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Women could solve UK’s productivity puzzle 

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Just 14 FTSE 350 boards have a female chief executive, including drugs giant GlaxoSmith-Kline's Emma Walmsley

Just 14 FTSE 350 boards have a female chief executive, including drugs giant GlaxoSmith-Kline's Emma Walmsley

Just 14 FTSE 350 boards have a female chief executive, including drugs giant GlaxoSmith-Kline’s Emma Walmsley 

Boosting women’s participation in the workforce could be the answer to Britain’s ‘productivity puzzle’, claims a top economist.

Productivity, or the amount of goods and services produced per hour worked, has flat-lined in the UK since the start of the financial crisis even as the economy has recovered, confusing experts.

But encouraging more women into the workforce could jump-start productivity, according to Vicky Pryce of economic consultancy the Centre for Economics and Business Research.

She has called for measures such as better parental leave, more heavily subsidised childcare and stronger enforcement of equal pay. 

Pryce added: ‘It is clear that when women leave work to have children they almost never recover their earlier career path.’

On Wednesday, a report from the Hampton-Alexander Review – an independent body set up to increase the number of women on FTSE 350 boards – is expected to show progress at many firms. 

Currently just 14 have a female chief executive, including drugs giant GlaxoSmith-Kline’s Emma Walmsley.

 

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Top stock picks by CapitalVia Global Research: Buy Marico, ICICI Bank

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Technical Calls by Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor

Gaurav Garg  |  Mumbai 

Market traded in close range on Friday; 12,000 would be crucial for next week

Market traded in a close range on Thursday as traders turned cautious ahead of an extended weekend since equity remained closed on Friday due to Mahashivratri. The Nifty closed at 12,080.90 on Thursday, shedding 45 points. PSU banks, Metal and Private banks traded with positive sentiments whereas IT and FMCG stocks traded with weakness. Nifty bank closed at 30,942.85, adding 104.65 points from the previous day’s closing.

As per the weekly option data, handful of call writing on higher strikes ranging from 12,100 to 12,200 is seen which shows Nifty is witnessing resistance in sub -12,150 zone. Traders should try to buy any dip as market has maximum put open interest (OI) at 12,000 which will act as major support for weekly expiry and 12,200 will act as resistance as maximum OI for the calls stands here. We can witness short-covering move along with addition of fresh position only if the Nifty is able to breach 12,200. Therefore, traders should try to buy any dip keeping close eye on 12,000.

We can see a big momentum in following stocks:

Buy: Limited (Above Rs 307.25)

Target: Rs 327

Stop loss: Rs 296

The stock is witnessing bullish divergence on daily charts. Further strength in stock could result in a bullish movement. Breakout from the level of 307.25 might lead stock towards its next resistance zone. Considering the technical evidence discussed above, we recommend buying the stock above 307.25 for the target of Rs 327, keeping a stop loss at Rs 296 on a closing basis.

Buy: Limited (Above Rs 550)

Target: Rs 573

Stop loss: Rs 535

The stock is forming a bullish flag pattern in daily charts, resistance breakout from the level of 550 would lead stock to hit its 52-week high placed at Rs 552.20. Sustaining above Rs 550 will lead to more bullish movement. We recommend buying the stock above Rs 550 for the target of Rs 573, keeping a stop loss at Rs 535 on a closing basis.


Disclaimer: The analyst does not hold position in any of the stocks mentioned above.

First Published: Mon, February 24 2020. 08:08 IST

Source: Business Standard

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Nifty outlook & stock recommendations by Sameet Chavan of Angel Broking

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Once Nifty surpasses 12,160, we may see Nifty retesting of 12,220 – 12,250 levels

Sameet Chavan  |  Mumbai 

Nifty Outlook

Despite some uncertainty, 12,000 defended successfully

We had a shaky start to the week as some overhang continued of what we saw previous Friday with respect to the AGR case. In addition to this, things related to coronavirus aggravated which had a rub off effect on all global peers. Thus, the market looked nervous in the first half of the week to retest 11,900 levels. Fortunately, bulls pounced on this opportunity quite aggressively and as a result, we witnessed a V-shaped recovery thereafter to reclaim the 12,000 mark on a weekly closing basis.

