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Electoral Bonds | Increasing reporting, mandatory disclosures required for more transparency

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Regulating political donations through regular banking channels has introduced an element of transparency, but there is scope to improve Electoral Bonds | Increasing reporting, mandatory disclosures required for more  transparency

In India, political funding and the mechanism to raise monies remain a bone of contention amid arguments over transparency in donations from individuals, groups, and entities, especially the big corporations. The exercise of conducting elections are now a regular feature every year largely on account of elections to the state assemblies that follow different cycles of completion of tenures.

Elections require political parties to spend huge amount of money for a range of activities, from advertising to logistics, and much more. Over the years parties have raised funds through various methods with donations from supporters, party workers, and businesses (small and big) which poured in largely in the form of cash.

In order to address the challenge of cash collection, and to formalise fund raising channelised through the banking system, the then Finance Minister Arun Jaitley during the 2017 Budget mentioned of electoral bonds aimed at cleansing the mechanism and injecting transparency. Nearly a later, the Government of India notified the scheme.

According to reports compiled by the Association of Democratic Reforms, a non-government organisation working for improvement in India’s electoral system, between March 2018 and July 2022, 18,779 electoral bonds worth Rs 10,245.2 crore were sold, and most of it were encashed by political parties. The ADR and two others challenged the electoral bonds in the Supreme Court, which heard the matter recently, and scheduled to take it up further in December.

During debates, several political parties raised objections when relevant laws of income tax, foreign contributions, companies and representation of the people, were amended to incorporate features of the electoral bonds on the grounds that the new mechanism contained opaqueness. The amendments among other features allowed anonymity to the extent that only the donor knows how much has been distributed to a political party. The government defended the provision that past experience showed that donors did not find attractive the scheme where donations were made public, and thus preferred cash donations. The earlier provision required political parties to identify donations over Rs 20,000.

The electoral bond is the method through which a citizen or a body incorporated in India is eligible to purchase the bond, which is issued for any value in the multiples of Rs 1,000, up to Rs 1 crore. These bonds are issued periodically for a limited time by specified branches of the State Bank of India. These instruments in the form of interest-free promissory notes can be purchased by fulfilling KYC norms and through a bank account. The beneficiary political party identified by the purchaser can get the donation only if it is registered, and secured not less than one percent of the votes at the last Lok Sabha or assembly elections.

Explaining the rationale and benefit of the new system of funding envisaged, late Jaitley had said in an article: “…the choice has now to be consciously made between the existing system of substantial cash donations which involves total unclean money and is non-transparent and the new scheme which gives the option to the donors to donate through entirely a transparent method of cheque, online transaction or through electoral bonds.” He then noted that the government was willing to consider all suggestions to further strengthen the cleansing of political funding.

The idea of regulating political donations through regular banking channels introduced an element of transparency, but there is scope to improve and take steps in the direction of increasing reporting and mandatory disclosures.

Quash Pernod bid to halt lawsuit against $244 mn tax demand: Govt to court

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Oct 3 Mumbai court filing by India's customs authority underlines growing dispute between PM Modi's government and Pernod's local unit over how the company valued some of its imports for over a decade

Pernod Ricard

Indian authorities have asked a court to quash Pernod Ricard's bid to halt proceedings related to a $244 million tax demand, accusing the French spirit giant of being a "habitual litigant" and conspiring to "defraud" the government, legal documents show.

The Oct. 3 Mumbai court filing by India's customs authority, which has not been reported previously, underlines the growing dispute between Prime Minister Narendra Modi's government and Pernod's local unit over how the company valued some of its imports for over a decade.

The customs authority says Pernod did so to evade full payment of import taxes.

The tussle comes when  is facing business and regulatory stress in India, one of its key growth markets where it accounts for a 17% share. It has previously told Modi that long-running disputes over the valuation of liquor imports had "inhibited fresh investments" in India.

After India demanded back taxes from the maker of Chivas Regal and Absolut vodka in June, Pernod challenged it in court, saying the investigation should be put on hold as it relied on incorrect industry data, and the process was "neither fair nor reasonable."

In the 43-page October filing, India's customs authority said the French company was resorting to "delay tactics" by approaching a court for relief, instead of responding to the government's tax demand notice.

