Markets languish at day’s low on incremental selling pressure

With incremental selling pressure, local equity markets were now languishing at day’s low points on prevailing caution ahead of RBI’s bimonthly monetary policy review on Tuesday amidst expectation that India’s central bank is widely expected to keep interest rates on hold after a off-policy rate cut in January. However, participants would widely keep an eye on the central bank’s guidance regarding the quantum of rate cuts with bets ranging from 50 basis points to 100 basis points during the course of 2015. At day’s low, both Sensex and Nifty were trading below crucial 29,000 and 8,800 levels respectively, with losses of over half a percent. Meanwhile, broader indices showing a degree of performance were trading higher with gains in the range of 0.40%-0.75%.

On the global front, Asian shares languished on Monday, after the latest gauge of China's factory sector activity raised concerns about the world's second-largest economy. The final HSBC/Markit Purchasing Managers' Index (PMI) for January came in at 49.7 on a seasonally adjusted basis, just below the 50.0 level that separates growth from contraction. The figure released on Monday was slightly lower than a preliminary 'flash' reading of 49.8.

Closer home, sentiment also took a hit after the HSBC India Manufacturing Purchasing Managers' Index (PMI) fell to 52.9 in January 2015 from December's two-year record high of 54.5, but the data indicated that the Indian manufacturing sector continued to grow solidly during the month. On the sectoral front, massive drubbing was witnessed by stocks from FMCG, Banking and Public Sector Undertaking (PSU) counters, while maximum demand was witnessed by those belonging from Information Technology, Infrastructure and Capital Goods counters. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1503:1176; while 112 shares remained unchanged.

The BSE Sensex is currently trading at 28995.92, down by 187.03 points or 0.64% after trading in a range of 28958.52 and 29158.57. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index up by 0.74%.

The gaining sectoral indices on the BSE were IT up by 1.01%, INFRA up by 0.85%, Capital Goods up by 0.71%, Consumer Durables up by 0.71% and Realty up by 0.69% while, FMCG down by 1.77%, Bankex down by 1.08%, PSU down by 0.38%, Oil & Gas down by 0.22% and Metal down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Hindalco up by 3.08%, Wipro up by 2.47%, Sun Pharma Inds. up by 1.63%, GAIL India up by 1.38% and Maruti Suzuki up by 0.82%. On the flip side, Bharti Airtel down by 3.02%, ICICI Bank down by 2.81%, Dr. Reddys Lab down by 2.64%, Hindustan Unilever down by 2.55% and Bajaj Auto down by 2.51% were the top losers.

Meanwhile, apprehensive over a massive deficit in TDS collections, Central Board of Direct Taxes (CBDT) has mandated Income Tax (IT) department to initiate special measures to achieve the direct taxes collection target for this fiscal. The board has directed I-T officials to bolster their efforts and give special emphasis on tax collections under the Tax Deducted at Source (TDS) and Advance Tax categories.

This development comes on the heels of TDS collections slipping by 50% for the fiscal. For FY2013-14, the growth under this head was 16.73%, while in FY2014-15 the growth slipped to 7.84%. The budgeted target under the direct tax category has been pegged at Rs 7.36 lakh crore for the current fiscal, while the collection has summed up to Rs 5,46,661 crore till January 23, according to CBDT.

Further, the apex policy making body of the I-T department, also asked the taxman to ensure that those assessees who have made handsome self-assessment tax declarations should be tapped to deposit it as advance tax so that the figures could be collated and reflected in this fiscal, which will end December 31.

In order to ensure better TDS and Advance Tax collections, I-T officials have been asked to make on-spot visits to defaulting organisations and also interact with officials and individuals responsible under the established official mechanism in this regard.

The department, which is confident of surpassing the budgeted tax target, has been facing a big challenge on this front because of the issuance of large amounts of refunds. The contribution of TDS to the overall gross direct taxes collections during 2013-14 fiscal was Rs 2,71,069 crore, which is 17.88% higher than the collections shown under this head from Rs 2,29,943 crore during 2012-13. Thus, the TDS category contributes over 37% to the gross direct taxes collections.

The CNX Nifty is currently trading at 8760.30, down by 48.60 points or 0.55% after trading in a range of 8751.10 and 8808.10. There  were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 4.58%, IDFC up by 3.17%, Hindalco up by 2.79%, Wipro up by 2.55% and DLF up by 1.88%. On the flip side, Asian Paints down by 5.62%, Bank Of Baroda down by 3.73%, Bharti Airtel down by 3.32%, Ultratech Cement down by 3.00% and ICICI Bank down by 2.72% were the top losers.

Asian markets were mostly trading lower; Taiwan Weighted trading lower by 25.08 points or 0.27% to 9,386.99; Nikkei 225 trading lower by 116.35 points or 0.66% to 17,558.04; Shanghai Composite trading lower by 82.06 points or 2.56% to 3,128.30’ Hang Seng trading lower by 78.64 points or 0.32% to 24,428.41; Jakarta Composite trading lower by 26.79 points or 0.51% to 5,262.61 and FTSE Bursa Malaysia KLCI trading lower by 0.92 points or 0.05% to 1,781.26. On the flip side, KOSPI Index trading higher by 3.42 points or 0.18% to 1,952.68 and Straits Times trading higher by 19.16 points or 0.56% to 3,410.36.