Month: July 2023

Palanivel Thiaga Rajan bats for 28% GST for online gaming based on gross gaming revenue model

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Palanivel Thiaga Rajan, the IT Minister of Tamil Nadu, has advocated a well-defined gross gaming revenue model to determine a 28 percent GST rate for online gaming industry. In an interview with CNBC-TV18, Rajan emphasised that this approach strikes a harmonious balance between regulating the industry, generating revenue, and supporting its continued growth to bolster the economy.

On July 11, the GST Council had decided to impose a 28 percent tax on the turnover of online gaming companies, horse racing, and casinos. However, it appears that there may be a further clarification on the definition of online gaming during the Council’s upcoming meeting on August 2, 2023. The Council is anticipated to introduce a refined description of ‘online money gaming,’ which will take into account games that involve a combination of skill and chance.

Below are the excerpts of the interview.

Q: Did you anticipate this backlash as far as the 28 percent GST on full value for online gaming is concerned. The rate in itself was never in doubt and the industry had accepted that but it was 28 percent on what which is causing the consternation?

A: 28 percent was never the question. The question revolved around 4-5 things. First is, what is the law? Constitutional amendment for GST says that betting and gambling will come under GST. Then the question is what is betting and gambling or is there a distinction between games of skill versus games of chance.

Third issue was when things like lottery tickets are already being taxed at 28 percent on the face value, will it be a contradiction that some games of chance — there are Supreme Court judgements which have called horse racing a game of skill and not of chance or rummy as a game of skill. So there are contradictory judgements all over the place. So if you open up this can of worms that you will now do anything less than the face value, some people were concerned with that and it will put the lottery tickets back on the table.

Last was how do you know what is the gross gaming revenue or what is the actual platform fee or access fee? Is it self-reporting? Can it be done by accounting, can it be done by having separate accounts like a escrow account for betting and a separate account for the fee component? So this was the complexity of it. In places like casinos where people don’t just play one game, they play multiple games, so unless you do a entry-exit kind of check, you really cannot tell what has happened. In fact the industry likes to bundle things in such a way that you cannot tell what are the odds of winning or losing compared to the platform fee. So this was a complexity always.

I don’t think anybody had a problem with the notion that the highest rate of GST should be applied to gambling. So the question is 28 percent GST on what and how do we stay within the amendments of the GST and on the other hand with legal precedent and also not upset the revenue stream that some states are already making from lotteries.

Q: As far as the 28 percent is concerned, as you pointed out, there was no discussion or even debate on whether it should be 28 percent. The decision was that it should be 28 percent. The question was, what should the 28 percent levy be on? The other issue, whether something should be taxed as a game of skill or a game of chance? Again, the council was the clear opinion. And that is the decision that’s been taken forward, that distinction will not be made between game of skill and game of chance. Industry’s point of view and this is the online gaming industry’s point of view and even within the online gaming industry’s point of view, it’s the real money games that are impacted by this decision. They’re saying we’ll be out of business, if it were to be 28 percent on full value, or face value. Now, what do you make of that claim?

A: I think we need to dig a little deeper into this right. I mean, first of all, this question of game of skill or game of chance is not a trivial question, because the GST Amendment says that betting and gambling shall come under GST. It doesn’t say if it’s a question of skill. It’s not clear what it comes under the either the constitutional amendment was not written in congruence with the Supreme Court judgments, or the judgments are not in congruence.

Q: Which is why the amendment will be moved to bring online gaming under it?

A: Correct. In a normal country, you will see that the court judgments follow a precedent, either one precedent holds and everybody sticks to it, or they write a new precedent and it breaks all the other judgments. But in this GoM, that was not the case, every week we were getting some new information about some other judgment, some going back to the 70s, some as recently as 2015 and then some of them were crucial to the case, meaning the case was is it a game of skill or chance. Some were over dicta in the judgment on some other matter that was being adjudicated. And in the process, the Supreme Court said something.

Q: GoM wasn’t dragging its feet, you’re saying that this is just a very complex issue with vested interests involved? Because there are states that are dependent significantly on the revenue that comes in from this.

A: Could it have been done faster? Yes. But with all other things in GST, that’s true, right? When people change in the roles or governments change, the reconstitution of the GoMs doesn’t happen that quickly, the re-nomination of the chairperson didn’t happen quickly. For example, when this GoM was first set, it was not Conrad Sangma, who is either a member or the convener, and then the Gujarat Chief Minister changed and then you we had some changes. So could the GST and GoM function much more efficiently and kind of on a time, time bound scale? Absolutely.