We have already mentioned in our intra-week reports how crucial that recovery was on Tuesday. Let us see what these technical observations are. On Tuesday, all major indices formed a ‘Bullish Hammer’ pattern on daily chart and for the Nifty it was placed at the 50 per cent retracement of the recent up move. Now we have moved one step forward as we can see the Tuesday’s ‘Hammer’ pattern along with Monday’s and Wednesday’s candle, combinedly gives a birth to a ‘Bullish Island Reversal’ pattern. This configuration occurs when the previous gap is precisely filled by yet another gap but in the opposite direction and has extremely bullish implication. Hence, going forward, as long as we do not enter into Wednesday’s gap area of 12042.10 – 12030.75, the said pattern remains intact and is likely to provide some impetus to the next leg of the rally. In the forthcoming week, once Nifty surpasses 12,160, we may see Nifty retesting of 12,220 – 12,250 levels. On the downside, 12,042 – 12,000 remains a strong support zone.

The banking index has been slightly underperforming since a few days but, on Thursday, we witnessed a sheer outperformance from this space, courtesy a smart move in the State Bank of India and Indusind Bank. Apart from this, the midcap space looked vibrant in the last couple of days and has managed to give a V-shaped recovery. Hence, we may see good traction in this universe in coming days as well.

Stock Recommendations:

NSE Code – KIRI INDUSTRIES

View – Bullish

Last Close – Rs. 423.95

Justification – This stock is yet to participate in the rally the broader market has seen over the past couple of months. We have already witnessed a long consolidation of nearly three months and finally, the stock prices managed to confirm a breakout in the upward direction. If we look at the overall volume activity, it has risen substantially in the recent up move. In addition, the ‘RSI-Smoothened’ on daily chart has crossed above the 70 mark, which we believe should provide the impetus for the next leg of the rally. Thus, we recommend buying this stock for a target of Rs 464 over the next days. The stop loss should be fixed at Rs 398.40.

2. NSE Code – TATA STEEL

View – Bullish

Last Close – Rs. 443.55

Justification – This stock is extremely sensitive to any development with respect to China. Recently, the stock managed to give a gigantic up move from lower levels but rising concerns over ‘coronavirus’ dented this rally and hence, the stock had to undergo a strong bout of profit booking. But now, looks like it has digested that worry and technically speaking, we can interpret this decline as a healthy retracement of the larger degree up trend. Looking at the favorable risk reward ratio, traders are advised going long for a target of Rs 468 over the next few days. The stop loss should be fixed at Rs 428.


Disclaimer: The author is Chief Analyst- Technical & Derivatives at Angel Broking. He may have positions in one or all of the above mentioned stocks. Views expressed are his own.

First Published: Mon, February 24 2020. 07:46 IST

Source: Business Standard

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The AGR case is a triumph of bureaucratic obstinacy over good sense

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While it raises the larger question of the Court’s role on matters that have a major impact on the economy, much of the blame also lies with the govt for poor handling of the issue

The ‘second National Bank of the United States’ was created by the Federal Government in 1816. Many state governments resented the bank for calling in loans it had made to them. Consequently, some states passed laws designed to hinder the bank’s operation. Others simply tried to tax it. Maryland imposed an annual levy of $15,000 on the bank, hoping to tax it out of existence.

When the challenge to the tax reached the Supreme Court, a unanimous Court speaking through Chief Justice Marshall held that the tax was invalid. The Court also used a phrase that has come to be one of the enduring clichés of taxation law: “The power to tax involves the power to destroy.”

If the events leading up to it and the judgment in the ‘AGR case’ are anything to go by, it’s a cliche that the Indian government and the have taken to heart.

Background

The National Telecom Policy of 1999 introduced the ‘Adjusted Gross Revenue’ model for payment of license fees. Under the policy, a percentage of the telecom companies’ AGR was to be shared with the Government as license fee. Initially, the percentage was fixed at 15 per cent. It was capped at eight per cent in 2013.

Litigations that have led to the October 2019 judgment started in 2003. They revolve around the definition of the term ‘Gross Revenue’. The companies argued that the definition of gross revenue for the purpose of levy of license fee could only be related to such receivables that arose out of ordinary telecom related activities. The Government’s stand was that license fee was payable on overall revenue (including revenue realised on account of non-telecom activities).

