Market rebound 710 points this week on strong global cues

 Mumbai, Jul 16 (PTI) Stocks: Strong global cues and inherent domestic market strength led the benchmark Sensex to rally by 709.60 points to finish the week at 27,836.50, while broader Nifty gained 218.20 points to conclude at 8,541.40.

Global stocks surged amid last weekend US jobs report which signalled the American economic recovery is back on track and landslide victory of Japanese ruling coalition that raised hopes for more stimulus.

While domestic market's relative outperformance capability garnered momentum on reports of above normal monsoon, optimism on passage of GST bill during the monsoon session of parliament spurred substantial FII investments in Indian equities.

However, market witnessed volatility with macro-economic data showing rise in both CPI and WPI inflation in June, but expanding Industrial Production (IIP) data helped to strengthen investors' sentiment.

Also, the market witnessed losses during weekend trade as IT index saw a massive sell-off after infosys slashed its full-year revenue guidance. And the same time, European stocks roiled amid terrorist attack in France as gunmen ploughed truck into a crowd killing 84 people.

The Sensex opened higher at 27,358.23 and surged to recapture 28,048.70 before ending the week at 27,836.50, showing a gain of 709.60 or 2.62 per cent.

The NSE 59-share Nifty also rallied by 218.20 points or 2.62 per cent to 8,8,541.40 after moving between 8,594.80 and 8,407.05.

Buying was led by metal, banks, auto, PSUs, capital goods, oil & gas, consumer durable, realty, FMCG, power, healthCare.

IT and Teck sectors witnessed selling pressure on the D- street.

Government reaches out to opposition for support on GST bill

India's Finance Minister Arun Jaitley addresses a gathering during ''Advancing Asia: Investing for the Future'' conference in New Delhi, March 11, 2016.

New Delhi : The BJP-led central government held talks with its main political rival, the Congress party, to settle differences over tax reform legislation on Friday, and sources in the two groups with direct knowledge of the matter said a consensus appeared possible in a parliament session starting next week.

The proposed reform, India's biggest revenue shake-up since independence in 1947, seeks to replace a slew of central taxes and levies in 29 states, transforming the nation of 1.2 billion people into a customs union.

Prime Minister Narendra Modi's party, which lacks a majority in the Rajya Sabha, has reached out to the Congress to end its opposition to the Goods and Services Tax (GST) bill which has stalled in parliament for years.

Finance Minister Arun Jaitley told reporters the government was trying to resolve differences with the Congress party, which include its demands to cap the tax rate at around 18 percent in the proposed bill.

The government has said it does not want to be bound to a particular rate written into the law as any future changes would require a further amendment of the constitution.

"We are trying to build a consensus," Jaitley said after meeting top Congress leaders ahead of the monsoon session of parliament beginning on Monday, where the government plans to discuss the bill.

Under pressure to deliver on economic growth and jobs, the government is hoping that the tax reform legislation would make the country an easier place to do business and fuel investment.

The GST bill could add 0.8 percentage point to India's economic growth in 3-5 years, HSBC said in a research note.

Congress leader Anand Sharma said discussions had been held with the finance minister and parliament affairs minister on the bill but declined to go into specifics.

A source in the Congress party, however, said the party was ready to support the bill if the government committed to capping the tax rate later even if it did not make it part of the law immediately.

Despite deep-seated political differences, the Congress party gave the government its support to a landmark bankruptcy bill at the last session.

May shakes up British government to prepare for Brexit

Britain's Prime Minister Theresa May arrives at 10 Downing Street, in central London July 14, 2016.

London : New Prime Minister Theresa May showed a ruthless streak on Thursday in building a cabinet to lead Britain's exit from the European Union, while her finance minister said he would do whatever was necessary to restore confidence in the economy.

A day after replacing David Cameron, May moved to impose her authority by axing a handful of prominent ministers including Justice Secretary Michael Gove, a leading 'Brexit' campaigner who had staged his own bid for prime minister.

