Indian benchmarks extend gains; trade near intra-day high level

Indian equity indices extended their early gains and continue to trade firm in noon session, hovering near intra-day high level, on account of buying of some blue-chip counters, which were heavily over-sold in last few trading sessions and covering-up of pending short positions by speculators ahead of the December futures and options expiry on Thursday. Inventors got some comfort with FM Arun Jaitley’s hint of a lower tax regime; he said that India has been guided by the principle that a lower level of taxation is the key to building a globally competitive economy in the past two and a half decades since liberalization. However, the upside remained capped with the report that the yearly State Bank of India (SBI) Composite Index, an indicator for tracking India’s manufacturing activity, has crashed to an all-time low in December 2016 of 45.5 (moderate decline), compared to last month’s revised index of 50 (low growth). The report said factory output, measured by the index of industrial production, may continue to remain in negative territory in December 2016.  Meanwhile, investors will be eyeing the meeting of Prime Minister Narendra Modi with economists and senior government officials at NITI Aayog. The theme of the meeting is 'Economic Policy Reform, Road Ahead' and it will be the first such meeting after the central government's announcement of demonetisation on November 8, 2016. The market may 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 markets were trading mixed on Tuesday, as investors’ preferred staying on sidelines,  in the absence of fresh cues as the US and European markets were closed overnight for Christmas holidays. Japan's Nikkei share average edged higher in thin trade, while China’s stock market edged lower despite the positive economic data and a rally of infrastructure-related sectors after Chinese regulators announced policies to encourage the financing of public private partnership (PPP) projects. 

Back home, barring Realty index, which was trading in negative territory, all the other indices were in the positive side, with Consumer Durables, Oil & Gas, IT and Metal surging up by around a percent. Banking stocks remained cautious, as the Reserve Bank of India has given an additional 60 days to farmers hit by demonetisation to repay their crop loans due in November-December and said that prompt repayment would be eligible for the extra 3 per cent interest subsidy.  In scrip specific development, NTPC gained after the company’s wholly-owned subsidiary - NVVN has signed a Power Purchase Agreement (PPA) with Nepal Electricity Authority (NEA) to supply 160 MW power for period from January 2017 to May 2017 through Muzaffarpur-Dhalkebar transmission line. Furthermore, Lupin rose 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. 

The market breadth remained optimistic as there were 1386 shares on the gaining side against 792 shares on the losing side, while 141 shares remained unchanged.

The BSE Sensex is currently trading at 25925.00, up by 117.90 points or 0.46% after trading in a range of 25803.19 and 25954.81. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.97%, while Small cap index up by 0.82%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.58%, Oil & Gas up by 1.11%, IT up by 1.10%, TECK up by 0.96% and Metal up by 0.93%, while Realty down by 0.65% was the sole losing index on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 1.62%, Lupin up by 1.55%, Cipla up by 1.49%, TCS up by 1.22% and Tata Steel up by 1.13%. On the flip side, GAIL India down by 1.45%, HDFC down by 0.37%, Bharti Airtel down by 0.35%, Hero MotoCorp down by 0.34% and Hindustan Unilever down by 0.17% were the top losers.

Meanwhile, hinting at lower taxes in the coming years, Finance Minister Arun Jaitley has said that India now needs to move to a lower level of taxation to provide services more competitive in nature, as competition is not domestic, it is global. He added that this is one important change you will witness while you will be in service. He also said that extraordinary high taxation rates in the past have led to higher tax aversions.

Jaitley highlighted that the authorities need to be fair in interpreting the tax laws as the country needs to move to a tax-friendly environment. He added that tax authorities are judged by the quality of what they write or what they decide. Level of fairness followed by tax authorities will define the quality of interpretation of tax laws by tax authorities. Voluntary compliance by citizens by payment of due taxes, needs to be reciprocated by tax authorities by a tax-friendly administration.

Minister also said that payment of taxes is the basis of development of an economy. He added that in many economies while they develop, payment of taxes is part of citizens' duty, and non-payment is visited with severe consequences. Further, he foresees India in next future decades will be an India where voluntary compliances will have to increase.

The CNX Nifty is currently trading at 7950.75, up by 42.50 points or 0.54% after trading in a range of 7903.70 and 7957.85. There were 40 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.14%, HCL Tech up by 1.98%, Eicher Motors up by 1.84%, Aurobindo Pharma up by 1.80% and Lupin up by 1.79%. On the flip side, GAIL India down by 0.97%, Idea Cellular down by 0.43%, Hero MotoCorp down by 0.42%, Bharti Airtel down by 0.29% and Indusind Bank down by 0.27% were the top losers.

Asian markets were exhibiting mixed trend; Shanghai Composite decreased 0.16%, Taiwan Weighted slipped 0.04% and FTSE Bursa Malaysia KLCI was down by 0.01%. On the flip side, Nikkei 225 added 0.06%, KOSPI Index increased 0.22% and Jakarta Composite was up by 1.02%.