On the other hand, was the great complexity here? Absolutely. I’m not even sure I would call them vested interest, it is a natural interest of let’s say, the minister of Goa that he wants to protect his industry. It is a natural interest of the Minister of West Bengal, that she does not want the notion of 28 percent on face value to be disrupted because the state of West Bengal makes thousands of crores of revenue out of the sale of lottery tickets.

In fact, I’ll go one step more profound than that. At some level, I suggested nobody was a taker, that really, horse racing, online gambling and casino should be separated into three different discussions. I’ll tell you why. Horse racing is a sport where there is a clear tote, and you can see what is coming in and going out and everything is published and taken out. And there is no question of bundling. I mean, there are some multi-level bets, like the Trifecta and all that, but it’s very clear what ticket you bought, and what you took up, casinos are not that clear. But then both horse racing and casinos have one thing in common, there is a locus, you cannot run horse racing, without a physical location. So it is located in one state, and in fact, is regulated by states. So one of the radical suggestions I had, why should horse racing and casinos be under GST at all? Make them like alcohol or petroleum or other things that are only at the state law? Because the legislation is state legislation? It’s not it’s not union government legislation.

Online gaming is a different thing, because it can be done anywhere, anytime across the country, and there’s no distinction of state borders. There’s no locus or even country border. But horse racing and casinos much simpler solution is to say, you regulate it as a state, just like lottery is regulated at the state, you tax it as a state and get on with it, but nobody was that radical. So now we’re left with this question of if you’re going to take it at 28 percent. What should you take it on? And I would say everybody spoke their state’s revenue and interest. And the real question here is not that the industry will die, the real question is, will it move into another world? Will it move underground?

Q: Which is also part of the concern and claim that industry has put forward including to the Prime Minister’s Office.

A: That was always the case. Always the question was, how do you incentivise people to stay in the sunlight, as opposed to go to the underground market where you can’t track what’s happening? And in that sense, as I said earlier to you privately, this notion that came up in Chandigarh, that we will levy 28 percent on online gaming and horse racing and only relocate it for casinos was absurd notion. Because the least substitutable, the least secretly actable sport is a casino, right? You want the music, you want the flash, you want the food, you want the entertainment. So that has the least risk of being substituted. The question is will people pay 28 percent and go to casino? In my view, I’m not sure it’s the death of any industry. But I think it’s like the Laffer curve. You make the system reasonable and a lot of people operate on the system and you get lots of revenue. You make the system unreasonable and much of it goes into the untraceable market.

Q: So do you think what is being proposed now is unreasonable?

A: I have proposed multiple solutions. The most radical solution of leave this to the states except for online gaming, found no takers. I suggested two other ways. I said nobody goes to bet expecting to lose. It’s human nature, I’m going to bet expecting to win. The real question is if I’m going to pay Rs 128 instead of 1 and win Rs 2, then it’s a completely different bet than if I pay Rs 1 and pay Rs 2.

Let’s say you’re able to say that 28 percent is the platform fee, and you only pay 28 percent GST on the total then you’re placing a Rs 1.56 paise bet on a Rs 2 bet. So there is a profoundly different odds in the minds of the punter. So all I said was for things like lottery, there’s no question of whether GST changes behavior or not, because they’re not expecting to win 10:1, they are not expecting to win 100:1, they are expecting to buy Rs 1 ticket and win one lakh. He doesn’t care whether he paid Rs 1 or Rs 1.28 paise to win Rs 1 lakh.

But if you go to games of odds of 1:3, 2:5, those kinds of odds, it makes a big difference, because 28 percent skews the odds. So there are multiple ways to deal with that. And one of them I said, was to basically say that if your winnings are less than x ratio, you will get the refund of the GST, as long as you keep proper electronic track. And if it’s more than 10x, let’s say, you don’t get the rebate, that would actually maximise revenues incentivise betters, and not really be a drain of any real loss on GST, because you’re only giving him back GST on Rs 1 right? And you can income tax, the Rs 5 or 10 gain because it is all computerised now, and those should be taxed as winnings in income.

