Benchmarks continue weak trade with modest cut

Indian equity benchmarks continued their weak trade with modest cut in late morning session ahead of expiry of April Futures & Options contracts. Extending its gains into the fourth straight session, the rupee opened higher against the dollar on account of selling of the American currency by banks and exporters. Foreign portfolio investors stood net buyers in the domestic equity market on Wednesday, as they bought shares worth a net of Rs 325.98 crore with gross purchases and gross sales of Rs 5,660.25 crore and Rs 5,334.27 crore, respectively. The sentiments were under pressure after Finance Minister Arun Jaitley expressed concerns at signs of economic protectionism and new barriers to migration while speaking in Moscow, days after raising the issue in Washington. Jaitley listed economic protectionism as a top concern, right after talking about unpredictability in ties between major powers. Separately, investors took note that a stronger rupee can help check inflation as it will pull down commodity prices, but export-reliant companies such as IT firms and drug makers are likely to take up to 4% hit on their earnings. Exporters’ body Federation of Indian Export Organisations (FIEO) said the rupee appreciation during the last two months has negatively impacted the country’s exports, and demanded immediate support from the government. A stronger rupee against the dollar erodes the margins of the exporters and reduces their competitiveness.

Traders were seen piling position in IT, Consumer Durables and TECK stocks, while selling was witnessed in Realty, FMCG and Metal stocks. In scrip specific development, GIC Housing Finance was trading in green on reporting 24.4% increase in net profit at Rs 46.61 crore for the fourth quarter ended March 31. It had reported net profit of Rs 35.87 crore for the same period of 2015-16. Tata Sponge Iron was trading in green on reporting 62% rise in consolidated profit to Rs 21.20 crore for the quarter ended March 31, 2017. The company had posted consolidated profit of Rs 13.08 crore in the year-ago period. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. April 2017 series to next month i.e. May 2017 series. The near month April 2017 derivatives contracts will expire today i.e. April 27, 2017.

On the global front, Asian shares were trading mostly in red, with South Korea in focus as well as comments on free trade in North America from the White House. The Bank of Japan increased its real gross domestic product (GDP) forecast for the 2017-18 fiscal year to 1.6% from 1.5%, while keeping its target yield for the benchmark 10-year Japanese government bond at around 0% and 80 trillion yen annual pace of expansion of its monetary base. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,350 and 30,100 levels respectively. The market breadth on BSE was negative in the ratio of 1124:1190, while 111 scrips remained unchanged.

The BSE Sensex is currently trading at 30088.08, down by 45.27 points or 0.15% after trading in a range of 30044.77 and 30184.22. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.18%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were IT up by 0.72%, Consumer Durables up by 0.62%, TECK up by 0.60%, Auto up by 0.44% and Industrials up by 0.29%, while Realty down by 0.59%, FMCG down by 0.57%, Metal down by 0.49%, Energy down by 0.35% and Telecom down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.61%, Power Grid Corporation up by 1.32%, Infosys up by 1.07%, Hero MotoCorp up by 0.99% and Cipla up by 0.82%.

On the flip side, ITC down by 1.46%, Lupin down by 1.36%, Axis Bank down by 1.10%, Tata Steel down by 0.88% and Asian Paints down by 0.87% were the top losers.

Meanwhile, dismissing the suggestion of NITI Aayog member Bibek Debroy, the Finance Minister Arun Jaitley has said that the government does not plan to impose any tax on agricultural income. He clarified that according to the constitutional allocation of powers, the central government has no jurisdiction to impose tax on agricultural income.

Jaitley said, ‘I have read the paragraph in Niti Ayog Report entitled 'Income tax on agriculture income'. To obviate any confusion on the subject, I categorically state that the Central Government has no plan to impose any tax on agriculture income. As per the Constitutional Allocation of Powers, the Central Government has no jurisdiction to impose tax on agricultural income.’

The NITI Aayog member Bibek Debroy had said that taxes should be imposed on agricultural income above a certain threshold in order to expand the tax base. He also added that on expanding the base on the personal income tax side, other than elimination of exemptions, is to also tax rural sector, including agriculture income above certain threshold.

The NITI Aayog has said that Debroy’s suggestion is neither the view of the Aayog nor is such a recommendation made anywhere in the Draft Action Agenda document as circulated to the Governing Council at the meeting on April 23, 2017. NITI Aayog noted that the views on taxing farm income expressed by Member Bibek Debroy were personal and not those of the Aayog.

The CNX Nifty is currently trading at 9344.95, down by 6.90 points or 0.07% after trading in a range of 9329.25 and 9363.40. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.30%, Tata Motors up by 1.56%, Tata Motors - DVR up by 1.22%, Power Grid Corporation up by 1.17% and Infosys up by 1.07%.

On the flip side, ITC down by 1.55%, Lupin down by 1.43%, Grasim Industries down by 1.17%, Axis Bank down by 1.05% and Hindalco down by 0.84% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 25 points or 0.13% to 19,264.43, Jakarta Composite decreased 21.33 points or 0.37% to 5,705.20, Shanghai Composite decreased 11.71 points or 0.37% to 3,129.14 and FTSE Bursa Malaysia KLCI decreased 1.25 points or 0.07% to 1,767.67.

On the other hand, KOSPI Index increased 0.85 points or 0.04% to 2,208.69, Hang Seng increased 1.88 points or 0.01% to 24,580.31 and Taiwan Weighted increased 6.84 points or 0.07% to 9,863.29.