repay your loans.
Protect your emergency fund
Emergency expenses can happen any time. But the possibility goes up during the old age. So we need to enhance the emergency reserve year on year based on the inflation and change in your expense levels. Emergency fund will give you a sense of security and also you need not touch your other investments during emergency where you need to pay pre-closure penalty. Also don’t forget to refill the emergency fund once you met an expense out of emergency fund.
Establish a retirement budget
You need to visualise your retired life well in advance and need to create a budget for your retirement. That is you will not be going to office. So the expenses on transport and clothes may come down. Also you will have more time to spend. You may need to spend more on leisure travel and health care.
Examine your cash flow
Take a close look at your cash inflow as well as outflow. Is there going to be any income after retirement? Like rent, royalty… Would there be any unwanted outflow during retired life? Like paying life insurance or SIP (systematic investment plan). At times during your beginning of the career you could have taken a policy where you need to pay premium up to the age of 60. But now you may plan to retire at 55 itself. So you need to realign your existing policy and other investments in sync with your retirement age.
Grow your retirement corpus
Find out how much corpus you need to have when you retire so that you will be having complete financial freedom. A professional financial planner will of great assistance to you in this regard.
Develop a withdrawal strategy
How are you planning to withdraw your cash outflow during retirement from the retirement corpus? Monthly, quarterly, half yearly or annually? Through systematic withdrawal plan (SWP) in mutual funds or by way of dividend or interest. All these will have a great impact on the corpus you need to accumulate. So you need to decide in advance.
Your retirement corpus and retirement income need to be tax efficient. You need to pay taxes for the interest accrued irrespective of that you withdraw the interest or reinvest under a cumulative option. But you need to pay income tax only when you withdraw from the mutual funds. Careful selection of investment vehicle can reduce your tax during the retired life.
Get sufficient mediclaim coverage
The moment you retire, your employer will stop covering you under the group mediclaim. So you need to plan for your individual medical cover well in advance. At old age the medical expenses are inevitable. If you have not planned it properly the all your retirement plan will become a mess.
Consider inflation adjusted annuities
The monthly income you need when you retire is not going to be the same even after five years of your retirement. Inflation will increase your retirement expenses year after year. So year after year your retirement income needs to go up.
Oversee estate planning
How your fixed assets and financial assets need to be distributed to your legal heirs? Create a Will. You can avoid creating relationship problems to your next generation because of your left out wealth.
The writer is the chief financial planner at Holistic Investment Planners
We have written many articles providing details about dematerialisation of securities, advantages of holding shares in demat or electronic form and how to manage your investment in demat mode.
The below write-up will elaborate more on how to open a demat account, importance of nomination, how to convert your physical shares into demat and other facilities offered by a demat account.
Opening a demat account
Step 1: To open a demat account, you have to approach a depository participant (DP), an agent of depository, and fill up an account opening form. The list of DPs is available in the websites of depositories: CDSL (Central Depository Services (India) Ltd and NSDL (National Securities Depository Ltd).
Step 2: Along with the account opening form, you must enclose photocopies of some documents for proof of identity and proof of address.
Step 3: You will have to sign an agreement with DP in the depository prescribed standard format, which gives details of rights and duties of investor and DP. You are entitled to receive a copy of the agreement and schedule of charges for future reference.
Step 4: The DP will then open an account and give you the demat account number. This is also called beneficial owner identification number (BO ID). All your purchases / investments in securities will be credited to this account. If you sell your securities, your demat account will be debited.
You can have multiple demat accounts if you so wish. You can choose your DP as per your convenience and there is no compulsion to open DP account with your stock broker.
Points to remember
Update your bank account details (bank account number, IFSC code) and postal address etc of your demat account as and when there is a change, as you will receive direct credit of refunds, dividends, interest & redemption payment and corporate correspondences like annual reports notice of AGMs etc. as per the details mentioned in your demat account.
Demat account charges
Investors are required to pay the charges towards:
Dematerialisation and rematerialisation of your securities
Annual account maintenance
Transactions fees (only for sell transactions)
The charges of DPs are available in comparable structure on the websites of the depositories.
Things to note
The DP may revise the charges by giving 30 days notice in advance.
If demat account is closed in between of the year, annual maintenance charges shall be levied proportionately for each quarter.