If you can’t do that, and that was considered too complicated and we don’t want to get into that. Then, with the help of the committee that we had set up in Tamil Nadu, I requested the senior Supreme Court lawyer, and he heads a committee for us when I was finance minister called the Committee on Federal Fiscal Relations and they are specialists. So they suggested something which I also proposed, they said, at the point of revenue booking, book the revenue into two different streams. One stream is whatever you consider to be your gross gaming revenue, your platform fee, access fee, whatever you want to call it, only that will be subject to GST, the rest you put in an escrow account for only winnings. And that money will be only subject to TDS and reporting for taxation. This way, you keep clean accounts, and now you’re no longer applying 28 percent on the full value. You’re applying 28 percent on whatever the system says is the platform fee, the access fee, the gross gaming revenue, but what that requires is for the industry to agree that they will run separate accounts. And therefore they cannot do this bundling and mixing of the odds they’ll have to reveal truly if you pay 100, how much of it is going into access fee and how much is really bet money.

Q: These were the proposals that you had sent to the GoM. And of course now we know that the decision of GST Council which according to the revenue secretary is not a decision at all, it’s a reiteration of what the law is. The revenue secretary in his conversation with me says that there is no question of retrospectivity because this 28 percent on full value is the situation as of today. And in fact, they believe that the judgment of the Karnataka High Court will be challenged now by the revenue department to say this is established law and this is the rate on full value. So given that, what do you expect this meeting of the GST Council on the second of August to arrive at and this is also unusual because it’s a meeting of the GST Council after decision has ostensibly been taken to operationalise a decision which hasn’t happened previously?

A: It’s no secret that I’ve been less than a great fan of the way the GST Council operates, I have a lot of profound issues, in the first meeting I attended. I listed them because that was the first time a DMK minister had been a member, it was like three years into the life of the council. But in practice these other nuances that really bother me.

If it is reiteration of the law, why did we need the GoM? If the first GoM report was acceptable, why was it sent back? Now, the second GoM report has arrived at the same conclusion that according to the government is the law. Now they have one more meeting just for the sake of implementation.

At some level, I’m okay that the GST Council meets but at some other level, what is the basis for the meeting? How the agenda gets set? For example, in December 2021, we had an emergency meeting, with like 24 or 48 hours’ notice, again unprecedented for a single point issue of deciding to put on hold the GST Council’s decision to raise the rate on some kinds of textiles.

Then what is the point of having a council? What is the point of making the decision? So a lot of these things are very haphazard, they’re not run with enough fore planning and thought. And then political pressure comes one way, you do something, it comes another way, you do another thing.

I realise that it’s in its infancy, it’s a 75 year old country, council has been around for five years. It’s not like it’s got a long track record, so there’ll be teething troubles. But there are some profound issues that need to be addressed, in my opinion about how the agenda gets set, how the topics are decided, how the decisions are kind of ratified without having to look back, for example, compensation.

Everybody asked for compensation. And there was kind of discussion about it, there was no decision. Now the question is, who should decide whether compensation should continue or not? If it is with the council, it should have been brought to the council as agenda item and put to vote. If it is not the council, how is it federalism and how is this the prime kind of platform of Union state relations, if the compensation issue is not decided by the council, but de facto decided by somebody else? Going back to the same terminology, the constitutional amendment called for five years, five years are up, discussion closed. That’s it, there was no actual process further. So these are the issues that over time will have to be worked out for the council to be really an effective kind of body.

Q: You do believe that claims of the industry’s demise are somewhat exaggerated, you believe what we could possibly see happening is the industry moving into dark mode. And that, once again, has been one of the concerns left on the table. But what do you believe could be the best way forward? And how hard will it be to execute what has already been decided?

A: To execute what has been decided is blunt force. Do you have good enough firewalls and blockers and sites from operating because it is a technology issue for online gaming, for horse racing and casinos its much easier, you can go physically inspect and make sure. So is it implementable? The answer is at least for horse racing and casinos, it’s implementable. For online gaming it’s a technology question, I assume that with the right kind of focus, you can get the right kind of solutions. Different countries ban, WhatsApp calling, they’re able to get away with that and that’s a much more ubiquitous kind of application.

The more profound question is, is this the best outcome for the industry and the revenues of the states or governments together. And is it protective, or somehow value adding to the people? That to me, still remains open. To my mind, the demise was always the extreme case. I don’t see things demise just because the tax rate is high.

But we have 100 examples all over the world, like when we tax alcohol high, we expect some of it will be that people stop drinking because they can’t afford to pay the tax, when you tax tobacco high, we expect people to stop smoking because they can’t afford to pay the tax. So there’s enough precedent that you should expect that at least it will have a retardant effect on the rate of growth of the industry, because of the tax.