It accused the company of a conspiracy "to defraud the Govt. of India of its legitimate revenue."

Pernod has been "a habitual litigant and always attempts to abuse the due process of law," the filing added, referring to some previous tax demands Pernod challenged in India.

Asked for comment, Pernod referred Reuters to a previously issued statement, which said the company is actively working on demonstrating its position to Indian authorities and has "always endeavoured to act with full transparency and in compliance with customs and regulatory requirements."

It declined further comment due to ongoing litigation and because the filing by the customs authority wasn't public. The court case will next be heard on Oct. 20 in Mumbai.

The Indian investigation assessed Pernod India's import bills of liquor concentrates from a group subsidiary, UK-based Chivas Brothers, and found they were undervalued for years.

To compensate for the undervalued imports, Pernod paid "hefty" dividends to the group's holding company,  in France, which also owns Chivas Brothers, the investigation found. Import duties on liquor concentrates are 150% while dividends attract lower taxes.

The long-standing tax disputes Pernod faces in India has led to business uncertainty - in July, the company wrote a letter to a federal tax authority saying the company was "facing significant business continuity challenges", asking for a resolution.

Last week, Pernod said its India CEO, Thibault Cuny, had stepped down due to health reasons.

Share Market Closing Note | Indian Stock Market Trading View For 17 October 2022

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Share Market Closing Note

Benchmark indices climbed over 1 per cent in intra-day deals on Tuesday, before cooling off mildly as HDFC twins, Sun Pharma, NTPC, and Tech M weighed. 

What Is a Stock Exchange? Definition and Examples

The gains were largely led by bank, auto, IT, and FMCG stocks. Their sectoral indices were up over 1 per cent each. 

The S&P BSE Sensex ended at 58,961, up 550 points or 0.94 per cent, while the Nifty50 closed at 17,487, 175 points or 1 per cent, higher. The indices hit intra-day highs of 59,144, and 17,528, respectively.

In the broader markets, the Nifty MidCap and SmallCap indices gained 1.2 per cent, and 0.75 per cent, respectively. Overall, the market breadth firmly favoured buyers in the ratio of 2:1. Volatility index, India VIX, meanwhile eased over 5 per cent. 

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Topic :- Time:3.00 PM

Nifty spot if manages to trade and hold above 17500 level on closing basis then expect some further upmove in the market in coming sessions and if it closes below above mentioned level then some sluggish movement can be seen. Avoid open positions for tomorrow.

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Topic :- Time:2.20 PM

Just In:

POLYCAB Q2 : CONS  NET PROFIT AT 270 CR V 198 CR (YOY).

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Topic :- Time:2.00 PM

Nifty is trading flat. Nifty spot if breaks and trade below 17450 level then expect some decline in it and if it manages to trade and sustain above 17500 level then some upmove an follow in it.

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Topic :- Time:1.45 pm

Just In:

1. HERITAGE FOODS Q2 ; CONS . NET PROFIT AT 19 CR V 32.7 CR (YOY)

REVENUE AT 81.6 CR V 67 CR (YOY)

2. PRAJ Q2 : CON. PROFIT AT 48 CR V 33 CR (YOY)

REVENUE AT 876 CR V 532 CR (YOY)

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Topic :- Time:1.30 pm

GOLD Trading View:

GOLD is trading at 50540.If it manages to trade and sustain above 50580 level then expect some further upmove in it and if it breaks and trade below 50500 level then some decline can follow in it.

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Topic :- Time:1.00 pm

Nifty is trading in a range. Nifty spot if manages to trade and sustain above 17540 level then expect some upmove in the market and if it breaks and trade below 17480 level then some decline can follow in the Nifty. Currently nifty is trading at 17497.

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Topic :- Time:1.00 pm

Nifty is trading in a range. Nifty spot if manages to trade and sustain above 17540 level then expect some upmove in the market and if it breaks and trade below 17480 level then some decline can follow in the Nifty. Currently nifty is trading at 17497.

