Benchmarks erase early gains; Nifty trade below 8100 mark

Indian equity benchmarks pared some early gains and were trading in a narrow range with a positive bias in noon session on account of buying in frontline blue chip counters. Sentiments got some support with Finance Minister Arun Jaitley’s statement that the government would offer tax incentives to small businesses engaged in cashless transactions, as part of the government's fight against the cash economy. He said the move would enable businesses with annual turnover of Rs 2 crore to save up to 30 per cent in tax payments.  However, the upside remained capped on report that foreign Institutional Investors (FIIs) continued their relentless sell-offs and sold domestic equities worth Rs 535.77 crore on December 20, 2016. Investors also remained cautious over CRISIL’s report that the government’s demonetising Rs 500 and Rs 1,000 notes may yield lasting economic benefits but its immediate impact has been stunningly disruptive, with cash shortages roiling business plans. The report highlighted that the government’s decision has given individuals and businesses very little time to adjust to the removal of large-denomination notes and printing of replacement notes has been slow, causing a cash crunch and drop in economic activity.

On the global front, Asian markets were trading mixed on Wednesday as investors remained cautious over the geopolitical concerns in Turkey, Germany and Switzerland. Japan's Nikkei share average edged up to a one-year peak in thin trading ahead of the holidays, tracking US shares higher on expectations that US President-elect Donald Trump's policies will stoke growth and inflation. US stocks rose on Tuesday, led by financials, while the Dow Jones industrial average kept marching toward 20,000.

Back home, stocks from Realty, Power and PSU counters were supporting the markets’ uptrend, while those from FMCG, Consumer Durables and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, IRB Infrastructure Developers gained after the company’s wholly-owned subsidiary - IRB Ahmedabad Vadodara Super Express Tollway (IRBAV) received Rs 20.55 crore from NHAI, against the bank guarantee submitted by IRBAV as part of 75% of the Arbitral Award amount pronounced by the Arbitral Tribunal. Moreover, Jyoti Structures surged after the company received an order from ESKOM, the South African utility, for supply of towers and construction of 765 and 400 kV Masa Ngwedi Transmission line Sec C.

The market breadth remained optimistic as there were 1222 shares on the gaining side against 957 shares on the losing side, while 144 shares remained unchanged.

The BSE Sensex is currently trading at 26343.27, up by 35.29 points or 0.13% after trading in a range of 26296.26 and 26394.14. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.29%, while Small cap index up by 0.37%.

The gaining sectoral indices on the BSE were Realty up by 1.02%, Power up by 0.73%, PSU up by 0.61%, Metal up by 0.58% and Auto up by 0.53%, while FMCG down by 0.30%, Consumer Durables down by 0.13%, Capital Goods down by 0.07%, IT down by 0.02% and TECK down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.36%, Mahindra & Mahindra up by 1.34%, Hero MotoCorp up by 1.24%, ONGC up by 0.95% and Lupin up by 0.93%. On the flip side, Sun Pharma down by 1.04%, TCS down by 0.82%, Tata Motors down by 0.76%, Larsen & Toubro down by 0.59% and GAIL India down by 0.59% were the top losers.

Meanwhile, in a bid to boost digital payments, Union Finance Minister Arun Jaitley has said that government will offer tax benefits to small scale business engaged in cashless transactions. He said that the move would enable small businesses having annual turnover of Rs 2 crore to save up to 30 percent in tax payments. He also said that small traders will be able to save up to 46 percent in tax by migrating from cash to digital transactions as the decision to tweak the presumptive income norms would reduce tax liability.

Jaitley further said that apart from making a tax saving of almost 46 percent by migrating to banking mode, the small businesses would be able to build their books which may also help them get bank loans easily. Also, if transactions are carried out through banking channels, then anybody having annual turnover up to Rs 66 lakhs will have zero tax liability after availing the benefit of Section 80C, after amendment of this new rate structure. He said in the Budget for 2016-17, small traders and businessmen, with turnover of up to Rs 2 crore who did not maintain proper accounts, were presumed to have earned 8 percent income or profit for tax purposes. But if they use digital mode of payments, their income will now be presumed to be 6 percent of the turnover and not 8 percent.

Following the demonetization, the government has taken several steps to encourage digital payments like discount of 0.75 percent will be offered for those who purchase petrol and diesel through digital mode. Moreover, public sector insurance companies, general and life insurance, will provide 10 percent and 8 percent discount for buying new policy or paying premium online via PSUs websites. Further, government also unveiled two lucky draw schemes to reward poor and middle-class consumers and small businesses for conducting cashless transactions.

The CNX Nifty is currently trading at 8091.25, up by 8.85 points or 0.11% after trading in a range of 8075.85 and 8112.55. There were 34 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Bosch up by 1.61%, Hindalco up by 1.47%, Idea Cellular up by 1.43%, Bajaj Auto up by 1.37% and Eicher Motors up by 1.35%. On the flip side, Bharti Infratel down by 1.72%, Sun Pharma down by 1.00%, Zee Entertainment down by 1.00%, GAIL India down by 0.90% and Tata Motors down by 0.88% were the top losers.

Asian markets were trading mixed; Jakarta Composite rose 0.11%, Shanghai Composite 1.11%, Nikkei 225 added 0.24% and Hang Seng was up by 0.57%. On the flip side, KOSPI Index declined 0.09%, Taiwan Weighted decreased 0.41% and FTSE Bursa Malaysia KLCI was down by 0.04%.