Benchmarks plunge to session’s lows in noon deals

Indian benchmark indices have plunged to the fresh intraday lows in Friday’s afternoon trades. Jittery investors lacked conviction to build positions ahead of key economic data - industrial production (IIP) numbers for October - to be released later in the day. Though, the Indian industrial output is forecasted to rise 7.8% annually in October, its strongest pace in more than three years and much faster than the 3.6% seen in September. The frontline indices are gradually crawling towards the psychological 7,600 (Nifty) and 25,000 (Sensex) levels. Investors failed to draw any sense of relief with United Nations’ (UN) projection that India to record a 7.3 percent economic growth in 2016 and 7.5 percent in 2017. It also stated that India will continue to be the fastest growing economy in the world in 2016 and 2017 amid volatile global financial conditions that will see diminished trade flows and stagnant investment.

On the global front, Asian markets were trading mostly in red at this point of time as lower crude prices kept markets on edge after a broad rout in commodities heightened fears about receding global growth. Back home, banking counter remained under pressure, as the rating agency Fitch has said that credit growth of banking sector may moderate further in the current financial year as worsening asset quality coupled with capital constraints were acting as impediments. However, select Cement stocks were remained in limelight after the Competition Appellate Tribunal set aside the Rs 6,300 crore on 11 cement companies. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 1,055 shares on the gaining side against 1,336 shares on the losing side while 164 shares remain unchanged.

The BSE Sensex is currently trading at 25067.32, down by 185.00 points or 0.73% after trading in a range of 25066.80 and 25316.14. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.55%, while Small cap index down by 0.38%.

The only gaining sectoral indices on the BSE were Metal up by 0.37% and IT up by 0.14% while, Realty down by 2.36%, Bankex down by 1.36%, Capital Goods down by 1.26%, Power down by 1.04% and PSU down by 0.76% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.09%, Infosys up by 0.63%, Hindustan Unilever up by 0.58% and TCS up by 0.14%. On the flip side, Axis Bank down by 2.29%, Larsen & Toubro down by 1.95%, ICICI Bank down by 1.91%, GAIL India down by 1.76% and ITC down by 1.70% were the top losers.

Meanwhile, India and South Korea have signed a new memorandum of understanding (MoU) on suspension of collection of taxes during pendency of Mutual Agreement Procedure (MAP). This MoU will help to ease the burden of double taxation for taxpayers in both the countries during the pendency of MAP proceedings. This is a step towards ease of doing business in India for Korean companies, as it will relieve economic double taxation and promote cross-border trade and investment.

Besides, both the countries have also agreed that the transfer pricing cases will be taken up for MAP under the revised Double Taxation Avoidance Agreement (DTAA) between India and Korea. Under MAP, which is a preferred way to settle cross-border tax cases globally, the two sides can negotiate settlement on a case that can subsequently be taken off from the formal legal process. The resolution process draws up parameters for taxation in one country for which credit would be available in another.

MAP is an alternate dispute resolution mechanism that allows competent authorities of India and its treaty partner to negotiate a mutually acceptable settlement. Its main advantage is elimination of double taxation arising out of transfer pricing tax disputes, existence of Permanent Establishment, and characterisation of income and attribution of profits to such establishments.

The CNX Nifty is currently trading at 7,624.20, down by 59.10 points or 0.77% after trading in a range of 7621.65 and 7703.05. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.11%, ACC up by 0.61%, Hindustan Unilever up by 0.60%, Infosys up by 0.54% and Ambuja Cement up by 0.32%. On the flip side, Axis Bank down by 2.37%, Idea Cellular down by 2.30%, Bank of Baroda down by 2.29%, ICICI Bank down by 2.20% and Larsen & Toubro down by 2.09% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 195.15 points or 0.9% to 21,509.46, Taiwan Weighted declined 100.28 points or 1.22% to 8,115.89, Jakarta Composite dropped 43.26 points or 0.97% to 4,422.95, Shanghai Composite shed 22.09 points or 0.64% to 3,433.41, KOSPI Index slipped 3.45 points or 0.18% to 1,948.62 and FTSE Bursa Malaysia KLCI was down by 3.4 points or 0.21% to 1,645.25. On the flip side, Nikkei 225 was up by 183.93 points or 0.97% to 19,230.48.