Markets sulk at day’s low point with loss of over 0.50%

Local equity markets were trading at day’s low point, with cut of over half a percent which dragged both Sensex and Nifty below psychologically crucial 28,300 and 8,600 levels respectively on accentuated selling pressure by both funds and retail investors after RBI on much expected lines, in its first bi-monthly monetary policy statement, 2015-16 kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.5% and consequently, the reverse repo rate under the LAF unchanged at 6.5%. Sentiment also was spooked after RBI’s governor, in its policy stance and rationale, underscored that policy moves were data dependent. Meanwhile, the session was productive for broader indices, which were trading with gains in the range of 0.04-0.25%.

On the global front, Asian stock markets were mostly higher early Tuesday following a rise in Wall Street shares overnight, with many investors shrugging off Friday’s disappointing U.S. jobs data as they returned from the holiday.

Closer home, most of the sectoral indices on BSE were trading in red, with prominent losers being the stocks from Realty, banking and counters. On the flip side, stocks from Infrastructure, metal, Consumer Durables and Capital Goods counters were the top gainers of the session. Rate sensitive stocks like realty and banking stocks declined after RBI maintained a status quo stance in its monetary policy statement. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1061:899; while 50 shares remained unchanged.

The BSE Sensex is currently trading at 28323.35, down by 181.11 points or 0.64% after trading in a range of 28320.75 and 28641.08. 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 0.04%, while Small cap index up by 0.27%.

The gaining sectoral indices on the BSE were Metal up by 0.44%, Consumer Durables up by 0.19% and Capital Goods up by 0.03% while, Realty down by 2.08%, Bankex down by 1.25%, INFRA down by 0.73%, Auto down by 0.56% and PSU down by 0.50% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.75%, NTPC up by 1.75%, Sesa Sterlite up by 1.12%, Hindalco up by 0.89% and Tata Steel up by 0.61%. On the flip side, Tata Motors down by 2.04%, ICICI Bank down by 1.90%, Axis Bank down by 1.86%, Sun Pharma Inds. down by 1.80% and Hero MotoCorp down by 1.58% were the top losers.

Meanwhile, defending the move of sending tax notices to about 100 FIIs totaling $5-6 billion, Finance Minister Arun Jaitley asserted that legitimate tax demand cannot be considered 'tax terrorism' because India is not a tax haven. The minister clarified that the country was not so vulnerable that every legitimate tax demand was considered as tax terrorism and neither was the country a tax haven.

The minister further highlighted that though some decisions of the past have made the taxation regime adversarial, however an emerging economy that counts on investment could-not indulge in something that has been referred as tax terrorism or very aggressive tax laws.

In the biggest-ever tax demand, nearly 100 foreign funds have been asked to cough up an estimated $5-6 billion for 'untaxed gains' made by them in the Indian markets over the past years. This has triggered huge protest from foreign investors since ‘Budget 2015-16’ announced foreign institutional investors (FIIs) would be exempt from minimum alternate tax (MAT) from 2015-16. However, several MAT notices have been issued to FIIs for assessment year 2011-12 and earlier. Overall, pending MAT demands from the tax department are said to stand at about Rs 37,000 crore.

Further, on black money issue, the minister highlighted there would be a grace period for companies and individuals to come clean on their overseas assets and that every suggestion regarding the compliance window (for black money) was welcomed.

The CNX Nifty is currently trading at 8609.50, down by 50.40 points or 0.58% after trading in a range of 8598.15 and 8693.60. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 2.48%, NTPC up by 1.71%, Sesa Sterlite up by 1.15%, Tech Mahindra up by 0.99% and HCL Tech. up by 0.91%. On the flip side, IDFC down by 2.34%, Tata Motors down by 2.01%, Ambuja Cement down by 1.93%, Sun Pharma Inds. down by 1.89% and Axis Bank down by 1.70% were the top losers.

Asian markets were mostly higher; with KOSPI Index trading higher by 0.6 points or 0.03% to 2,047.03; Straits Times trading higher by 7.95 points or 0.23% to 3,460.86; FTSE Bursa Malaysia KLCI trading higher by 10.1 points or 0.55% to 1,853.04; Jakarta Composite trading higher by 40.72 points or 0.74% to 5,520.75; Taiwan Weighted trading higher by 41.58 points or 0.43% to 9,641.90; Shanghai Composite trading higher by 78.95 points or 2.04% to 3,942.88; Hang Seng trading higher by 192.89 points or 0.77% to 25,275.64 and Nikkei 225 trading higher by 242.56 points or 1.25% to 19,640.54.