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Topic :- Time:11.30 am

News Wrap Up:

1.  Sensex off highs, up 550 pts; PSB index rises 3%, HDFC, BPCL fall

2.  66% CEOs in India expect recession in 2023; layoffs on the cards

3. Bangladesh, Vietnam seen as competitors in textile and garment trade

4. BSVI phase 2: Diesel car cost likely to rise by nearly Rs 80,000

5. Invesco to sell 5.51% stake in Zee Entertainment for over Rs 1,300 cr

6. Dalmia, Sagar Cements in race to buy debt-ridden Andhra Cements

7. Zee Entertainment surges 6% after 53 mn shares change hands via block deal

8. Samvardhana Motherson slips 7%, hits new 52-week low after block deal

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Topic :- Share Market Closing Note

Nifty ends above 17,300 led by SBI, Bajaj Finserv; metals, realty close in the red

Stock Market Updates: Among sectors, buying was seen in financials, auto and power spaces while selling was seen in metals and realty names.

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Topic :- Time:3.20 PM

Nifty spot close above 17280 level will result in some further upmove in coming sessions and if it closes below above mentioned level then some sluggish move can continue. Avoid open positions for tomorrow. 

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Topic :- Time:2.30 PM

GOLD Trading View:

GOLD is trading at 50514. If it breaks and trade below 50480 level then some decline can follow and if it manages to trade and sustain above 50550 level then some more upmove can follow. Gold is in Buy from decline trend as off now.

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Topic :- Time:2.00 PM

Nifty spot if manages to trade and sustain above 17320 level then expect some upmove in it and below 17280 level some decline can be seen.

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Topic :- Time:1.00 PM

Nifty spot if breaks and trade below 17260 level then expect some decline in the market and if it manages to trade and sustain above 17300-17320 levels then some upmove can follow in it. Currently Nifty spot is trading at 17287.

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Topic :- Time:12.30 pm

COPPER Trading View:

COPPER is trading at 654.If it holds above 652 level then expect good upmove in it and if it breaks and trade below 652 level then some decline can follow in Copper.

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Topic :- Time:12.00 PM

Nifty is showing some signs of weakness now. Nifty spot if breaks and trade below 17220 level then expect some decline in the market and if it manages to trade and sustain above 17260-17280 levels then some upmove can follow in the Nifty.

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Topic :- Time:11.40 am

Just In:

CRAFTSMAN AUTO Q2 : CONS NET PROFIT AT 62.48 CR V 49. 9 CR (YOY)

REVENUE AT 776 CR V 571 CR (YOY)

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Topic :- Time:11.30 am

News Wrap Up:

1. Sensex surges 200pts, Nifty50 above 17,200; SBI gains 2%

2. This recession was anticipated, says TCS MD & CEO Rajesh Gopinathan

3. HDFC twins may merge a few months ahead of schedule: HDFC Bank CFO

4. Soaring dollar leaves food piled up in ports as world hunger grows

5. Mothersons local wiring biz better placed than its global sales entity

6. Bajaj Auto gains 2% in a weak mkt after net profit climbs 20% YoY in Q2FY23

7. Rs 25 trn in Jan Dhan accounts, says Union Minister Kishan Reddy

8. Crypto weekly wrap: Tokens recover after plunging post-US inflation data

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Topic :- Time:11.00 am

After negative opening nifty has shown smart recovery and is trading in green now. Nifty spot if manages to trade and sustain above 17280 level then expect more momentum in the market and if it breaks and trade below 17220 level then some decline can be seen.

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Topic :- Here are 10 key factors that will keep traders busy next week

1) Corporate earnings

2) US industrial production, China Q3CY22 GDP

3) Other global economic data points

4) Indian rupee

5) FII flow

6) Economic data points

7) Technical View

8) F&O cues

9) Primary market

10) Corporate Action

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Topic :- Nifty Opening Note

Indian Stock Market Trading View For 17 October 2022:

Nifty to trade volatile and is likely to follow global cues. Trade as per market trend.

Nifty spot if manages to trade and sustain above 17250 level then expect some upmove in the market and if it breaks and trade below 17160 level then some further decline can follow in the market. 

Please note this is just opening view and should not be considered as the view for the whole day.

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Axis Bank hikes MCLR by 25 bps, joining other lenders in policy action

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Central bank's MPC has cumulatively increased the repo rate by 190 bps since May

Axis Bank

 has increased its marginal cost of funds-based lending rate (MCLR) by 25 basis points (bps) with effect from October 18. Accordingly, the bank’s overnight to three-year MCLR now ranges from 8.15 per cent to 8.50 per cent.

