Bloodbath continues on Dalal Street in noon deals

Indian equity benchmarks continued to witness butchery in noon deals amid global sell-off on renewed concerns over slowing growth after oil prices again cracked $30 a barrel. Depreciation in Indian rupee too dampened sentiments. The rupee again broke below the 68-mark by depreciating 28 paise to trade at 68.26 against the dollar in noon deals at the Interbank Foreign Exchange, due to increased demand for the American unit from importers and banks. Traders also shrugged off better-than-expected India’s services activity data. Nikkei/Markit Services Purchasing Managers' Index (PMI) surged to 54.3 in January from December's 53.6, marking a seventh month above the 50-level that separates growth from contraction.

On the global front, all the Asian markets were trading in red at this point of time after global crude oil prices resumed their downward trend. Closer home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include power, capital goods and industrials. Sectors like telecom, utilities, realty, finance, energy, banking and technology too were trading with huge losses. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 397 shares on the gaining side against 1,999 shares on the losing side while 68 shares remain unchanged.

Energy shares continue to reel under pressure as oil prices slip further. Metal shares are battered on falling commodity prices.

The BSE Sensex is currently trading at 24290.36, down by 248.64 points or 1.01% after trading in a range of 24246.94 and 24393.77. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.58%, while Small cap index down by 2.23%.

The losing sectoral indices on the BSE were Power down by 3.94%, Capital Goods down by 3.44%, Industrials down by 2.81%, Telecom down by 2.77% and Utilities down by 2.50%, while there were no gainers on the index.

The top gainers on the Sensex were Hindustan Unilever up by 2.53%, Sun Pharma Inds. up by 2.00%, Coal India up by 0.47%, Cipla up by 0.32% and Bajaj Auto up by 0.08%. On the flip side, BHEL down by 4.38%, Tata Motors down by 2.61%, SBI down by 2.39%, Reliance Industries down by 2.35% and Axis Bank down by 2.33% were the top losers.

Meanwhile, Easwar committee, which is headed by retired high court judge R.V. Easwar, will examine vexed issues such as salary deductions, general anti-avoidance agreement and tax treaty interpretations in its second report, expected in October this year. The recommendations will be aimed at making a predictable and non-adversarial tax regime in the economy. Examining the issue of salary deductions, the high-level panel will take a re-look at exemption limits and medical reimbursements, among other things. These recommendations will be considered only in the Budget for 2017-18. The focus will be to ensure simplicity, certainty and predictability in the income tax regime and cut litigation.

Besides, the panel will also make efforts to bring in some standards for the interpretational issues in the double-taxation avoidance (DTAA) treaties. The committee will also recommend simplification of rules for computation of income for charitable trusts. R.V. Easwar said that 'We will also look at the non-resident tax issue, of Section 9 with respect to Section 195, which forms a major chunk of litigation'. Moreover, the committee will deliberate on if there is a need for standard deduction. The panel will invite suggestions from experts and stakeholders on the complex matter.

The committee will deliberate on incorporation of limitation of benefits clause in India's tax treaties. However, the committee will not make any recommendations on the tax slabs as this might impact tax base and revenue which will be  contrary to the terms of reference of the committee, set up by Finance Minister Arun Jaitley in October last year.

Earlier, the Committee had submitted its first report in January in order to improve the ease of doing business, reduce litigation and accelerate the resolution of tax disputes. It 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 CNX Nifty is currently trading at 7381.60, down by 73.95 points or 0.99% 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 2.37%, Sun Pharma up by 1.92%, Zee Entertainment up by 1.78%, Yes Bank up by 0.56% and Cipla up by 0.41%. On the flip side, Vedanta down by 5.39%, BHEL down by 4.19%, Cairn India down by 3.09%, Power Grid down by 3.08% and Tata Power down by 2.89% were the top losers.

Asian markets were trading in red; Nikkei 225 tumbled 559.43 points or 3.15% to 17,191.25, Hang Seng dropped 508.99 points or 2.62% to 18,937.85, Taiwan Weighted decreased 68.24 points or 0.84% to 8,063.00, Jakarta Composite slipped 19.28 points or 0.42% to 4,568.16, KOSPI Index shed 15.93 points or 0.84% to 1,890.67, Shanghai Composite fell 15.6 points or 0.57% to 2,733.97 and FTSE Bursa Malaysia KLCI was down by 14.04 points or 0.85% to 1,639.14.