The week that was: Deal or no deal, mkt in for taxing times
The euro and shares fell on Friday, reflecting concern over a possible failure in the debt restructuring after the European Union and International Monetary Fund indicated that a hard-won Greek deal on spending cuts and wage cuts did not go far enough.
Back home, it was raining bad economic data this week. India’s trade deficit has soared to USD 148.7 billion during the first 10 months (April-January) of the current financial year putting further pressure on the rupee .
The figures clearly indicate that 2012 would be a difficult year for exports in view of growing uncertainty in the eurozone, slackening demand in other advance economies and third country effect on our exports to emerging economies.
India’s gross domestic product or GDP growth is expected to be lower than 7% at 6.9%, according to advance estimates for the year ending March 2012. This is the slowest growth after 2008-09 when India registered a growth rate of 6.7%.
And to top it off, India’s industrial growth is in danger zone! The IIP figure for the month of December has fallen way below estimates to 1.8%…capital goods having contributed largely to that fall. But to be fair, the market did expect the number to be poor and hence took very little notice of it.
The disappointing IIP data and pressure from Europe kept the markets in the red. Traders also used to opportunity to book profits. Here’s how indices performed during the week.
Market regulator SEBI, in the past few days, brought a number of changes in its listing norms. It has notified the Institutional Placement Programme (IPP) guidelines to allow companies to reduce promoter shareholding through private placement. This move is expected the aid government in its divestment process
In major initiatives to strengthen the cash-strapped aviation sector, a Group of Ministers today decided to allow airlines to directly import jet fuel to enable them save on high incidence of tax and permit Air India to raise Rs 7,400 crore by issuing bonds or other means.
State governments apprehend that direct jet fuel import by domestic airlines could result in revenue loss of approximately Rs 3,000 crore, a report in Hindu Business Line said.
However, airlines, which had asked for allowing direct fuel import in the first place, were still not happy. Here’s why !
The Baltic Dry Index (BDI), which tracks shipping rates across key routes, has undergone a free fall, hitting a nearly 20-year low, even below the mark that was witnessed during the worst of the post-Lehman crisis in 2008. The dramatic fall in the index indicates that not a lot of trade is happening among countries.
Major earnings this week
More surprising than the unexpected loss of Tata Steel was the market’s reaction to it. Tata Steel posted a net loss of Rs 687 crore against market expectations of Rs 340 crore profit. However, despite opening lower, the stock traded 4.5% higher on Friday.
More surprises came in from Bharti Airtel, which posted fourth straight quarter of lower net profit over its previous quarter. This has been despite the fact that the company’s sales have been rising during the same period.
And even though Hindustan Unilever (HUL) posted its highest reported net profit for the December 2011 quarter not everyone seem to be happy with the results.
Citi has downgraded the company after the strong performance. Reason for the downgrade cited in the report is that HUL’s business will probably face headwinds from escalating competition (higher ad spends) in soaps and detergents going forward.
(Catch all the Q3 earnings action HERE )
But it was not just India Inc or investors who are getting anxious. The finance minister Pranab Mukherjee losing sleep over the ‘enormity’ of subsidy bills, lower-than-targeted direct tax collections and a consequent widening fiscal deficit, has asked taxmen to pull up their socks to achieve collection target.
Taxing times indeed!
