Benchmarks extend losses in late afternoon session

Indian equity benchmarks extend losses and hovering near the lowest point of the day in the late afternoon session on account of selling in front line blue chip counters.  The sentiments remained under pressure as the Reserve Bank of India (RBI) kept its key policy rates unchanged, opting to wait for the government’s annual budget statement at the end of February to decide on whether to cut rates further. The RBI has also pointed out that there is an increase in the level of stalled projects in the economy, which is certainly a cause for concern. While the government is looking at remedying the situation, the banking regulator will be keeping a close eye on the progress. Traders were seen piling position in IT and TECK stocks while selling was witnessed in Metal, Power and Oil & Gas Power sector stocks. In scrip specific development, Aban Offshore was trading under pressure after the company reported consolidated net loss of Rs 88.73 crore in Q3 December 2015 as against net profit of Rs 129.99 crore in Q3 December 2014.

On the global front, the Asian markets were trading mostly in green while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,550 and 24,800 levels respectively. The market breadth on BSE was negative in the ratio of 1009:1476 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 24708.99, down by 115.84 points or 0.47% after trading in a range of 24702.10 and 24928.75. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.91%, while Small cap index down by 0.36%.

The gaining sectoral indices on the BSE were IT up by 0.36%, TECK up by 0.34% while, Metal down by 2.86%, Power down by 1.72%, Oil & Gas down by 1.67%, PSU down by 1.59%, Bankex down by 0.87% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.92%, Bajaj Auto up by 1.58%, Infosys up by 0.93%, HDFC up by 0.62% and Lupin up by 0.39%.

On the flip side, Tata Steel down by 5.19%, Cipla down by 4.32%, NTPC down by 3.53%, BHEL down by 3.31% and ONGC down by 3.11% were the top losers.

Meanwhile, with an aim to reduce transfer-pricing disputes concerning intra-group transactions, the Central Board of Direct taxes (CBDT) has entered into the bilateral advance pricing agreements (APAs) with two UK-based firms. The two bilateral APAs were signed with two Indian group entities of a UK-based multinational company. This is a significant step towards providing a stable and predictable tax regime. With the signing of the bilateral APAs, the two Indian companies have been provided with tax certainty for 12 years each- five under the Mutual Agreement Procedure (MAP) and seven under the APAs.

The two APAs are also significant because they address the issues of payment of management & service charges and payment of royalty. These transactions generally face prolonged and multi-layered transfer pricing disputes. With this signing, CBDT has so far signed 41 APAs out of which 38 are unilateral and 3 are bilateral. The APAs have been entered soon after the Competent Authorities of India and United Kingdom finalized the terms of the bilateral arrangement under the MAP process contained in the India-UK DTAA.

An APA, usually for multiple years, is signed between a taxpayer and CBDT in India on an appropriate transfer pricing methodology for determining the price and ensuing taxes on intra-group overseas transactions. The first bilateral APA was signed with Japan in December 2014.

The CNX Nifty is currently trading at 7522.50, down by 33.45 points or 0.44% after trading in a range of 7508.90 and 7576.30. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.01%, Bajaj Auto up by 1.64%, and Bank of Baroda up by 1.15%, Infosys up by 0.94% and PNB up by 0.72%.

On the flip side, Tata Steel down by 5.09%, Vedanta down by 4.97%, Cipla down by 4.37%, Tech Mahindra down by 4.15% and Sun Pharma down by 3.08% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 148.66 points or 0.76% to 19,446.84, Nikkei 225 decreased 114.55 points or 0.64% to 17,750.68, Taiwan Weighted decreased 25.72 points or 0.32% to 8,131.24, Jakarta Composite decreased 23.94 points or 0.52% to 4,600.70, KOSPI Index decreased 18.22 points or 0.95% to 1,906.60 and FTSE Bursa Malaysia KLCI decreased 10.04 points or 0.6% to 1,657.76.

On the other hand, Shanghai Composite increased 60.72 points or 2.26% to 2,749.57.

The European markets were trading in red; UK’s FTSE 100 decreased 41.26 points or 0.68% to 6,018.84, Germany’s DAX decreased 44.59 points or 0.46% to 9,713.29 and France’s CAC decreased 32.99 points or 0.75% to 4,359.34.