Post Session: Quick Review

Indian markets showed a choppy trend on Wednesday to end the session on a flat note with a negative bias, earlier the markets traded in range after surging over half a percent in early deals tracking positive trends seen in other Asian markets and were also supported with a US Treasury Department report that amid weaker outlook across emerging market economies India's recovery has strengthened under a new reform agenda, since it is not a large importer. However, the markets turned weak in noon trade amid a slump in China markets and after report that government deferred a decision on convening the Winter session of Parliament till next week, amid indications that it could be summoned any day after November 19. But a final decision will be taken by the Cabinet Committee of Parliamentary Affairs (CCPA) on October 26. The committee took stock of 53 bills pending in the Rajya Sabha where the government lacks the majority. While eight bills have been passed by Lok Sabha, five others are pending with various parliamentary committees. The crucial GST bill is also pending in Parliament which the government hopes to pass in the Session.

The global cues remained mostly sluggish, though after the modestly negative close of the US markets, the major Asian markets ended in green led by the Japanese market, which not only boosted the sentiments in the region but helped the MSCI Asia Pacific Index climb for the first time this week. On the other hand the Chinese market suffered sharp drop, biggest in a month on heavy volume, led by smaller companies. Later the European markets too made mostly a lower start ahead of the data on the UK’s net borrowing in September but regained strength.

Back home, the second half of the trade was mainly guided by the earnings reaction, and markets once after losing their momentum kept struggling to enter the green again, though there were various successful attempts but they were momentary only and followed by profit taking. Traders grew concerned by the sharp drop in Chinese equity markets. The domestic market sentiments were also weighed down by the weakness in rupee, which trended lower tracking the mixed Asian currencies market. Meanwhile result reaction kept the markets buzzing; Federal Bank slumped around 12 per cent after weak quarterly earnings, while Hero MotoCorp gained about a quarter per cent on better than expected earnings. MphasiS shares jumped over 8 per cent after it reported a consolidated net profit of Rs 185 crore in the July-September quarter against Rs. 160 crore reported in the same period last year. The S&P BSE Sensex and NSE Nifty barely managed to protect their 27300 and 8250 turf. The broader market which showed some resistance in early trade lost their way and ended in red too. On sectoral front selling pressure was seen in realty, capital goods and banking stocks, while metals were the top gainers.  IT stocks too remained up, tracking rupee weakness. Oil producing companies remained under pressure after international crude prices fell with data from an US industry group showing a larger-than-expected build in US crude inventories last week.

The BSE Sensex ended at 27275.67, down by 31.16 points or 0.11% after trading in a range of 27190.55 and 27445.24. There were 17 stocks in green against 13 stocks in red on the index. (Provisional)

The broader indices too ended in red; the BSE Mid cap index was down by 0.14%, while Small cap index lost 0.43%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.20%, TECK up by 0.42%, IT up by 0.25%, Auto up by 0.21%, Consumer Durables up by 0.09%, while Realty down by 1.83%, Capital Goods down by 0.99%, Bankex down by 0.89%, PSU down by 0.56%, Oil & Gas down by 0.48% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Vedanta up by 4.30%, Bajaj Auto up by 3.39%, Bharti Airtel up by 2.54%, NTPC up by 1.72% and Tata Steel up by 1.54%. On the flip side, Dr. Reddys Lab down by 3.48%, SBI down by 1.95%, BHEL down by 1.79%, GAIL India down by 1.67% and ICICI Bank down by 1.59% were the top losers. (Provisional)

Meanwhile, the government has notified amendments for transfer pricing calculations to incorporate range concept and use of multi-year data to reduce litigation and bring Indian laws in line with international practices. The new rules are applicable for calculating the arm's length pricing of international transactions and specified domestic transactions from April 1, 2014. Transfer pricing is one of the main reasons for tax disputes in India. The tax department has made these changes to provide more clarity.

Finance ministry has said that the amended rules would therefore provide clarity in determination of price in transfer pricing cases and reduce disputes on transfer pricing issues. It is a part of the government’s continuing initiative of providing a stable and certain direct tax regime. The new rules also provide for use of multi-year data, which will take care of annual fluctuations.

The range concept will be applicable in certain cases for determining the price and will begin with the 35th percentile and end with the 65th percentile of the comparable prices. Transaction price shown by the taxpayers falling within the range will be accepted and no adjustment will be made. This will help reduce adjustments to only cases where transfer prices are outside the range. The use of multiple year data allows for yearly variations to be averaged out and would therefore add value to transfer pricing analysis.

The CNX Nifty ended at 8249.10, down by 12.55 points or 0.15% after trading in a range of 8217.15 and 8294.40. There were 22 on gainers side against 27 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 4.20%, Bajaj Auto up by 3.40%, Bharti Airtel up by 2.35%, Tata Steel up by 1.87% and NTPC up by 1.76%. On the flip side, Dr. Reddys Lab down by 3.45%, SBI down by 2.14%, Asian Paints down by 2.11%, BHEL down by 1.91% and PNB down by 1.77% were the top losers. (Provisional)

European markets after initial dilly-dallying were trading in green, France’s CAC was up by 16.92 points or 0.36% to 4,690.73, UK’s FTSE 100 gained 20.87 points or 0.33% to 6,366.00 and Germany’s DAX increased by 41.3 points or 0.41% to 10,188.98.

The Asian equity markets ended mostly in green on Wednesday, with investors eyeing the start of earnings season after a tough quarter for many companies. Hong Kong stock exchange was closed on account of ‘Chung Yeung Day’ holiday. Japan’s trade deficit in September was a worse than forecast 114.48 trillion yen ($95 billion) as exports slowed, especially to China. The trade data released showed exports rose only 0.6 percent from the year before to 6.42 trillion yen (53 billion) while imports fell 11 percent, to 6.53 trillion yen ($54 billion). Japan’s trade balance has improved with the fall in prices of crude oil and other fuels. In September, imports of oil, gas and coal fell 36 percent from the year before.  The trade deficit in September of 2014 was 961.98 billion yen. In August, it was 569 billion yen ($4.8 billion). Japan’s All Industries Activity Index fell to a seasonally adjusted -0.2%, from -0.1% in the preceding month whose figure was revised down from 0.2%. Japan’s trade balance rose to a seasonally adjusted -0.36T, from -0.37T in the preceding month whose figure was revised down from -0.36T. Singapore’s annual consumer prices are forecast to have contracted for the 11th consecutive month, pressured by persistently lower prices of car permits and housing costs. The all-items consumer price index (CPI) was seen down 0.7 percent in September on a year-on-year basis. In August, headline CPI fell 0.8 percent, the steepest drop since late 2009.