Local equities trading slightly in red

Local equity benchmarks were trading slightly in red in late morning session, amid rising global trade tensions. The market breadth is red as 1243 shares declined, as against 915 shares advanced, while 145 shares were unchanged. FMCG, Healthcare, Energy stocks are providing some support to the indices, while PSU banks are down 0.98%. Traders took note of a report that with interest rates cycle reversing, cost of borrowing for housing finance companies (HFCs) and microfinance institutions (MFIs) is likely to increase by over 30 basis points in the current fiscal year, and by another 40-50 basis in FY20. Adding to the some pessimism IMF estimated that the real effective depreciation of Indian rupees is between six and seven percent. Indian rupee has lost about 11 percent of its value in nominal terms vis-a-vis the US dollar. However, losses remained capped as traders were getting some solace with Finance Minister Arun Jaitley’s statement that the depreciation of rupee to a combination of global factors, including trade war and internal policy decisions of the United States. Besides, a private report stated that the current depreciation in the rupee is part of an emerging market scare. The measures announced by the government are very promising and good on intent but possibly a little bit underwhelming as far as the actual action is concerned.

On the global front, Asian markets were trading mostly in red, after US President Donald Trump said he will impose tariffs on an additional $200 billion worth of Chinese imports, escalating of the trade conflict between the world’s two biggest economies. Back home, on the sectoral front, PSU banking stock were trading in red, despite the government cleared the way for a long-pending proposal of a major consolidation of public sector banks by announcing the merger of Bank of Baroda, Vijaya Bank and Dena Bank, which bank veterans and market watchers called a ‘big, bold and intelligent’ step.

The BSE Sensex is currently trading at 37541.66, down by 43.85 points or 0.12% after trading in a range of 37531.85 and 37745.44. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.10%, while Small cap index was down by 0.19%.

The few gaining sectoral indices on the BSE were FMCG up by 1.08%, Healthcare up by 0.66%, Energy up by 0.08% and Consumer Disc was up by 0.05%, while Realty down by 1.02%, PSU down by 0.98%, Power down by 0.79%, Metal down by 0.74% and Utilities was down by 0.69% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.90%, Yes Bank up by 1.43%, Asian Paints up by 1.22%, Sun Pharma up by 0.98% and ONGC was up by 0.64%. On the flip side, Vedanta down by 2.05%, Tata Motors - DVR down by 1.91%, Power Grid down by 1.64%, Tata Motors down by 1.27% and SBI was down by 1.19% were the top losers.

Meanwhile, expressing confidence on robust tax collection, Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra is hoping to cross the Rs 11.5 lakh crore direct tax collection target for the current fiscal (FY19). The government had projected a 14.3% rise in direct tax collections to Rs 11.5 lakh crore in 2018-19 budget. Besides, direct tax collection increased over 18% to Rs 10.03 lakh crore in fiscal year 2017-18. However, Controller General of Accounts data showed that the direct tax collections grew a paltry 4.2% on year to Rs 1.54 lakh crore in April-June.

CBDT Chairman said total tax refund so far in the current financial year stands at about Rs 95,000 crore. This year, the government conducted a special drive during June 1-30 to expeditiously clear pending direct tax refunds. As per the finance ministry statement, over 99% of all refund claims pending as of June 30 had been processed and disbursed.

Chandra said the government has received close to Rs 7,500 crore on account of Flipkart-Walmart deal. Walmart Inc had completed the acquisition of 77% stake in Flipkart for about $16 billion in mid-August. Following the deal, it had to withhold taxes as per Indian laws while making payments to shareholders of Flipkart. Withholding tax, or retention tax, is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is withheld or deducted from the income due to the recipient.

As per domestic tax law, long-term capital gains tax is levied at 20% for shares sold by foreign investors after 24 months of purchase. However, the I-T law also provides for a taxpayer to pay taxes at a lower or nil rate if he is eligible to claim the benefits under the double taxation avoidance agreement between India and the country from where the investment was routed.

The CNX Nifty is currently trading at 11354.80, down by 22.95 points or 0.20% after trading in a range of 11347.90 and 11411.45. There were 16 stocks advancing against 32 stocks declining, while 2 stocks remain unchanged on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.85%, Dr. Reddy’s Lab up by 1.97%, Yes Bank up by 1.38%, Sun Pharma up by 0.94% and Asian Paints was up by 0.91%. On the flip side, Vedanta down by 2.21%, Hindalco down by 2.13%, Tech Mahindra down by 1.60%, Power Grid down by 1.54% and Tata Motors was down by 1.50% were the top losers.

Asian markets were trading mostly in red, Taiwan Weighted declined 64.18 points or 0.6% to 10,764.43, Straits Times slipped 18.33 points or 0.59% to 3,123.07, Shanghai Composite dropped 3.26 points or 0.12% to 2,648.53, Jakarta Composite lost 28.93 points or 0.5% to 5,795.33 and Hang Seng was down by 229.48 points or 0.86% to 26,703.37.

On the other side, KOSPI gained 4.58 points or 0.2% to 2,307.59 and Nikkei 225 was up by 352.80 points or 1.5% to 23,447.47.