Benchmarks trade slightly in green in early deals

Indian equity benchmarks have made a cautious start and are trading slightly in green in early deals on Tuesday, as traders remained on sidelines ahead of Consumer Price Index (CPI) data which is expected to cool down for the month of November, as the data accommodates the impact of the government’s decision to demonetise high value currency notes that month. The all-India general CPI inflation had dropped to 4.2 per cent in October from 4.39 per cent in the previous month. Traders took some encouragement with Central Board of Direct Taxes (CBDT) clarification that an increase in turnover of a business owing to its accepting digital means of payment will not trigger reopening of cases of past years.

On the global front, Asian markets exhibiting mixed trend at this point of time, with Chinese market extending the worst losses in six months even as China’s statistics bureau reported stronger-than-expected industrial output and retail sales. The US markets made a mixed closing in last session, though the Dow still managed to reach a new record closing high.

Back home, the market breadth indicating the overall health of the market was strong, with 1008 shares gaining and 752 shares declining, while a total of 87 shares were unchanged. On the sectoral front, shares of public sector oil marketing companies (OMCs) edged higher, despite report that, as from midnight tonight, all petrol and diesel purchased using digital payment will get a discount of 0.75 percent and will be borne by state-owned oil marketing companies.

The BSE Sensex is currently trading at 26568.80, up by 53.56 points or 0.20% after trading in a range of 26494.23 and 26611.81. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.12%, while Small cap index was up by 0.10%.

The top gaining sectoral indices on the BSE were Auto up by 0.85%, Consumer Durables up by 0.77%, Oil & Gas up by 0.59%, Capital Goods up by 0.23% and PSU up by 0.18%, while Metal down by 1.06%, Bankex down by 0.18% and Realty down by 0.05% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.74%, Wipro up by 1.71%, Maruti Suzuki up by 0.88%, Reliance Industries up by 0.78% and Larsen & Toubro up by 0.65%. On the flip side, Lupin down by 1.40%, Asian Paints down by 1.04%, Tata Steel down by 0.77%, ICICI Bank down by 0.68% and Cipla down by 0.37% were the top losers.

Meanwhile, the Income Tax regulatory authority, Central Board of Direct Taxes (CBDT), trying to ally fear of tax terror, especially among the smaller and medium-sized business (SMEs) entities, who would be accepting digital payments for the first time in the back drop of demonetization, has clarified that an increase in turnover of a business owing to its accepting digital means of payment will not trigger reopening of cases of past years.

The recent initiatives of the government to curb black economy in the country has encouraged people to shift towards digital modes of payment, but raised fear that increased turnover in the current year may lead to reopening of earlier years’ cases involving lower turnover u/s 147 of the Income-tax Act, 1961 by the Assessing Officer causing undue harassment to tax payers.

CBDT in its circular has stated that by adopting the digital mode of payment, no financial transactions would remain undisclosed and consequently an enhanced turnover of business might get reflected in the books of accounts. It added that an apprehension was raised by the business community that increased turnover in the current year may lead to reopening of earlier years' cases where the turnover was lower. It clarified that reopening would cause undue harassment to taxpayers and added that mere increase in turnover, because of use of digital means of payment or otherwise, in a particular year cannot be a 'sole' reason to believe that income has escaped assessment in earlier years.”

It further advised the I-T officers not to reopen past assessments in cases, merely on the ground that the current year's turnover has increased. CBDT has clarified that reopening of cases u/s 147 of the Act is feasible only when the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year and not merely on the basis of any reason to suspect.

The CNX Nifty is currently trading at 8179.75, up by 8.95 points or 0.11% after trading in a range of 8155.80 and 8200.95. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.85%, Tata Motors - DVR up by 2.24%, Wipro up by 1.91%, BPCL up by 1.66% and Bharti Infratel up by 1.18%. On the flip side, Zee Entertainment down by 2.62%, Hindalco down by 2.56%, Ultratech Cement down by 1.84%, Grasim Industries down by 1.58% and Lupin down by 1.43% were the top losers.

Asian markets were trading mixed; FTSE Bursa Malaysia KLCI gained 1.3 points or 0.08% to 1,642.72, KOSPI Index rose 1.62 points or 0.08% to 2,028.86, Nikkei 225 added 1.66 points or 0.01% to 19,156.69 and Taiwan Weighted was up by 15.27 points or 0.16% to 9,361.11.

On the flip side, Hang Seng decreased 81.59 points or 0.36% to 22,351.43, Jakarta Composite dropped 39.8 points or 0.75% to 5,268.32 and Shanghai Composite was down by 20.83 points or 0.66% to 3,132.14.