Indian equities continue the lackadaisical trade

Indian equity markets continued to trade on a daunting note in the noon trades, even after Finance Minister Arun Jaitley assured investors that the government does not plan to impose a long-term capital gains tax, a day after Prime Minister Narendra Modi suggested that people earning from financial markets must make a 'fair contribution' to nation building.  Finance Minister also expressed hope that demonetisation will help increase government revenue and lower fiscal deficit, leading to higher expenditure on defence and rural infrastructure. Investors remained cautious with the report that the GST Council could not evolve a consensus on the issue of dividing the administrative powers between the Centre and States in its two-day meeting which concluded on Friday even as it cleared all other provisions of draft model GST Bill and whole of compensation Bill. The next meeting of the GST Council will take place on January 3 and 4, 2017. Trading sentiments weakened further 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. Foreign institutional investors’ pulling out also continues to weigh on equity markets. So far in December, FIIs have pulled out Rs 3,744 crore from equity markets following US Federal Reserve decision to increase interest rates by 0.25% and hinting at quicker rate hikes in 2017. The market is likely to remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. December 2016 series to next month i.e. January 2017 series. The near month December 2016 derivatives contracts will expire on Thursday i.e. December 29, 2016.

On the global front, Asian stocks were trading on a mixed note in light trading after Christmas, with most other Asian markets closed. Investors chose to remain on the sidelines in the absence of fresh cues. The Japanese market, which resumed trading after a three-day holiday, is trading lower led by falls in banking and exporter stocks with risk appetite sapped by a pause in the yen's recent tendency to weaken. Among the other Asian markets, Shanghai is in negative territory. On Friday, Wall Street ended the week on a positive note as investors doubled down on a rally fuelled by optimism that President-elect Donald Trump's policies will boost economic growth.

Back on street, all sectoral indices on the BSE were trading in the red with Metal index emerging as the top loser down by around three percent followed by Realty, PSU and Power indices among others. In scrip specific development, Lupin gained after the company received tentative approval for its Olmesartan Medoximil Tablets, 5 mg, 20 mg and 40 mg from the United States Food and Drug Administration (USFDA) to market a generic version of Daiichi Sankyo Inc’s Benicar Tablets. Moreover, Ratnamani Metals rose after the company bagged two new orders aggregating to 22,000 MT valued at around Rs 103 crore and Rs 33 crore for supply of Carbon Steel ERW pipes for gas pipe line in India to be completed by June/July 2017 and Oct/Nov 2017 respectively.

The market breadth remained pessimistic as there were 465 shares on the gaining side against 1754 shares on the losing side, while 107 shares remained unchanged.

The BSE Sensex is currently trading at 25804.56, down by 236.14 points or 0.91% 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 was down by 1.52%, while Small cap index down by 1.45%.

The top losing sectoral indices on the BSE were Metal down by 2.91%, Realty down by 2.53%, PSU down by 1.50%, Power down by 1.41% and Bankex down by 1.37%, while there were no gainers on BSE sectoral front.

The top gainers on the Sensex were Hindustan Unilever up by 0.42%, Lupin up by 0.39%, Dr. Reddys Lab up by 0.22% and Reliance Industries up by 0.01%. On the flip side, Cipla down by 3.56%, Tata Steel down by 2.15%, Axis Bank down by 2.02%, Hero MotoCorp down by 1.89% and Mahindra & Mahindra down by 1.86% 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 7906.65, down by 79.10 points or 0.99% after trading in a range of 7893.80 and 7970.05. There were 4 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 0.76%, Dr. Reddys Lab up by 0.38%, Lupin up by 0.30% and Reliance Industries up by 0.07%. On the flip side, Hindalco down by 4.99%, Cipla down by 3.49%, Aurobindo Pharma down by 3.27%, Yes Bank down by 2.73% and Bank of Baroda down by 2.39% were the top losers.

Asian markets were trading mixed; Shanghai Composite decreased 0.47% and Nikkei 225 was down by 0.02%. On the flip side, KOSPI Index increased 0.14% and Taiwan Weighted was up by 0.35%.