IMF warns about the increasing debt of corporate India.

Is there any scientifically proven optimal debt to equity ratio? Well, not really but the number that can come pretty close to it is perhaps 100%. In other words, if past history is anything to go by, the moment debt starts getting higher than the equity base of a firm, investors should start turning cautious. And this is precisely why a news item in a leading daily has us worried. It highlights how about one third of the corporate debt in India is having a debt to equity ratio of more than 3 times! And the agency to flag off this warning signal is none other than the global financing agency, the IMF.

It has further pointed out how about half the corporate debt in India is on the books of companies with return on assets less than 5%. Basically, this does not even cover the interest expenses. Similarly, more than 20% debt is owed by firms with profit to interest expenses ratio being less than one. Clearly, should the economic scenario worsen further, we could well be staring at a fresh round of troubles for the Indian banking sector. For this reason alone, the sector may not be a haven for value investors as it is being made out to be.

Pfizer offered to purchase AstraZeneca

In January for £46.61 ($76.62) a share in cash and stock, with the proposal representing a 30% premium on AstraZeneca's (AZN) shares at the time. The U.K. company turned the offer down, explaining that it "significantly undervalued AstraZeneca and its prospects." Pfizer (PFE) again approached AstraZeneca on Saturday and was rebuffed a second time, and is now "considering its options." AstraZeneca's shares were +15% premarket at $78.54.

Japanese retail sales jumped at the fastest level

In 17 years in March, climbing an expected 11% on year after growing 3.6% in February. The reason for the large gain is that consumers rushed to purchase goods before a rise in sales tax to 8% from 5% went into effect on April 1. The upshot is that sales are expected to fall this month but then recover in May.

President Obama has announced new targeted sanctions

Against Russia that will hit more individuals and companies after the G7 concluded that the country hasn't met its pledge to "de-escalate" the conflict with Ukraine. However, any moves won't target broad sections of Russia's economy. While the U.S. and EU have made noises about wider-ranging action, individual EU countries fear the consequences for their economies.

Not keeping separate books together with frequent transactions means that gains from shares has to be assessed as business profits instead of as STCG

CIT vs. M/s D&M Components Ltd (Delhi High Court)

The AO and CIT(A) held that separate books were not used. Amounts were freely transferred from the profits gained to business and vice-versa. However, perhaps the single-most telling circumstance is the volume, frequency, duration (of holding) of the transactions. Apart from the above significant aspect, the AO and the CIT (A) observed that the assessee had been purchasing and selling a large number of shares of a few companies. It was also held that the transactions involved large or substantial sums of money. Whenever any share is purchased with the intention of investment, it cannot be sold off within a very short span of time, since the share market is always fluctuating. Since in the present case, very frequent purchase and sale of shares have been done it indicates that the main intention of the assessee was to earn income out of these shares which have been claimed to be under the head of short term capital gains. Having regard to the short duration of holding of the shares, and the lack of clarity in the account books, this Tribunal was wrong in assessing the gains as STCG instead of as business profits

RBI to become the only regulator to frame which loan is NPA

The rise in non-performing assets of PSU banks in the past fiscal has given rise to many doubts. The most pertinent one is whether bank's inability to recover bad loans is as real and projected by them. And if so, whether the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI Act), 2002 has completely failed. For the uninitiated the said act was meant to be a pariah for banks burdened with NPAs. The act allows banks and financial institutions to auction borrowers' properties if they fail to repay their loans. It thus enables banks to reduce their non-performing assets (NPAs) by adopting measures for recovery.

However, that has certainly not helped over the past year. The reason being an amendment to the SARFAESI Act in 2005 allowed different regulators to have different loan classification for NPAs. And that resulted in delayed acknowledgement that the loans are indeed bad. However a recent Gujarat High court judgment has repealed the amendment. It has in fact allowed RBI to become the only regulator to frame policies on NPAs. We believe that although belated, this judgment will certainly allow the central bank to control the NPA malady in the sector.

Japanese core inflation remains steady at 1.3% on year in march.

Japanese core inflation, which excludes fresh food prices, held steady at 1.3% on year in March but came in below consensus of 1.4%. Core core CPI, which excludes fresh food and energy, slipped to +0.7% from +0.8% in February. The data helped the Nikkei buck a negative global tape and close +0.2%, due to hopes that the Bank of Japan will increase its bond-buying program in order to make sure that inflation rises to the BOJ's target of 2%.