Indian benchmarks continue firm trade in noon session

Indian equity benchmarks continued to trade in green in noon session on emergence of buying by funds and retail investors. Investors’ sentiments remained optimistic, triggered by the Commerce and industry minister Nirmala Sitharaman’s statement that the economy grew by 7.1% in the first half of 2016-17, though the central statistics office is yet to release Gross Domestic Product (GDP) data for the second (July-September) quarter. She added that the government has been taking various steps to boost industrial production and growth, which includes ‘Make in India’ and ‘Startup India’ initiatives, liberalisation of FDI (Foreign Direct Investment) policy and development of industrial corridors. Besides, appreciation in rupee against the US dollar too was supporting the upbeat mood of the markets. Indian rupee edged higher by 5 paise to 68.71 against the US dollar at the forex market in early trade on fresh selling of the American currency by exporters and banks. Some support also came with Finance Minister Arun Jaitley's introduction of a Taxation Laws (Second Amendment) Bill in Lok Sabha, which proposes a new voluntary disclosure and investment scheme, named Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016. PMGKY will be notified after the Bill is passed by Parliament and receives Presidential Assent. Once the amendments are approved by Parliament, there would be a penalty of 30 per cent of unaccounted income, if admitted and taxes are paid. This would take the total incidence of tax and penalty to 60%.

On the global front, Asian markets trading mostly lower on Tuesday as concerns over an OPEC oil production cut and Italy's constitutional referendum cast a pall on the markets.  Japan's Nikkei share average dropped as stronger yen hurt sentiments and insurers took a breather from recent gains.  Meanwhile, US stocks declined on Monday for their worst performance in nearly a month, weighed down by a pullback in the financial and consumer discretionary sectors as some investors booked profits on the heels of a record-setting week.

Back home, stocks from Auto, Realty and Consumer Durables counters were supporting the markets’ uptrend, while those from FMCG counters were adding to the underlying cautious undertone. In scrip specific development, Triveni Engineering & Industries rallied after the company reported nearly three-fold jump in consolidated net profit at Rs 68 crore for the quarter ended September 30, 2016, on back of higher operational income.  Moreover, Mahanagar Gas has hit a new high of Rs 828 in early trade after reporting 41% year-on-year (YoY) growth in net profit at Rs 102 crore for the quarter ended September 30, 2016, due to lower raw material cost.

The market breadth remained optimistic as there were 1674 shares on the gaining side against 576 shares on the losing side, while 134 shares remained unchanged.

The BSE Sensex is currently trading at 26536.62, up by 186.45 points or 0.71% after trading in a range of 26357.56 and 26577.45. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.81%, while Small cap index up by 1.20%.

The top gaining sectoral indices on the BSE were Auto up by 2.15%, Realty up by 1.64%, Consumer Durables up by 1.04%, Capital Goods up by 0.88% and TECK up by 0.54%, while FMCG down by 0.04% was the sole losing index on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.43%, Mahindra & Mahindra up by 2.38%, GAIL India up by 2.28%, HDFC up by 2.09% and Coal India up by 1.76%. On the flip side, Sun Pharma down by 0.95%, Power Grid down by 0.92%, Hindustan Unilever down by 0.69%, Cipla down by 0.45% and NTPC down by 0.37% 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 8186.40, up by 59.50 points or 0.73% 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 Idea Cellular up by 4.95%, Eicher Motors up by 4.44%, Maruti Suzuki up by 3.47%, Mahindra & Mahindra up by 2.64% and GAIL India up by 2.36%. On the flip side, Sun Pharma down by 1.13%, BPCL down by 0.88%, Hindustan Unilever down by 0.74%, Hindalco down by 0.62% and Lupin down by 0.61% were the top losers.

Asian markets were most trading mostly in red; Hang Seng declined 0.28%, Nikkei 225 decreased 0.19%, Taiwan Weighted slipped 0.32%, FTSE Bursa Malaysia KLCI lost 0.09% and Shanghai Composite was down by 0.01%. On the other hand, Jakarta Composite increased 0.81% and KOSPI Index was up by 0.14%.