And at worst, it could drive a lot of this activity into illegal corners of the market or the world that nobody benefits from because then what you worry about is second order effects. The loss of revenue etc are primary effects. The second order effect is once you see criminal activity, meaning by definition, illegal activities, criminal activity, then criminal activity with large amounts of money involved will lead to all kinds of other complications and law and order problems and so forth. So that’s the real risk of having a high tax rate.

Eventually, like all the rest of the world, I think the best case solution will be to find a way to get at a common agreement of what is the platform fee or the access fee or the gross gaming revenue, tax that indirectly, tax that with the equivalent of sales tax and tax the winnings with income tax as direct tax. That’s what most countries in the world do, so that I think would have been the right answer, but it requires a level of technology and requires a level of implementation that maybe some people feel is not realistic. I can’t tell.

But based on my global experience, I would say if other people have done it, we should be able to do it. Also the industry needs to cooperate, they have to say what is the percentage and they have to show like by having separate accounts that they are actually adhering to that percentage because if the percentage is wrong in two years or five years or six months, you’ll find that money is accruing in the pot in the in the escrow pot without being distributed. If they do the division the other way wrong, you’ll find that they’re not able to pay winnings. So over time, there’ll be accumulation that tells you what’s right and what’s wrong.

Q: So you’re saying essentially, the best way would be for revenue to actually tax 28 percent at gross gaming. But you’re also saying that industry needs to come clean on what constitutes gross gaming revenue and arrive at a uniform definition of what constitutes gross gaming revenue and that is what at least as far as online, real money games are concerned that 28 percent should be levied on gross gaming revenues.

A: I think that would work really well for online and it would work really well for horse racing. Whether that would work well for casinos or not, I’m not sure because the member from Goa had all these scenarios where he was talking about people moving tables, winning, losing, but I still say that as long as you tax them on the day they come in — let’s say they come play for eight hours, 50 games doesn’t matter. What they came in with and what they go out with is what you should really kind of track. If you start at inception with parallel accounts, you got a solution in my mind, but maybe that’s not implementable in the casinos. I don’t know.

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DLF’s promoter group to sell Rs 1086.2 crore-worth shares on Tuesday

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India hikes windfall tax on crude oil to Rs 4,250 per tonne from August 1

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian government on Monday implemented a significant hike in the Special Additional Excise Duty (SAED) on certain petroleum products, effective from August 1, 2023. According to the new regulations, the SAED on crude petroleum has been increased from Rs. 1,600 per tonne to Rs. 4,250 per tonne.

Additionally, the SAED on diesel has also been revised, with the duty increasing from being nil per liter to Rs. 1 per liter. On the other hand, the SAED on petrol and aviation turbine fuel (ATF) will remain unchanged, maintaining the status quo of nil taxation on these two products.

The government had reimposed the windfall tax on domestic crude oil production to Rs 1,600 per tonne, recently, effective from July 15. However, it did not change the SAED on petrol, diesel and aviation turbine fuel (ATF).

In May this year, the Indian government cut the windfall tax on petroleum crude to zero from Rs 4,100 per tonne. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.

Global crude oil prices have risen again on the back of supply cuts by Saudi Arabia and Russia, consequently, the Indian crude oil basket after averaging below $75/bbl in May and June this year touched $80.92/bbl on July 13.

India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre ($12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel.

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Aggregate deposits in Jan Dhan accounts crosses Rs 2 lakh crore, informs Govt in Lok Sabha

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aggregate deposits in 49.49 crore Jan Dhan accounts have crossed Rs 2 lakh crore, Parliament was informed on Monday.

The Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched in August 2014 with the aim to provide universal banking services through opening of zero balance bank account for every unbanked household, based on the guiding principles of banking the unbanked, securing the unsecured and funding the unfunded.

As on July 12, deposits in 49.49 crore Jan Dhan accounts stood at Rs 2,00,958 crore, Minister of State for Finance Bhagwat Karad said in a written reply in Lok Sabha.

Some of the features of PMJDY are, one Basic Savings Bank Deposit (BSBD) account to “every unbanked adult”, overdraft limit of Rs 10,000, and free Rupay debit card with inbuilt accident insurance cover of Rs 2 lakh (Rs 1 lakh for accounts opened before August 28, 2018).

The last mile delivery of basic banking services like cash deposit, cash withdrawal, intrabank or interbank fund transfer, balance enquiry and mini statement, etc. are being provided to the bank customers through banking outlets, he said.