The increase in lending rate by the country’s third largest private sector bank comes after the central bank’s six-member rate-setting body-- (MPC)—raised the benchmark  by 50 bps in its September meeting, taking the  to 5.90 per cent.

It was the third consecutive 50 bps hike delivered by the MPC and cumulatively the  has been increased by 190 bps since May.

State Bank of India, the country's largest lender, last week raised its MCLR by 50 bps from October 15. Consequently, its overnight to three years’ MCLR now ranges between 7.60 per cent and 8.25 per cent.

Private lender Kotak Mahindra Bank increased its MCLR for various tenors with effect from October 16. Its overnight to three-year MCLR ranges between 7.70 per cent and 8.95 per cent.

Kochi-based Federal Bank has revised its one-year MCLR to 8.70 per cent.

Punjab National Bank, ICICI Bank, Yes Bank, HDFC Bank, Bank of Baroda are among the lenders which have already raised their  following  rate action.




Fear of Lehman-like capitulation lessens as authorities respond promptly

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The UK episode indicates that policymakers and regulators are watching financial stability like a hawk and will not be held back by ideology or ego when financial stability is at stake; this realisation that a Lehmanesque capitulation won't be allowed may put a bottom for the markets for now

Fear of Lehman-like capitulation lessens as authorities respond promptly

The crash and recovery of UK gilts after the United Kingdom government reversed nearly all the tax cuts may have one positive side-effect on global markets: it could reassure markets that even if there are unknown unknowns like overleveraged institutions, regulators and authorities won’t mind bending the rules and eating humble pie, to avoid a default like Lehman Brothers. The rise of not just UK bonds but indeed many global risk assets in the past 24 hours is probably in celebration of this point.

Since the June fall the S&P 500 has repeatedly seen selling between 4,100-4,200 levels. One can pinpoint to similar resistances (17,900-18,000) in other major indices like Nifty as well. One big reason for this resistance has been a latent fear that the rapid hiking of rates and sucking out of liquidity by all major central banks will catch some institutions swimming naked. The events in the UK in the last fortnight proved that these fears are well-founded. No one expected that in a developed financial market like the UK, pensions funds — known to be solid risk averse institutions — will be found overleveraged or holding derivatives.

Nor did anyone expect the UK government — the oldest democracy in the world, with the world's oldest global financial centre in its jurisdiction — to indulge in such thoughtless policy flip-flop: to announce a yawning fiscal deficit in the teeth of double digit inflation, when bond markets were already skittish with uncertain geopolitics, and unprecedented energy prices. Such immature policy adventures are expected from banana republics, and from the derisively termed ‘under developed’ countries.

But the crisis also reassured global markets of mature reaction by politicians and regulators, when systemically important institutions or markets come to the brink. As leveraged pensions funds started off a panic vicious bond-selling, the Bank of England shrugged off all fears of criticism and boldly reversed its bond sale plan. It went out and bought bonds for a full two weeks unconcerned about criticism that it is diluting its monetary stance; the idea was to give pension funds adequate time to arrange for funds at not-too-distressed prices. Even more sensible was the way in which it ended the bond purchase programme, giving the UK government adequate notice that it won’t reverse its inflation-fighting mandate beyond a point, and it was time now for the fiscal authorities to undo their part of the damage.

UK Prime Minister Liz Truss and her Cabinet appear to have taken the hint and acted with equal speed and sense. The finance minister, the author of the tax cuts in the mini-budget, was sacked and a new chancellor of the exchequer was appointed, who quickly announced a near complete reversal of the tax cuts which created the chaos in the first place.

For markets, this sordid episode indicated that policy-makers and regulators are watching financial stability like a hawk, and will not be held back by ideology or ego when financial stability is at stake. This realisation that a Lehmanesque capitulation won't be allowed may put a bottom for the markets for now.

However, there are other dangers for the market.

Geopolitical minefields can still erupt. The US administration, earlier this month, announced restrictions on US persons supporting the development, production, or use of integrated circuits at some chip plants located in China. These restrictions appear to be applicable to all US Green Card holders, as well as US citizens working for the identified chip plants. It isn't yet clear how severely it may cripple some Chinese chipmakers. This step may well create a worldwide shortage of some chips once again. If the Chinese retaliate, there can be more geopolitical uncertainties.

