Markets continue to trade firm led by Metal and PSU

Indian equity benchmarks continued to trade firm in early noon session, on the back of value-buying emerging in blue-chip stocks amid mixed Asian cues. Investors got some support after the truce in Parliament, with the government being hopeful about a substantial portion of pending legislative business being completed in the remaining three days of the Winter Session, where 18 bills are pending. Appreciation in Indian rupee too aided the sentiment. Rising for the fifth straight session, the rupee gained 6 paise at 66.33 against the dollar in early trade on Monday at the Inter-bank Foreign Exchange on increased selling of the US currency by exporters.

On the global front, Asian markets were trading mostly in green, after a lackluster start, defying a dive on Wall Street, and the price of Brent crude threatening to plumb lows last seen in 2004 on renewed worries over a global oil glut. Back home, the broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices have gained over half a percent each. The market breadth was positive as 1623 stocks were advancing while 633 stocks were declining.

In scrip specific developments, share of IVRCL was trading higher by over 5% after the debt-laden infrastructure firm decided to split its engineering procurement construction (EPC) and assets business -- land and Build Operate Transfer (BOT) - to float two separate companies.  Jubilant Life sciences was trading higher after the Reserve Bank of India (RBI) allowed foreign institutional investors (FIIs) and registered foreign portfolio investors (RFPI) to buy up to 45 percent stake in the company under the portfolio investment scheme.

The BSE Sensex is currently trading at 25645.35, up by 126.13 points or 0.49% after trading in a range of 25413.54 and 25684.73. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.58%, while Small cap index was up by 0.63%.

The top gaining sectoral indices on the BSE were Metal up by 1.84%, PSU up by 1.18%, Bankex up by 1.13%, Power up by 0.76% and Auto up by 0.64%, while Consumer Durables down by 0.70% was the lone losing index on BSE.

The top gainers on the Sensex were ICICI Bank up by 3.04%, ONGC up by 2.35%, Mahindra & Mahindra up by 2.05%, Coal India up by 1.99% and Tata Steel up by 1.92%. On the flip side, Sun Pharma Inds. down by 5.57%, Hindustan Unilever down by 0.86%, Asian Paints down by 0.73%, Bharti Airtel down by 0.36% and Reliance Industries down by 0.33% were the top losers.

Meanwhile, authority for Advance Ruling (AAR) has notably said that Payments to expats working in India for local arms of multinationals by the foreign parent won't attract service tax. The decision is important as it brings some relief to MNCs that have been served with notices in similar cases.  This followed a plea by North American Coal Corp. India, the local subsidiary of US-based North American Coal Corp. It sought a ruling on the application of service tax on social security benefits given by the parent to an employee working in India on contract.  Authority for Advance Ruling said 'There shall be no liability to pay service tax on the salary and the allowances payable by the applicant to the employee in terms of the dual employment agreement and such salary will not be eligible to levy the service tax as per the provisions of the Finance Act.’

Recently, the tax authority was issuing notices to MNCs in a number of cases where an expat employee received payments from the parent in his home country. Their contention is that the practice of paying salaries for work in India that are then transferred to foreign accounts by the parent company and reimbursed to it by the Indian subsidiary make it akin to supply of manpower and therefore taxable.

Although rulings by the AAR are case specific, they have an effect on tax assessment of other firms under similar circumstances. AAR is a quasi-judicial body, set up to give opinions and guide companies on potential tax liabilities. The Advance Ruling Authority is a good indication as to how this situation should be taken.

The CNX Nifty is currently trading at 7804.15, up by 42.20 points or 0.54% after trading in a range of 7733.45 and 7816.35. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 3.00%, ONGC up by 2.55%, Power Grid up by 2.25%, Mahindra & Mahindra up by 2.23% and Vedanta up by 2.02%. On the flip side, Sun Pharma down by 5.55%, Hindustan Unilever down by 0.67%, Asian Paints down by 0.62%, Tata Power down by 0.62% and Tech Mahindra down by 0.62% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite increased 2.45 points or 0.05% to 4,471.10, KOSPI Index increased 7.01 points or 0.35% to 1,982.33, Taiwan Weighted increased 14.43 points or 0.17% to 8,271.75, Shanghai Composite increased 69.25 points or 1.94% to 3,648.22 and Hang Seng increased 86.94 points or 0.4% to 21,842.50, while Nikkei 225 decreased 87.39 points or 0.46% to 18,899.41 and FTSE Bursa Malaysia KLCI decreased 15.22 points or 0.93% to 1,628.68.