Government is monitoring the availability of banking outlets (bank branch / business correspondent / Indian Post Payments Bank (IPPB) branch) for providing banking services within 5 km of all inhabited villages.

Out of 6,01,328 mapped inhabited villages, 99.63 percent villages are covered by a banking outlet through 1.71 lakh Branches, 7.70 lakh BCs, and 1.44 lakh India Post Payments Banks (IPPB).

Replying to another question, Karad said the growth in digital transactions during 2021-22 and 2022-23 is much higher than the growth in volume of cheques.

He further stated that payment through ‘cheque’ is provided under the Negotiable Instruments Act, 1881.

However, to encourage customers to adopt digital banking, to create awareness about payment products and to disseminate information about safe digital banking, RBI has been conducting Electronic Banking Awareness and Training (e-BAAT) programmes across the country, it said.

In reply to another question, Karad said PSBs opened 316 branches in rural areas out of total 927 branches in 2022-23.

Further, the Minister said, RBI has granted general permission to domestic Scheduled Commercial Banks (excluding Regional Rural Banks) to open banking outlets including branch at any place in the country, without seeking prior approval of RBI.

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Nestle optimistic about growth prospects in India amid inflation challenges

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nestle India Ltd, a leading FMCG firm, on Monday, expressed confidence in the company’s growth prospects despite facing inflationary pressures.

In an exclusive interview with CNBC-TV18, Suresh Narayanan, chairman, and managing director, said, “Till 2020, the company had spent about Rs 7,000-8,000 crore from the time of its inception. So in about 60 years, we had spent about Rs 7,000-Rs 8,000 crore. From 2020 to the first half of 2023, we have already spent about Rs 2,130 crore in capacity expansion.”

Looking forward, an additional Rs 4,130 crore was earmarked for investment from the first half of 2023 until 2025. This ambitious plan, totaling Rs 6,000 crore, was primarily aimed at capacity creation, with a significant focus on prepared dishes, chocolates, confectioneries, nutrition, and coffee, Narayanan said.

“From the first half of 2023 till 2025, another Rs 4,130 is being invested. So in all over, Rs 6,000 crore of investment is coming in. About a third of this investment is in terms of the prepared dishes category, about a third is in chocolates and confectionaries and the rest of it is in nutrition and coffee,” he said.

Impact of inflation on growth: a positive outlook

Narayanan acknowledged that in 2022, the company achieved a commendable 14 percent growth in turnover. Breaking down the numbers, approximately 10 percent of the growth was attributed to organic, value-based expansion, while the remaining 4 percent came from volume growth.

He emphasised that a trend of about seven to eight percent volume growth was expected for the company.

The CMD drew attention to the unprecedented inflation experienced in 2022, surpassing the inflation levels of previous years. Despite these challenges, the company managed to achieve a notable 10 percent organic growth and four percent volume growth during the year.

Narayanan stated that if inflation moderates, the company could return to its anticipated trend of seven to eight percent volume growth, reflecting the underlying rhythm of the market.

“Going forward, if inflation moderates (and there is a big ‘if’ to that), the volume growth for the company would get back on the trend line, which is the seven to eight percent volume growth that we have seen. That’s the expectation and the underlying rhythm of the market dictating it.”

Food inflation continues to be a cause of concern

While expressing optimism, Narayanan did not overlook the prevailing concerns related to food inflation. Wheat prices remained a matter of concern, and although milk prices were stable, structural issues hindered a substantial decrease in milk prices.

Other commodities, such as coffee, saw a significant surge of 50-60 percent in the last two years, indicating a persistent specter of food inflation. He also acknowledged the impact of climate change, uneven monsoon distribution, and the looming influence of el-nino on commodities like tomatoes, chili, and spices.

He asserted that these factors would inevitably contribute to inflationary pressures on the organisation. Despite these challenges, the milk and nutrition segment of the company, accounting for about 40 percent of its business, remained a beneficiary of double-digit growth, demonstrating its promising potential as a sustainable source of growth.

Narayanan  emphasised that penetration-led volume growth was driving strong demand, not only from large metros and mega-cities but also from rural areas, commonly referred to as Bharat.

He reiterated the company’s commitment to the “Make in India” initiative, with 98-99 percent of the products sold in India being locally manufactured. Furthermore, he announced plans for an environmentally friendly, technologically advanced factory in Odisha, which would serve as an example for other food processing companies.

