Benchmarks continue to trade in red in noon session

Recovering from day’s low, Indian benchmark indices have started gaining some momentum, however were still trading below the neutral line as investors and foreign funds were adopting a cautious approach, ahead of government's Budget session, which will start tomorrow with the Economic Survey of India and Annual Budget presentation for financial year 2017-18 by the Finance Minister Arun Jaitley on Wednesday. Sentiments remained subdued with Former Finance Minister P Chidambaram’s statement that cash crunch in the wake of demonetisation is still continuing in many places in the country even though it has eased to an extent in the metros. However, losses remained capped with the tax department assuaging investors concern ahead of implementation of GAAR from April 1. The Central Board of Direct Taxes in clarifications on GAAR, has said that the adequate procedural safeguards are in place to ensure that General Anti-Avoidance Rules (GAAR), which seeks to prevent companies from routing transactions through other countries to avoid taxes, are invoked in a uniform, fair and rational manner. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 211.77 crore on January 27, 2017. Meanwhile, shares of IT companies such as TCS, Infosys and Wipro came under pressure after US President Donald Trump introduced immigration curbs adding to fears that his 'America First' policy may prove detrimental for Indian software services firms. Trump on Friday signed an executive order that suspends the arrival of refugees for at least 120 days and bars visas for travelers from seven Muslim majority countries including Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen for the next three months.

On the global front, Asian markets were trading mixed on Monday as investors turned cautious after President Donald Trump introduced immigration curbs that sparked criticism at home and abroad and added to global fears of increasingly unpredictable US policies. Japan's Nikkei declined as demand for the safe-haven yen weighed on exporters. Further, the greenback weakened against most of its major peers, trading near the lowest levels in two months. Meanwhile, Wall Street ended on a mixed note on Friday after the initial fourth-quarter GDP read fell short of estimates, but managed to record weekly gains of around 1%.

Back home, stocks from Realty, Capital Goods and FMCG counters were supporting the markets, while those from Auto, IT and Consumer Durables counters were adding to the underlying cautious undertone. In scrip specific development, L&T gained after the company reported a 38.86% rise in consolidated net profit at Rs 972.47 crore for the quarter ended December 31, 2016 against Rs 700.34 crore reported for the corresponding quarter last year. Moreover, Bharat Electronics jumped after the company reported 33.34% rise in its net profit at Rs 373.54 crore for third quarter ended December 31, 2016 as compared to Rs 280.14 crore for the same quarter in the previous year.

The market breadth remained pessimistic, as there were 1159 shares on the gaining side against 1233 shares on the losing side, while 178 shares remained unchanged.

The BSE Sensex is currently trading at 27870.64, down by 11.82 points or 0.04% after trading in a range of 27813.32 and 27916.20. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.36%, while Small cap index down by 0.04%.

The top gaining sectoral indices on the BSE were Realty up by 0.71%, Capital Goods up by 0.50%, FMCG up by 0.12%, PSU up by 0.06% and Power up by 0.02%, while Auto down by 0.72%, IT down by 0.63%, Consumer Durables down by 0.62%, Oil & Gas down by 0.31% and Banking down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.27%, Sun Pharma up by 1.53%, Dr. Reddy’s Lab up by 1.26%, Larsen & Toubro up by 0.82% and Reliance Industries up by 0.57%. On the flip side, Tata Motors down by 1.52%, Wipro down by 1.42%, TCS down by 1.17%, Hero MotoCorp down by 1.13% and Tata Steel down by 1.12% were the top losers.

Meanwhile, Union Finance Minister Arun Jaitley has expressed his confidence that the implementation of the Goods and Services Tax (GST), along with demonetisation will bring more revenues as far as states and the central government are concerned and enlarge the size as far as the formal economy is concerned.

Talking about the impact of demonetisation, the Minister has said that the move shook the system for some time but is now gradually increasing the process of integrating India’s shadow economy with the formal economy. He also said that the size of the formal economy is growing, so are the transactions in the banking system and through the digital mode.

Asserting that India is largely a tax non-compliant society, Finance Minister said that states and the central government struggled with their revenues to run the system which created an unfair enrichment in favour of the evader. He also said that the country also becomes very unfair on the normal taxpayer because what the evader manages to evade is what the compliant has to pay more. He added that, therefore, the government had decided to withdraw high-denomination bank notes of Rs 500 and Rs 1,000.

On the GST front, Jaitley said that most of the contentious issues have been sorted out between the Centre and states. He also said that national indirect levy—Goods and Services Tax (GST)—is all set to become a reality by July 1 and further noted that GST will make India one single market, eliminate multiple assessments, check evasion and bring more revenues into the system. 

The CNX Nifty is currently trading at 8632.45, down by 8.80 points or 0.10% after trading in a range of 8617.75 and 8650.15. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 8.27%, Bharti Airtel up by 4.32%, Grasim Industries up by 2.60%, Sun Pharma up by 1.41% and Dr. Reddy’s Lab up by 1.22%. On the flip side, Aurobindo Pharma down by 1.95%, HCL Tech down by 1.78%, Bharti Infratel down by 1.71%, Tata Motors - DVR down by 1.57% and Hero MotoCorp down by 1.18% were the top losers.

The Asian markets were trading mixed; Nikkei 225 was down by 0.65%, while Jakarta Composite was up by 0.07%. Markets in China, Singapore, South Korea, Taiwan, Malaysia and Hong Kong were shut on Monday for the Lunar New Year holiday.