Benchmarks stage smart recovery in noon deals; Sensex regains 25,000 mark

Indian equity benchmarks have staged smart recovery in noon deals with Sensex and Nifty recapturing their crucial 25,000 and 7,600 levels as market participants opted to buy beaten down but fundamentally strong stocks. Sentiment turned up-beat after Moody’s Investors Service said India's current account deficit is likely to remain low supported by declining oil prices but a slow recovery in industrial output and investment would drag economic growth to 7% in the current fiscal. Appreciation in Indian rupee too supported the sentiments. The rupee firmed up further in noon deals and was trading higher by 19 paise to quote at 66.63 following sustained selling of the greenback by banks and exporters amid weakness of dollar overseas on the back of higher equities.

Firm opening in European counters too supported the sentiments, CAC, DAX and FTSE all were trading with a gain of around a percent in early deals. However, most of the Asian equity indices were trading in red at this point of time with Japan's Nikkei 225 losing year-to-date gains. Back home, on the sectoral front, banking, power and metal witnessed the maximum gain in trade, while consumer durables, fast moving consumer goods and healthcare remained the top losers on the BSE sectoral space. The broader indices too were trading with traction, while the market breadth on the BSE was negative; there were 941 shares on the gaining side against 1,424 shares on the losing side while 113 shares remain unchanged.

The BSE Sensex is currently trading at 25064.13, up by 170.32 points or 0.68% after trading in a range of 24833.54 and 25104.76. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index was up by 0.30%, while Small cap index down by 0.38%.

The gaining sectoral indices on the BSE were Bankex up by 2.18%, Power up by 1.56%, Metal up by 1.33%, Capital Goods up by 1.22% and infrastructure up by 1.00%, while Consumer Durables down by 2.97%, FMCG down by 1.21% and Healthcare down by 1.12% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 5.63%, ICICI Bank up by 3.41%, Vedanta up by 3.06%, Tata Steel up by 2.96% and Axis Bank up by 2.49%. On the flip side, Hindustan Unilever down by 3.73%, Lupin down by 1.97%, Cipla down by 1.89%, Bharti Airtel down by 1.76% and Dr. Reddys Lab down by 0.92% were the top losers.

Meanwhile, the Central Board of Direct Taxes (CBDT) has issued guidelines for compounding of offences under Income Tax Act, 1961/Wealth Tax Act, 1957, in cases of persons holding undisclosed foreign bank accounts/assets. CBDT has issued directions to all field formations, including principal chief commissioners, chief commissioners and principal DGs Income-Tax, to compound cases, where an assessee has cooperated fully or partially and paid taxes. The matter was examined in consultation with the Special Investigation Team (SIT) on black money.The compounding exercise will cover cases of Indians, who have bank accounts in HSBC Geneva, Liechtenstein-based LGT Bank and banks based in the British Virgin Islands.

According to the compounding guidelines, the cases in which the assessee has admitted accounts/assets either fully or partially, paid taxes and penalty or cooperated with the department may be considered for compounding only after filing the complaints ,as per the guidelines dated 23.12.2014. CBDT had further clarified with respect to guidelines dated 23.12.2014 that offences may be compounded by the authority on its satisfaction of the eligibility conditions and keeping in view factors such as conduct of the person, nature and magnitude of the offence and facts and circumstances of each case. As per the eligibility conditions for compounding, if the person has paid outstanding tax, interest, penalty, relating to the offence for which compounding has been sought, the person undertakes to pay the compounding charges including the compounding fee, the person undertakes to withdraw appeal filed by him, if any, in case the same has a bearing on the offence sought to be compounded.

Compounding guidelines issued on September 4 clarified that such cases can be compounded only after filing the prosecution complaints and shall not be compounded at the stage of show cause notice and/or without filing the complaint in the court. The CBDT has decided not to compound cases, where assessee has failed to cooperate

It further stated that prosecution instituted under Indian Penal Code, if any, cannot be compounded as per these guidelines. However, Section 321 of Criminal Procedure Code, 1973 provides for withdrawal of such prosecutions. Earlier, field formations had sought clarifications from CBDT whether offences relating to undisclosed foreign bank accounts/assets could be compounded as per the extant guidelines of the Board dated 23.12.2014. The CBDT had then presented new proposal to SIT investigating black money, which in August approved the proposal.

The guidelines highlighted that in the cases where the assessee has not admitted the foreign bank account (s)/assets and/or has not cooperated with the department in the assessment, penalty & recovery proceedings shall not be compounded. Furthermore, the CBDT also clarified that there is no provision for compounding of offences under the newly enacted Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Consequently, the above clarifications will not apply to cases coming under the purview of this Act. A panel set up by I-T authorities, which will include chief commissioner (central), director-general (investigation) and the commissioner of the zone where the case is being processed, will clear applications for compounding without any intervention by courts.

The CNX Nifty is currently trading at 7617.10, up by 58.30 points or 0.77% after trading in a range of 7539.50 and 7630.55. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 5.89%, Yes Bank up by 5.27%, Bank Of Baroda up by 4.51%, Tata Power up by 4.36% and ICICI Bank up by 3.53%. On the flip side, Hindustan Unilever down by 3.76%, Cairn India down by 2.78%, Lupin down by 2.26%, Cipla down by 2.16% and Bharti Airtel down by 1.99% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 tumbled 433.39 points or 2.43% to 17,427.08, Jakarta Composite decreased 12.14 points or 0.28% to 4,289.23, Straits Times shed 8.92 points or 0.31% to 2,843.49, KOSPI Index slipped 4.54 points or 0.24% to 1,878.68 and FTSE Bursa Malaysia KLCI was down by 1.89 points or 0.12% to 1,580.96. 

On the flip side, Taiwan Weighted increased 14.94 points or 0.19% to 8,001.50, Shanghai Composite surged 63.98 points or 2.08% to 3,144.40 and Hang Seng was up by 319.48 points or 1.55% to 20,903.00.

European Markets were trading in green; Germany’s DAX surged 1.23%, France’s CAC gained 1.10% and UK’s FTSE was up by 0.92%.