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GST evasion of Rs 14,302 crore unearthed in April-May

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As many as 2,784 cases of GST evasion involving Rs 14,302 crore were detected in the first two months of the current fiscal, while Rs 5,716 crore was recovered during the period, Parliament was informed on Monday.

Finance Minister Nirmala Sitharaman in a written reply in the Lok Sabha gave details of Goods and Services Tax (GST) and income tax evasion, as well as detection of outright smuggling by the Customs department.

As per the data, GST evasion of over Rs 2.68 lakh crore was detected in 43,516 cases between 2020-21 and 2023-24 (April-May). A recovery of Rs 76,333 crore was made during the period while 1,020 persons were arrested.

In the current fiscal (April-May), 2,784 cases of evasion of Rs 14,302 crore were detected. As many as 28 persons were arrested and Rs 5,716 crore recovered during the period.

As per the statistics on surveys, searches and seizures carried out by the Income Tax Department in the last 5 years, searches were conducted on 3,946 groups while assets worth Rs 6,662 crore was seized.

In 2022-23 fiscal alone, 741 groups were searched and Rs 1,765.56 crore assets were seized.

In the last four years, 42,754 cases of outright smuggling detected by the Customs Department, involving value of about Rs 46,000 crore.

In April-May period of the current fiscal, 2,986 cases of outright smuggling involving goods valued at Rs 1,031 crore were detected by the Customs department.

About 12,259 cases of commercial frauds were also detected in the last 4 years, having duty implication of Rs 21,225 crore.

Sitharaman said with the availability of information in electronic form, the Income Tax Department has developed a wide range of non-intrusive methods for detecting tax evasion.

Besides, the GST department too is taking a number of steps to tackle evasion, including using robust data analytics and artificial intelligence to identify and track risky taxpayers; sharing of data with partner law enforcement agencies for more targeted interventions; reduction in threshold limit for issue of e-invoice for B2B transactions from Rs 10 crore to Rs 5 crore from August 1, 2023.

CBIC through its customs field formations, along with DRI, is actively engaged in detecting and curbing import-export related commercial frauds.

Data analysis based risk management and intelligence development along with human intelligence are being employed by said formations to gather actionable intelligence, which has resulted in substantial detections of tax evasion in recent years, Sitharaman said.

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Trade Setup for August 01: Nifty 50 can surge towards 20,000 yet again if it closes above these levels

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Nifty 50 is back at making an attempt to scale the 20,000 mark. It closed above the 19,700 mark on Monday only for the second time in the last six trading sessions. The index ended the month of July with gains of close to 3 percent. This was the fifth straight monthly advance for the Nifty 50, a streak last achieved two years prior, between May-October, 2021.

19,771 was the high that the Nifty 50 made on Monday after reversing exactly from levels of 19,600 on the downside, making this level a crucial support for the index. Auto stocks will be the dominant ones in Tuesday’s trading session with companies coming out with their sales figures for the month of July. Stocks like Maruti will also be reacting to their quarterly results, which were reported after market hours on Monday.

“The underlying trend of the Nifty 50 remains choppy,” said Nagaraj Shetti of HDFC Securities. He expects a decisive move above levels of 19,870 to open the doors for a sharp upmove towards levels of 20,000 in the near-term. Immediate support is seen at levels of 19,600.

The Nifty Bank index snapped a two-day losing streak during which it shed over 600 points. Despite ending higher, the index underperformed the Nifty 50 on Monday. However, the higher closing meant that the index ended above the 45,500 mark,

The Nifty Bank index reversed from the 20-DEMA level of 45,362 on the daily chart. Ashwin Ramani of SAMCO Securities said that a close above Monday’s high of 45,695 can lead to initiation of fresh longs on the index, while 45,300 continues to be a strong support for the Nifty Bank.

Kunal Shah of LKP Securities said that the bulls ensuring that the Nifty Bank took support at its 20-DEMA was proof of their willingness to prevent further downside on the index. 45,700 – 45,800 continues to be a strong resistance area for the index and a break above that would mean a move towards its all-time high. However, Shah said that in case the index breaks below the 45,300 mark, it can lead to a correction towards 45,000 – 44,700.

The stock in focus on Tuesday would most likely be UPL after the agrochemical maker cut its full year revenue growth and operating profit growth guidance. Although the stock ended little changed on Monday, it may react to brokerage commentary post the analyst call.

“We are extremely disappointed in terms of the guidance cut that UPL has given and with el-nino conditions expected to now play out, my own sense is that the first half of the year will be an absolute washout. Second half recovery really depends on a lot of factors and therefore the stock trades below all pivot levels. So we would avoid the stock looking at the Q1 numbers,” Mayuresh Joshi of William O’Neill said.