Her most contentious appointment is Foreign Secretary Boris Johnson, who compared the EU's aims to those of Hitler and Napoleon during the campaign leading up to Britain's vote last month to quit the 28-nation bloc.

The surprise choice drew a withering response from French Foreign Minister Jean-Marc Ayrault, who described the former London mayor as a liar.

Three weeks after the referendum, May's new government faces the formidably complex task of extricating Britain from the EU - itself reeling from the shock of Brexit - while trying to protect the economy from feared disruption to confidence, trade and investment.

The Bank of England kept interest rates unchanged on Thursday, wrong-footing many investors who had expected the first cut in more than seven years. But it said it was likely to deliver a stimulus in three weeks' time to support the economy, once it has assessed the fallout from the June 23 vote. The pound rose sharply on the news, while shares fell.

New finance minister Philip Hammond signaled he would take a less aggressive approach to cutting the budget deficit than his predecessor George Osborne, who was dumped on Wednesday.

"Markets do need signals of reassurance, they need to know that we will do whatever is necessary to keep the economy on track," Hammond said.

"Of course we've got to reduce the deficit further but looking at how and when and at what pace we do that ... is something that we now need to consider in the light of the new circumstances that the economy is facing."

May, who had favored a vote to stay in the EU, must now decide when and how to start official divorce proceedings from the other 27 countries, who are pressing her to move quickly to lift the uncertainty now hanging over them all.

In her first words to the nation on Wednesday, she promised to champion social justice and to help ordinary Britons in their struggle to make ends meet.

"The government I lead will be driven not be the interests of the privileged few, but by yours. We will do everything we can to give you more control over your lives," she said.

Income Declaration Scheme 2016 – Government Issues Clarifications in the form of Fourth Set of Frequently Asked Questions (FAQs)

The Income Declaration Scheme, 2016 provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and assets. The Board has issued three sets of clarifications in the form of FAQs. The fourth set of Frequently Asked Questions (FAQs) providing clarification on various issues are in the process of being issued and will be available on the official website of the Income Tax Department i.e., www.incometaxindia.gov.in later today.

Queries have been received from various  stakeholders whether the payment under the Scheme can be made out of undisclosed income without including the same in the income declared, thereby bringing down the effective rate of tax, surcharge and penalty payable under the Scheme to around 31%. The fourth set of FAQs seek to set this issue at rest as follows:

“Question No. 6:       With reference to Question No.5 issued vide Circular No.25 of 2016, wherein it has been stated that the department will not make any enquiry in respect of sources of income, payment of tax, surcharge and penalty, it may be clarified that whether the payment under the Scheme can be made out of undisclosed income without including the same in the income declared, thereby bringing down the effective rate of tax, surcharge and penalty payable under the Scheme to round 31 per cent?

Answer:                      It is clarified that the intent of the clarification issued vide Question No.5 of Circular No.25 of 2016 was limited to conduct of enquiry by the Department. It in no way intends to modify or alter the rate of tax, surcharge and penalty payable under the Scheme which have been clearly specified in the Scheme itself.  Sections 184 & 185 of the Finance Act, 2016 unambigously provide for payment of tax, surcharge and penalty at the rate of 45 per cent of undisclosed income. This is illustrated by the following example—

                                    In a case a person declares Rs.100 lakh as undisclosed income, being the fair market value of undisclosed immovable property as on 1^st June, 2016 and pays tax, surcharge and penalty or Rs.45 lakh (30 lakh + 7.5 lakh + 7.5 lakh) on the same out of his other undisclosed income. In this case the declarant will not get any immunity under the Scheme in respect of undisclosed income of 45 lakh utilized for payment of tax, surcharge and penalty but not included in the declaration filed under the Scheme. To get immunity under the Scheme in respect of the entire undisclosed income of Rs.145 lakh (Rs.100 lakh being undisclosed income represented by immovable property and Rs.45 lakh being the payment made from undisclosed income) and pay tax, surcharge and penalty under the Scheme amounting to Rs.65.25 lakh i.e., 45 per cent of Rs. 145 lakh.”