There is no minimum number of shares that have to be kept in the demat account.
No charge is applicable for closure of DP account.
No charge for transfer of holdings from one DP to another DP, if investor is not satisfied with the services of your existing DP.
Nomination smoothens the process of transmission of your securities to your heirs, upon demise. For physical shares, you have to avail nomination separately for each company in which you hold shares / debentures. Whereas, by availing nomination for your demat account, all your investments in that account is covered under that nomination.
How to demat your shares?
To demat your physical certificates, you should approach the DP and submit the following documents:
Dematerialization Request Form (DRF)
Physical certificates by marking “Surrendered for Dematerialization”
Separate DRF has to be filled for each ISIN.
Process of dematerialisation:
Surrender your physical certificates to your DP for dematerialisation.
The DP intimates your request to the depository through the system.
The DP submits the certificates to the registrar and share transfer agent (RSTA) of the company.
In case of any objection or in case of additional documents (if any), the RSTA informs you directly. RSTA confirms the dematerialisation request from depository.
After dematerialising the certificates, RSTA updates the accounts and informs depository regarding completion of dematerialisation.
Depository updates its accounts and informs the DP.
The DP then updates your demat account by crediting the shares.
Before approaching your DP for demating your shares, you can check the list of shares and debentures that can be dematerialised from the websites of CDSL and NSDL.
To convert physical certificates into demat mode, the name in the share certificate should match with the name of the demat account holder.
In case of joint holding, the name should be in the same order both in the physical certificate as well as in the demat account. However, you can request to change the order of the names of the joint holders in the share certificate by submitting a Transposition cum Demat Form.
Example: You may have a demat account in the sequence of, ‘A’ & ‘B’, whereas the share certificate may be in the sequence of ‘B’ & ‘A’. In this case, you can lodge the security certificates for dematerialisation in the same account by filling Transposition cum Demat Form to effect change in the order of names and to dematerialise the securities as well.
Depository websites have a list of shares in demat form. Investor cannot demat the shares of vanishing companies or shares of the companies which are not in list of depositories.
What is ISIN number?
ISIN (International Securities Identification Number) is a unique 12 digit alpha-numeric identification number allotted to each security. (E.g.- INE383C01018). Fully paid-up equity shares, partly paid-up shares, equity with differential voting / dividend rights issued by the same issuer will have different ISINs.
How to find ISIN number?
The details of ISIN number of securities are available in the website of National Securities Depository Ltd and Central Depository Services (India) Ltd.
Power of attorney (PoA)
You have the option to authorise any person to operate your DP account by executing a power of attorney (PoA) and submitting it to the DP. PoA enables the authorised person to operate the account on your behalf.
You have the option to grant PoA in favour of your broker and / or DP to operate your account, i.e. to buy or sell shares on your behalf, debit or credit your bank account and DP account. However, you are required to carefully read and understand all the clauses of the PoA before signing it.
PoA is an optional facility and executing it is not mandatory. No stock broker or DP can deny services to you if you refuse to execute it. You can revoke PoA at any time.
Other features of demat account
Consolidation: If you hold various folios of a particular company and want to consolidate them into single folio, you can forward the physical certificates along with the letter signed by you to the RSTA of the company.
Account freezing: You can freeze your account, specific security or specific number of securities for any given period of time.
Account types: Similar to the bank account, you can open demat account in single / joint names / multiple accounts. If you are opening an account for the minor, guardian should be appointed for operating the account.
However, you cannot open demat account in “either or survivor” basis. You cannot change name or add or delete the account holder’s names. In such instances, you have to open new demat account with the desired names.
Source: Securities and Exchange Board of India
Key benchmark indices dropped after Federal Reserve Bank of St. Louis President James Bullard said on Friday, 20 September 2013, that the Federal Reserve could make a small stimulus reduction at its next meeting in October 2013. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The market sentiment was also hit by the Reserve Bank of India's hawkish tone at its latest monetary policy review on Friday, 20 September 2013.
The barometer index, the 30-share S&P BSE Sensex, fell below the psychological 20,000 mark. The 50-unit CNX Nifty fell below the psychological 6,000 level. Both these indices closed at their lowest levels in almost a week. The Sensex fell 362.75 points or 1.79%, up close to 75 points from the day's low and off about 299 points from the day's high. The market breadth, indicating the overall health of the market, was negative.
