Markets trade lower in early deals; Sensex breaches 25,550 level

With negative opening, markets have extended their previous session's losses and are now trading with a cut of around quarter a percent, on sustained selling by market participants, in early deals on Wednesday. Weakness in Asian peers too weighed down the sentiments. Besides, sentiments were also under pressure with the statement of industry body CII's President Sumit Mazumder that the economy is not doing as good as it was expected and the pace of reforms has slowed down. Meanwhile, rating agency Crisil said that the corporate earnings will continue to be subdued due to weak commodity prices, slow investment demand and sagging rural consumption. Moreover, foreign portfolio investors (FPIs) sold shares worth net Rs 352.42 crore on January, 5 2016, as per provisional data released by the stock exchanges that kept pressurizing the markets. On the sectoral front, traders were seen piling up position in Oil & Gas, TECK, IT, Power and PSU, while selling was witnessed in Metal, FMCG, Auto, Bankex and Consumer Durables.

In the scrip specific development, Gokaldas Exports surged nearly 10% on the Bombay Stock Exchange after the board at its meeting on Tuesday decided to transfer/sale of land, building and related assets pertaining to some of its properties.

On the global front, the US markets ended mostly in green, as Wall Street fought off a fall in oil prices but continued to deal with the aftershocks of Monday’s China-inspired rout. Asian markets were mostly trading in red amid worries about China's economy after the country's central bank fixed the yuan at a fresh five-year low against the U.S. dollar.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,750 and 25,500 levels respectively. The market breadth on BSE was positive in the ratio of 1246: 734 while 92 scrips remained unchanged.

The BSE Sensex is currently trading at 25527.99, down by 52.35 points or 0.20% after trading in a range of 25502.96 and 25632.57. There were 12 stocks advancing against 17 stocks declining on the index while 1 stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index up by 0.21%.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.40%, TECK up by 0.19%, IT up by 0.15%, Power up by 0.13% and PSU up by 0.02%, while Metal down by 0.78%, FMCG down by 0.45%, Auto down by 0.40%, Bankex down by 0.38% and Consumer Durables down by 0.31% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.50%, GAIL India up by 1.10%, TCS up by 0.86%, Cipla up by 0.72% and Asian Paints up by 0.51%. On the flip side, Tata Steel down by 1.59%, ITC down by 1.42%, Tata Motors down by 1.03%, Hero MotoCorp down by 0.88% and ONGC down by 0.87% were the top losers.

Meanwhile, Industry chamber in their pre-budget consultation with Finance Minister Arun Jaitley on January 06 will push for simplification of Income Tax laws and calibrated phasing out of exemptions after lowering of corporate tax rate. Confederation of Indian Industry (CII) is likely to demand lowering of corporate tax rate to near 20 per cent, as against the intention of the government to bring it down to 25 per cent from the present 30 per cent in the next four years.

In the 2015-16 budget, Jaitley had announced that corporate tax rate would be brought down gradually to 25 per cent from the present 30 per cent over the next four years and exemptions would be phased out. Accordingly, in November, the revenue department unveiled the draft roadmap for phasing out of exemption and invited public comments on the same. Revenue Secretary Hasmukh Adhia had earlier said that major cause of large-scale litigations is various exemptions and deductions given under the existing income tax law.Further, Assocham is likely to ask for addressing policy gaps in existing provisions and enacting specific provisions to deal with key issues. According to the industry chamber several existing provisions of the Act leave significant questions of policy (both substantive as well as procedural) which remain unaddressed lead to extensive litigation. Assocham has said that addressing such gaps through suitable legislative amendments in the Act will go a long way in minimising litigation and provide certainty to taxpayers

The government has already set up a high-level committee under a former Delhi High Court judge to suggest simplification of Income Tax laws. The committee would submit its preliminary report by January 31, just in time for incorporating suggestions that need legislative approval in the Budget for 2016-17.

The CNX Nifty is currently trading at 7767.85, down by 16.80 points or 0.22% after trading in a range of 7759.20 and 7788.30. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 1.59%, Idea Cellular up by 1.29%, GAIL India up by 1.13%, TCS up by 0.90% and Cipla up by 0.73%. On the flip side, Tata Steel down by 1.71%, Zee Entertainment down by 1.34%, ITC down by 1.28%, Vedanta down by 1.24% and Hindalco down by 1.21% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 decreased 273.85 points or 1.49% to 18,100.15, Hang Seng decreased 201.87 points or 0.95% to 20,986.85, Taiwan Weighted decreased 94.72 points or 1.17% to 7,980.39 and KOSPI Index decreased 10.76 points or 0.56% to 1,919.77.

On the flip side, FTSE Bursa Malaysia KLCI increased 1.09 points or 0.07% to 1,666.79, Shanghai Composite increased 22.53 points or 0.69% to 3,310.24 and Jakarta Composite increased 48.85 points or 1.07% to 4,606.67.