Short point, world markets may have found some kind of a ‘put’ from global financial regulators, but this ‘put’ can be swept away by geopolitical uncertainties.

Healthcare | Should governments regulate private hospitals?

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Though the medical industry needs to be regulated, worse can be the cure through the unleashing of a mindless ‘inspector raj’ driven less by the keenness to protect patient interests, and more by rent seeking Healthcare | Should governments regulate private hospitals?

In July, the Competition Commission of India (CCI) released its report on the pricing practices of 12 corporate hospitals. Though not surprising that these hospital chains were overcharging patients, what drew peoples’ attention was that for the first time an audit of sorts was carried by an arm of the government with powers to penalise ‘wrongful’ gains.

It was a report long overdue, and so welcomed by citizens struggling with the issue of exploitative prices without accountability to outcomes or ethical considerations. This then raises the issue whether it is time for government to regulate the pricing of services charged by private hospitals with the attendant question of should it, and can it.

Theory For Government Intervention

Asymmetry of information that creates an unequal power structure between care providers and patients is a typical characteristic of the health sector, providing a compelling argument for government intervention. It is basic economics that tells us that perfect competition and markets can only function when there are certain conditions such as perfect knowledge between suppliers and buyers, and no barriers to entry among others. Therefore, says economic theory, since health is not amenable to the fair allocation of resources between competing interests, it quickly slips into exploitation and exclusivity, unless controlled. This then sets the stage for the entry of the State.

In July, the Competition Commission of India (CCI) released its report on the pricing practices of 12 corporate hospitals. Though not surprising that these hospital chains were overcharging patients, what drew peoples’ attention was that for the first time an audit of sorts was carried by an arm of the government with powers to penalise ‘wrongful’ gains.

It was a report long overdue, and so welcomed by citizens struggling with the issue of exploitative prices without accountability to outcomes or ethical considerations. This then raises the issue whether it is time for government to regulate the pricing of services charged by private hospitals with the attendant question of should it, and can it.

Theory For Government Intervention

Asymmetry of information that creates an unequal power structure between care providers and patients is a typical characteristic of the health sector, providing a compelling argument for government intervention. It is basic economics that tells us that perfect competition and markets can only function when there are certain conditions such as perfect knowledge between suppliers and buyers, and no barriers to entry among others. Therefore, says economic theory, since health is not amenable to the fair allocation of resources between competing interests, it quickly slips into exploitation and exclusivity, unless controlled. This then sets the stage for the entry of the State.

Building value-based and non-adversarial work environments in the health sector is critical since all stakeholders have in the ultimate analysis one primary goal — the benefit of the patients, and their well-being as all are dependent on each other, and cannot do without the other.

Share Market Closing Note | Indian Stock Market Trading View For 17 October 2022

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Topic :- Share Market Closing Note

Nifty ends above 17,300 led by SBI, Bajaj Finserv; metals, realty close in the red

Stock market: Settlement holiday today. What investors should know? | Mint

Stock Market Updates: Among sectors, buying was seen in financials, auto and power spaces while selling was seen in metals and realty names.

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Topic :- Time:3.20 PM

Nifty spot close above 17280 level will result in some further upmove in coming sessions and if it closes below above mentioned level then some sluggish move can continue. Avoid open positions for tomorrow. 

--------------------------------------------------------------------------------------------

Topic :- Time:2.30 PM

GOLD Trading View:

GOLD is trading at 50514. If it breaks and trade below 50480 level then some decline can follow and if it manages to trade and sustain above 50550 level then some more upmove can follow. Gold is in Buy from decline trend as off now.

--------------------------------------------------------------------------------------------

Topic :- Time:2.00 PM

Nifty spot if manages to trade and sustain above 17320 level then expect some upmove in it and below 17280 level some decline can be seen.

--------------------------------------------------------------------------------------------

Topic :- Time:1.00 PM

Nifty spot if breaks and trade below 17260 level then expect some decline in the market and if it manages to trade and sustain above 17300-17320 levels then some upmove can follow in it. Currently Nifty spot is trading at 17287.

--------------------------------------------------------------------------------------------

Topic :- Time:12.30 pm

COPPER Trading View:

COPPER is trading at 654.If it holds above 652 level then expect good upmove in it and if it breaks and trade below 652 level then some decline can follow in Copper.