The Sensex has fallen 745.68 points or 3.61% in two trading sessions from a recent high of 20,646.64 on Thursday, 19 September 2013. The barometer index had lost 1.85% on Friday, 20 September 2013, after the Reserve Bank of India, in a surprise decision, raised its key policy rate viz. the repo rate by 25 basis points (bps) to 7.5% from 7.25% after a monetary policy review. The Sensex has gained 1,281.24 points or 6.88% in September 2013 so far (till 23 September 2013). The Sensex has risen 474.25 points or 2.44% in calendar 2013 so far (till 23 September 2013). From a 52-week high of 20,739.69 on 19 September 2013, the Sensex has declined 838.73 points or 4.04%. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 2,452.25 points or 14.05%.
Coming back to today's trade, interest rate sensitive banking and realty stocks extended Friday's losses as the Reserve Bank of India, in a surprise decision, raised its key policy rate viz. the repo rate by 25 basis points (bps) to 7.5% from 7.25% after a monetary policy review on Friday, 20 September 2013, and as the central bank retained hawkish tone at the latest monetary policy review. Most pharma stocks declined.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month September 2013 series to October 2013 series. The September 2013 F&O contracts expire on Thursday, 26 September 2013.
The S&P BSE Sensex lost 362.75 points or 1.79% to settle at 19,900.96, its lowest closing level since 17 September 2013. The index declined 437.41 points at the day's low of 19,826.30 in mid-afternoon trade. The index fell 63.90 points at the day's high of 20,199.81 in early trade.
The CNX Nifty lost 122.35 points or 2.04% to 5,889.75, its lowest closing level since 17 September 2013. The index hit a low of 5,871.40 in intraday trade. The index hit a high of 5,989.40 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,314 shares fell and 1,000 shares rose. A total of 142 shares were unchanged.
The BSE Mid-Cap index lost 1.27% and the BSE Small-Cap index lost 0.58%. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 1779 crore, lower than Rs 2550.88 crore on Friday, 20 September 2013.
Among sectoral indices on the BSE, the S&P BSE Bankex (down 4.41%), the S&P BSE Realty index (down 4.33%), the S&P BSE Capital Goods index (down 3.28%), the S&P BSE PSU index (down 2.56%) and the S&P BSE Power index (down 2.26%), underperformed the Sensex.
The S&P BSE Oil & Gas index (down 1.78%), the S&P BSE FMCG index (down 1.26%), the S&P BSE Auto index (down 1.16%), the S&P BSE Healthcare index (down 0.74%), the S&P BSE Metal index (down 0.01%), the S&P BSE Teck index (up 0.43%), the S&P BSE IT index (up 0.91%) and the S&P BSE Consumer Durables index (up 2.36%), outperformed the Sensex.
Among the 30-share Sensex pack, 22 stocks fell and rest of them rose.
Bank stocks extended Friday's losses as the Reserve Bank of India, in a surprise decision, raised its key policy rate viz. the repo rate by 25 basis points (bps) to 7.5% from 7.25% after a monetary policy review on Friday, 20 September 2013, and as the central bank retained hawkish tone at the latest monetary policy review.
PSU banking major State Bank of India dropped 5.39% to Rs 1652.45, with the stock extending intraday losses. The state-run bank on 18 September 2013 said it has raised the base rate by 10 basis points (bps) to 9.8% per annum (pa) from 9.7% and the benchmark prime lending rate by 10 bps to 14.55% from 14.45% with effect from 19 September 2013. The bank also raised interest rates for retail term deposits.
Among other PSU bank stocks, Union Bank of India (down 9.51%), Bank of Baroda (down 6.95%), Oriental Bank of Commerce (down 6.87%), Bank of India (down 6.82%), Punjab National Bank (down 6.24%), UCO Bank (down 5.29%), Allahabad Bank (down 4.83%), Central Bank of India (down 4.33%) and Dena Bank (down 4.21%), edged lower.
Among private bank stocks, Yes Bank (down 8.15%), ICICI Bank (down 4.39%), IDBI Bank (down 3.94%), Kotak Mahindra Bank (down 3.83%) and Federal Bank (down 3.22%), edged lower.
