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    The rupee rose to a five-week high against the dollar as the foreign exchange markets moved in line with sentiment in the equity markets after exit polls forecast a strong performance by the BJP.

    The domestic currency touched a high of 61.52 against the dollar before closing at 61.75, up 29 paise from its previous close of 62.06 against the dollar.

    What is also boosting the rupee is the $34 billion mobilized by RBI by swapping dollars raised by banks through non-resident deposits and ECBs. The dollar mop-up by RBI is expected to increase the foreign exchange reserves by $18-19 billion, according to Yes Bank.

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    Finance Ministry on Wednesday said it is finalising the official amendments to Direct Taxes Code (DTC) Bill so that it could be taken up in the Winter Session of Parliament beginning December 5.

    “We are working on the DTC Bill and want to bring it as soon as possible,” Revenue Secretary Sumit Bose told reporters on the sidelines of a CII summit in New Delhi.

    The Finance Ministry is currently working on the official amendments to the DTC Bill which was tabled in Parliament earlier.

    Meanwhile, a senior Finance Ministry official said that the amendments to the Bill would be placed before the Cabinet shortly for approval.

    “The Finance Ministry wants to bring it in the Winter session of Parliament,” the official added.

    Among other things, the DTC Bill proposes a higher income tax rate of 35 per cent.

    While the Bill proposes to keep exemption limit at Rs. 2 lakh for individual tax unchanged, it proposes to introduce a fourth slab of 35 per cent tax rate for those with an annual income of over Rs. 10 crore.

    It also proposes to levy a 10 per cent tax on dividend income of more than Rs. 1 crore.

    Besides, Minimum Alternate Tax (MAT) may be levied on book profit and not on gross assets, sources said. Further, the Securities Transaction Tax (STT) is likely to be retained, though the Standing Committee on Finance, which had scrutinised the bill, had suggested abolition of the levy.

    At present, tax is levied on income between Rs. 2-5 lakh at 10 per cent, Rs. 5-10 lakh at 20 per cent, and above Rs. 10 lakh at 30 per cent. Further, those earning more than Rs. 1 crore have to pay a surcharge of 10 per cent.

    The Finance Ministry, according to sources, had accepted most of the recommendations of the Standing Committee.

    On whether there is a scope for lowering the rate of corporate tax, the official said it is not possible in India.

    The DTC bill, which aims to rationalise tax rates to bring more people and companies under the tax net and overhaul the I-T Act of 1961, was introduced in Parliament in 2010.

    The Bill has retained the 30 per cent tax on corporates, which was also the recommendation of the Standing Committee.

    The first draft of the Bill was prepared by Finance Minister P. Chidambaram in 2009, followed by a second draft by the then Finance Minister Pranab Mukherjee, which was later sent to the Standing Committee for their recommendations.

    The first draft prepared by Mr. Chidambaram in 2009 had proposed a 10 per cent income-tax on slabs of Rs. 1.6-10 lakh, 20 per cent on slabs of Rs. 10-25 lakh and 30 per cent on Rs. 25 lakh and above. Besides, corporate tax was proposed at 25 per cent.

    This was followed by the draft DTC Bill prepared by the then Finance Minister Pranab Mukherjee in 2010, which proposed income tax of 10 per cent for Rs. 2-5 lakh slabs, 20 per cent for Rs. 5-10 lakh and 30 per cent for Rs. 10 lakh and above besides corporate tax at 30 per cent.

    The Standing Committee suggested slabs of Rs. 3-10 lakh, Rs. 10-20 lakh and Rs. 20 lakh and above. On corporate tax, it recommended the rate be retained at 30 per cent.

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    The S&P BSE Sensex dropped 1.8% to 19,379.77, the lowest close since 6 September. Photo: Mint
    The S&P BSE Sensex dropped 1.8% to 19,379.77, the lowest close since 6 September. Photo: Mint



    Also Read
     
     
    India’s benchmark stock index fell to a three-week low, paring a monthly gain, before the release of current account deficit data and a potential US government shutdown. Banks and capital goods companies led the retreat.
    ICICI Bank Ltd., the country’s second-biggest lender, slid 4.3%. Power-equipment producer Bharat Heavy Electricals Ltd. (BHEL) lost 4.4% after jumping 6% last week. Oil and Natural Gas Corp. Ltd. (ONGC), the country’s largest explorer, decreased for a third day. The rupee weakened 0.2%.
    The S&P BSE Sensex dropped 1.8% to 19,379.77, the lowest close since 6 September. The current-account gap widened to $21.77 billion in the three months ended June from $18.08 billion, data released after trading ended showed. The median estimate in a Bloomberg survey was $23 billion. The fiscal and current-account deficits have driven the rupee down 12% in 2013, and this month prompted Standard & Poor’s to say there is more than a one-in-three chance the country will lose its investment-grade rating within two years.
    There was nervousness due to the US debt ceiling concern and the impending data on the current-account deficit, said Kaushik Dani, a fund manager with Peerless Mutual Fund, which has about $725 million in assets.
    ICICI tumbled to Rs883.65, the lowest close since 4 September. State Bank of India (SBI) dropped 1.6% to Rs1,614.90. HDFC Bank Ltd., the biggest lender by value, lost 2.6% to Rs593.05. The 13-member S&P BSE Bankex fell 2.8%. Mortgage lender Housing Development Finance Corp. Ltd. (HDFC) decreased 2.5% to Rs764.25.
     
