Choppiness continues on Dalal Street in noon deals

Indian benchmarks continued to trade choppy in noon deals with key gauges trading in a narrow range with Sensex and Nifty swinging between negative and positive zone, as investors remained on sidelines ahead of the May F&O expiry due on Thursday. Traders also remained worried that higher interest rates in the US will drain liquidity from emerging markets and redirect it to developed economies. Some support came in with India, Iran, and Afghanistan signing the strategic Chabahar port pact. Weakness in Asian market too weighed down sentiments. All the regional counterparts were trading in red at this point of time as a stronger yen weighed on exporters in Japan and speculation mounted the U.S. is closer to raising interest rates. Back home, depreciation in rupee dampened sentiments. The rupee slid for the ninth day as it depreciated 23 paise more to trade at over two and half month low of 67.72 against the dollar in noon deals, hit by sustained foreign fund outflows.

The BSE Sensex is currently trading at 25255.24, up by 24.88 points or 0.10% after trading in a range of 25181.47 and 25274.21. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.57%, while Small cap index down by 0.79%.

The top gaining sectoral indices on the BSE were Utilities up by 0.33%, FMCG up by 0.24%, Consumer Durables up by 0.11%, Power up by 0.10% and Auto up by 0.06%, while Realty down by 1.20%, Oil & Gas down by 1.06%, Capital Goods down by 1.00%, Metal down by 0.76% and Telecom down by 0.70% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.87%, Tata Motors up by 1.75%, ICICI Bank up by 1.00%, Reliance Industries up by 0.97% and ITC up by 0.82%. On the flip side, BHEL down by 1.77%, Bajaj Auto down by 1.56%, ONGC down by 1.27%, Sun Pharma down by 1.19% and Adani Ports &Special down by 1.16% were the top losers.

Meanwhile, in order to avoid tax disputes in future, the Central Board of Direct Taxes (CBDT) has taken the next big step in implementing the controversial ‘indirect transfer’ provisions that has dented India’s image among the foreign investor community which led to international companies face huge tax bills in the country. The department has issued a proposed set of rules for computation of the fair market value (FMV) of assets for taxing any indirect transfer of assets abroad. The FMV calculation is critical as it forms the basis of trigger of ‘indirect transfer’ provisions under the income tax law, say tax experts.

As per the proposal, if the asset is the share of an Indian company listed on a recognised stock exchange, the fair market value of the share will be the price of such a share on the exchange. When the share is listed on more than one recognised exchange, the price on the bourse recording the highest volume of trading will be considered. Furthermore, where the asset is the share of an Indian company not listed on a recognised exchange on the specified date, the FMV will the one determined by a merchant banker or an accountant 'in accordance with any internationally accepted pricing methodology for valuation of shares on arm's length basis and increased by the liability.

Stakeholders and general public have been given time till May 29 to electronically send in their comments and suggestions on the draft rules.

This move comes almost a year after finance minister Arun Jaitley had clarified in the 2015-16 budget that indirect transfer abroad between two companies would draw tax if the value of Indian assets of the company concerned on the specified date exceeded Rs 10 crore and these represented at least 50 per cent of the value of all the assets owned by such a foreign company globally.

The CNX Nifty is currently trading at 7729.50, down by 1.55 points or 0.02% after trading in a range of 7715.80 and 7744.80. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.91%, Tata Motors up by 1.98%, Tata Power up by 1.49%, ACC up by 1.19% and Grasim Industries up by 1.18%. On the flip side, Hindalco down by 3.16%, Aurobindo Pharma down by 2.69%, Idea Cellular down by 2.63%, BPCL down by 2.12% and Bank of Baroda down by 1.97% were the top losers.

Asian markets were trading in red; Nikkei 225 declined 155.84 points or 0.94% to 16,498.76, Hang Seng dipped 63.66 points or 0.32% to 19,745.37, Taiwan Weighted shed 43.78 points or 0.52% to 8,300.66, Shanghai Composite decreased 21.37 points or 0.75% to 2,822.28, KOSPI Index fell 17.57 points or 0.9% to 1,937.68, Jakarta Composite slipped 11.98 points or 0.25% to 4,731.68 and FTSE Bursa Malaysia KLCI was down by 5.22 points or 0.32% to 1,629.67.