Indian benchmarks exhibit firm trends but remain in tight range in noon trades

Indian equity markets continue to trade on an enthusiastic note in Monday afternoon trades after investors hunted for fundamentally strong but undervalued bargains as sentiments remained optimistic ahead of the year end. The frontline indices were hovering above the psychological 4,750 (Nifty) and 15,900 (Sensex) levels as market mood was partly lifted on hopes of strengthening US economic environment after a slew of economic reports suggested that the onerous Euro-zone debt trouble had little impact on the pace of world’s largest economy’s growth. The domestic markets were outperforming their regional counterparts in the noon trades as among the Asian markets which were open for trade, barring Japanese benchmark, all the indices traded in the negative terrain. Meanwhile reports showed that India’s foreign direct investment declined by over 50% to $1.16 billion in October for the second month in a row, reflecting economic slowdown in the world's major economies. On the BSE sectoral space, the beaten down Technology index remained the top gainer in the space with close to two percent gains followed by the Capital Goods pocket which traded with around one and half a percent gains. Moreover, telecom stocks including Bharti Airtel and Idea jumped around three percent each in the session after the Telecom Disputes Settlement and Appellate Tribunal gave a temporary relief to the telecom firms by asking DoT not to take any coercive action against operators in the 3G roaming issue till the next hearing on January 3.

Moreover, the broader markets too traded on an optimistic note with good gains around a percent, performing in line with their larger peers. The bourses gained on good volumes of over Rs 0.60 lakh core. The market breadth on BSE was in favor of advances in the ratio of 1609:818 while 104 scrips remained unchanged.

The BSE Sensex is currently trading at 15,913.75 up by 175.05 points or 1.11% after trading as high as 15,956.93 and as low as 15,761.18. There were 26 stocks advancing against 4 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 0.77% and Small cap soared 1.02%.

On the BSE sectoral space, TECk up 1.79%, IT up 1.54%, Capital Goods up 1.35%, Realty up 1.32% and Metal up 0.94% were the major gainers while there were no losers in the space.

Bharti Airtel up 3.48%, Hero Moto up 2.13%, Tata Steel up 1.92%, TCS up 1.88% and Infosys up 1.64% were the major gainers on the Sensex, while Hindalco down 0.90%, Cipla down 0.48%, ONGC down 0.11%, and M&M down 0.01% were the major losers in the index.

Meanwhile, Finance Minister Pranab Mukherjee has authorized the revenue department to go ahead with the negative list on services so that it could be implemented from the next financial year. The list is important to roll-out a standardized goods and services tax regime that the government is intending to introduce soon.

In the negative list, almost all services except a select few would come under the tax net. Currently, 117 services are taxed at a rate of 10%. Service taxes are a high-growth revenue source for the government in a country where services account for more than half of the GDP.

Last month, the government issued a revised draft of the negative list of services and asked for feedback from various stakeholders by December 15. The first draft was released in August this year. According to a finance ministry official, once the shift from the current practice of taxing services on a selective basis (positive list-based) to the negative list is implemented, tax revenue would pick up by 20%.

As per the revised paper, 22 categories of services would figure in the negative list. The services added to the proposed negative list in the new draft compared to the previous one include some services relating to agriculture, horticulture and animal husbandry, services provided by freelance journalists, government news agencies and advertisements in media other than newspapers and TV. In the first draft, 27 services were kept outside the tax net.

Moreover, government services would be exempt. However those where they compete with the private sector would not be exempted. Therefore, insurance services, port and airport services, posts, trade fairs and exhibitions, business promotion services, construction/work contract, renting of immovable property, security services etc. would be taxed.

In the revised paper, the central board of excise and customs, the indirect taxes wing of the revenue department, also proposed to broaden the exemption for services relating to infrastructure projects which are meant for ‘larger public good’. If put into practice the list would benefit the construction industry where input tax credit is not offered in all cases.

The S&P CNX Nifty is currently trading at 4,761.85, higher by 47.85 points or 1.02% after trading as high as 4,777.60 and as low as 4,718.15. There were 39 stocks advancing against 11 declines on the index.

The top gainers on the Nifty were Bharti Airtel up 3.42%, Hero Moto up 2.39%, Tata Steel up 1.99%, TCS up 1.97% and Cairn up 1.84%.

Ranbaxy down 2.01%, Hindalco down 0.90%, BPCL down 0.89%, Siemens down 0.60% and Power Grid down 0.59% were the major losers on the index.

Asian markets traded on a mixed note; Shanghai Composite down 0.69%, Seoul Composite down 0.56% and Taiwan Weighted down 0.26%.

On the flip side Nikkei 225 was the lone gainer up 1%.

Meanwhile, stock markets in Hong Kong, Indonesia, Malaysia and Singapore remained closed on Monday in observance of the Christmas holiday.