--------------------------------------------------------------------------------------------

Topic :- Time:12.00 PM

Nifty is showing some signs of weakness now. Nifty spot if breaks and trade below 17220 level then expect some decline in the market and if it manages to trade and sustain above 17260-17280 levels then some upmove can follow in the Nifty.

--------------------------------------------------------------------------------------------

Topic :- Time:11.40 am

Just In:

CRAFTSMAN AUTO Q2 : CONS NET PROFIT AT 62.48 CR V 49. 9 CR (YOY)

REVENUE AT 776 CR V 571 CR (YOY)

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Topic :- Time:11.30 am

News Wrap Up:

1. Sensex surges 200pts, Nifty50 above 17,200; SBI gains 2%

2. This recession was anticipated, says TCS MD & CEO Rajesh Gopinathan

3. HDFC twins may merge a few months ahead of schedule: HDFC Bank CFO

4. Soaring dollar leaves food piled up in ports as world hunger grows

5. Mothersons local wiring biz better placed than its global sales entity

6. Bajaj Auto gains 2% in a weak mkt after net profit climbs 20% YoY in Q2FY23

7. Rs 25 trn in Jan Dhan accounts, says Union Minister Kishan Reddy

8. Crypto weekly wrap: Tokens recover after plunging post-US inflation data


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Topic :- Time:11.00 am

After negative opening nifty has shown smart recovery and is trading in green now. Nifty spot if manages to trade and sustain above 17280 level then expect more momentum in the market and if it breaks and trade below 17220 level then some decline can be seen.

--------------------------------------------------------------------------------------------

Topic :- Here are 10 key factors that will keep traders busy next week

1) Corporate earnings

2) US industrial production, China Q3CY22 GDP

3) Other global economic data points

4) Indian rupee

5) FII flow

6) Economic data points

7) Technical View

8) F&O cues

9) Primary market

10) Corporate Action

--------------------------------------------------------------------------------------------

Topic :- Nifty Opening Note

Indian Stock Market Trading View For 17 October 2022:

Nifty to trade volatile and is likely to follow global cues. Trade as per market trend.

Nifty spot if manages to trade and sustain above 17250 level then expect some upmove in the market and if it breaks and trade below 17160 level then some further decline can follow in the market. 

Please note this is just opening view and should not be considered as the view for the whole day.

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Monetary policy and failure: A short discussion on what lies ahead of RBI

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The September retail inflation print released on October 12 confirmed the Indian central bank had failed to meet its mandate for the very first time. This warrants a fresh scanner on the recent past, the present, and immediate future of India's monetary policyMonetary policy and failure: A short discussion on what lies ahead of RBI

After months of waiting for the obvious, we can finally say that the Reserve Bank of India (RBI) has failed to meet its inflation mandate.

The release of the Consumer Price Index (CPI) data for September on October 12 confirmed average headline retail inflation has been out of the 2-6 percent tolerance range for three consecutive quarters – 6.3 percent in January-March, 7.3 percent in April-June, and 7 percent in July-September.

What happens next is clear: the RBI must submit a report to the central government detailing the reasons for failure, the remedial actions it proposes to take, and an estimate of the time period within which inflation will return to target.

To draft the report, the Monetary Policy Committee (MPC) must meet soon as the report has to be sent to the government within one month of the occurrence of failure, or by November 12. But what exactly will the report say?

Of the three aspects mentioned above, two are pretty clear – the reasons for failure and the time period within which the RBI hopes to return inflation to target.

"The reasons will be…you can't prevent the Russia-Ukraine war. It (the report) will talk of supply disruptions, the zero-COVID policy in China. The RBI will say this is why it failed," a person familiar with the developments had told Moneycontrol in May after it started becoming clear that the central bank would likely fail to meet its mandate.

It was in anticipation of an ugly April print that the MPC acted out of its meeting schedule and kick-started the rate hike cycle with a 40-basis-point increase in the repo rate on May 4.

The number did not disappoint, with CPI inflation surging to a 95-month high of 7.79 percent in April, data released on May 12 showed.