     
    BHEL, Reliance
    BHEL slumped 4.4% to Rs137.40, paring the monthly climb to 15.5%. ONGC declined 2.4% to Rs267.85. Tata Steel Ltd. lost 5.5% to Rs271.55, a one-month low. Reliance Industries Ltd., owner of the world’s largest refining complex, lost 2.1% to Rs822.40.
    Global equities fell, trimming their best quarter in 18 years, as a budget impasse in the US threatens to shut down parts of the world’s largest economy for the first time in 17 years. The US Congress has just one day to end a stalemate.
    The MSCI All Country World Index lost 0.6% as of 12:26 pm in London as the Stoxx Europe 600 Index slid 0.7% and Asia’s benchmark gauge fell 1.5%.
    Investors are jittery as a US shutdown will affect fund flows to emerging markets, including India, D.K. Aggarwal, chairman of SMC Investments & Advisors Ltd. in New Delhi, said in an interview on Monday.
     
     
    Net Buyers 
    Overseas funds bought a net $2.1 billion of local shares this month, the first monthly net inflows since May, after the Reserve Bank of India (RBI) governor Raghuram Rajan announced plans to boost the rupee when he took charge on 4 September and the US Federal Reserve decided to keep stimulus. Inflows helped the rupee rebound 10% from a record low of 68.845 per dollar on 28 August and fueled a 4.1% rally in the Sensex this month, the biggest since November.
    The Sensex has lost 0.2% this year and is valued at 13.4 times estimated 12-month profits, versus the five-year average of 14.1 times. The gauge is headed for a 4.8% climb, ending three months of decline. The MSCI Emerging Markets Index is trading at 10.4 times.
    The CNX Nifty on the National Stock Exchange (NSE) decreased 1.7% to 5,735.30. India VIX, which gauges the cost of protection against losses in the Nifty, jumped 11%.
    Overseas funds sold a net $28 million of domestic shares on 27 September, data from the regulator showed. That took this year’s net inflow to $13.5 billion, the second-highest among 10 Asian markets tracked by Bloomberg. Bloomberg

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    Indian imports, affected by a July 22 RBI notification stipulating that at least 20 per cent of the yellow metal brought into the country should be re-exported, are likely to resume anytime now.
    Indian imports, affected by a July 22 RBI notification stipulating that at least 20 per cent of the yellow metal brought into the country should be re-exported, are likely to resume anytime now.
     
    Gold prices on the domestic spot and futures market are likely to look up a little on hopes that buying in China and India may increase. However, uncertainty over the US Federal Reserve’s move on the $85-billion-a-month stimulus package is proving to be a market dampener.
    Indian imports, affected by a July 22 RBI notification stipulating that at least 20 per cent of the yellow metal brought into the country should be re-exported, are likely to resume anytime now. With kharif harvest beginning and festivals ahead, rural consumers could begin buying gold.
    On the other hand, buying in China is seen up ahead of holidays starting October 1. Gold purchases in Shanghai exchange increased on Monday.
    But holdings of gold in electronic form in exchange-traded funds dropped. On Monday, SPDR Trust, world’s largest gold exchange traded fund, reported that its holdings dropped below 910 tonnes to 909.59 tonnes.
    Data on Germany business climate, US Consumer confidence, US chain store sales and housing index could have some influence on the precious metals market later in the day. In India, any rise in the rupee’s value against the dollar will make imports of gold, crude oil and vegetable oils cheaper.


    Spot gold, gold futures
    In early Asian trade, spot gold rose to $1,326.63 an ounce and gold futures maturing in December at $1,326.60.
    In Mumbai bullion market, gold for jewellery (99.5% purity) dropped to Rs 29,790 and pure gold (99.9% purity) to Rs 29,935.
    On MCX, gold October contracts could try to scale back to Rs 30,000.