What Do The F&O Cues Indicate?

Nifty 50’s August futures shed 0.2 percent or 19,150 shares in Open Interest. They are now trading at a premium of 90.1 points compared to 105.75 points earlier. On the other hand, Nifty Bank’s August futures added 8 percent or 1.45 lakh shares in Open Interest. Nifty 50’s Put-Call Ratio is back at 1, from 0.82 earlier.

Piramal Enterprises has joined the F&O ban list from today’s trading session, while Indiabulls Housing Finance continues to remain in the ban list.

Nifty 50 on the Call side for August 03 expiry:

Most Nifty 50 call strikes between 19,600 to 19,750 of this Thursday’s expiry have seen shedding in Open Interest. However, the 20,000 strike call saw Open Interest addition for this week’s expiry.

Nifty 50 on the Put side for August 03 expiry:

After Monday’s gains, Nifty 50’s put strikes between 19,600 and 19,700 saw addition in Open Interest. Interestingly, even the 19,000 strike call for this Thursday’s expiry saw Open Interest addition

Here’s a look at the stocks that added fresh longs on Monday, which means an increase in price and Open Interest:

Here’s a look at the stocks which added fresh shorts on Monday, meaning a decrease in price but increase in Open Interest:

Here are the stocks to watch out for in Tuesday’s trading session:

• Maruti Suzuki: Board approves termination of contract manufacturing agreement with Suzuki Motor Gujarat. Maruti will acquire 100 percent stake in Suzuki Motor Gujarat from Suzuki Motor Corporation. Acquisition to be done before March 31, 2024. Quantum and process will be determined at a later date.
• Nestle India: CMD Suresh Narayanan in an exclusive conversation with CNBC-TV18 said that hopefully a period of less inflation is coming and it sets the ground for volume-led growth. He further said that one-third of the portfolio is price-point-led and that M&A should not dilute the value accretion to the company.
• EaseMyTrip: To acquire 51 percent aggregate paid-up share capital in three travel tech companies – Guideline Group, Tripshope Online and Dook Travels.
• Petronet LNG: Strong beat on margins at 10.1 percent from 6.8 percent in the March quarter and higher than the 8.7 percent expected. Revenue fell 16 percent sequentially, while net profit grew by nearly 30 percent.
• RVNL: Gets Letter of Award for two packages 16 and 17 of MPPKVVCL, Jabalpur Company Area. The packages are valued at Rs 149 crore and Rs 182 crore respectively.
• Delta Corp: Puts IPO plans of online gaming unit on hold due to GST uncertainties.

What Do The Global Cues Indicate?

Asian equities have opened higher on Thursday ahead of private manufacturing surveys around the region including Japan, South Korea and China.

The Nikkei 225 has opened flat, as has the Topix as the country’s unemployment rate fell slightly to 2.5 percent in June.

South Korea’s Kospi is up nearly 0.7 percent, while the Kosdaq is up 0.5 percent. Hang Seng futures are pointing towards a stronger open.

Markets on Wall Street ended modestly higher on Monday, kickstarting a busy earnings week and ending the month with gains.

The Dow Jones ended 100 points higher, while the S&P 500 and Nasdaq gained 0.1 percent and 0.2 percent each respectively. The S&P 500 gained 3.1 percent in July, notching up its fifth straight positive month, since its seven-month winning streak that ended in August 2021.

It was the fifth straight positive month for the Nasdaq too, the longest streak since April 2021.

Foreign investors remained net sellers in the cash market on Monday, while domestic investors continued to pour in money at lower levels.

Osho Krishnan of Angel One said that the 19,600 level on the Nifty 50 will act as a support while the 200-point range between 19,800 – 20,000 sees a cluster of resistances. He advises traders to avoid complacency and buy the decline and sell the rallies.

Despite Monday’s surge, the Nifty 50’s Relative Strength Index (RSI) is still in a bearish crossover, indicating a potential downside, according to Rupak De of LKP Securities. A decisive move above levels of 19,800 may push the Nifty 50 towards the 20,000 mark, he said.

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SBI raises Rs 10,000 crore via unsecured long-term infrastructure bonds at 7.54%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Country’s biggest lender State Bank of India (SBI) on Monday raised Rs 10,000 crore at a coupon rate of 7.54 percent through its third infrastructure bond issuance, bidding for which took place on July 31, 2023.

