Every qtr, companies need to pay advance tax as per the schedule given in the Income Tax act. While these numbers are provided they give us as investors some good information on potential earnings of companies before the results season starts. Hence market forces eagerly look forward to this leading indicator to companies performances.
So if the advanced tax numbers are higher than last quarter or YOY ( year on year) it indicates healthy performance of the company and a price movement in the scrip is expected.
However, sometimes we should be careful of these numbers and there could be some exceptions.
1. There could have been an exception income for the company because of which tax out go could be higher.
2. The comparison should be YOY or quarter on quarter
3. Some companies may be in a tax free environment and hence the tax outgo comparisons may not work at all.
But here are some details of the recent advanced tax numbers--- all of them giving a positive signal to the healthy performance of these companies. Great, Same, worse
Now Last year
RIL 770 365
ACC 330 340
Infosys 250 125
Union Bank of India 185 253
ICICI 350 250
Asian Paints 60 43
SBI 1857 1810
Tata Motors 115 0
BOB 300 280
Zee entertainment 97 109
Tata steel 513 406
L&T 270 275
Bajaj Auto 177 60
M&M 235 0
So the ones in blue should have or can move up in the coming few days.... this is one of the reasons that in todays trade reliance was up 4%!
Hope this adds to your understanding of the market...
Happy investing.
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