HDFC Bank declined 2.55% to Rs 642.25, off the day's low of Rs 633.
Dr. Raghuram G. Rajan, Governor, Reserve Bank of India, said in a statement on Friday, 20 September 2013, that the calibrated withdrawal of the exceptional measures that the RBI had taken since mid-July to tighten liquidity with a view to dampening volatility in the foreign exchange market will provide a boost to growth, reduce the financing distortions that are emerging in the market and reduce the strain on corporate and bank balance sheets. In an attempt to tame high inflation, which is partly fueled by the currency's recent slump against the dollar, the RBI raised its policy rate viz. the repo rate after a monetary policy review on Friday, 20 September 2013. The central bank, however, eased some of the liquidity-tightening measures it had taken to prop up the rupee. The RBI reduced the rate at which it lends funds to banks through its marginal standing facility, by three quarters of a percentage point, to 9.5%. The marginal standing facility is an emergency funding facility for banks. On net, the RBI's latest measures will reduce the cost of bank financing substantially while allowing the RBI to take an appropriately precautionary stance on inflation, Dr. Rajan said on Friday, 20 September 2013.
The minimum daily maintenance of the CRR prescribed by the Reserve Bank of India (RBI) has been brought down from 99% of the requirement to 95% from the fortnight beginning 21 September 2013. The timing and direction of further actions on exceptional measures will be contingent upon exchange market stability, and can be two-way, the RBI said after a monetary policy review. However, any further change in the minimum daily maintenance of the CRR is not contemplated, the RBI said. The RBI kept the cash reserve ratio (CRR) unchanged at 4%.
"Over the next few weeks, together with the government, we will take a close look at corporate distress and bank NPAs to see how we can accelerate the process of resolution", Dr. Rajan said. The RBI Governor said that the RBI has implemented the full liberalization of bank branching, with some safeguards to encourage inclusion.
Indian Overseas Bank fell 2.74% to Rs 46.20 after the bank's board approved raising capital by way of issue of equity shares to the Government of India. The announcement was made after market hours on Friday, 20 September 2013. Indian Overseas Bank's (IOB) board of directors at a meeting held on Friday, 20 September 2013, approved raising capital by way of issue of equity share of Rs 10 each at a price determined under Sebi (ICDR) Regulations of 2009 to the Government of India (GoI) to the extent of capital infusion by GoI under preferential allotment. The board has also accorded its approval to the bank to issue equity shares of Rs 10 each to Qualified Institutional Buyers (QIBs) by way of private placement for the shortfall in Tier I capital requirements of Rs 2100 crore assessed by the bank and the capital infusion by GoI. The exact amount of government support for infusion of capital and the quantum and size of issue for QIP will be known in due course, IOB said.
Interest rate sensitive realty stocks extended Friday's losses triggered by the Reserve Bank of India, in a surprise decision, raising its key policy rate viz. the repo rate by 25 basis points (bps) to 7.5% from 7.25% after a monetary policy review on Friday, 20 September 2013, and as the central bank retained hawkish tone at the latest monetary policy review. Purchases of both residential and commercial property are largely driven by finance.
DLF (down 6.46%), Indiabulls Real Estate (down 5.7%), HDIL (down 5%), Prestige Estates Projects (down 4.68%), Unitech (down 4.64%), Godrej Properties (down 3%), Peninsula Land (down 2.72%), Phoenix Mills (down 2.49%), Sunteck Realty (down 1.5%), Oberoi Realty (down 1.17%), D B Realty (down 0.97%), Sobha Developers (down 0.77%) and Parsvnath Developers (down 0.38%), edged lower.
Most pharma stocks declined. GlaxoSmithKline Pharmaceuticals (down 2.25%), Biocon (down 2.12%), Sun Pharmaceutical Industries (down 1.38%), Wockhardt (down 1.2%), IPCA Laboratories (down 0.94%), Cipla (down 0.83%), Cadila Healthcare (down 0.26%), Aurobindo Pharma (down 0.13%) and Divi's Laboratories (down 0.01%), edged lower.
