Benchmarks make dismal start ahead of F&O expiry

Indian equity benchmarks have made a dismal start with frontline gauges breaching their crucial 28,900 (Sensex) and 7,950 (Nifty) levels, as traders remained concerned ahead of F&O expiry for the month of December. Sentiments remained down-beat with Prime Minister Narendra Modi’s statement that his government would not hesitate to make tough decisions to help support its growing economy and his suggestion that people earning from financial markets must make a 'fair contribution' to nation building. Traders also remained concerned with domestic rating agency ICRA's  latest report stating that India's gross value added growth is likely to be at 6.6 percent in 2016-17 as economic activity will take more time to normalise following the government's move to demonetise high-value notes.

On the global front, most of the Asian counters remained closed today, while those who are trading have made a mixed start. Japanese market opened flat on Monday in quiet holiday trading following a three-day weekend. Back home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include realty, banking and metal. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 314 shares on the gaining side against 1,529 shares on the losing side while 64 shares remain unchanged.

The BSE Sensex is currently trading at 25836.45, down by 204.25 points or 0.78% after trading in a range of 25753.74 and 26008.57. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.31%, while Small cap index was down by 1.34%.

The top losing sectoral indices on the BSE were Realty down by 2.27%, Metal down by 1.68%, Bankex down by 1.30%, PSU down by 1.20% and Power was down by 1.19%, while there were no gainers on the BSE sectoral front.

The top gainers on the Sensex were Maruti Suzuki up by 0.88%, Dr. Reddys Lab up by 0.72%, Asian Paints up by 0.69% and TCS up by 0.34%. On the flip side, Cipla down by 2.70%, Axis Bank down by 1.86%, Power Grid down by 1.70%, ICICI Bank down by 1.55% and Adani Ports & Special down by 1.48% were the top losers.

Meanwhile, industry body, Associated Chambers of Commerce and Industry of India (ASSOCHAM) has suggested removal of a provision in the revised Model GST Law dealing with anti-profiteering, since it is open to misuse and subjective interpretation. In a detailed representation to the Central Board of Excise and Customs (CEBC) and the Finance Minister Arun Jaitley, the ASSOCHAM also sought clarity on a wide range of issues like location of recipient and supplier of services and the treatment of related party transactions.

ASSOCHAM said that in the revised Model GST Law, the central government has been given powers to constitute an authority to examine whether input tax credits availed of by any registered taxable person, or the benefit of a reduction in the tax rate, has resulted in a commensurate reduction in the price of the goods or services supplied. Also, the authority would have powers to impose penalties where the prices of goods or services supplied are not reduced.

Industry body added that while the intent of such a proposal cannot be questioned, the industry believes that it will be very difficult to implement and the costs of compliance and administration will significantly outweigh the risks that some businesses will seek to ‘profiteer’ from the change in indirect tax systems. With regard to location of recipient and supplier of services for the purpose of ascertaining place of supply, the chamber has said the concept of business establishment be introduced (which should be only one location per legal entity) for sake of simplicity, such as location could be the billing address of the recipient/ supplier.

The CNX Nifty is currently trading at 7923.25, down by 62.50 points or 0.78% after trading in a range of 7893.80 and 7970.05. There were 6 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 0.88%, Maruti Suzuki up by 0.79%, Asian Paints up by 0.57%, TCS up by 0.44% and Reliance Industries up by 0.16%. On the flip side, Hindalco down by 2.67%, Aurobindo Pharma down by 2.58%, Cipla down by 2.49%, Yes Bank down by 2.02% and Bank of Baroda down by 1.93% were the top losers.

Asian markets were trading mixed; Shanghai Composite decreased 24.34 points or 0.78% to 3,085.82 and Nikkei 225 was down by 7.36 points or 0.04% to 19,420.31.

On the flip side, KOSPI Index increased 1.76 points or 0.09% to 2,037.66 and Taiwan Weighted was up by 26.28 points or 0.29% to 9,105.89.