Benchmarks continue weak trade in late afternoon session

Indian equity markets continued their weak trade in the late afternoon session on account of selling in frontline blue chip counters. The sentiments were on pessimistic note from the early trade on concerns that slowing growth in Europe will hurt the American economy as the Federal Reserve ends its bond purchases. Traders were seen piling positions in IT and TECK while selling was witnessed in Metal, Auto and FMCG sector stocks. In scrip specific development, Infosys was trading firm after the software major reported a better-than-expected consolidated net profit at Rs 3,096 crore for the second quarter ended September 30, 2014 (Q2). Cairn India was trading in red after a foreign brokerage firm downgraded the stock to underweight from neutral.

On the global front, the Asian markets were trading in red while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,900 and 26,400 levels respectively. The market breadth on BSE was negative in the ratio of 1017:1703 while 117 scrips remained unchanged.

The BSE Sensex is currently trading at 26374.45, down by 262.83 points or 0.99% after trading in a range of 26301.38 and 26555.92. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.82%, while Small cap index down by 0.52%.

The gaining sectoral indices on the BSE were IT up by 1.99%, TECK up by 1.15% while, Metal down by 2.98%, Auto down by 2.33%, FMCG down by 2.26%, Bankex down by 1.26%, Realty down by 1.19% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 6.21%, Sun Pharma up by 1.18%, BHEL up by 1.01%, Hero MotoCorp up by 0.84% and Reliance Industries up by 0.69%. On the flip side, Tata Motors down by 4.89%, Hindalco down by 4.37%, ITC down by 3.18%, Tata Steel down by 3.13% and Sesa Sterlite down by 2.98% were the top losers.

Meanwhile, in a big sigh of relief to Information technology and IT-enabled services (ITeS) sectors firms, the government has permitted these firms to transfer or redeploy up to 50% of manpower from existing units to new ones in special economic zones (SEZs) without losing any tax benefits.

The Central Board of Direct Taxes (CBDT) has notified that mere transfer or redeployment of technical manpower from an existing unit of a taxpayer to a new SEZ unit in the first year of commencement of business will not be construed as splitting up or reconstruction of an existing business, provided the number of technical staff so transferred does not exceed 50% of the total manpower actually engaged in developing software at any point of time. Earlier, the limit of technical staff transferred was set at much lower at 20%.

The government decision came after intense pressure by the industry body Nasscom seeking clarity over the availability tax benefits to the IT companies that have set up parallel operations in SEZs to take advantage of profit-linked exemptions available under the policy.

Section 10AA of the Income Tax Act, 1961 provides tax benefit to a unit set up in a SEZ if the revenue is generated from exports of computer software or from providing ITeS. However, this tax exemption is not available till now if the unit is formed by transfer of used plant or machinery or splitting or reconstruction of an existing business.

The CNX Nifty is currently trading at 7886.95, down by 73.60 points or 0.92% after trading in a range of 7854.50 and 7924.05. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Infosys up by 6.11%, HCL Tech up by 2.50%, Asian Paints up by 2.27%, Sun Pharma up by 1.26% and BHEL up by 1.10%. On the flip side, Jindal Steel & Power down by 5.07%, Tata Motors down by 4.92%, Hindalco down by 4.47%, NMDC down by 4.27% and Cairn India down by 3.99% were the top losers.

The Asian markets were trading in red; Hang Seng decreased 445.99 points or 1.9% to 23,088.54, Nikkei 225 decreased 178.38 points or 1.15% to 15,300.55, Straits Times decreased 31.42 points or 0.96% to 3,227.83, Jakarta Composite decreased 30.97 points or 0.62% to 4,962.91, KOSPI Index decreased 24.33 points or 1.24% to 1,940.92, FTSE Bursa Malaysia KLCI decreased 19.47 points or 1.06% to 1,810.26 and Shanghai Composite decreased 14.83 points or 0.62% to 2,374.54.

Taiwan market remained shut for the trade today for National Day.

The European markets were trading in red; Germany’s DAX decreased 87.06 points or 0.97% to 8,917.96, UK’s FTSE 100 decreased 47.77 points or 0.74% to 6,384.08 and France’s CAC decreased 37.13 points or 0.9% to 4,104.32.