Benchmarks trim losses in morning session

Indian equity benchmarks trimmed losses and continued to trade below neutral line in morning session on account of selling in frontline blue chip counters. The market witnessed consolidation amid global weakness, with the benchmark indices trading marginally lower. Investors are awaiting more corporate earnings that scheduled to be announced over next one month and Karnataka elections due next month for further directions. The rupee is back to its losing ways as it fell against the dollar at the open on Wednesday. Pricey oil, a surge in commodity prices, trade deficit worries, deteriorating external finances and the banking mess are all adding to the rupee’s cup of trouble. The street took note that a rise in global crude oil cost to around $75 per barrel lifted the domestic retail petrol to become dearer by 13 paise to Rs 74.63 per litre from Monday’s cost of Rs 74.50 per litre. Petrol prices climbed to new multi-year highs in other major metro cities -- Kolkata, Mumbai and Chennai -- at Rs 77.32, Rs 82.48 and Rs 77.43 per litre respectively on Tuesday. Diesel prices, too, touched record levels in Delhi, Kolkata, Mumbai and Chennai. They rose to Rs 65.93, Rs 68.63, Rs 70.20 and Rs 69.56 per litre respectively. Separately, India is likely to face greater pressure to eliminate duties on 90% of goods it trades with China under the mega trade agreement among 16 Asia Pacific countries that is in the works.

The downside was, however, capped with Ashish Kumar Bhutani, joint secretary in Ministry of Agriculture statement that agriculture credit is growing every year and reached Rs 10 lakh crore last fiscal, while stressing upon the need to increase the flow to small farmers as well as providing loan access to tenant cultivators. Bhutani said Rs 6.8 lakh crore was short-term crop loans out of Rs 10 lakh crore credit disbursed last fiscal. In the short-term crop loans, he said 50 per cent amount was provided to small and marginal farmers. Separately, Union Commerce and Industry Minister Suresh Prabhu said that the government has finalized a new industrial policy with a major focus on promoting setting up of industrial units in rural areas.

Meanwhile, telecom companies stocks were buzzing after the telecom tribunal stayed a regulatory order that reset the threshold for predatory pricing and required operators to report all tariffs in the interests of transparency and non-discrimination, offering relief to India’s top telcos that said the revised norms benefitted only Reliance Jio Infocomm, their newest rival. Mixed reactions were witnessed in realty stocks on private report that private equity (PE) investments into the country’s real estate sector declined by 19% year on year in financial year 2017-18. The report added that the decline in PE investment could reflect turbulence in the real estate sector.

Traders were seen buying in Telecom, IT and TECK stocks, while selling was witnessed in Metal, Utilities and Power sector stocks. In scrip specific development, Religare Enterprises was trading in green after the Burman family of Dabur Group has picked up a 9.9% stake in the company by converting warrants that were issued to three of their companies last week after they committed to invest Rs 150 crore. Anand C Burman and Mohit Burman have acquired stake in Religare due to private equity firm Bay Capital’s involvement in the company.

On the global front, Asian markets were trading in red. South Korea’s finance minister said that the government is closely watching currency markets as the won and other emerging currencies are weakening against the US dollar. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 34,600 and 10,600 levels, respectively. The market breadth on BSE was negative in the ratio of 902:1258 while 108 scrips remained unchanged.

The BSE Sensex is currently trading at 34563.09, down by 53.55 points or 0.15% after trading in a range of 34501.89 and 34614.61. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.17%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Telecom up by 1.78%, IT up by 1.38%, TECK up by 1.19%, Realty up by 0.05% and FMCG up by 0.02%, while Metal down by 1.04%, Utilities down by 0.78%, Power down by 0.75%, Capital Goods down by 0.68% and Basic Materials down by 0.61% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.28%, Wipro up by 2.04%, TCS up by 1.66%, Infosys up by 0.78% and Hero MotoCorp up by 0.55%.

On the flip side, ONGC down by 1.51%, NTPC down by 1.47%, Asian Paints down by 1.27%, Tata Steel down by 1.13% and Larsen & Toubro down by 1.12% were the top losers.

Meanwhile, the Finance Ministry has proposed to relax certain conditions for availing a concessional tax rate of 10% on long-term capital gains (LTCG) arising from transfer of listed equity shares or units of equity-oriented fund. After a gap of 14 years, the Union Budget 2018 reintroduced 10% tax on LTCG exceeding Rs 1 lakh from sale of shares. However, LTCG tax was nil for shares sold after a year of purchase till March 2018, as per Budget 2018 proposals. LTCG on sale of unlisted shares is taxed at 20 percent, while short-term capital gain tax on it is 30 percent.

The Finance Ministry has said that to provide the applicability of the tax regime under Section 112A of the I-T Act to genuine cases where the STT could not have been paid, it has also been provided in sub-section (4) of Section 112A of the Act that the Central Government may specify, by notification, the nature of acquisitions in respect of which the requirement of payment of STT shall not apply in the case of acquisition of equity share in a company.

In the draft notification, the Central Board of Direct Taxes (CBDT) has specified the nature of acquisitions in respect of which requirement of payment of STT would not apply for availing the concessional rate of LTCG. Finance Act 2018 provided for long term capital gain tax on transfer of specified securities only if STT has been paid on acquisition and transfer of such capital asset. It also authorised the Central government to notify genuine cases where such payment of STT could not be done.

The CNX Nifty is currently trading at 10592.20, down by 22.15 points or 0.21% after trading in a range of 10576.65 and 10612.60. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 4.23%, TCS up by 1.99%, Wipro up by 1.86%, BPCL up by 1.39% and Tech Mahindra up by 1.38%.

On the flip side, Zee Entertainment down by 2.16%, Vedanta down by 1.73%, Hindalco down by 1.67%, ONGC down by 1.56% and Cipla down by 1.51% were the top losers.

The Asian markets were trading in red; Hang Seng decreased 304.99 points or 1% to 30,331.25, Jakarta Composite decreased 80.28 points or 1.29% to 6,149.36, Nikkei 225 decreased 76.42 points or 0.34% to 22,201.70, KOSPI Index decreased 24.3 points or 0.99% to 2,439.84, FTSE Bursa Malaysia KLCI decreased 14.39 points or 0.77% to 1,850.95, Taiwan Weighted decreased 13.52 points or 0.13% to 10,565.98 and Shanghai Composite decreased 12.65 points or 0.4% to 3,116.28.