Benchmarks trade slightly in green ahead of CPI inflation data

Indian equity benchmarks continued their firm trade in late morning session on fresh buying by domestic investors ahead of inflation data. Investors will be eyeing the 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 demonetize high value currency notes that month. The all-India general CPI inflation had dropped to 4.2 percent in October from 4.39 percent in the previous month. Markets took some support 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. The upside was however capped after Asian Development Bank (ADB) slightly lowered its 2016 growth forecast for developing Asia, reflecting slower-than-expected expansion in India. The ADB trimmed its 2016 growth estimate for India to 7.0 percent from 7.4 percent due to weak investment, agricultural slowdown and the government’s recent demonetization. But India’s growth forecast for 2017 was kept at 7.8 percent. Traders were seen piling up position in Consumer Durables, Auto and Oil & Gas stocks, while selling was witnessed in Metal, Realty and Bankex sector stocks. In scrip specific development, Fortis Healthcare was trading in green on reports that the promoters Malvinder and Shivinder Singh are in discussions with private equity group TPG Capital to sell a significant minority shareholding in the company, the country’s second-largest private hospital chain.

On the global front, Asian shares were trading mostly in green, as investors awaited the looming outcome of the Federal Reserve’s rates review, with all eyes on how the Fed steers monetary policy in the wake of Republican Donald Trump's surprise election win last month. Chinese data showed factory output and retail sales grew faster than expected in November, while fixed-asset investment was in-line with forecasts, adding to growing signs of stabilization in the world’s second-biggest economy. 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 1114:885, while 105 scrips remained unchanged.

The BSE Sensex is currently trading at 26567.89, up by 52.65 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 was down by 0.31%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.06%, Auto up by 0.85%, Oil & Gas up by 0.78%, FMCG up by 0.33% and PSU up by 0.14%, while Metal down by 1.07%, Realty down by 0.36%, Bankex down by 0.23%, TECK down by 0.19% and IT down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.21%, Wipro up by 1.60%, ITC up by 0.95%, Maruti Suzuki up by 0.77% and Reliance Industries up by 0.68%.

On the flip side, Lupin down by 1.39%, Tata Steel down by 0.91%, Asian Paints down by 0.86%, NTPC down by 0.39% and ICICI Bank down by 0.38% were the top losers.

Meanwhile, after PM Modi's surgical strike on black money, cases of cash crunch, money laundering, and illegal exchange of discontinued notes started to surface which led to economic mess. So, after analyzing the recent movements, a new scheme Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) for disclosure of unaccounted money has made its way through Lok Sabha, hoping the offer will bring a large amount of untaxed money back into the economy.

The Department of Revenue will by the end of the week notify PMGKY 2016, which was a part of 'The Taxation Laws (Second Amendment) Bill, 2016' and was approved by the Lok Sabha on November 29. This scheme gives an opportunity to all the black money holders to come out clean by declaring their undisclosed income and paying heavy taxes and penalty, which amounts to approximately 50 % tax of the undisclosed income. Apart from paying tax and penalty, the declarants will also be required to deposit 25% of the amount disclosed in the PMGKY, which will be interest free deposits locked in for a period of 4 years. This money will be utilized for poverty welfare measures.

The disclosures in PMGKY scheme will ensure that no questions will be asked about the source of fund and there would be relief from Wealth Tax, civil laws and other taxation laws. But there is no immunity from FEMA, PMLA, Narcotics and foreign Black Money Act. In case the assessee does not declare the illegal income, the government proposes a tax burden of more than 80% and a stringent penalty in cases where such income has been unearthed through a search operation.

The CNX Nifty is currently trading at 8176.40, up by 5.60 points or 0.07% after trading in a range of 8155.80 and 8200.95. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.26%, BPCL up by 1.97%, Wipro up by 1.80%, Tata Motors - DVR up by 1.73% and Idea Cellular up by 1.39%.

On the flip side, Hindalco down by 2.86%, Zee Entertainment down by 2.69%, Grasim Industries down by 1.66%, Lupin down by 1.61% and Ultratech Cement down by 1.34% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.59 points or 0.1% to 1,643.01, KOSPI Index increased 2.85 points or 0.14% to 2,030.09, Taiwan Weighted increased 17.63 points or 0.19% to 9,367.57 and Nikkei 225 increased 50.08 points or 0.26% to 19,205.11.

On the other hand, Hang Seng decreased 82.71 points or 0.36% to 22,350.31, Jakarta Composite decreased 42.98 points or 0.81% to 5,265.15 and Shanghai Composite decreased 20.33 points or 0.64% to 3,132.64.