Indian Markets May Open Sideways

The global stocks too edged lower last night as investors in the US and Europe booked profits, thereby putting a momentary break on advances in the global equity markets seen since the start of CY12. Also, there were some negative sentiments emerging from the estranged euro zone as Fitch Ratings slashed its rating for Greek sovereign debt to ‘C’ from ‘CCC’, indicating that default is “highly likely in the near term”. The downgrade comes just after the country secured a second bailout from its creditors and the subsequent announcement by the Greek government that private investors holding Greek debt would be forced to accept a debt swap, in which they exchange their bonds for lower-value debt.

On the domestic front, with the Union Budget round the corner, the Prime Minister’s Economic Advisory Council (PMEAC) has urged the government to initiate urgent action in order to shore up credibility in the economy. In the review of the economy for 2011-12, the PMEAC has asked the government to rein in fiscal deficit, raise indirect taxes, cut diesel subsidies and check rising current account deficit to bring the economy back on a higher growth trajectory. The government’s credibility on the issue of economic management has suffered several knocks over the past year while it has struggled to curtail subsidies and tame inflation. Over this period, industrial output fell, exports slowed down, tax receipts slipped and the government suffered all-round criticism for not acting against fiscal recklessness. 

For today the markets would continue to remain volatile and negative as the F&O segment contracts near expiry today. We have been continuously advising our readers to book profits and we maintain the same tone now.

According to Business Standard, Econet Wireless is seeking at least USD 3.1 billion in damages from Bharti Airtel in a dispute over ownership of its subsidiary Airtel Nigeria. The move follows a Nigerian court ruling on January 30 that Bharti Airtel’s ownership of its subsidiary Airtel Nigeria is “null and void” because co-founder and 5 per cent shareholder Econet was not consulted on the transfer. South Africa-based Econet Wireless is disputing Bharti’s ownership of one of its top Africa operations. 

According to sources, the Income Tax Department (IT) has disallowed Sesa Goa’s tax deductions of Rs 246 crore on the basis of regular assessment conducted for the financial years 2009 and 2010. The IT Department believes that to be able to get a deduction under the IT Act the entire process in the production cycle has to be new. But in case of Sesa’s three export-oriented units set up in 2000, 2003 and 2006, while the beneficiation plants are new the mines are old and therefore no deduction can be allowed. Sources indicate that certain accounts of the company had also been frozen, but no information is available as to when this was carried out. However, the company seems to suggest that they have been de-frozen now. Meanwhile, Sesa Goa has appealed against this regular assessment order.

According to sources, Kingfisher Airlines has received yet another blow as the Income Tax Department is believed to have rejected the airline’s plea to lift the freeze on its accounts. Sources say that KFA’s offer of partial payment is too small. KFA has about Rs 300 crore pending as dues with the IT Department. Ticket proceeds worth Rs 50-60 crore have been attached.