Other queries related to revision of declaration, chargeability of capital gain and TDS on transfer of property from benamidar to beneficial owner etc. have also been dealt with in the circular.

Income Declaration Scheme 2016 – Government Revises Time Schedule for Making Payments under the Scheme

During the course of meetings and seminars held in different parts of the country, various stakeholders have expressed concern that the time period available under the Scheme up to 30th November, 2016 for making payment of tax, surcharge and penalty is very short, especially where funds in liquid form are not readily available with the declarants. It has also been mentioned that for making payment by 30.11.2016, the declarants may have to opt for distress sale of the assets. 

Taking into consideration the practical difficulties of the stakeholders, the Government has decided to revise the time schedule for making payments under the Scheme as under: 

(i) a minimum amount of 25% of the tax, surcharge and penalty to be paid by 30.11.2016; (ii) a further amount of 25% of the tax, surcharge and penalty to be paid by 31.3.2017; and (iii) the balance amount to be paid on or before 30.9.2017. 

A Notification to this effect shall be issued shortly. 

China vows to protect South China Sea sovereignty, Manila upbeat

BEIJING/MANILA :China vowed to take all necessary measures to protect its sovereignty over the South China Sea and said it had the right to set up an air defense zone, after rejecting an international tribunal's ruling denying its claims to the energy-rich waters.

Chinese state media called the Permanent Court of Arbitration in the Hague a "puppet" of external forces after it ruled that China had breached the Philippines' sovereign rights by endangering its ships and fishing and oil projects.

Beijing has repeatedly blamed the United States for stirring up trouble in the South China Sea, where its territorial claims overlap in parts with Vietnam, the Philippines, Malaysia, Brunei and Taiwan.

"China will take all necessary measures to protect its territorial sovereignty and maritime rights and interests," the ruling Communist Party's official People's Daily said in a front page commentary on Wednesday.

The case, covering a region that is home to one of the world's busiest trade routes, has been seen as a test of China's rising power and its economic and strategic rivalry with the United States.

Underscoring China's rebuffing of the ruling, state media said that two new airports in the Spratlys, on Mischief Reef and Subi Reef, both received test flights from civilian aircraft on Wednesday.

Beijing called the Philippines' claims of sovereignty in the South China Sea "baseless" and an "act of bad faith". In a government white paper published on Wednesday, China also said its fishing boats had been harassed and attacked by the Philippines around the disputed Spratly Islands.

"On whether China will set up an air defense zone over the South China Sea, what we have to make clear first is that China has the right to... But whether we need one in the South China Sea depends on the level of threats we face," Vice Foreign Minister Liu Zhenmin told reporters in Beijing, adding that China hoped to return to bilateral talks with Manila.

"We hope that other countries don't use this opportunity to threaten China, and hope that other countries can work hard with China, meet us halfway, and maintain the South China Sea's peace and stability and not turn the South China Sea in a source of war."

U.S. officials have previously said they feared China may respond to the ruling by declaring an air defense identification zone in the South China Sea, as it did in the East China Sea in 2013, or by stepping up its building and fortification of artificial islands.

China's Liu also took aim at the judges on the tribunal, saying that as not one of them was Asian they could not possibly understand the issue and it was unfair of them to try.