It is worth noting that Andrew Bailey, governor of the Bank of England, also mentioned the impact of the Russia-Ukraine war and supply shortages of certain key items such as semiconductors to explain why inflation had moved away from the 2 percent target in his March 17 letter to the then Chancellor of Exchequer, Rishi Sunak.

The second aspect of the report that is for all to see even now is the timeframe within which the RBI wants to bring inflation back to target. For some time now, RBI officials have mentioned how two years is an appropriate period of time for inflation to be lowered to 4 percent.

Even in the post-policy press conference on September 30, Governor Shaktikanta Das said the central bank expected inflation to "come down close to the target over a two-year cycle; that was our expectation earlier and even now."

There is little reason for the failure report to say anything different, especially with RBI's latest forecast pegging average CPI inflation for FY24 at 5.2 percent, a steep 150 basis points lower than the average of 6.7 percent for the current financial year.

What of the third aspect of the report?

Rising terminal rate?

The failure report must also detail the remedial actions the RBI proposes to take to bring inflation down to target. And here we are in the dark, for while the central bank has already taken some action – 190 basis points worth of it, to be precise – there is broad agreement among economists that more needs to be done.

One basis point is one-hundredth of a percentage point.

In fact, the slightly higher-than-expected September inflation figure of 7.41 percent, in combination with an aggressive US Federal Reserve, has perhaps pushed the terminal repo rate higher.

"With increased Fed rate hikes in 2022 and an adverse inflation forecast, RBI will have to walk a fine balance of rate hikes," Soumya Kanti Ghosh, State Bank of India's group chief economic adviser, noted on October 12.

"We are now looking at the terminal repo rate going higher than 6.5 percent," Ghosh added.

On the other hand, divisions within the MPC have become apparent thanks to the minutes of the September 28-30 meeting of the panel, released on October 14.

While it was already known that Ashima Goyal preferred a 35-basis-point increase in the repo rate on September 30 as opposed to the majority vote of 50 basis points, fellow external member Jayanth Varma explicitly said the MPC should now pause and wait for its actions to take effect.

The next four weeks or so are crucial then; not only must the RBI submit its report to the government by November 12, the October CPI inflation print will be released on November 14 and should influence what happens in the December 5-7 meeting of the MPC, with economists predicting a sharp drop-off to sub 6.5-percent levels.






Bengaluru Floods: Better planning and policies needed to tackle urban floods

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The recommended action includes; preparation of contour maps, augmentation of storm water drainage network, cross-drainage works, and augmentation of pumping capacity. Cities will have to complement the states in providing mitigation strategies:Bengaluru Floods: Better planning and policies needed to tackle urban floods

Bengaluru, famed as the ‘Silicon Valley of India’, and the country’s leading information technology exporter, had large portions of the city underwater for two days (August 29 and 30). Unprecedented and relentless rains, said to be the third-heaviest ever recorded in Bengaluru, inundated the city. Bengaluru’s lakes were full; some breached their banks and the water, finding little egress, camped on the city’s streets, in parking lots, and houses. In some areas, residents had to be evacuated on tractors. Other concomitant failures were also visited upon the city. There were huge traffic disruptions, power outages, loss of productivity, and many normal activities had to be halted. The flooding of the pump houses hit the water supply to the city, and some areas had to depend on water from bore wells and tankers.

Some of the reasons behind the disaster were specific to the city. Bengaluru was long celebrated as the city of lakes. Unfortunately, its governance has been unkind to the elaborate ecosystem that had sustained the city in the past. Many of the lakes have been filled up; others have been curtailed through slow and stealthy encroachment and concretisation. Additionally, the interconnectivity between water bodies has been disrupted. The drainage system of the city has also been compromised due to large-scale encroachments. Other items of city infrastructure that have a bearing on floods have been equally mismanaged. The upkeep of stormwater drains in the city has been poor, and its solid waste management leaves a lot to be desired.

Bengaluru also has an extremely fractured governance system. The urban local body has truncated functions, and several parastatals have been created to manage separate services. Water and wastewater are managed by the Bangalore Water Supply and Sewerage Board; city transport is in the hands of the Bangalore Metropolitan Transport Corporation; and fire services are provided by the Karnataka Fire and Emergency Services. On the planning side, Bangalore Development Authority is the principal planning authority for the city, and the Bangalore Metropolitan Management Authority is responsible for the planning of the Bengaluru metropolitan region. It is apparent that co-ordination among these agencies during a crisis would pose enormous problems.

