Markets make gap-down opening on China woes

With a gap down opening Indian equity markets have extended their previous session's losses and hit record low in early deals with frontline gauges breaching their crucial 7,650 (Nifty) and 25,050 (Sensex) levels. Meanwhile, the session was also harrowing for broader indices, which were trading with losses of around 1.50%. Weakness in Asian peers weighed down the markets after China's regulators halted trading for the day following a sharp plunge in Chinese shares. The devaluation of the yuan rekindled fears of a growth slowdown in the world's second largest economy while slump in crude oil prices also dampened sentiments. Further, foreign institutional investors were net sellers in equities to the tune of Rs 242 crore on Wednesday, as per provisional stock exchange data that too dampened the sentiments. Moreover, the sentiments were weighed down by Indian rupee depreciating by 4 paise to 66.86 against the US dollar in early trade on Thursday after the Chinese central bank, PBoC, set the yuan midpoint to its weakest level since March 2011, sending Asian currencies tumbling.

In the scrip specific development ESS DEE Aluminium slumped over 10 per cent after rating agency CARE downgraded the company to default rating or CARE D from the previous rating of BBB-.

On the global front, the US markets ended in red, pressurised by continued concerns over global economic growth, low oil prices and increased geopolitical tensions. Asian markets were trading in red after China opted to keep guiding the yuan sharply lower, deepening concerns about the economy and the potential for competitive devaluations by other countries.

Back home, all the sectoral indices on the BSE were trading in red led by Auto, Realty, Metal, Capital Goods and Consumer Durables. The market breadth on BSE was negative in the ratio of 347: 1668 while 55 scrips remained unchanged.

The BSE Sensex is currently trading at 25034.02, down by 372.31 points or 1.47% after trading in a range of 25027.95 and 25230.35. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.41%, while Small cap index down by 1.86%.

The losing sectoral indices on the BSE were Auto down by 2.32%, Realty down by 2.26%, Metal down by 2.23%, Capital Goods down by 2.01% and Consumer Durables down by 1.83%, while there were no gainers. 

The only gainers on the Sensex were Bharti Airtel up by 0.14% and Lupin up by 0.05%. On the flip side, Tata Motors down by 3.94%, Tata Steel down by 3.48%, Maruti Suzuki down by 3.16%, Axis Bank down by 2.59% and BHEL down by 2.57% were the top losers.

Meanwhile, the Government has collected Rs 2,428.4 crore in taxes after over 600 declarations were made by stash holders to the Income Tax department under the one-time black money compliance window that ended last year. The declarants were liable to pay tax at the rate of 30 per cent and a like amount of 30 per cent by way of penalty on the value of assets declared by December 31, 2015. The amount received by way of tax and penalty upto December 31, 2015 is Rs 2,428.4 crore .

The Central Board of Direct Taxes (CBDT) has said that there was a 'shortfall' in collections under this category as in some cases there was prior information with the taxman which led to the disqualification of the declarations while some payments had come post the December deadline. Under the compliance window provided in the Act (new anti-black money law) which closed on September 30, 2015, there were total of 644 declarations. The amount involved in these 644 declarations was Rs 4,164 crore. In some cases, the department had rejected the undertakings stating that it had prior information about the individuals or entities involved through official channels and they cannot take this route to claim lesser punishment.

CBDT further stated that the shortfall is primarily on account of certain declarations in respect of which there was prior information under the provisions of Double Taxation Avoidance Agreements (DTAAs) and Tax Information Exchange Agreements (TIEAs) or receipt of payment (was made) after December 31, 2015.

The new law, called the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 came into force with effect from July 1, 2015. The Act provided for a one-time compliance window to declare assets held abroad and pay due taxes and penalty on the value of assets declared. Under the new law, a three-month compliance window has been given for disclosure of all undeclared foreign assets, for which they would need to pay 30% tax and 30% penalty. However, after this window anyone with undisclosed foreign assets would have to pay 30% tax and 90% penalty and further would also be liable for jail term of up to 10 years.

The CNX Nifty is currently trading at 7633.15, down by 107.85 points or 1.39% after trading in a range of 7624.20 and 7674.95. There was 1 stock advancing against 49 stocks declining on the index.

The only gainer on Nifty was Bharti Airtel up by 0.45%. On the flip side, Vedanta down by 4.61%, Tata Motors down by 4.06%, Cairn India down by 3.98%, Tata Steel down by 3.40% and Hindalco down by 3.23% were the top losers.

Asian markets were trading in red; Hang Seng decreased 514.98 points or 2.45% to 20,465.83, Nikkei 225 decreased 324.28 points or 1.78% to 17,867.04, Shanghai Composite decreased 245.95 points or 7.32% to 3,115.89, Taiwan Weighted decreased 216.32 points or 2.71% to 7,774.07, Jakarta Composite decreased 45.55 points or 0.99% to 4,563.43, KOSPI Index decreased 18.89 points or 0.98% to 1,906.54 and FTSE Bursa Malaysia KLCI decreased 8.7 points or 0.52% to 1,659.27.