Benchmarks recover from day's low; bounce back into positive territory

Bouncing back from day's low, Indian benchmark indices were trading marginally in green, on fresh buying by investors and foreign funds on hopes of passage of the GST Bill in Rajya Sabha during the monsoon session of Parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The monsoon session of Parliament kicked off from July 18, 2016 and concludes on August 12, 2016. Some support also came with the report that Morgan Stanley has revised upwards its India growth estimate for this year to 7.7 percent from 7.5 percent earlier, because of 'positive surprises' in the macro data. According to the global financial services major, the growth recovery is becoming more broad-based, driven by public capex, FDI and consumption. However, investors remained cautious  with the RBI Governor Raghuram Rajan’s statement that  India has a long way to catch up with China on per capita GDP and will need years of strong growth but cautioned against expanding economy at the cost of environment. He also said that the rupee level currently is pretty reasonable and any attempt to devalue it may lead to a surge in inflationary pressures and offset any benefits. According to governor, the country has come a long way as far as financial inclusion is concerned, but still has a way to go.

On the global front, Asian markets were trading mostly lower on Tuesday as a downturn in crude oil curbed the enthusiasm from fresh record highs on Wall Street. Besides, a failed coup in Turkey had dented risk sentiment and bolstered the perceived safe-haven yen before it ran its course. However, Stocks in Japan rose for their sixth straight session amid continued expectations that the Bank of Japan will soon roll out stimulus for the economy.

Back home, stocks from Oil & Gas, PSU and Metal counters were supporting the markets’ uptrend, while those from FMCG, Realty and Banking counters were adding to the underlying cautious undertone. In scrip specific development, Mindtree has slipped after the company reported 7% quarter-on-quarter (QoQ) decline in consolidated net profit at Rs 124 crore for the quarter ended June 30, 2016. On the other hand, Camlin Fine Sciences has surged after the company received Environmental Clearance for its proposed facility at Dahej SEZ, Bharuch District in state of Gujarat.

The market breadth remained optimistic as there were 1194 shares on the gaining side against 900 shares on the losing side, while 114 shares remained unchanged.

The BSE Sensex is currently trading at 27759.64, up by 12.98 points or 0.05% after trading in a range of 27689.96 and 27804.73. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.33%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.09%, PSU up by 0.49%, Metal up by 0.44%, TECK up by 0.31% and Auto up by 0.29%, while FMCG down by 0.73%, Realty down by 0.05%, Bankex down by 0.05% and Consumer Durables down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 1.76%, Tata Motors up by 1.41%, Sun Pharma up by 1.20%, GAIL India up by 1.10% and Bharti Airtel up by 0.89%. On the flip side, Hindustan Unilever down by 2.06%, Hero MotoCorp down by 1.00%, ITC down by 0.90%, HDFC Bank down by 0.63% and Mahindra & Mahindra down by 0.58% were the top losers.

Meanwhile, in order to facilitate reduced tax litigation to the taxpayers, the Central Board of Direct Taxes (CBDT) has signed seven more unilateral advance pricing agreements (APAs) with taxpayers as it aims to reduce tax litigation by providing certainty in the domain of transfer pricing. In the current financial year, a total of 13 unilateral APAs have been entered into so far. Till date, CBDT has entered into 77 APAs, these includes 3 bilateral APAs and 74 unilateral APAs.

The seven APAs signed with taxpayers pertain to various sectors of the economy like banking, Information Technology and Automotives. Further, the international transactions covered in these agreements include various services like software development services, IT enabled services (BPOs), engineering design services and administrative and business support services.

APA’s introduced in the Income Tax Act in 2012, is an agreement between a taxpayer and the tax department on a transfer pricing procedure for determining the value of assets and ensuing taxes on intra-group overseas transactions. This scheme attempts to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance, while the progress of the APA Scheme strengthens the government’s mission of fostering a non-adversarial tax regime.

The CNX Nifty is currently trading at 8518.15, up by 9.45 points or 0.11% after trading in a range of 8493.65 and 8525.95. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 2.41%, ICICI Bank up by 1.84%, Tata Motors up by 1.47%, Zee Entertainment up by 1.46% and Bharti Infratel up by 1.45%. On the flip side, Hindustan Unilever down by 2.16%, Indusind Bank down by 1.66%, ITC down by 0.92%, Hero MotoCorp down by 0.78% and Kotak Mahindra Bank down by 0.66% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 0.63%, Shanghai Composite dropped 0.69%, KOSPI Index decreased 0.41%, FTSE Bursa Malaysia KLCI slipped 0.09% and Taiwan Weighted was down by 0.01%. On the flip side, Jakarta Composite increased 0.95% and Nikkei 225 was up by 0.82%.