Markets continue to trade lower in early noon session

Indian equity benchmarks continued to trade in red in early noon session, tracking a plunge in Asian stocks, as concern grew over the health of the global economy after oil prices slumped. Depreciation in the Indian rupee too dampened the sentiment. The rupee again broke below the 68-mark by depreciating 20 paise to trade at 68.18 against the dollar in early trade at the Interbank Foreign Exchange, due to increased demand for the American unit from importers and banks amid a lower opening in the domestic equity market. Moreover, investors failed to get any sense of relief from the report that the India’s services sector activity touched a 19-month high in January driven by strengthening underlying demand and improved weather conditions, a monthly survey showed on Wednesday. The Nikkei Business Activity index climbed to a 19-month high of 54.3 last month from 53.6 in December, pointing to a marked expansion of activity across the sector. On the sectoral front, all the indices were trading in red led by Power, Capital Goods, Realty, PSU and Oil & Gas

In scrip specific development, shares of DLF were trading higher after the company reported 24 percent rise in its consolidated net profit at Rs 163.95 crore for the quarter ended December 2015 on higher sales and one-time gain from stake sale in two projects to Singapore’s sovereign wealth fund GIC. Tube Investments of India was trading higher after the company reported a 27.9 percent rise in consolidated net profit at Rs 111.50 crore for the quarter ended December. The city-based company had posted net profit of Rs 87.14 crore during the corresponding period last fiscal.

On the global front, Asian markets were trading in red, as oil prices dropped for a third day, prompting investors to seek shelter in safe-haven assets and lifting bonds and gold to multimonth highs. Back home, both the Sensex and Nifty were trading below their crucial 24,300 and 7,400 levels respectively.

The market breadth was extremely negative as 1890 stocks were falling, while 368 stocks were advancing on the Bombay Stock Exchange.

The BSE Sensex is currently trading at 24283.75, down by 255.25 points or 1.04% after trading in a range of 24246.94 and 24393.77. There were 6 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.53%, while Small cap index down by 2.14%.

The top losing sectoral indices on the BSE were Power down by 3.96%, Capital Goods down by 3.56%, Realty down by 1.79%, PSU down by 1.71% and Oil & Gas down by 1.68%, while there were no gainers on the sectoral index.

The top gainers on the Sensex were Hindustan Unilever up by 2.24%, Sun Pharma Inds. up by 1.63%, Bajaj Auto up by 0.53%, Cipla up by 0.38% and Coal India up by 0.28%. On the flip side, BHEL down by 4.45%, Tata Motors down by 2.90%, SBI down by 2.86%, Reliance Industries down by 2.54% and Larsen & Toubro down by 2.24% were the top losers.

Meanwhile, in order to bring consistency and streamline the direct and indirect tax policy and administration, the government has set up two new committees -- Tax Policy Research Unit and Tax Policy Council. The new structure is based on the recommendations of the Tax Administration Reform Commission (TARC) that identified 'handling of tax policy and related legislation as one of the areas which needs structural modifications' and suggested the new arrangement. 

Finance Ministry has said that 'To bring consistency, multidisciplinary inputs, and coherence in policy making, TARC has recommended that a Tax Council supported by a common Tax Policy and Analysis (TPA) unit should be established to cater to needs of both direct and indirect taxes'.

Tax Policy Council headed by the finance minister will approve broad policy measures to ensure consistency in direct and indirect tax changes based on inputs from the Tax Policy Research Unit (TPRU). The Council will be advisory in nature, which will help the Government in identifying key policy decisions for taxation. It will have nine more members including Ministers of State for Finance and Commerce and Industry, Deputy Chairman, NITI Aayog, Chief Economic Adviser, Finance Secretary as well as Secretaries to the Departments of Revenue, Economic Affairs, Commerce and Industrial Policy and Promotion. The Chairpersons of the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) will be special invitees.

Meanwhile, the TPRU will be headed by an officer of the level of chief commissioner at functional level alternatively from the CBDT and CBEC for a fixed tenure, who will directly report to the revenue secretary. The TPRU will include officials from the CBDT and the CBEC as well as economists, statisticians, operational researchers and legal experts.

TPRU will be a multi-disciplinary body to examine and analyse any fiscal or tax policy referred by the CBDT and CBEC and also prepare and disseminate policy papers and background papers on various taxation issues. It will assist Tax Policy Council in policy decisions and also liaise with State commercial tax departments. For every tax proposal, TPRU will prepare an analysis covering three broad areas - legislative intent behind the proposal; expected change in tax collection; and the likely economic impact through the proposal.

The CNX Nifty is currently trading at 7378.35, down by 77.20 points or 1.04% after trading in a range of 7362.65 and 7406.10. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.22%, Zee Entertainment up by 1.78%, Sun Pharma up by 1.44%, Yes Bank up by 0.62% and Bajaj Auto up by 0.46%. On the flip side, BHEL down by 4.53%, Vedanta down by 3.85%, Tata Power down by 3.40%, Cairn India down by 3.13% and Tata Motors down by 2.96% were the top losers.

Asian markets were trading in red; Nikkei 225 decreased 584.98 points or 3.3% to 17,165.70, Hang Seng decreased 532.28 points or 2.74% to 18,914.56, Taiwan Weighted decreased 68.24 points or 0.84% to 8,063.00, Shanghai Composite decreased 43.14 points or 1.57% to 2,706.43, Jakarta Composite decreased 21.1 points or 0.46% to 4,566.34, KOSPI Index decreased 15.96 points or 0.84% to 1,890.64 and FTSE Bursa Malaysia KLCI decreased 13.97 points or 0.85% to 1,639.21.