The telecom companies further argued that 80 per cent of the license fees demanded by the Government had been paid. Payment of the remaining amount had been stayed by the Court. Non-payment was due to a bonafide dispute, and under protective orders of Courts. Thus, if the Court found that the Government’s definition of gross revenue was correct, the companies would only be required to pay the remaining license fee. Penal consequences like interest or penalty could not be imposed. The Government argued that it was entitled to interest and penalty.

The Court upheld the Government’s stand on both counts. As a result, the telecom companies are required to pay a total of Rs 1.3 trillion (92,000 crore in licence fee, and 41,000 crore as spectrum usage charges) to the Government. Only 25 per cent of this amount is the actual sum owed by the companies. The rest is in the form of interest and penalties.

The reasoning behind the verdict is dubious. How can licenses fees be paid on non-telecom revenues? It also raises the larger question of the Court’s role in determining issues that have a significant impact on the economy – issues that it is admittedly ill-equipped to handle. While a fair share of the blame for the crippling effect the Judgment is likely to have on the lies on the Court, an equally large share of the blame lies at the doors of the Government for poor handling of the issue.

The and the economy

The Supreme Court has traditionally been regarded as the arbiter tasked with the mechanical duty of applying the law and interpreting the Constitution. Economic matters remain outside its domain – and expertise. A wide and somewhat erratic exercise of the power of judicial review has meant that matters with serious economic consequences often reach Court. In a 2017-judgment, the Supreme Court held that it is the “bounden duty of the Court” to keep in mind the economic impacts of its decisions. However calls for such an economic analysis remain a voice in the judicial wilderness.

There have also been instances where the Court has departed from the tradition of deference to legislative/executive policy, in order to actively participate in charting the course of the economy. A key example of this was the Supreme Court’s cancellation of 2G licences given to 122 telecom companies. The catalyst of the affair was a figure of Rs 1.76 trillion—the CAG’s estimate of the notional loss to the exchequer in the allocation of 2G licences. The figure was based on dubious assumptions. Crucially, both the and the Supreme Court reasoning began with a faulty premise: that the government’s guiding principle should have been revenue maximization.

Considering that the Indian economy relies on foreign and local investments, the implications of such Court action are serious. The Court’s “interventionist” and “legitimizing” roles send conflicting signals to the business sector. Already having to contend with a vast executive bureaucracy, the sector is forced to face years of uncertain legal proceedings. Often a win in Court does not mean relief – because the Government remains free to retrospectively amend the law – as it did with its tax demand on Vodafone.

The Government’s handling of litigation

Economic policy seeks to regulate relations rooted in an atmosphere of negotiation, flexibility, and trade-offs. Guided as it is by the rigid rule of precedents and concrete constitutional principles, a court is not the best forum to handle such issues.

In the immediate aftermath of the AGR Judgment and the dismissal of petitions seeking review of the same, the Government is trying to find ways to offer some succour to the telecom companies. The Finance Minister is on record saying that she is waiting for the Telecom department’s stand on the issue. Reports also indicate that the Reserve Bank of India has requested the government to provide some relief to the telecom players on clearance of the dues, in order to save banks from exposure.

It is reasonable to assume that these issues were known to the Government when it escalated the matter to the Supreme Court. However its actions (to borrow an expression used by the late Mr. Palkhivala), are “a triumph of bureaucratic obstinacy over good sense.” The Supreme Court does not seem to have been informed of the economic fallout of its decision. The 153-page judgment does not speak of its likely impact on the economy even once.

The judgment is likely result in Vodafone-Idea shutting – leaving behind a private sector duopoly. The government itself stands to lose a large part of the sum that it is owed. The option of a retrospective amendment still remains. Given the likely political ramifications of the same, it is unlikely.

Chief Justice Marshalls’ cliché about taxation was tempered by later judges. It was put to rest by the great Justice Holmes with the trenchant observation that “the power to tax is not the power to destroy while this Court sits.” It’s a message that does not seem to have reached our Supreme Court; or our government. And that does not augur well for the investment climate in our country.


The authors are lawyers who practise in the Supreme Court. They tweet @sanjayuvacha & @parahoot

Disclaimer: Views expressed are personal. They do not reflect the view/s of Business Standard.

Source: Business Standard

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