Benchmarks continue to trade in red in late morning session

Indian bourses continued to trade in red in the late morning session on sustained selling by fund and retail investors amid weak Asian cues. Sentiments remained subdued with exporters body FIEO’s observation after exports fell for the 14th month in a row, that the country may end up with outbound shipments of $260 billion in 2015-16, sharply lower than the $ 310.5 billion mark achieved in the previous fiscal. Market participants also remained concerned with report that foreign portfolio investors (FPIs) sold shares worth a net Rs 964.19 crore on February 16, 2016. Besides, a weakness in rupee against the dollar, also weighed on market sentiment. Indian rupee weakened by 24 paise to trade at a 30-month low of 68.62 against the dollar in early trade amid increased demand for the US currency from importers and banks.  However, investors got some support with the report that the government is likely to meet its fiscal deficit target of 3.9 per cent of the GDP for the current financial year, largely on account of the latest round of excise duty hikes on oil products and marginal compression in expenditure.

On the global front, Asian markets trading mostly in red  amid volatility in oil prices after Russia and Saudi Arabia dampened prospects of a supply cut by deciding to freeze the output if other big exporters joined them. Meanwhile, a positive closing was witnessed on the Wall Street led by gains in consumer discretionary and financials. 

Back home, barring Oil & Gas, all other BSE sectoral indices were trading in the red. Among them, consumer durables plunged the most by 2.98 per cent, followed by metal 1.64 per cent, FMCG 1.22 per cent and banking 1.15 per cent. Only oil & gas index was up 0.31 per cent. In scrip specific development, shares of Valecha Engineering have surged after the company has received fresh orders worth Rs 398.03 crore. On the other hand, shares of United Breweries (Holdings) have declined after the company received a letter from Punjab National Bank (PNB), whereby the bank has declared the company as a ‘Willful Defaulter’.

The market breadth on BSE was negative, out of 2237 stocks traded, 542 stocks advanced, while 1598 stocks declined on the BSE.

The BSE Sensex is currently trading at 23043.60, down by 148.37 points or 0.64% after trading in a range of 22920.84 and 23241.88. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.33%, while Small cap index down by 1.33%.

The only gaining sectoral indices on the BSE was Oil & Gas up by 0.31%, while Consumer Durables down by 2.98%, Metal down by 1.64%, FMCG down by 1.22%, Bankex down by 1.15% and Capital Goods down by 1.08% were the top  losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.83%, Dr. Reddys Lab up by 1.32%, Adani Ports &Special up by 0.95%, Reliance Industries up by 0.86% and Sun Pharma Inds. up by 0.56%. On the flip side, Bajaj Auto down by 2.48%, GAIL India down by 2.44%, Coal India down by 1.71%, Hero MotoCorp down by 1.53% and ICICI Bank down by 1.50% were the top losers.

Meanwhile, the Central Board of Direct Taxes (CBDT) in about two years since April 1, 2014 has resolved 180 disputes with foreign companies in various sectors through a Mutual Agreement Procedure (MAP). The total amount of income locked-up in dispute in these cases is approximately Rs. 5,000 crore. The resolved cases pertain to various sectors of the economy like software services, IT enabled services, manufacturing and consultancy services, etc. The countries with which cases have been resolved are USA, Japan, United Kingdom and China.

MAP is a mechanism under the double taxation avoidance agreement (DTAA), or tax treaties signed by India with various countries, through which international tax disputes are resolved. CBDT has said that in the last two years, increased focus on MAP has resulted in resolution of large number of disputes relating to double taxation.

MAP has provided comfort to foreign investors and also reduced the number of cases under litigation. In order to encourage foreign investment this is one of the actions taken by CBDT to ensure a fair and judicious dispute resolution regime.  The MAP programme is led by one or more competent authorities designated by the signatory countries to resolve tax disputes under the provisions of each treaty.

The CNX Nifty is currently trading at 7001.85, down by 46.40 points or 0.66% after trading in a range of 6960.65 and 7059.75. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.41%, Bank of Baroda up by 1.83%, Tata Motors up by 1.76%, Dr. Reddys Lab up by 1.55% and Adani Ports &Special up by 1.12%. On the flip side, Vedanta down by 3.57%, Yes Bank down by 2.93%, Hindalco down by 2.78%, GAIL India down by 2.54% and Bajaj Auto down by 2.24% were the top losers.

Asian markets were trading mostly in red, Hang Seng was down by 0.61%, Nikkei 225 down by 1.98%, KOSPI Index down by 0.11% and Shanghai Composite down by 0.35%. On the flip side, FTSE Bursa Malaysia KLCI was up by 0.12%, Taiwan Weighted up by 0.02% and Jakarta Composite up by 0.44%.