Benchmarks trade in green in late afternoon session

Indian equity markets continued their firm trade in the late afternoon session on account of buying in frontline blue chip counters. The sentiments were on optimistic note after Finance Minister highlighted the achievements of his government on completion of first year in the office. Finance Minister claimed that there was more enthusiasm in India after Modi assumed power on May 26, 2014 and that the stability returned to the economy. Traders were seen piling position in Capital Goods, PSU and FMCG stocks while selling was witnessed in Realty, Consumer Durables and Auto sectors stocks.

In scrip specific development, oil marketing companies BPCL and IOC were trading firm after Finance Ministry sanctions Rs 5,223-crore fuel subsidy for them. Indian Oil Corporation (IOC) will get Rs 2,932 crore subsidy and Bharat Petroleum Corporation (BPCL) Rs 2,291 crore for selling fuel below cost in Q4 of 2014-15, but Hindustan Petroleum Corporation (HPCL) will not get any support, due to certain adjustments for the past payments. Jindal Steel & Power (JSPL) was trading in green after trial court grants bail to Naveen Jindal in coal scam case.

On the global front, the Asian markets were trading in green while the European markets were trading mostly on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,400 and 27,900 levels respectively. The market breadth on BSE was negative in the ratio of 1205:1334 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 27942.38, up by 133.03 points or 0.48% after trading in a range of 27828.61 and 28071.16. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.13%, while Small cap index up by 0.13%.

The gaining sectoral indices on the BSE were Capital Goods up by 0.70%, PSU up by 0.60%, FMCG up by 0.57%, Oil & Gas up by 0.49% and IT up by 0.45% while, Realty down by 0.33%, Consumer Durables down by 0.03% and Auto down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.16%, TCS up by 1.85%, HDFC up by 1.60%, ONGC up by 1.35% and ITC up by 1.10%.

On the flip side, Wipro down by 1.16%, Bajaj Auto down by 1.12%, Vedanta down by 0.77%, Hero MotoCorp down by 0.63% and Hindalco down by 0.61% were the top losers.

Meanwhile, in order to make ‘arm’s length pricing’ determination more reasonable in transfer pricing cases Central Board of Direct Taxes (CBDT) has come up with draft rules for introduction of ‘range concept’. The tax department has proposed to use multiple year data for determining the Arm's Length Price against the current practice of taking into account only one year data for calculating Arm's Length Price. The use of multiple year data is expected to provide relief to the companies on account of difficulty to provide comparable data for the immediate previous year.

The draft norms of range concept, which will be used for determination of Arm’s length price of goods and services traded between related entities, would be open for comments till May 31, 2015. Notably, since its introduction in 2001, transfer pricing regulations have always been a major area of litigation between the tax department and tax payers, which are mainly MNCs, who usually blame the tax department of being aggressive in imposition of taxes to garner more revenues.

The draft norms follow an announcement by Finance Minister Arun Jaitley in his 2014 Budget with a view to aligning transfer pricing regulations in India with the best available practices. It remains to be clarified that the 'range concept' will only apply where a minimum of nine comparable data about similar transactions are available. In case the number of comparable data is inadequate, the existing provision of 'arithmetic mean concept' would apply.

The CNX Nifty is currently trading at 8449.90, up by 28.90 points or 0.34% after trading in a range of 8420.60 and 8489.55. There were 31 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.11%, TCS up by 1.90%, HDFC up by 1.55%, Power Grid Corporation up by 1.47% and Lupin up by 1.31%.

On the flip side, Ultratech Cement down by 2.96%, Idea Cellular down by 2.21%, Bajaj Auto down by 1.21%, Wipro down by 1.17% and Grasim Industries down by 1.16% were the top losers.

The Asian markets were trading mostly in green; Jakarta Composite increased 7.71 points or 0.15% to 5,320.92, Straits Times increased 11.49 points or 0.33% to 3,451.35, KOSPI Index increased 23.29 points or 1.1% to 2,146.10, Taiwan Weighted increased 60.24 points or 0.63% to 9,638.80, Nikkei 225 increased 61.54 points or 0.3% to 20,264.41, Shanghai Composite increased 128.18 points or 2.83% to 4,657.60 and Hang Seng increased 469.11 points or 1.7% to 27,992.83. On the other hand, FTSE Bursa Malaysia KLCI decreased 9.95 points or 0.55% to 1,785.09.

The European markets were trading mostly in red; France’s CAC decreased 11.77 points or 0.23% to 5,134.93, Germany’s DAX decreased 10.99 points or 0.09% to 11,853.60 while, UK’s FTSE 100 increased 22.37 points or 0.32% to 7,035.84.