Lupin declined 1.56% to Rs 854.10. A block deal of 3.21 lakh shares was executed in the counter on BSE at Rs 860.50 per share at 11:42 IST. Lupin announced after market hours today, 23 September 2013, that it has signed a strategic co-promotion agreement with US-based Onset Dermatologics, LLC (Onset) that grants Lupin exclusive rights to promote Onset's Locoid Lotion (hydrocortisone butyrate 0.1%) to Pediatricians in the US. Locoid is the most highly prescribed mid-potency steroid brand in the US. Locoid Lotion is a corticosteroid indicated for the topical treatment of mild to moderate Atopic Dermatitis in patients 3 months of age and older, Lupin said in a statement.
The addition of Locoid Lotion will enable Lupin to strengthen its US Brand business and expand its product portfolio for the US Pediatrics segment. "We are very pleased with the addition of Locoid Lotion to our brand portfolio and are committed to bring meaningful products to the US Pediatric community," said Vinita Gupta, CEO, Lupin Pharmaceuticals Inc. and Lupin. Bob Moccia, President of Onset Dermatologics said: "This partnership will give pediatricians greater opportunity to utilize Locoid lotion in their patients while Onset maintains its focus on promoting Locoid to the dermatology community. We are confident that Locoid will continue to be the most prescribed mid-potency steroid brand in the US".
Glenmark Pharmaceuticals dropped 5.78% to Rs 494.80. The company announced during market hours today, 23 September 2013, that Glenmark Generics Inc., USA, a subsidiary of Glenmark Generics, has been granted final abbreviated new drug approval (ANDA) from the USFDA for Desoximetasone Ointment USP, 0.25% their generic version of Topicort by Taro Pharmaceuticals USA Inc and shipping will commence immediately. According to IMS Health sales data for the 12 month period ended June 2013, Desoximetasone Ointment garnered annual sales of about $40 million. Desoximetasone Ointment is indicated for the relief of the inflammatory and pruritic manifestations of corticosteroid responsive dermatoses.
Dr Reddy's Laboratories rose 1.06%, with the stock reversing intraday losses.
Ranbaxy Laboratories rose 0.87% to Rs 336.35, with the stock recovering after Friday's slide triggered by the company receiving a Paragraph IV certification notice of filing from Watson Laboratories Inc. for a generic version of Absorica. Shares of Ranbaxy Laboratories had declined 4.86% to settle at Rs 333.45 on Friday, 20 September 2013, after the company after market hours on 19 September 2013, said it received a Paragraph IV certification notice of filing from Watson Laboratories Inc. for a generic version of Absorica.
Ranbaxy Laboratories Inc. (RLI), a wholly owned subsidiary of Ranbaxy Laboratories, has received a Paragraph IV Certification Notice of filing from Watson Laboratories Inc. of an Abbreviated New Drug Application (ANDA) to the US Food and Drug Administration (FDA) for a generic version of Absorica (isotretinoin capsules), a product that is licensed from Cipher Pharmaceuticals Inc. (Cipher) of Mississauga, Ontario.
RLI and Cipher intend to vigorously defend Absorica's intellectual property rights and pursue all available legal and regulatory pathways in defense of the product, RLI said in a statement. Absorica is currently protected by two issued patents listed in the FDA's Approved Drug Products List (Orange Book), which expire in September 2021. RLI shall take appropriate actions in response to the Paragraph IV notice letter, and FDA approval of the ANDA shall then be governed by the Hatch-Waxman Act, RLI said. Absorica was approved by the FDA in May 2012, and granted a three-year market exclusivity period, which expires in May 2015.
Hotel Leelaventure rose 1.71% to Rs 14.85 after the company said its board of directors has approved preferential allotment of equity shares to Rockfort Estate Developers -- a promoter group entity.
Mahindra & Mahindra (M&M) fell 1.37% to Rs 860.65. M&M announced during trading hours today, 23 September 2013, the appointment of Dr. Pawan Goenka to the board of the company as Executive Director (ED), the first ED appointment to the board since 1992. He will now be designated Executive Director and President (Automotive & Farm Equipment Sectors), with effect from today, 23 September 2013.
Shares of public sector oil marketing companies (PSU OMCs) declined as the weakness of the rupee against the dollar could raise cost of crude oil imports. HPCL (down 5.71%), BPCL (down 3.22%) and Indian Oil Corporation (down 1.67%), edged lower. PSU OMCs meet most of their crude oil requirements through imports.
