Benchmarks continue weak trade in late afternoon session

Indian equity benchmarks continued its weak trade in the late afternoon session on account of selling in front line blue chip counters taking cues from global counterparts. The depreciation in Indian rupee also 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. The sentiments were also under pressure on reports that Foreign Institutional Investors sold shares worth Rs 113.98 crore while the Domestic Institutional Investors sold shares worth Rs 323.23 crore on Tuesday. Traders were seen piling position in FMCG stocks while selling was witnessed in Power, Capital Goods and Realty sector stocks. In scrip specific development, Crompton Greaves tumbled on the bourses following losses, provision for impairment of value of subsidiaries and slump in order inflow during December quarter. The Avantha Group Company posted a consolidated loss of Rs 107 crore in Q3 due to lower revenue and weak operational performance. Profit stood at Rs 274.3 crore in year-ago period and Rs 52.14 crore in preceding quarter.

On the global front, the Asian markets were trading in red while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,400 and 24,400 levels respectively. The market breadth on BSE was negative in the ratio of 490:2039 while 81 scrips remained unchanged.

The BSE Sensex is currently trading at 24338.43, down by 200.57 points or 0.82% after trading in a range of 24246.94 and 24409.26. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.04%, while Small cap index down by 2.00%.

The gaining sectoral indices on the BSE were FMCG up by 0.08% while, Power down by 3.75%, Capital Goods down by 2.86%, Realty down by 2.19%, PSU down by 1.41%, Bankex down by 1.29% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 3.34%, Sun Pharma up by 1.20%, Bajaj Auto up by 0.65%, Mahindra & Mahindra up by 0.59% and Coal India up by 0.31%.

On the flip side, BHEL down by 4.45%, Tata Motors down by 2.85%, NTPC down by 2.50%, Axis Bank down by 2.36% and Tata Steel down by 2.20% 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 7396.80, down by 58.75 points or 0.79% after trading in a range of 7362.65 and 7419.40. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 3.34%, Zee Entertainment up by 1.62%, Yes Bank up by 1.23%, Sun Pharma up by 1.11% and Mahindra & Mahindra up by 0.91%.

On the flip side, Vedanta down by 5.24%, BHEL down by 4.53%, Tata Motors down by 2.70%, Idea Cellular down by 2.59% and NTPC down by 2.39% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 559.43 points or 3.15% to 17,191.25, Hang Seng decreased 455.25 points or 2.34% to 18,991.59, Taiwan Weighted decreased 68.24 points or 0.84% to 8,063.00, KOSPI Index decreased 15.93 points or 0.84% to 1,890.67, FTSE Bursa Malaysia KLCI decreased 12.78 points or 0.77% to 1,640.40, Shanghai Composite decreased 10.32 points or 0.38% to 2,739.25 and Jakarta Composite decreased 5.91 points or 0.13% to 4,581.52.

The European markets were trading in red; UK’s FTSE 100 decreased 35.98 points or 0.61% to 5,886.03, Germany’s DAX decreased 108.7 points or 1.13% to 9,472.34 and France’s CAC decreased 32.61 points or 0.76% to 4,251.38.