The proceeds of bonds will be utilised in enhancing long-term resources for funding infrastructure and the affordable housing segment. The tenor of these bonds is 15 years. This is the first issuance of long-term bonds by any bank for this tenor in the current financial year, the bank said.

The issue attracted an overwhelming response from investors with bids of Rs 21,698 crore and was oversubscribed by 4.34 times against the base issue size.

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The total number of bids received was 115 indicating wide participation. The investors were across provident funds, pension funds, insurance companies, mutual funds, corporates, etc.

Based on the response, the State Bank of India has decided to accept Rs 10,000 crore at a coupon rate of 7.54 percent payable annually for a tenor of 15 years. This represents the spread of 13 bps over the corresponding FBIL G-Sec par curve.

Prior to this, the bank had raised infrastructure bonds of Rs 9,718 crore on January 19, 2023, at a spread of 17 bps over the corresponding FBIL G-Sec par curve. The bank has an AAA credit rating with a stable outlook from domestic credit rating agencies for these instruments.

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This issuance is also very significant as despite the recent hardening of yields, the bank has been successful in raising 15 years Long Term Bonds successively at a finer spread and it will help the bank in lending long-term to infrastructure.

Shares of State Bank of India ended at Rs 620.10, up by Rs 4.05, or 0.66 percent on the BSE.

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Delhi services bill listed for introduction in Lok Sabha for August 1

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Delhi services bill which seeks to replace an ordinance that mandated the creation of an authority for transfers and postings of senior officers in the Delhi government is listed for introduction in the Lok Sabha on Tuesday.

According to the revised list of business for Tuesday, Home Minister Amit Shah will introduce the bill while his deputy Nityanand Rai will make a statement on the reasons for bringing an “immediate legislation” by promulgating the ordinance.

The ordinance has become a rallying point for opposition parties against the BJP-led NDA. According to The Government of National Capital Territory of Delhi (Amendment) Bill, all transfers and postings of senior officers in the Delhi government will be done by a three-member committee headed by the Delhi chief minister.

The Delhi ordinance was promulgated by the central government a week after the Supreme Court handed over the control of services in Delhi, excluding police, public order and land, to the elected government headed by Chief Minister Arvind Kejriwal.

“With a view to give effect to the intent and purpose behind the provisions of Article 239AA of the Constitution, a permanent authority, headed by the Chief Minister of Delhi along with the Chief Secretary, Government of National Capital Territory of Delhi and the Principal Secretary, Home, Government of National Capital Territory of Delhi, is being constituted to make recommendations to the Lieutenant Governor regarding matters concerning transfer postings, vigilance and other matters, according to the statement of objects and reasons of the bill.

The National Capital Civil Service Authority shall have the responsibility to recommend the transfers and postings of all Group ‘A’ officers (IAS) and officers of Delhi Andaman and Nicobar Islands Civil Service (DANICS) officer (DANICS) serving in the Delhi government. It says that this would balance the interest of the nation with the interest of the Union territory of Delhi in the administration of the capital to the manifestation of the will of the people reposed in the central government as well as the government of National Capital Territory of Delhi.

Justifying the move to bring the bill, the statement of objects and reasons says several important national and international institutions and authorities like the President, the Parliament, the Supreme Court, various constitutional functionaries, foreign diplomatic missions, international agencies, etc are located in Delhi and high dignitaries from other nations pay official visits to Delhi. The highest possible standards are required to be maintained in the administration and governance of the National Capital Territory of Delhi, it said.

It said that any decision taken in respect of Delhi not only affects the residents of the city but the entire country and shall have the potential of putting the national reputation, image, credibility and prestige at stake in the international global spectrum and therefore, the entire nation is vitally interested in the governance of the National Capital Territory of Delhi.

Chief Minister Arvind Kejriwal’s Aam Aadmi Party had opposed the ordinance saying the Centre had “deceived” the people of Delhi.

“This is a deception committed with the Supreme Court and the people of Delhi who have chosen Kejriwal thrice as the chief minister. He doesn’t have any powers but the LG, who has not even been chosen but forced upon people, will have powers and through him the Centre will keep tabs on the work happening in Delhi. This is contempt of court,” AAP chief spokesperson and Services Minister Saurabh Bharadwaj had said.

Kejriwal himself, along with party ruled Punjab’s Chief Minister Bhagwant Mann, had visited most non-BJP-ruled states and met opposition leaders seeking their support to oppose the legislation.

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