It must, however, be recognised that urban floods have now become a national phenomenon, affecting many mega and metropolitan cities in India almost annually. For example, in July, heavy rainfall inundated Ahmedabad. Many areas of the city were waterlogged, and the ground floors of many housing societies and bungalows disappeared underwater. In November 2021, Chennai came to a standstill as several areas were submerged on account of heavy rainfall. The city recorded 17 deaths; there were power outages and several Chennai localities were marooned. In October 2020, Hyderabad struggled with unprecedented levels of precipitation that left nearly 50 dead and destroyed property worth around Rs 5,000 crore. Delhi, Mumbai, Patna, Pune, and many other metros have also flooded at different points in time, bringing them to a halt for several days.

On the strength of these events and many more, it would be safe to conclude that this is on account of the forces of climate change that have accentuated the severity of rainfall in cities. These render the current urban drainage systems unable to cope with such bursts of rain, leading to flooding. India already ranks very high among countries in terms of disaster events, disaster victims, and economic losses. An additional disaster that has now been added to this list is urban floods, which is now proving to be a huge national challenge.

For quite some time, urban floods did not receive much attention as the National Disaster Management Authority (NDMA) focused on riverine floods that wreaked havoc in the rural areas.  The turning point in this regard was the deadly deluge in Mumbai in July 2005, when an unprecedented cloudburst caught the city unprepared to tackle a disaster of that magnitude. It was then that NDMA decided to address urban flooding as a separate disaster and delinked it from other floods.

A study of the reasons behind these floods reveals a commonality of causes that combine matters of urban planning and urban governance across India’s cities. The 10 most-significant reasons can be listed as: Absence of storm water drains in many localities; poor maintenance of existing storm water drains leading to their clogging with mud and material; filling up water bodies and nullahs; incapacitating drainage through encroachments or poor maintenance; truncating and concretising open space, depriving them of their permeability; uncontrolled built and demographic densification beyond the city’s infrastructural capacity; failure to prevent rampant unauthorised construction; allowing construction in low-lying areas without adequate mitigation measures; indiscriminate disposal of solid waste; illegal dumping of construction debris; and overlooking the maintenance and upkeep of the city’s overall infrastructure that impacts egress of water.

Several committees have gone into the reasons behind urban flooding and have suggested remedial measures. The first group of recommended action points includes the preparation of contour maps, augmentation of the storm water drainage network, cross-drainage works, and augmentation of pumping capacity. The second set of jobs includes removal of obstruction to storm water drains, removal of blockages caused by floating debris, restoration of the nalla system that stands constricted due to encroachments, effective garbage handling, desilting, and preservation of holding ponds. Regulatory measures include a ban on plastics and prevention of further encroachments.

Some of the above cited jobs need to be undertaken by the cities. There are some others that are in the state’s domain. Even if it is conceded that urban development is a state subject, the Union government cannot be a bystander watching city infrastructure failing to support the needed quality of life in large Indian cities. Such cities are national assets and growing contributors to the Indian economy. It cannot be denied that the national government has played a role in the financial emaciation of cities and has not taken steps to support their financial sustainability. Inaction on the government’s part can worsen the condition of Indian cities; the country’s economic growth can be seriously impacted, and the image of Indian cities can take a global battering.

At the same time, this new paradigm of disaster will have to be sufficiently imbibed by the states. First, the fractured governance architecture witnessed in Indian cities is not designed to cope with disaster situations. The multiplication of city parastatals needs to be eschewed, and a new structure ought to put urban local bodies in command. Second, the dovetailing of Climate Change and urban floods into disaster management by all vulnerable states will help rivet more attention to pre-disaster policies and planning, thereby, making Climate Change mitigation an essential component of disaster risk management. Cities themselves will have to consider urban floods as a recurring phenomenon, and complement the states in providing an equal emphasis on floods and mitigation strategies.

Beyond the states, community approaches are critical for disaster mitigation, and management.  This will include integration of disaster risk reduction into development policies and plans of urban local bodies. Furthermore, capacity building programmes for citizens across cities need to be taken up through a massive educational effort so that risk reduction behaviour becomes part of their daily lives.

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