Benchmarks trade flat with positive bias in range-bound session of trade

In the extremely range-bound session of trade, Indian benchmark indices altering between positive and negative territory, were trading flat with bit of positive bias as investors and foreign funds were adopting a cautious approach, amid weak Asian cues.  However, the broader indices outperformed benchmark indices, as market participants turned their focus on fundamentally sound mid-cap and small-cap stocks as valuations in large-cap stocks seem stretched. Sentiments got some support after Moody’s Investors Service retained India’s growth forecast at 7.5% for 2016 and stated that the outlook for emerging markets economies stabilized on account of the modest recovery in commodity prices, better capital flows and a better near-term outlook for growth in China. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 162.17 crore on August 18, 2016.

Meanwhile, banking stocks gained some traction on the report that the India will soon allow banks to pledge corporate bonds as collateral security to borrow funds from the central bank's overnight repo window. Mild buying was observed in selected oil producing majors after Brent crude topped $50 for the first time in six weeks as major producers prepared to discuss a possible output freeze. Moreover, metal stocks also witnessed some buying as India has slapped anti-dumping duty on certain cold-rolled flat steel products from four nations including China and South Korea to guard domestic industry from cheap imports.

On the global front, Asian markets trading mostly in red on Friday as investors turned jittery after some Federal Reserve officials reiterated the case for raising interest rates in coming months. However, US stocks ended slightly higher on Thursday as Brent oil's rise above $50 a barrel boosted energy shares and an upbeat outlook lifted Wal-Mart to a 14-month high. Back home, stocks from Metal, Consumer Durables and PSU counters were supporting the markets, while those from IT and Teck counters were adding to the underlying cautious undertone. In scrip specific development, Shipping Corporation of India slipped after the company registered 72.56% fall in its net profit at Rs 55.91 crore for the quarter ended June 30, 2016 as compared to Rs 203.78 crore for the same quarter in the previous year. On the flip side, UltraTech Cement extended gains and touched a fresh high of Rs 3,954 after the company announced plans to raise funds up to Rs 500 crore through issuance of secured redeemable non-convertible debentures (NCDs) on private placement basis.

The market breadth remained optimistic as there were 1421 shares on the gaining side against 895 shares on the losing side, while 167 shares remained unchanged.
The BSE Sensex is currently trading at 28136.59, up by 13.15 points or 0.05% after trading in a range of 28089.55 and 28212.30. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.68%, while Small cap index up by 0.58%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.78%, Metal up by 0.77%, Capital Goods up by 0.65%, PSU up by 0.63% and Power up by 0.57%, while TECK down by 0.22% and IT down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 3.28%, Cipla up by 1.07%, Adani Ports &Special up by 1.02%, Larsen & Toubro up by 0.96% and Hindustan Unilever up by 0.92%. On the flip side, Coal India down by 1.43%, Bharti Airtel down by 1.06%, HDFC down by 0.79%, TCS down by 0.79% and Axis Bank down by 0.67% were the top losers.

Meanwhile, Tax department has declared ‘Income Declaration Scheme (IDS) 2016’ for those people who want to disclose their unaccounted income or assets. The scheme gives an opportunity to tax evaders to come out clean by paying the applicable tax, cess and penalty totaling 45% of the undisclosed income. This will help them regularise their wealth.

I-T department stated that the tax authorities will not question the valuation reports of the accredited valuers, clearing more doubts about the four-month long scheme. The government has requested the Reserve Bank of India to issue instructions to banks to allow over the counter payment of tax under the scheme in cash. The window under the IDS 2016 opened on June 1 and will close on September 30. Therefore department has said that people should make use of this opportunity.
The department further said that income declared under the scheme for a particular assessment year can be taken into account to explain the transactions in the subsequent assessment years, helping assesses avoid multiple taxes on the same income once the declaration is made. However, a nexus between the income declared and the transactions of the subsequent assessment year will have to be established.

It added that in cases where fictitious loans, creditors, advances received, share capital, payables etc. are disclosed in the audited balance, these can also be declared under the scheme even if they are not linked to investment in any specific asset. However, in cases where there is a direct link between the fictitious liability and the asset acquired then the amount to be declared shall be the fair market value of the acquired asset as on June 1, 2016.

The CNX Nifty is currently trading at 8678.20, up by 4.95 points or 0.06% after trading in a range of 8663.35 and 8696.60. There were 30 stocks advancing against 20 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were SBI up by 3.28%, Bank of Baroda up by 3.11%, Hindalco up by 2.62%, BHEL up by 1.39% and Ambuja Cement up by 1.30%. On the flip side, Bharti Infratel down by 2.39%, Coal India down by 1.58%, Bharti Airtel down by 1.19%, TCS down by 0.97% and Power Grid down by 0.88% were the top losers.

Asian markets were trading mostly in red; Hang Seng slipped 0.33%, Taiwan Weighted decreased 0.97%, Shanghai Composite shed 0.36%, Jakarta Composite dipped 0.1%, FTSE Bursa Malaysia KLCI fell 0.22% and KOSPI Index was down by 0.1%. On the flip side, Nikkei 225 was up by 0.3%.