Firm trade prevails in late morning session

Indian equity benchmarks were trading in green in late morning session following mixed global cues from Asian markets. The rupee appreciated in early trade on account of some selling of American currency by banks and exporters. The sentiments remained on upbeat note after the government informed that the Indian economy grew at 7.1 percent in the first six months of the current financial year despite subdued growth in the world economy. The Commerce and Industry Minister Nirmala Sitharaman has said that India has maintained a Gross Domestic Product (GDP) growth rate of 7.1 percent during April to September of 2016-17 over 7.6 percent in 2016-16 and 7.2 percent in 2014-15. The Organization for Economic Cooperation and Development (OECD) in its semi-annual report lifted its global growth forecasts for 2017 and predicted expansion in 2018 will reach its fastest pace in half a decade as Donald Trump’s planned fiscal stimulus provides a boost to major economies. The Paris-based organization sees India’s growth rates to hover above 7.5 percent over the 2017-18 period but many emerging market economies will continue to grow at a more sluggish pace. Investors also kept an eye on foreign brokerage report that has lowered India’s growth forecast for FY’17 to 7.3% from 7.7% earlier on account of currency replacement programme. However, it expects investments and capacity expansion in 2018 after a gap of six years of weak trend. Traders were seen piling up positions in Auto, Realty and Consumer Durables sector stocks. In scrip specific development, India Cement was trading in green after the Competition Appellate Tribunal granted a stay in the appeal filed by the company against an order of the Competition Commission of India which had imposed a penalty of Rs 187.48 crore on it for cartelisation.

On the global front, Asian shares were trading mostly in red, with Tokyo down after mixed data on household spending and retail sales. In Japan, household spending for October fell 1.0% month-on-month, compared to a 0.1% gain seen, and at a minus 0.4% pace year-on-year, compared to a 0.6% fall expected for the eighth straight drop. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,150 and 26,500 levels respectively. The market breadth on BSE was positive in the ratio of 1636:474, while 98 scrips remained unchanged.

The BSE Sensex is currently trading at 26546.81, up by 196.64 points or 0.75% after trading in a range of 26357.56 and 26577.45. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.87%, while Small cap index was up by 1.17%.

The gaining sectoral indices on the BSE were Auto up by 1.99%, Realty up by 1.65%, Consumer Durables up by 1.17%, Capital Goods up by 0.81% and Bankex up by 0.61%

The top gainers on the Sensex were Maruti Suzuki up by 2.68%, Mahindra & Mahindra up by 2.67%, HDFC up by 2.62%, GAIL India up by 2.13% and Coal India up by 1.80%.

On the flip side, Sun Pharma down by 0.96%, Lupin down by 0.62%, Hindustan Unilever down by 0.45%, Cipla down by 0.36% and Dr. Reddy’s Lab down by 0.34% were the top losers.

Meanwhile, providing another window to people holding black money, to disclose their unaccounted cash, Union Finance Minister Arun Jaitley has introduced the Taxation Laws (Second Amendment) Bill, 2016 in the Lok Sabha, which aims to impose higher rate of tax and penalty in certain incomes and proposes a new voluntary disclosure and investment scheme, named Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016.

The amendment bill has proposed to levy a total tax, penalty and surcharge of 50 per cent on the amount deposited post-demonetisation, while higher taxes and stiffer penalty of up to 85 per cent await those who don't disclose but are caught. The declarant under this scheme shall be required to pay tax at the rate of 30% of the undisclosed income, and penalty at the rate of 10% of the undisclosed income. Further, a surcharge to be called ‘Pradhan Mantri Garib Kalyan Cess’ at the rate of 33% of tax is also proposed to be levied.

In addition to tax, surcharge and penalty (totaling to approximately 50%), the declarant shall have to deposit 25% of undisclosed income in a Deposit Scheme to be notified by the RBI under the ‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’. The amount is proposed to be utilized for the schemes of irrigation, housing, toilets, infrastructure, primary education, primary health and livelihood, so that there is justice and equality. The Taxation Laws (Second Amendment) Bill, 2016 proposes to amend Section 115 BBE of the Income Tax Act to provide for a punitive tax, surcharge and penalty on unexplained credit, investment, cash and other assets.

PMGKY will be notified after the Bill is passed by Parliament and receives Presidential Assent. Those with unaccounted incomes who do not opt for PMGKY could have it rough: any unexplained credit (including in bank accounts) will attract 60 per cent tax plus 25 per cent surcharge and 10 per cent penalty, making it an effective rate of 85 per cent.

The CNX Nifty is currently trading at 8188.65, up by 61.75 points or 0.76% after trading in a range of 8128.70 and 8196.40. There were 39 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 4.00%, Idea Cellular up by 3.56%, Mahindra & Mahindra up by 2.89%, HDFC up by 2.72% and Maruti Suzuki up by 2.68%.

On the flip side, Sun Pharma down by 1.16%, Hindalco down by 1.04%, Lupin down by 1.01%, BPCL down by 0.87% and Hindustan Unilever down by 0.53% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 65.9 points or 0.36% to 18,290.99, Hang Seng decreased 18.65 points or 0.08% to 22,811.92, KOSPI Index decreased 3.6 points or 0.18% to 1,974.53 and FTSE Bursa Malaysia KLCI decreased 1.41 points or 0.09% to 1,627.25.

On the other hand, Taiwan Weighted increased 4.08 points or 0.04% to 9,226.32, Shanghai Composite increased 18.81 points or 0.57% to 3,295.81 and Jakarta Composite increased 41.42 points or 0.81% to 5,155.99.