SC restores Cong government in Arunachal Pradesh

 New Delhi, Jul 13 (PTI) In a major setback to the Bharatiya Janata Party and the government headed by it at the Centre, the Supreme Court of India on Wednesday ordered restoration of the Congress government in the north-eastern Indian Arunachal Pradesh state by quashing all decisions of the Governor that had precipitated its fall in January, holding them "violative" of the Constitution

The apex court's verdict came as a shot in the arm for the Congress, paving the way for the return of its dismissed government headed by Nabam Tuki

The landmark unanimous judgement by a five-judge bench set aside among other things Governor Jyoti Prasad Rajkhowa's message directing the preponing of the session and the manner of holding the proceedings of sixth session of the Assembly scheduled from January 14, 2016, to December 16-18, 2015

The constitution bench, headed by Justice J S Khehar, ordered that status quo ante as prevailed on December 15, 2015 be restored in Arunachal Pradesh Assembly

This is the second major blow for the Centre from the Supreme Court which had only in May ordered a fresh floor test in the Assembly of the north Indian state of Uttarakhand that led to the return of the Congress government headed by Harish Rawat and lifting of the President's Rule imposed on March 27

Reading out the operative portions of the main judgement, Justice Khehar said the order of the Governor dated December 9, 2015, preponing the session of Legislative Assembly from January 14, 2016, to December 16, 2015, is violative of Article 163 read with Article 174 of the Constitution and as such is liable to be quashed and the same is quashed

"Secondly, the message of governor directing the manner of conducting the proceedings of the sixth session of Legislative Assembly of Arunachal Pradesh from December 16-18, 2015, is violative of Article 163 read with Article 175 of the Constitution and as such is liable to be quashed and the same is quashed," the bench said

Thirdly, the bench said "all steps and decisions taken by the Legislative Assembly of Arunachal Pradesh in pursuant to Governor's order of December 9, 2015, are unsustainable and liable to be set aside and as such it is set aside." 

Finally, the bench observed, "In view of the decision from one to three, status quo ante as it prevailed on December 15, 2015, is ordered to be restored." .

Government reviews consumer redressal mechanism with industry

Industry asked to display the policy for replacement and refund and timeframe for redressal of grievances on websites

A conference on Government industry partnership for redressal of consumer grievances convened here today. Secretary, Consumer Affairs Shri Hem Pande chaired the conference which was attended by all the leading Chambers of Commerce and Industry viz. ASSOCHAM, FICCI, CII, PHD, DICCI and 130 companies cutting across different sectors such as Consumer Products, E- Commerce, Banking, Insurance, travel etc.

The Secretary Consumer Affairs said that in view of the increasing number of consumer grievances pertaining to different sectors of industry, there is a genuine need to pay immediate attention to strengthen redressal mechanism so that grievances are redressed within a given timeframe. The need for transparency in this regard is of prime importance. Each company should bring out names of the nodal officers for handling grievances as well as the escalation matrix so that grievance if not redressed can be taken up with the next higher level. The names and contact details of alternate nodal officers should also be given. The policy for replacement and refund should be placed on the website of the companies. While the companies should acknowledge timeframe by which the grievances are addressed by giving a unique registration number they should also have regular interaction with the consumers. They should refrain from giving misleading image of the products and services. A company which eliminates the grievances of consumers can only grow on a sustainable basis. He said that to go far one must go together, the Secretary said.

The industries were asked to constantly share their ideas with the Department of Consumer Affairs so as to make the consumer redressal mechanism robust. The Chambers of Commerce and Industry as well as companies representing sectors like manufacturing, services, banks, insurance, real estate expressed their solidarity with the cause taken up by Department of Consumer Affairs and endorsed their commitment towards redressal of grievances of their consumers which help them grow in their business. 

Industrial production expands 1.2% in May

New Delhi, Jul 12 (PTI) Industrial production grew by 1.2 per cent in May after seeing a contraction in the previous month, mainly due to uptick in consumer durables output.

Factory output, measured in terms of the Index of Industrial Production (IIP), had expanded by 2.5 per cent in May last year, the data released by the Central Statistics Office (CSO) showed today.

On cumulative basis, the factory output in April-May contracted by 0.1 per cent compared to 2.8 per cent growth in the year-ago period.

Despite a rebound in May, the growth figure remained low and may add to the clamour for rate cut by the Reserve Bank of India.

Meanwhile, the provisional estimates of 0.8 per cent contraction in April this year was revised downwards to 1.34 per cent decline in factory output.

