Markets display spirited performance; Sensex rallies around 300 points

A session after capitulating to late sell-off, Indian benchmark indices managed to pull through a scintillating performance by rallying over a percentage point on Tuesday, thanks to the hefty short covering in the beaten down Banking and high beta Capital Goods counters. Sentiments got a boost with report that Indian economy is expected to grow by 7.9 per cent in the next fiscal and may progress at a similar pace over a couple of years extending beyond 2019. The report also added that the various macro parameters show that India has and is likely to perform better than its peers in the near term. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. However, gains remained capped with Reserve Bank of India Governor Raghuram Rajan's statement that implementation remains the major challenge for India's economy and if it can deliver on its promises the country will be 'the place to be'. Furthermore, investors also remained cautious with India's Group of 20 summit negotiator Arvind Panagariya’s statement that India would be very concerned if China were to allow a major devaluation in the yuan currency, adding that he doubted Beijing would allow this to happen. He also said that the strength of the Indian rupee against many currencies had contributed to the weak export performance of Asia's third-largest economy.

On the global front, Asian markets bounced back in afternoon trade after having a mixed but volatile reaction to a slew of key Chinese data. China’s economy grew 6.8% in the fourth quarter from a year earlier, matching expectations and the slowest since the global financial crisis, putting pressure on Beijing to roll out more support measures as fears of sharper slowdown panic investors. Further, European equities too bounced back from 13-month lows on Tuesday, with mining and energy stocks leading the market higher after prices of major industrial metals and crude oil surged following the release of Chinese growth data. Meanwhile, Oil prices rose after strong Chinese fuel demand halted a slide to 2003 lows triggered by the lifting of sanctions on Iran.

Back home, the benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The frontline indices sooner than later capitalized on the momentum and crossed the psychological 24,400 and 7,400 levels. Thereafter, the indices kept oscillating in a narrow range through the day’s trade. However, hefty short covering in the late hours helped the indices to bounce to higher levels but mild resistance around the 24,500 and 7,450 levels pushed the key gauges back to a small extent by the end of trade. Finally, the NSE’s 50-share broadly followed index - Nifty garnered over a percentage point to settle above the crucial 7,400 levels while Bombay Stock Exchange’s Sensitive Index - Sensex accumulated about three hundred points to settle above the 24,450 mark. Moreover, the broader markets too finished with strong gains and managed to outperform their larger peers, by quite a margin. On the BSE sectoral space, hefty buying was evident across the board as not even a single sectoral index went home in the negative territory. The Capital Goods index soared by close to three percent being the top gainer, followed by the rate sensitive Banking and Realty counters too gained good traction and went home with over one and half a percent gains. The market breadth remained optimistic as there were 1728 shares on the gaining side against 947 shares on the losing side while 150 shares remained unchanged.

Finally, the BSE Sensex gained 291.47 points or 1.21% to 24479.84, while the CNX Nifty ended up by 84.10 points or 1.14% to 7,435.10.

The BSE Sensex traded in a range of 24563.34 and 24247.23. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices made a positive closing; the BSE Mid cap index ended up by 1.75%, while Small cap index ended up by 1.74%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.85%, Bankex up by 1.68%, Realty up by 1.67%, Power up by 1.27% and Auto up by 1.14%, while there were no losers on BSE sectoral space.

The top gainers on the Sensex were Adani Ports &Special up by 5.90%, Axis Bank up by 5.23%, Tata Motors up by 3.71%, Larsen & Toubro up by 3.68% and Bharti Airtel up by 3.26%. On the flip side, Mahindra & Mahindra down by 1.19%, Wipro down by 1.02%, Coal India down by 0.92%, Asian Paints down by 0.63% and Maruti Suzuki down by 0.61% were the top losers.

Meanwhile, in order to improve the ease of doing business, reduce litigation and accelerate the resolution of tax disputes, the committee, headed by retired high court judge R.V. Easwar, has suggested several taxpayer-friendly measures. The committee which was set up by the government to change direct tax laws, has recommended raising the threshold limits for deduction of tax at source as also slashing the rate of withholding tax, considering the importance of the long overdue revision of these puny limits.

The committee in its report, recommended enhancement and rationalization of the threshold limits and reduction of the rates of TDS (tax deducted at source). It proposed that 'TDS rates for individuals and HUFs (Hindu undivided family) to be reduced to 5 percent as against the present 10 percent. It has proposed raising the threshold for TDS to Rs 15,000 from Rs 2,500 annually and reducing the tax rate to 5 percent for interest on securities.  Besides, for other interest earnings it recommended raising the limit to Rs 15,000 from the present Rs 10,000 for bank deposits, and Rs 5,000 for others. For payments to contractors, the panel has proposed raising the TDS limit from the current Rs 30, 000 for single transaction and Rs 75,000 annually, to Rs1 lakh limit per annum.  The TDS threshold limit on rent income has been proposed to be raised from Rs 18 lakh annually to Rs 2.4 lakh. The threshold for fees for professional or technical services is recommended to be raised to Rs 50,000 from Rs 30,000, but it said the TDS rate here may be retained at 10 percent.

The committees in its 78 page draft report has said that nearly 65 percent of the personal income-tax collected in India was through TDS, whose provisions need to be made more friendly and less 'tedious', as they have remained over the years.

Furthermore, the committee also recommended deferring implementation of Income Computation and Disclosure Standards (ICDS) and making the process of refunds faster, to provide more time to taxpayers to deal with changes in law such as to the Companies Act, 2013, and the proposed Goods and Services Tax (GST) Act.  Besides, it suggested an increase in turnover limit for tax audit applicability from Rs. 1 crore to Rs.2 crore for business and Rs.1 crore for professionals.

In order to minimize human interface, the committee recommended that most of the processes of the income-tax department should be conducted electronically. Accordingly, it suggested that processes such as filing of tax returns, rectification of mistakes, appeal, refunds and any communication regarding scrutiny including notices, questions and documents sought should be done electronically.

Some of these recommendations that require amendments to the income-tax act are likely to be a part of the Union budget to be presented on 29 February, while some other changes in administrative procedure can be implemented through official notifications by the income tax department The committee has invited comments from the public till January 23, following which it will finalise the report's first part by January 31.

The CNX Nifty traded in a range of 7,462.75 and 7,364.15. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 6.11%, Adani Ports & SEZ up by 6.06%, Idea Cellular up by 4.71%, Tata Motors up by 4.13% and Yes Bank up by 3.97%. On the flip side, Mahindra & Mahindra down by 1.26%, Power Grid down by 1.19%, Maruti Suzuki down by 1.09%, Tech Mahindra down by 0.85% and Wipro down by 0.83% were the top losers.

European markets were trading with good gains, France’s CAC increased by 81.06 points or 1.93% to 4,270.63, UK’s FTSE 100 was up by 88.59 points or 1.53% to 5,868.51 and Germany’s DAX surged by 159.17 points or 1.67% to 9,681.02.

Asian equity markets ended in green on Tuesday, after China's GDP data pointed to no hard landing. China's economy grew 6.9 percent in 2015, just short of the government's 7 percent target and its slowest pace in 25 years, putting pressure on policymakers to unveil more fiscal and monetary measures. GDP growth eased to 6.8 percent in the fourth quarter from a year earlier, matching expectations while industrial production rose 5.9 percent in December from a year ago, down from 6.2 percent in November and expectations for a moderation to 6.0 percent. Retail sales and fixed-asset investment also slowed at the end of the year, fueling speculation of more government stimulus. Japanese shares swung between gains and losses before finishing higher for the first time in four days as Chinese GDP data met expectations.