Meanwhile, as per media reports that the government has turned cautious about the proposal to increase diesel prices sharply and raise them every week as top Congress leaders and the party's allies are worried about the political fallout of such a move ahead of the festive season and elections in five states.
Yes Bank clocked a highest turnover of Rs 108.44 crore on BSE. State Bank of India (Rs 85.08 crore), Tata Motors (Rs 68.59 crore), Tech Mahindra (Rs 62.40 crore) and ICICI Bank (Rs 56.16 crore), were the other turnover toppers on BSE in that order.
SMS Techsoft (India) reported highest volume of 2.25 crore shares on BSE. Reliance Power (53.07 lakh), Cals Refineries (38.95 lakh), SpiceJet (37.14 lakh) and Yes Bank (32.04 lakh), were the other volume toppers on BSE in that order.
The government has no plan to offer a special window to lend funds at lower interest rates to companies in some sectors, economic affairs secretary Arvind Mayaram said on Monday, 23 September 2013. Mayaram was reacting to media reports that the finance ministry and the central bank are considering a selective stimulus plan that involved a debt-buying programme for eligible companies.
In the foreign exchange market, the rupee dropped against the dollar. The partially convertible rupee was hovering at 62.60, weaker than its close of 62.23/24 on Friday, 20 September 2013. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
Mayaram today, 23 September 2013, said that the intrinsic value of the rupee is between 58 and 60 against the dollar. He said that overseas speculators were partly responsible for the sharp fall in the currency over the past few months. He also said that a fall in bulk diesel demand this fiscal year will save the government about $1 billion. Mayaram said he expected foreign direct investment (FDI) flows of about $36 billion for the fiscal year ending on 31 March 2014 if the current trend continues. Net FDI in the first quarter of this fiscal year rose to $9 billion from $5 billion in the same period a year earlier, Mayaram said last week.
Bond prices declined sharply as the government is likely to unveil its market borrowing programme via dated securities for the period from October 2013 to March 2014 today, 23 September 2013. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.8505%, higher than its close of 8.5777% on Friday, 20 September 2013. Bond prices and bond yields are inversely related.
European stock markets edged lower in choppy trade on Monday, 23 September 2013, after a round of mixed euro-zone purchasing managers' indices. Key benchmark indices in UK and Germany were down 0.12% to 0.31%. France's CAC 40 was flat.
Chancellor Angela Merkel's conservative party won Germany's election, but finished just short of an absolute majority. Merkel's Christian Democrats (CDU) bloc took about 42% of the vote. But she might yet have to seek a grand coalition with the Social Democrats (SPD) who won about 26% of the vote. Mrs Merkel's preferred liberal partners have not made it into parliament. The results showed that the liberal Free Democrats (FDP) won only 4.8%, leaving it with no national representation in parliament for the first time in Germany's post-war history. Mrs Merkel has made clear she would be prepared to work with the Social Democrats (SPD) in a grand coalition, as she did in 2005-09.
Preliminary euro-zone PMI data showed the manufacturing sector expanded less than expected in September. The composite PMI for the region, however, climbed to a 27-month high.
Asian stocks were mixed on Monday, 23 September 2013. Key benchmark indices in Indonesia, Hong Kong and Singapore were off 0.46% to 0.72%. Key benchmark indices in South Korea, China and Taiwan rose 0.19% to 1.33%. Japanese markets were closed for a holiday.
A Chinese manufacturing index rose to a six-month high in September, signaling that a rebound in the world's second-largest economy is gaining steam. The preliminary reading of 51.2 for a Purchasing Managers' Index released today by HSBC Holdings Plc and Markit Economics. The gauge was at 50.1 in August.
Trading in US index futures indicated that the Dow could gain 11 points at the opening bell on Monday, 23 September 2013. US stocks fell on Friday, 20 September 2013, after Federal Reserve Bank of St. Louis President James Bullard said that the Fed could make a small stimulus reduction at its next meeting in October. Bullard said tapering is more likely if the labor market continues to improve. The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013.
On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus. Kansas City Fed President Esther George on Friday, 20 September 2013, said markets were ready for reduced stimulus to begin, and the central bank's failure to follow through on expectations hurt its credibility on Wall Street.