Market may extend losses on weak Asian stocks

The market may extend recent losses on weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 68 points at the opening bell. Grasim Industries' consolidated net profit fell 7.97% to Rs 808.78 crore on 14.48% rise in total income to Rs 7562.59 crore in Q4 March 2012 over Q4 March 2011. The results were announced on Saturday, 5 May 2012. Housing finance major HDFC announces FY 2012 results today, 7 May 2012. Key benchmark indices tumbled on the last trading session of the week on Friday, 4 May 2012 to hit lowest closing level in more than 14 weeks weighed by news that the government is considering a review of the Double Taxation Avoidance Treaty with Mauritius to raise revenues. The BSE Sensex was down 320.11 points or 1.87% to 16,831.08, its lowest closing level since 23 January 2012.From a recent high of 17,318.81 on 30 April 2012, the Sensex has declined 487.73 points or 2.81% in three trading sessions. Foreign institutional investors (FIIs) bought shares worth Rs 427.92 crore on Friday, 4 May 2012 as per provisional data from the stock exchanges. FIIs bought shares worth Rs 1224.82 crore in five trading sessions from 28 April 2012 to 4 May 2012. 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. Hindalco Industries and Asian Paints unveil Q4 results tomorrow, 8 May 2012. Kotak Mahindra Bank also announces FY 2012 results on 8 May 2012. Punjab National Bank and Ranbaxy Laboratories unveil quarterly results on 9 May 2012. NTPC announces FY 2012 results on 10 May 2012. Cipla announces Q4 results on the same day. Dr Reddy's Laboratories announces FY 2012 results on 11 May 2012. L&T announces FY 2012 results on 14 May 2012. Bajaj Auto announces FY 2012 results on 17 May 2012. Tata Power Company announces FY 2012 results on 22 May 2012. BPCL unveils FY 2012 results on 25 May 2012. Mahindra & Mahindra (M&M) unveils FY 2012 results on 30 May 2012. The Finance Bill 2012 is scheduled to be debated and passed in Parliament this 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. In 2007, Vodafone International Holdings BV, the UK-based telco's Dutch subsidiary, bought the Indian business operations of Hutchison Telecommunications International (HTIL) through the sale of a Cayman Islands-based firm called CGP Investments (Holdings), a unit of HTIL, also incorporated in the Cayman Islands. The tax department had held that even though the indirect transfer of shares happened overseas, the underlying assets were in India and the transaction was subject to capital gains tax. After a protracted legal battle, the Supreme Court ruled in Vodafone's favour in January and said the tax department had no right to levy tax on the transaction. 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 a review of developments in the global financial markets and current macro-economic conditions, the Reserve Bank of India (RBI) has taken the following measures to ease foreign currency flows as also to enhance the availability of export credit in foreign currency: Interest rate ceiling on Foreign Currency Non-Resident [FCNR (B)] deposits of banks has been raised from 125 basis points (bps) above the corresponding LIBOR/Swap rates to 200 bps for maturity period of 1 year to less than 3 years, and to 300 bps for maturity period of 3 to 5 years. The ceiling rate on export credit in foreign currency which was constraining the availability of credit to exporters in foreign currency has been deregulated by allowing banks to freely determine their interest rates on such credit. The above measures are aimed at augmenting foreign currency inflows to banks which in turn would facilitate their foreign currency loans to exporters. These measures will come into effect from 5 May 2012. The detailed guidelines are being issued separately. Asian shares tumbled Monday after poor jobs data raised fresh fears about the health of the U.S. economy, and European elections over the weekend added to jitters about the euro zone's future. Key benchmark indices in China, Indonesia, Hong Kong, Singapore Taiwan, Japan and South Korea fell by between 0.39% to 2.45%. In France, polls indicated that President Nicolas Sarkozy had lost to Socialist challenger Francois Hollande, who had indicated he wants to renegotiate Europe's fiscal compact and its tough budget rules. In Greece, exit polls indicated that the center-right New Democracy Party and the center-left Pasok party — both supporters of the country's most recent bailout — took a drubbing. US stocks ended its worst week this year with a sharp sell off on Friday after a slowdown in job creation in the world's top economy raised the biggest question mark yet about the prospects for US growth. Data showed just 115,000 jobs were added to the U.S. economy last month, well below the market expectations of 163,000 job additions.