Benchmarks hover near lowest point of the day

Indian equity benchmarks continued their weak trade hovering near the lowest point of the day in late morning session on account of selling in front line blue chip counters. The cash crunch hitting consumer demand in the economy, a major spike in crude oil prices and mixed signals from the US market have taken the toll on the market. The rupee wiped off its opening gains and was trading down on account of sustained foreign fund outflows coupled with buying of American currency by banks and importers. Foreign Institutional Investors stood net sellers in domestic equity markets on Thursday as they sold shares worth of Rs 360.39 crore with gross purchases and gross sales of Rs 14,573.16 crore and Rs 14,933.55 crore, respectively, according to the data available with NSDL. The demonetization drive continue to hurt the domestic economy. The ratings agency, Crisil lowered the country’s GDP growth forecast by 100 basis points to 6.9 percent from 7.9 percent earlier for the current fiscal. At the same time, the agency expects the consumer price index (CPI)-based inflation to print lower at 4.7 percent as compared to its earlier estimate of 5 percent. Investors will be taking a cautious approach ahead of the GST Council meet starting today. The GST Council, which has Union Finance Minister and state representatives as members, will finalize the model Goods and Services Tax (GST) law, Integrated GST (IGST) law and Compensation law. The meeting has become significant in the light of the controversial comments made by West Bengal finance minister Amit Mitra that demonetization - making over 85% of old Rs 500 and Rs 1,000 currency notes illegal - will delay implementation of GST. Traders were seen selling in FMCG, Consumer Durables and Realty sector stocks. In scrip specific development, Shilpa Medicare was trading in green after it announced that the board has approved the raising of funds of up to Rs 175 crore by issuing equity shares on preferential basis to TA FII Investors, Mauritius.

On the global front, Asian shares were trading mostly in red, following mostly sluggish sessions on Wall Street and Europe, and as crude futures soared to 16-month highs. The Chinese government has rolled out new tightening measures on capital outflow from the country, amid the yuan’s 7% decline this year. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,150 and 26,400 levels respectively. The market breadth on BSE was negative in the ratio of 617:1457, while 84 scrips remained unchanged.

The BSE Sensex is currently trading at 26315.47, down by 244.45 points or 0.92% after trading in a range of 26299.15 and 26445.52. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.69%, while Small cap index was down by 0.85%.

The losing sectoral indices on the BSE were FMCG down by 1.36%, Consumer Durables down by 1.20%, Realty down by 1.19%, Bankex down by 1.11% and Capital Goods down by 0.87%.

The top gainers on the Sensex were Coal India up by 1.17%, Reliance Industries up by 0.60%, ONGC up by 0.55%, GAIL India up by 0.47% and Sun Pharma up by 0.07%, while there were no gaining indices on BSE sectoral front.

On the flip side, HDFC down by 2.61%, Dr. Reddys Lab down by 2.13%, Adani Ports & Special Economic Zone down by 1.67%, ITC down by 1.65% and HDFC Bank down by 1.51% were the top losers.

Meanwhile, allaying fears over the proposed amendments to the Income-Tax Act regarding gold holding, the Finance Ministry through an official release has clarified that the Centre has not introduced any specific provision in the recently introduced Taxation Laws Bill to cover “household jewellery”. The government said that amendments to income tax laws do not seek to tax inherited gold, jewellery and items that are purchased through disclosed income. It added that fears over jewellery with households acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is “totally unfounded and baseless” and there will be no seizure of gold jewellery and ornaments to the extent of existing guidelines during search operations.

The Central Board of Direct Taxes (CBDT), the apex direct taxes body, said in a statement that the proposed amendments do not seek to tax inherited gold and jewellery as also those items that are purchased through disclosed or agriculture income. CBDT clarified that no new provision had been introduced regarding chargeability of tax on jewellery.

Following the decision to withdraw Rs 500 and Rs 1,000 banknotes, the government introduced the Taxation Laws (Second Amendment) Bill, 2016 , seeking to impose up to 85 per cent tax and penalty on undisclosed wealth that is discovered by tax authorities during search and seizure, raising rumors that gold jewellery could be covered under the amended law. The bill which received Lok Sabha approval is currently under consideration of the Rajya Sabha, proposes to amend Section 115BBE of the Income-Tax Act to provide for 60 per cent tax and a 25 per cent surcharge on it. CBDT has said that tax rate under section 115BBE is proposed to be increased only for unexplained income as there were reports that the tax evaders are trying to include their undisclosed income in the return of income as business income or income from other sources.

The CNX Nifty is currently trading at 8113.50, down by 79.40 points or 0.97% after trading in a range of 8108.45 and 8154.15. There were 11 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 1.67%, Coal India up by 1.22%, Tech Mahindra up by 1.04%, HCL Tech up by 0.77% and Tata Power up by 0.69%.

On the flip side, BPCL down by 2.94%, Kotak Mahindra Bank down by 2.69%, HDFC down by 2.47%, Dr. Reddy’s Lab down by 2.07% and IndusInd Bank down by 1.88% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 282.82 points or 1.24% to 22,595.41, Nikkei 225 decreased 142.6 points or 0.77% to 18,370.52, Taiwan Weighted decreased 74.95 points or 0.81% to 9,188.58, Shanghai Composite decreased 32.21 points or 0.98% to 3,241.10 and KOSPI Index decreased 14.75 points or 0.74% to 1,969.00.

On the other hand, FTSE Bursa Malaysia KLCI increased 1.47 points or 0.09% to 1,627.91 and Jakarta Composite increased 9.05 points or 0.17% to 5,207.81.