The impact of Joe Biden’s victory in the US election was clearly visible in two business sessions last week. The stock market was closing sharply for the last five trading sessions. The Sensex has reached its ten-month high. Today, let’s try to understand what will happen in the stock market.
Bihar election results will be affected this week
The domestic stock market moves will be largely determined this week by the participants’ reaction to the Bihar election results, macroeconomic data and global political activities. The counting of votes for the Bihar assembly elections will be held on 10 November. Hemang Jani, head equity strategist, Motilal Oswal Financial Services Ltd, said, “According to the exit poll, there are signs of a hung assembly in Bihar, which is a bit negative for market sentiment.” In the US presidential elections, Joe Biden defeated outgoing President Donald Trump. Many market participants believe Biden’s win is good news for Indian companies, and especially IT companies, in the domestic financial market.
The government issues Sovereign Gold Bond (SGB) at different times. Investors can subscribe to SGB whenever its issue is issued. Investors can invest in denominations of 1 gram. On the allotment, they are given a Gold Bond Certificate. The investor gets the value of gold while redeeming. Its rate is fixed on the average closing price of the last three days. The interest is paid to the investor at a pre-determined rate during the bond period. When the issue of SGB opens, investors can apply to the bank’s branch, post office, authorized stock exchanges directly or through their agents.
Interest income is taxable when it comes to tax rules regarding investment in Sovereign Gold Bonds. Sovereign gold is very good for HNI in terms of bond tax, as it does not have to pay capital gains tax to keep it till maturity.
Before Diwali (Diwali 2020) you have a great chance to buy cheap gold from the market. However, it is not physical gold. The Reserve Bank of India has decided to issue the eighth series of the sovereign gold bond scheme. A price of Rs 5,177 per gram has been fixed for the next installment of the gold bond. The Reserve Bank gave this information on Friday. Applications for the eighth series of the Government Gold Bond Scheme 2020 – 21 will be accepted between 9 and 13 November 2020. RBI said, ‘The gold for gold bond is based on the normal average closing price of gold of 999 purity by the Indian Bullion and Jewelers Association Limited (IBJA). Under this, the price has been fixed at Rs 5,177 per gram.
The Reserve Bank has said that after consultation with the central bank, the government has decided that investors applying for gold bonds online will be given a discount of Rs 50 per gram on the fixed price of the bond. Such investors will also have to make payment in digital mode along with the application. The Reserve Bank said that for investors applying online, the issue price of gold bond will be Rs 5,127 per gram.
These bonds are issued for a period of eight years and there is also an option to withdraw after five years. Applications are issued in at least one gram and its multiplier. An individual investor can invest for a minimum of one gram and a maximum of four kilos. It is permissible to invest up to four kg for a Hindu undivided family and up to 20 kg for a trust etc.
Results of these companies will come
Quarterly results of companies like Hindalco Industries, Hindustan Copper, IDFC, Mahindra & Mahindra, NMDC, Aurobindo Pharma, Eicher Motors, Grasim, GAIL, IGL and ONGC are also due this week. The BSE Sensex rose 2,278.99 points, or 5.75 percent, over the past week. Apart from this, the markets will also monitor the cases of Kovid-19 in the country and around the world.
State Bank of India
Last week, SBI’s shares gained nearly 15 per cent. The bank saw a 55 per cent jump in profits in the second quarter. The bank’s standalone profit stood at 4574 crore in the September quarter.
Capital gains are taxed after a limit. There is no tax on long-term capital gains up to 1 lakh every financial year. In such a situation, if you have invested in mutual funds, stocks, equity funds, then the tax burden will be reduced if the investment is redeemed with planning. Long term capital gains are tax free up to 1 lakh every financial year. In such a situation, if instead of redeeming a big fund on a four- to five-year gap, every year, a small amount of capital gains will be within the limit of 1 lakh. This will save you from heavy taxation.
The financial expert also says that if you need more money then there are also measures. . Redeem from April 1, you will count in the new fiscal year. In this way, taxpayers can avail tax free capital gains of up to 2 lakhs at a difference of few days.
Raghavendra Nath, managing director of Ladderup Wealth Management, says that while capital gains are taxed, capital gains also get a benefit. It comes under the Income Tax Act. However, long term gains and short term gains have to be separated for this. Long term gain can be minimized by long term loss and short term gain with short term loss. He also says that investors should always pay attention to the performance of their portfolio. If you are losing money in an investment, then it will definitely benefit in tax, but investors should get out of such low quality funds. It would be good for investors to redeem such funds and reinvest in better funds.
Investing in debt mutual funds (corporate and government bonds, corporate debt securities, and money market instruments) is considered better than tax. In such a situation, the tax burden will be reduced if the investors maintain the balance in debt funds and fixed deposits. According to the Income Tax Act, every year on FD you get interest but it is taxable. Even if the interest accruing on FD is accumulating, tax has to be paid on that earnings every year. On the other hand, when redeeming debt funds, it comes under the tax net. Also, indexation benefit is available in it. Meaning, only earnings that are higher than inflation rate are taxable. Funds that are more than three years old are subject to long-term capital gains tax and also get indexation benefit.
The Maharashtra government allowed cinema halls and multiplexes to open with 50 per cent capacity. Due to this, PVR’s stock has risen significantly. However, the company incurred significant losses in the September quarter. Despite this, the perception is now becoming positive.
The chemical company said its profit jumped 57 percent in the September quarter. This led to a 12 per cent rise in its stock. The company’s net profit in the September quarter stood at 201 crores.
In the second quarter, the company’s profit grew by 41 per cent. The company’s net profit in the September quarter was 432 crore. After the result, the company’s stock rose 11 percent last week.