Markets pare gains after making a good start

After making a positive start for the sixth straight trading sessions, Indian equity markets have pared their gains and are currently trading near neutral line, marginally in green, as investors opted to book some of their profits at higher levels. Further, caution prevailed in the markets ahead of GDP data for the March quarter and fiscal deficit data for the month of March later today. India's GDP growth for the fourth quarter of 2015-16 is likely to be around 7.1 per cent, but slow private sector capital expenditure (capex) spending and stressed banking sector will weigh on the economy's growth potential this year. Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 355.54 crore yesterday as per provisional data released by the stock exchanges that kept supporting the sentiment. In the scrip specific development, Tata Motors surged over 8 per cent on reporting a three-fold rise in quarterly net profit, helped by strong sales of its luxury brand Jaguar Land Rover. However, Sun Pharmaceutical Industries dropped over 3 per cent despite logging 92 per cent growth in quarterly net profit on the back of strong revenue growth.

On the global front, the US markets remained closed on Monday on account of ‘Memorial Day’ holiday. Asian markets were mostly trading mixed. Japanese market was trading higher on the back of falling yen post comments from US Federal Reserve Chairwoman Janet Yellen. However, Taiwan stocks fell on profit-taking after the main index hit highs not seen since late April in the previous session.

Back home, on the sectoral front, traders were seen piling up position in Auto, Consumer Durables, FMCG, Realty and Power, while selling was witnessed in Metal, TECK, IT, Capital Goods and PSU. The market breadth on BSE was negative in the ratio of 704: 849, while 82 scrips remained unchanged.

The BSE Sensex is currently trading at 26769.82, up by 44.22 points or 0.17% after trading in a range of 26753.70 and 26837.20. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.01%, while Small cap index was down by 0.06%.

The top gaining sectoral indices on the BSE were Auto up by 1.79%, Consumer Durables up by 0.81%, FMCG up by 0.33%, Realty up by 0.25% and Power up by 0.10%, while Metal down by 0.80%, TECK down by 0.59%, IT down by 0.54%, Capital Goods down by 0.46% and PSU down by 0.18% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 8.41%, NTPC up by 1.47%, HDFC up by 1.02%, Cipla up by 0.96% and Axis Bank up by 0.76%. On the flip side, Sun Pharma Inds. down by 3.29%, Bharti Airtel down by 1.73%, GAIL India down by 1.53%, Coal India down by 1.22% and Infosys down by 1.14% were the top losers.

Meanwhile, batting for a longer income tax exemption period from the current three years and making more lucrative the pet project of the government and the Prime Minister ‘Startup India’, the Ministry of Commerce & Industry has approached the Ministry of Finance with an industry proposal to widen the tax holiday for the start-ups from the current three years to seven years.

The minister further stated that “I have been interacting with startups and a lot of them are in touch with us directly. The decision has to be taken by the Finance Ministry, who are favourably inclined to helping them out because this is a major initiative.”  She added that Startups want the tax holiday to be extended to up to seven years because no company breaks even in three years. They say a longer-duration tax concession would not only encourage entrepreneurship but also enable companies to expand operations, generate employment and hire quality talent.

The government’s Startup Action Plan had stated with cash constraints and limited avenues of finances available to startups, a tax holiday in the initial years can be very helpful. Besides tax exemption to startups for three years, tax exemption on capital gains and tax exemption on investments above fair market value were the other two announcements made during the Startup Action Plan. Investors may invest in a fund-of-funds, which will in turn invest in startups. If investors reinvest their capital gains in such an approved fund, they will be exempt from paying tax on those gains.  In its ‘start-up India Action Plan’, in order to promote the start-up ecosystem in the country, the government has envisaged establishing a Fund of Funds, which intends to raise Rs 2500 crore annually for four years to finance startups.

The CNX Nifty is currently trading at 8182.75, up by 4.25 points or 0.05% after trading in a range of 8182.10 and 8213.60. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Tata Motors - DVR up by 8.94%. Tata Motors up by 8.36%, Aurobindo Pharma up by 1.76%, NTPC up by 1.29% and Cipla up by 1.03%. On the flip side, Sun Pharma Inds. down by 3.29%, GAIL India down by 1.72%, Bharti Airtel down by 1.55%, Coal India down by 1.45% and Infosys down by 1.33% were the top losers.

Asian markets were trading mixed; KOSPI Index increased 11.77 points or 0.6% to 1,978.90, Shanghai Composite increased 68.7 points or 2.43% to 2,891.15, Nikkei 225 increased 83.93 points or 0.49% to 17,151.95 and Hang Seng increased 263.84 points or 1.28% to 20,893.23.

On the flip side, Taiwan Weighted decreased 30.22 points or 0.35% to 8,505.65, Jakarta Composite decreased 10.08 points or 0.21% to 4,825.95 and FTSE Bursa Malaysia KLCI decreased 3.31 points or 0.2% to 1,626.56.