MASTER MIND FINNASSET

Tuesday, March 23, 2010

Mutual funds step up selling

Outflow of Rs 359.50 crore on 22 March 2010

Mutual funds (MFs) sold shares worth a net Rs 359.50 crore on Monday, 22 March 2010, higher than Rs 101.80 crore on Friday, 19 March 2010.

The net outflow of Rs 359.50 crore on 22 March 2010 was a result of gross purchases Rs 508.30 crore and gross sales Rs 867.80 crore. The BSE Sensex lost 167.66 points or 0.95% to 17,410.57 on that day following a surprise hike in key short-term interest rates by the Reserve Bank of India.

MFs sold shares worth net Rs 2752.20 crore in March 2010 (till 22 March 2010). MFs had sold shares worth net Rs 697.20 crore in February 2010.

Monday, March 22, 2010

Get PAN or pay higher income tax

From the new financial year, assessees will have to pay a higher income tax at source if they do not have a Permanent Account Number (PAN). Tax at higher of the prescribed rate or 20 percent will be deducted on all transactions liable to tax deduction at source (TDS), if the person liable to the tax does not possess a PAN.

The new provisions related to TDS under the Income Tax Act will become applicable with effect from April 1, 2010.

All those liable to pay the tax, including non-residents, need to obtain a PAN by March 31, 2010. This number has to be communicated to those liable to deduct tax before the tax is actually deducted on transactions after that date.

Financial transactions without PAN will be taxed

As such, all financial transactions without PAN will attract tax from April 1, 2010. The Income Tax Department has already made it mandatory for employers to quote PAN of their employees and parties from whom tax is deducted while filing TDS returns.

The move of imposing penalty for not quoting PAN is aimed at strengthening the database of the revenue department and increasing tax compliance.

According to the new provisions, declaration by a taxpayer under Section 197A for non-deduction of TDS on payments will not be valid if it is given without quoting PAN. The certificate for deduction at a lower rate or no deduction will not be given by the assessing officer under Section 197 in the absence of PAN.

Non-quoting of PAN may lead to pay 20% TDS

To avoid disputes regarding quoting, non-quoting of PAN or accuracy, all eligible for the deduction and those liable to deduct will be required to quote PAN in all correspondence, bills, vouchers and other documents sent to each other.

If a person eligible for deduction fails to do so, he will have to pay 20 percent TDS instead of two percent on rental payments for plant and machinery and 10 percent on land and building.

PAN is a ten-digit alphanumeric number, issued in the form of a laminated card. It is mandatory to quote PAN on return of income, all correspondence with any income tax authority and challans for any payments due to Income Tax Department.

Quote PAN in all documents

It is also compulsory to quote PAN in all documents pertaining to economic or financial transactions notified from time-to-time by the Central Board of Direct Taxes.

The effort is also seen as a step by the government to increase revenue collections. The 20 percent rate on TDS will be a deterrent and compel many to obtain and furnish PAN. Otherwise, it will directly impact their cash flows in terms of higher tax payout at source.

Those who still don't have a PAN should immediately apply for one before April 1, 2010.

Oil Trips Below $80 On Weak Equities

Crude oil tripped below $80 as the US equity futures tumbled heavily today and the US currency surged against the Euro.

U.S. stock futures pointed to a lower opening on Wall Street on Monday, as European equity markets posted losses. S&P 500 futures fell 7.6 points to 1,148.70 and Nasdaq 100 futures dropped 10.75 points to 1,921.50. Futures on the Dow Jones Industrial Average fell 53 points.

In the currencies the US dollar surged against the Euro and Pound. It is up 0.05% about to break the 1.3500 mark against the single currency as the Greece issue weighs on Euro.

Crude for May delivery, the most actively traded contract, dropped 94 cents to $80.03 a barrel. It was recently down 74 cents at $ 80.23. Oil prices dropped 1.8% on Friday, pressured by the U.S. dollar's strength and the decision of India's central bank to raise interest rates.

No major U.S. economic data are scheduled for release on Monday.

MCX Crude dropped to as low as Rs 3630 per barrel. The trades were recommended a sell in the morning update with the target around Rs 3610 levels. The next support comes around Rs 3570 levels.

Bullion metals hammered

Strong dollar takes away shine from precious metals

Precious metal prices ended considerably lower on Friday, 19 March 2010. A strong dollar hammered precious metal prices as the euro fell following renewed concerns over Greece's fiscal problems.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Friday, gold for April delivery ended at $1,107.6 an ounce, lower by $19.9 (1.8%) an ounce on the New York Mercantile Exchange. For the week, gold gained 0.5%. In FY 2010, gold touched a high of $1,154 in January.

On Friday, May Comex silver futures ended lower by 39 cents (2.2%) at $17.03 an ounce. For the week, silver ended almost unchanged against last Friday's closing of $17.04.

A day earlier on Thursday, precious metal prices had managed to gain inspite of s strong dollar. But that dynamics was missing a day later.

Doubts about the euro zone's aid plan for the debt-strapped Greek government resurfaced amid talk that Greece might resort to help from the International Monetary Fund.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.5%.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

FIIs continue buying

Inflow of Rs 393.40 crore on 19 March 2010

Foreign institutional investors (FIIs) bought shares worth a net Rs 393.40 crore on Friday, 19 March 2010, lower than Rs 710.80 crore on Thursday, 18 March 2010.

FII inflow of Rs 393.40 crore on 19 March 2010 was a result of gross purchases Rs 2671.60 crore and gross sales Rs 2278.20 crore. There was an inflow of Rs 393.60 crore into secondary equity markets which was a result of gross purchases Rs 2671.40 crore and gross sales Rs 2277.80 crore. The BSE Sensex rose 58.97 points or 0.34% to 17578.23 on that day.

There was an outflow of Rs 0.20 crore in the category 'primary market & others', which was a result of gross purchases Rs 0.20 crore and gross sales Rs 0.40 crore.

FII inflow in March 2010 totaled Rs 15,126 crore (till 19 March 2010). FII had bought equities worth Rs 2311 crore in February 2010. FII inflow in the calendar year 2010 totaled Rs 15,842.20 crore (till 19 March 2010).

There are a total of 1,711 foreign funds registered with the Securities & Exchange Board of India (Sebi).

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