Post Session: Quick Review

Wednesday turned out to be a daunting session for the Indian equity indices which got pounded by over a percentage point, amid global sell-off on renewed concerns over slowing growth after oil prices again cracked $30 a barrel. After a gap-down opening, the domestic bourses never looked in recovery mood and ended the trade at intraday lows, breaching their crucial support levels of 24,300 (Sensex) and 7,400 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included power, industrials and capital goods.

Traders shrugged off better-than-expected India’s services activity data that rose at its fastest pace in 19 months in January as demand picked up. 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. Market participants also failed to get any solace with the Reserve Bank keeping its growth projections for Indian economy unchanged at 7.4 percent for the current fiscal, a tad higher than 7.3 percent forecast by the World Bank.

Selling got intensified after European counters have made a feeble start on Wednesday, as weak earnings from some leading companies weighed on markets, although Syngenta surged after ChemChina agreed on a $43 billion bid for the Swiss seeds and pesticides group. Most of Asian equity indices ended 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 multi-month highs.

Back home, depreciation in Indian rupee too dampened sentiments. The rupee again broke below the 68-mark by depreciating 18 paise to trade at 68.16 against the dollar at the time of equity markets closing at the Interbank Foreign Exchange, due to increased demand for the American unit from importers and banks. Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 113.98 crore on February 2, 2016, as per provisional data released by the stock exchanges.

Metal shares mainly plated spoil sport for Indian markets on falling commodity prices. Energy shares too reeled under pressure as oil prices slip further. Rate sensitive counters i.e. banking, auto and realty remained under pressure after the Reserve Bank of India (RBI) maintained status quo on interest rates in its sixth bi-monthly monetary policy yesterday. Moreover, shares of oil exploration and production companies edged lower on decline in crude oil prices.

The NSE’s 50-share broadly followed index Nifty tumbled by around hundred points to end below the psychological 7,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around three hundred and twenty points to finish below its psychological 24,300 mark. Broader markets too witnessed selling pressure and ended the session with a cut of around two percentage points.

The market breadth remained in favor of decliners, as there were 586 shares on the gaining side against 2,078 shares on the losing side while 96 shares remain unchanged. (Provisional)

The BSE Sensex ended at 24223.32, down by 315.68 points or 1.29% after trading in a range of 24187.54 and 24409.26. There were 2 stocks advancing against 28 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.30%, while Small cap index down by 2.25%. (Provisional)

The top losing sectoral indices on the BSE were Power down by 4.16%, Capital Goods down by 2.79%, Industrials down by 2.69%, Realty down by 2.63% and Utilities down by 2.59%, while there were no losers on the index. (Provisional)

The top gainers on the Sensex were Hindustan Unilever up by 2.97% and TCS up by 0.79%. On the flip side, BHEL down by 4.71%, Tata Steel down by 3.89%, NTPC down by 3.43%, ICICI Bank down by 3.18% and Tata Motors down by 3.03% were the top losers. (Provisional)

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 ended at 7361.80, down by 93.75 points or 1.26% after trading in a range of 7350.30 and 7419.40. There were 4 stocks advancing against 46 stocks declining on the index. (Provisional)

The few gainers on Nifty were Hindustan Unilever up by 2.69%, Yes Bank up by 1.75%, TCS up by 0.76% and Zee Entertainment up by 0.59%. On the flip side, Vedanta down by 5.01%, BHEL down by 4.90%, NTPC down by 4.03%, Tata Steel down by 3.22% and ICICI Bank down by 3.02% were the top losers. (Provisional)

European markets were trading in red; Germany’s DAX declined 106.88 points or 1.12% to 9,474.16, UK’s FTSE 100 decreased 48.58 points or 0.82% to 5,873.43 and France’s CAC was down by 31.65 points or 0.74% to 4,252.34.

Asian equity markets ended mostly in red on Wednesday after Wall Street stocks fell sharply overnight and oil extended declines for a third day on concerns about the pace of global economic recovery. Japanese shares ended lower as a stronger yen hit overall market sentiment amid weak earnings, including those of major Tokyo listing Nomura Holdings, which fell 10%. Hong Kong shares tumbled, led by energy firms as oil prices declined and insurance heavyweights, after Beijing imposed limits on purchases of insurance products in the city by mainlanders using bank cards. Chinese shares followed regional peers lower, despite positive service sector data and fresh measures announced by the government to spur new property investment. Reports showed that China's Caixin purchasing managers' index (PMI) for the services sector showing activity expanded at its fastest pace in six months in January. The index rose to 52.4 in January from a 17-month low reading of 50.2 in December.