Benchmarks trade flat with modest gains

Indian equity benchmarks traded on a flat note with modest gains in late morning session on account of buying in front line blue chip counters and in absence of any triggers. The rupee was trading higher against the US dollar in early trade amid mixed global cues. Robust foreign money outflow coupled with near-term consequences of Fed rate hike largely kept sentiments cautious despite a dollar retreat. Some support came with NITI Aayog member Ramesh Chand’s statement that despite the impact of demonetisation, growth in agriculture for the current year will still be above 5 percent, though he pointed that the prevailing cash crunch has hit the growers of perishables more compared to those who grow bulk crops such as paddy and cotton. Investors took note of report that India has overtaken UK & become the fifth largest GDP after USA, China, Japan & Germany. Owing to Britain’s recent Brexit-related problems and thanks to India’s rapid economic growth, India has managed to overtake its erstwhile colonial master United Kingdom in terms of the size of the economy - the first time after nearly 150 years. A report published in Forbes magazine highlighted that this dramatic shift has been driven by India’s rapid economic growth over the past 25 years as well downslide in the value of the pound over the last 12 months. Tata group companies were in focus after Cyrus Mistry yesterday quit from the boards of six listed companies, including Tata Motors and Indian Hotels. He vowed to shift his fight to a larger platform as the ‘coercive action taken by Tatas against various stakeholders was making him uneasy’. He would, however, continue to remain a director on the board of Tata Sons. Traders were seen piling up position in IT, TECK and Capital Goods stocks, while selling was witnessed in Metal, Bankex and Oil & Gas sector stocks. In scrip specific development, Wockhardt was trading in green after the drug firm said that the UK health regulator has confirmed that its manufacturing facility at Chikalthana in Maharashtra complies with good manufacturing practices (GMP).

On the global front, Asian shares were trading mostly in red. China stocks fell as Beijing’s move to tighten supervision of shadow banking activities and persistent liquidity concerns restrained risk appetite. China’s central bank said it would tighten supervision of shadow banking businesses by including off-balance sheet wealth management products (WMPs), widely viewed as a source of financial risk, into its risk-assessment framework next year. The Bank of Japan kept monetary policy steady and gave a more upbeat view of the economy, reinforcing market expectations that its future policy direction could be an increase - not a cut - in interest rates. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,100 and 26,400 levels respectively. The market breadth on BSE was negative in the ratio of 999:1021, while 138 scrips remained unchanged.

The BSE Sensex is currently trading at 26407.82, up by 33.12 points or 0.13% after trading in a range of 26361.39 and 26435.56. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.35%, while Small cap index was up by 0.04%.

The top gaining sectoral indices on the BSE were IT up by 1.16%, TECK up by 0.96%, Capital Goods up by 0.64%, Realty up by 0.56% and Consumer Durables up by 0.49%, while Metal down by 0.62%, Bankex down by 0.54%, Oil & Gas down by 0.48%, Auto down by 0.33% and PSU down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.08%, Coal India up by 1.30%, ITC up by 1.21%, GAIL India up by 1.12% and Infosys up by 1.07%.

On the flip side, Bajaj Auto down by 2.09%, Tata Steel down by 1.23%, ONGC down by 1.22%, Power Grid down by 1.14% and Bharti Airtel down by 0.95% were the top losers.

Meanwhile, in order to promote cashless payments, the government has said that small traders and businesses with a turnover of up to Rs 2 crore will pay less tax if they accept payments through digital mode such as Debit/Credit Cards, Mobile Wallets and Prepaid Loyalty Cards.

Central Board of Direct Taxes (CBDT) has said that under section 44AD of the Income-Tax Act, 1961, it has been decided to reduce the existing rate of deemed profit of 8% to 6% in respect of the amount of total turnover or gross receipts received through digital mode for the financial year 2016-17. However, it added that  the existing rate of deemed profit of 8% as stated in section 44AD of the I-T Act, shall continue to apply if total turnover or gross receipts are received in cash. The tax body also said that legislative amendment in this regard would be carried out through the Finance Bill, 2017.

Under the existing provisions of Section 44AD of the Income-Tax Act, in case of certain assesses (an individual, HUF or a partnership firm other than LLP) carrying on any business having a turnover of Rs 2 crore or less, the profit is deemed to be 8% of the total turnover for taxation. The decision has been taken to achieve the government’s mission of moving towards a less-cash economy and to incentivise small traders/businesses to proactively accept payments through digital modes.

The CNX Nifty is currently trading at 8113.05, up by 8.70 points or 0.11% after trading in a range of 8098.20 and 8124.10. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were TCS up by 2.14%, Ultratech Cement up by 1.64%, Coal India up by 1.43%, Tech Mahindra up by 1.38% and ITC up by 1.28%.

On the flip side, Bosch down by 2.99%, Aurobindo Pharma down by 2.01%, Bajaj Auto down by 1.93%, Hindalco down by 1.45% and ONGC down by 1.34% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 51.19 points or 0.23% to 21,781.49, Shanghai Composite decreased 17.72 points or 0.57% to 3,100.37, Jakarta Composite decreased 11.31 points or 0.22% to 5,180.61, Taiwan Weighted decreased 2.92 points or 0.03% to 9,236.40 and FTSE Bursa Malaysia KLCI decreased 0.71 points or 0.04% to 1,633.59.

On the other hand, KOSPI Index increased 6 points or 0.29% to 2,044.39 and Nikkei 225 increased 99.66 points or 0.51% to 19,491.26.