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    Since January this year, the rupee has weakened 12.39% and has lost the second most among Asian currencies, after the Indonesian rupiah. Photo: Pradeep Gaur/Mint
    Since January this year, the rupee has weakened 12.39% and has lost the second most among Asian currencies, after the Indonesian rupiah. Photo: Pradeep Gaur/Mint
     
     
    The Indian rupee continued to decline against the dollar on Tuesday on demand for the US currency from importers.
    The Indian rupee closed at 62.77 per dollar, down 0.27% against its previous close of 62.5975 per dollar.
    The rupee had opened at 62.8550 per dollar and traded in the range of 62.4450 and 62.9075 per dollar.
    Since January this year, the rupee has weakened 12.39% and has lost the second most among Asian currencies, after the Indonesian rupiah.
    The dollar index, which measures the US currency’s strength against major currencies, was at 80.561, up 0.13% from its previous close of 80.449.
    India’s benchmark equity index Sensex edged 19 points higher to 19,920.21.
    Yield on the benchmark 10-year bond closed at 8.848%, down 0.3% compared with its previous close of 8.874%.
    The inter-bank call money rate stood at 9.5%, unchanged from the previous close.
    The government on Monday said its second half borrowing programme will remain unchanged at Rs.2.35 trillion and that it will meet its fiscal deficit target set this year.

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    BusinessWPI based inflation had risen for the third straight month to 6.1 per cent in August. Reuters

    Onion prices in the national capital continue to remain high at Rs 70-80 per kg as supplies are still under pressure.
    Prices of the kitchen staple in Azadpur mandi, Asia's largest wholesale market, were ruling at Rs 60 per kg today as supplies were below normal.
    "Today, there was a marginal increase in the supplies of onion at 9,500 quintals, but that was insufficient to bring down the prices," Onion Merchant Traders Association President Surendra Budhiraj said. 

    Onions prices to ease in 2-3 weeks on fresh output: Sharad Pawar
    He said the prices are likely to remain at this level for the next 10-15 days as most of the stored quantities from last year's crop have been exhausted and fresh supplies from South India are yet to reach the consuming states. 


    Cut-price onions crash attention-seeking Groupon website
    Traders also attributed the rise in wholesale onion prices to increase in prices of the bulb in Lasalgaon Mandi in Nashik, which sets the price trend across the country.
    At Mother Dairy outlets in the city, onions are being sold at Rs 65-67 per kg, while local vendors are selling it at 70-80 per kg, depending upon the quality and location.
    According to National Horticultural Research and Development Foundation data, prices of the politically sensitive commodity at Lasalgaon in Nashik, slightly declined from Rs 58 per kg to Rs 56 per kg today.
    Meanwhile, the Consumer Affairs Ministry had said in the status report on onions that prices are under pressure as 90 per cent of stored onions from last year's crop are exhausted and only 3-4 lakh tonnes are available for consumption.

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    The rupee rebounded on Thursday from a record low after the Reserve Bank of India's move to provide dollars directly to oil companies provided relief to the currency, while a recovery in emerging market currencies also helped offer support.

    The RBI decision is aimed at removing a major source of dollar demand from the spot market - worth $400 million to $500 million daily - and so reduce downward pressure on the Indian currency.

    The rupee rose as high as 66.85 per dollar shortly after the open, up sharply from a record low of 68.85 per dollar on Wednesday when the currency posted its biggest single-day percentage fall since October 1995. The rupee was trading at 67.69 at 1.12 p.m.

    The Reserve Bank of India (RBI) said it was providing a special window with immediate effect to sell dollars to Indian Oil Corp Ltd, Hindustan Petroleum Corp, and Bharat Petroleum Corp Ltd. Oil represents India's biggest import item.

    However, analysts said the RBI measures alone would not lead to a sustained rupee recovery unless the government can pass measures that can convince markets of its willingness to tackle India's fiscal and current account deficits and slowing growth.

    "The measure is unlikely to arrest the decline in the INR with the authorities increasingly trying to find new means to stem the rout in the currency," Mitul Kotecha, head of global markets research for Asia at Credit Agricole in Hong Kong, said in an email to clients.

    Thursday's rupee bounce also boosted shares and bonds, underscoring how movements in domestic markets are increasingly being driven by the beleaguered currency.

    The improved sentiment was also helped as Asian shares recovered while emerging market currencies stabilised as fears abated that U.S.-led forces would soon launch a military strike against Syria.

    The defence of the rupee has largely rested so far on the RBI's shoulders. Yet its plan to drain cash from markets and curb speculative trading is becoming increasingly controversial as bond yields have surged, raising borrowing costs in an economy already growing at its slowest pace in a decade.

    At the same time, the government has struggled to inspire confidence despite a slew of measures to raise dollars from abroad and curb imports of gold and oil that have most contributed to a record current account deficit.

    Prime Minister Manmohan Singh's ruling coalition, which faces elections by May next year, is banking on passing land acquisition rules that would replace laws dating back to the 19th century.

    The Lok Sabha is set to discuss on Thursday the controversial bill on how to compensate farmers for land acquired for infrastructure and industrial projects, an action that aims to speed up major projects, but which critics say could raise costs and actually slow down the acquisition process.

    Copyright Thomson Reuters 2013

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