According to data, output of consumer durables, which include white goods like television, refrigerators and washing machines, grew by 6 per cent in May compared to a contraction of 3.9 per cent in the same month a year ago.

The manufacturing sector that constitutes over 75 per cent of the index saw a growth of 0.7 per cent in May compared to 2.1 per cent a year ago.

Power generation grew 4.7 per cent in May compared to 6 per cent in the same month a year ago.

The mining sector recorded a growth of 1.3 per cent in May this year as against 2.1 per cent a year ago.

In terms of industries, 14 out of 22 industry groups in the manufacturing sector have shown growth during the month of May 2016 compared to the corresponding month of the previous year.

As per user-based classification, the growth rates in May 2016 are 3.9 per cent in basic goods, (-) 12.4 per cent in capital goods and 3.6 per cent in intermediate goods.

The consumer non-durables output contracted by 2.2 per cent. The overall growth in consumer goods was 1.1 per cent.

Retail inflation inches up to 5.77 percent in June
India's annual consumer price inflation edged up to 5.77 percent in June, mainly driven by higher food prices, government data showed on Tuesday.

Economists surveyed by Reuters had expected annual retail inflation last month to come in at 5.73 percent compared with 5.76 percent in May.

Food inflation was 7.79 percent last month, higher than a revised 7.47 percent in May.

UN backed Tribunal says China has no historic title over South China Sea

Beijing/The Hague, Jul 12 (PTI) A UN-backed international tribunal today struck down China's claims of "historical rights" in the strategic South China Sea, prompting Chinese President Xi Jinping to reject its ruling and asserting that Beijing will not accept the verdict "under any circumstances".

Xi's strong remarks came immediately after The Hague- based tribunal dismissed the core of China's claims over the 90 per cent South China Sea (SCS), ruling that "there was no legal basis for China to claim historic rights within the sea areas falling within the 'nine-dash line'", which is based on a Chinese map dating back to the 1940s.

In his meeting with European Council President Donald Tusk and European Commission President Jean-Claude Juncker, President Xi, also the General Secretary of the ruling Communist party and commander-in-chief of the military, said China's territorial sovereignty and maritime interests in SCS will not be affected by the ruling under any circumstances.

Xi's comments indicates China's tough stand on the ruling by the five judge tribunal appointed by the Permanent Court of Arbitration which struck down Beijing's controversial nine- dash line on the SCS claiming over 90 per cent of the area.

China "neither accepts nor recognises" the ruling of the tribunal in the SCS arbitration established at the request of the Philippines, the Chinese Foreign Ministry said in Beijing.

"The award is null and void and has no binding force," it said in a statement minutes after the tribunal delivered its judgement striking down Beijing's claims of historic rights over the area, strongly disputed by the Philippines, Vietnam, Malaysia, Brunei and Taiwan.

China's territorial sovereignty and maritime rights and interests in the SCS shall under no circumstances be affected by those awards. China opposes and will never accept any claim or action based on those awards, the statement quoted by state-run Xinhua new agency said.

The tribunal concluded that "to the extent China had historic rights to resources in the waters of the SCS, such rights were extinguished to the extent they were incompatible with the exclusive economic zones provided for in the Convention" (UN Convention on the Law of Seas), it said.

"The tribunal also noted that, although Chinese navigators and fishermen, as well as those of other States, had historically made use of the islands in the SCS, there was no evidence that China had historically exercised exclusive control over the waters or their resources," it said.

For decades China, which boycotted the tribunal questioning its legality has been asserting that its emperors have discovered the islands hundreds years ago and have been exercising control over the area throughout the history.

But is claims came into conflict with the Philippines, Vietnam, Malaysia, Brunei and Taiwan as they hardly have exclusive economic zones (EEZ) provided by UNCLOS which Beijing declined to recognise.

While the Philippines filed the case in 2013, Beijing's claims over the SCS are also contested by Vietnam, Malaysia, Brunei, Taiwan and Indonesia as well. .