Post Session: Quick Review

After two consecutive sessions of record breaking run, local equity markets witnessed consolidation on Monday as bulls took a breather from their berserk run, which led Sensex and Nifty end flat at its previous closing 27,850 and 8,300 levels respectively. It turned out to be nothing sort of session for Dalal Street, whereby benchmark equity indices ended almost where they started from. Though, benchmarks hit another life time high levels in early session of trade, profit-booking gripped markets thereafter. Bit of recovery seen after day’s low level too was reciprocated with incremental efforts of profit-booking in the first half of the session, however the trend was little different in the second half as bit of lower level buying crept into the markets, which led to recovery in the dying hours of trade. Meanwhile, broader indices outperforming their larger peers  went home with gains of over a percent.

Not much of gains could be witnessed in the backdrop of disappointing macro-economic data. Sentiments were rather minced after India's fiscal deficit reached nearly 83% of its full-year target in the first half of the year and core sector growth slowed down to 1.9% in September. On the macro-front, India's fiscal deficit was at Rs 4.39 trillion during April-September. The deficit was 76% during the comparable period in the previous fiscal year. Meanwhile, the market-participants largely ignored good manufacturing activity data. In an encouraging development, business condition in Indian manufacturing sector continued to grow at a modest pace in October as robust demand. The HSBC India Purchasing Managers' Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, rebounded from September's nine-month low of 51.0 to 51.6 in October.

On the global front, stocks in Asia ended mostly in red following the latest data on Chinese manufacturing. A survey released on Monday indicated China's services sector grew at its slowest pace in nine months in October. The non-manufacturing Purchasing Managers' Index (PMI) fell to 53.8 in October from 54 in September, due in part to a cooling property market. Meanwhile, European stocks inched lower in early trading on Monday, taking a breather following last week’s sharp gains.

Closer home, most of the sectoral indices on BSE managed to settle into positive territory, nevertheless the top gainers were the stocks from Realty, Healthcare and Banking counters. Meanwhile, technology stocks gained, tracking strong cues from the U.S. markets. Additionally, shares in Indian airline companies surged after state-run oil marketing companies slashed jet fuel prices since fuel charges contribute to nearly one-third of an airline's operational expenses. On the flip side, Consumer Durables, Auto and Public Sector Undertaking (PSU) counters were the prominent losers of the session. Shares in Indian auto companies fell after manufacturers reported weak despatches in October. While, Maruti Suzuki plunged over a percent after reporting a 1.1% fall in October sales, Mahindra & Mahindra plunged over 2% on reporting 15 percent fall in sales. The overall market breadth on BSE is in the favour of advances, which thumped declines in the ratio of 1264:711; while 21 shares remained unchanged. The market breadth on the BSE remained in the favour of advances; where advancing and declining stocks were in a ratio of 1832:1149, while 107 scrips remained unchanged. (Provisional)

The BSE Sensex ended at 27845.84, down by 19.99 points or 0.07% after trading in a range of 27785.40 and 27969.82. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.02%, while Small cap index up by 1.34%. (Provisional)

The gaining sectoral indices on the BSE were Realty up by 3.73%, Healthcare up by 0.44%, Bankex up by 0.41%, TECK up by 0.25% and Capital Goods up by 0.16% while, Consumer Durables down by 1.63%, Auto down by 0.91%, PSU down by 0.30%, Oil & Gas down by 0.21% and Metal down by 0.17% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sesa Sterlite up by 1.51%, Axis Bank up by 1.20%, HDFC up by 0.91%, ICICI Bank up by 0.79% and Sun Pharma Inds. up by 0.79%. On the flip side, GAIL India down by 6.08%, Mahindra & Mahindra down by 2.64%, Coal India down by 2.59%, NTPC down by 1.63% and Maruti Suzuki down by 1.60% were the top losers. (Provisional)

Meanwhile, industry body Assocham has sought deferment in the introduction of General anti-avoidance rules (GAAR) under the Indian income tax law, underscoring that at this juncture to introduce GAAR as part of tax law is not warranted in the country. Apex industry Chamber stated that Indian economy is not matured enough to stand up to the exacting standards of GAAR examination. On the other hand, tax administration is also not ready to handle a sophisticated instrument like GAAR.

Assocham highlighted that if GAAR is introduced at this stage, it will only act as a grip for more harassment of taxpayers, thus making the tax administration more adversarial.

GAAR is anti-tax avoidance rule which prevents tax evaders, from routing investments through tax havens like Mauritius, Luxemburg, Switzerland. There are roughly 45 tax havens in the world today. In Indian context, Mauritius is considered to be the most significant tax havens or tax evading route. The tax evasion in India through, Mauritius is estimated to be over $55 billion , mostly attributed to the loopholes in a bilateral agreement on double taxation.

According to GAAR guidelines, foreign investors not opting for treaty benefits and ready to pay taxes will not come under GAAR, but those who do opt for dual taxation avoidance agreements will come under its purview. The rule empowers the revenue department to annul any deal that has been made with the deliberate attempt to avoid tax. This rule applies to those claiming tax benefits over Rs 3 crore.

On Direct taxes code (DTC) issue, Assocham suggested the government not to introduce DTC as this would entail more cost than benefit. Assocham is of the view that a certain level of stability has been achieved with the present law. It added that introduction of a new law with new concepts will only unsettle the situation and more time will be spent on understanding it and putting a mechanism to administer it. 

India VIX, a gauge for markets short term expectation of volatility rose 3.32% at 13.73 from its previous close of 13.39 on Friday. (Provisional)

The CNX Nifty ended at 8324.15, up by 1.95 points or 0.02% after trading in a range of 8297.65 and 8350.60. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Jindal Steel & Power up by 5.16%, DLF up by 3.05%, Tech Mahindra up by 2.49%, Sesa Sterlite up by 2.46% and Bank of Baroda up by 2.21%. On the flip side, GAIL India down by 5.57%, Coal India down by 3.06%, Mahindra & Mahindra down by 2.96%, NMDC down by 2.93% and HCL Tech. down by 2.34% were the top losers. (Provisional)

European Markets were trading in the red; UK’s FTSE 100 was down 0.33%, France’s CAC was down by 0.52% and Germany’s DAX was down by 0.55%.

Asian markets ended mostly in red on Monday, after gauges of China’s manufacturing and services industries showed signs of a broadening slowdown in the world’s second-largest economy. The Japanese market remained shut for the trade today for Culture Day holiday. Growth in China’s factories fell to a five-month low in October, missing expectations for an expansion as manufacturers battled cooling order growth and rising costs in the slowing economy. The official Purchasing Managers’ Index (PMI) eased to 50.8 in October from September’s 51.1. Growth in new orders cooled in October, as the index retreated to 51.6 from 52.2. New export orders were 49.9 in October, pointing to a contraction, from 50.2 in September. The services sector has been more resilient than the manufacturing sector and is creating more jobs, which partly explains why the government has so far refrained from more aggressive policy easing in supporting the slowing economy. The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 53.8 in October from September’s 54.0, which was the weakest reading since January.

Thai Consumer Price Inflation fell to a seasonally adjusted annual rate of 1.48%, from 1.75% in the preceding month. Indonesian Trade Balance rose to a seasonally adjusted -0.27B, from -0.31B in the preceding month while Indonesian Inflation rose to a seasonally adjusted 4.83%, from 4.53% in the preceding month. South Korean Trade Balance rose to a seasonally adjusted 7.50B, from 3.43B in the preceding quarter whose figure was revised up from 3.40B.