Benchmarks continue weak trade; Capital Goods, Power drag

Indian equity markets continued their weak trade in the late afternoon session on account of selling in frontline blue chip counters. The markets fell around to their lowest in four months, on strong selling on algorithmic trading platforms, while continued offloading by foreign investors amid retrospective tax worries. The markets didn’t took note of a prominent think-tank of US, the Center for Strategic and International Studies, which stated that the first year of the new BJP government is one of the best years for India in terms of liberalization and economic reforms. Traders were seen selling in Capital Goods, Power and PSU sector stocks. In scrip specific development, Bharti Airtel was trading in green after MSCI raised the company’s weight-age to 2.6 percent from 1.3 percent with effect from June 1. The street expects the company may see inflows of over $200 million due to increase in MSCI weight-age.

On the global front, the Asian markets were trading mostly in red while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,150 and 26,900 levels respectively. The market breadth on BSE was negative in the ratio of 514:2043 while 96 scrips remained unchanged.

The BSE Sensex is currently trading at 26866.01, down by 574.13 points or 2.09% after trading in a range of 26738.55 and 27501.15. There were 1 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.36%, while Small cap index down by 2.52%.

The losing sectoral indices on the BSE were Capital Goods down by 3.41%, Power down by 2.91%, PSU down by 2.83%, Bankex down by 2.74% and Realty down by 2.72%.

The top gainers on the Sensex were Bharti Airtel up by 2.75%. On the flip side, BHEL down by 4.56%, NTPC down by 4.22%, ICICI Bank down by 4.10%, Larsen & Toubro down by 3.62% and Vedanta down by 3.42% were the top losers.

Meanwhile, clarifying the doubts raised regarding the Income Computation and Disclosure Standards (ICDS), the Finance Ministry has said that LPG subsidy received by individuals in their bank accounts will continue to be exempt from income tax. The Ministry said that the provision in the Finance Bill, 2015, will not affect the LPG subsidy and other welfare subsidies received by individuals. The ministry release stated that to restate the position, the provision in the Finance Bill, 2015, will not affect the LPG subsidy and other welfare subsidies received by individuals.

There were doubts being raised by tax experts over an amendment in Finance Bill, 2015 that expanded the definition of taxable income to include subsidies, grants, cash incentive and duty drawback. The Finance Bill, 2015 passed by Lok Sabha on April 30 proposes to align the definition of income with that provided in ICDS for this purpose. The central government notifies ICDS for any class of assesses or for any class of income.

The ministry has further clarified that the ICDS is applicable to persons having income chargeable under the head 'Profits and gains of business or profession' or 'Income from other sources' and following Mercantile System of Accounting. The Central Board of Direct Taxes (CBDT) notified ICDS on 31.3.2015 vide Notification number S.O. 892 (E) after wide consultations with the stakeholders for which the draft was placed in the public domain. Sub-section (2) of section 145 provides that the Central Government may notify ICDS for any class of assesses or for any class of income.

The CNX Nifty is currently trading at 8141.20, down by 183.60 points or 2.21% after trading in a range of 8100.55 and 8331.95. There were 1 stocks advancing against 49 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.05%. On the flip side, Ambuja Cement down by 5.33%, BHEL down by 4.77%, NTPC down by 4.22%, ICICI Bank down by 4.17% and Ultratech Cement down by 3.76% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 114.63 points or 0.41% to 27,640.91, Shanghai Composite decreased 69.44 points or 1.62% to 4,229.27, KOSPI Index decreased 27.65 points or 1.3% to 2,104.58, Straits Times decreased 12.86 points or 0.37% to 3,458.33, FTSE Bursa Malaysia KLCI decreased 9.62 points or 0.53% to 1,817.80 and Taiwan Weighted decreased 1.93 points or 0.02% to 9,818.20. On the other hand, Jakarta Composite increased 8.42 points or 0.16% to 5,168.72. Japanese stock exchange was closed today on account of ‘Greenery Day’ holiday.

The European markets were trading in green; France’s CAC increased 17.59 points or 0.35% to 4,991.66, Germany’s DAX increased 71.53 points or 0.63% to 11,399.21 and UK’s FTSE 100 increased 29.74 points or 0.43% to 6,957.32.