Post Session: Quick Review

Indian indices extended their bleeding for fourth straight session on Tuesday, as caution set in ahead of index of industrial production (IIP) data for December and inflation numbers for January to be released later in the day. Sharp sell-off in last leg of trade dragged the markets to low points, breaching their crucial 10,850 (Nifty) and 36,200 (Sensex) levels. Key indices made a cautious start and traded marginally lower in morning deals, as traders remained wary with the Agricultural & Processed Food Products Export Development Authority’s (Apeda) data showing that India’s exports of agricultural commodities nosedived by up to a staggering 46 per cent in volume terms due to supply glut in the international market which prompted stockists to defer their purchase plans amid expectations of further price fall.

After that, key equity indices traded flat in afternoon session, as traders remained anxious with a private report which stated that India’s budgets show the government’s been fixing unrealistic revenue targets, and in the process setting itself up for falling short of fiscal deficit goals. Markets witnessed sharp selling activity towards the end of the day, even as global cues remained positive. Tepid earnings by some more companies and foreign fund outflows also dampened trading sentiment. Traders even overlooked Electronics and IT Secretary Ajay Prakash Sawhney’s statement that new schemes introduced by the government will focus not only on manufacturing of electronics in India, but also positioning the country as an export hub.

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading in green, as investors hoped a new round of US-China trade talks would help resolve a dispute that's dented global growth. Back home, Airlines stocks ended lower, despite aviation consultancy CAPA India’s report showing that India's airlines are poised to cut their cumulative losses by as much as two-thirds in the financial year starting in April due to a more stable oil price, with low-cost carriers returning to profitability. 

The BSE Sensex ended at 36152.05, down by 242.98 points or 0.67% after trading in a range of 36127.61 and 36465.40. There were 8 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.01%, while Small cap index was down by 0.43%.(Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.56%, Healthcare up by 0.37%, Basic Materials up by 0.31% and Energy up by 0.19%, while Telecom down by 1.78%, Realty down by 1.06%, Bankex down by 0.88%, FMCG down by 0.77% and IT down by 0.74% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 1.94%, Sun Pharma up by 1.59%, Tata Steel up by 1.31%, Asian Paints up by 0.77% and NTPC up by 0.68%. (Provisional)

On the flip side, Hero MotoCorp down by 2.71%, HDFC down by 2.22%, SBI down by 1.75%, ICICI Bank down by 1.69% and Tata Motors - DVR down by 1.60% were the top losers. (Provisional)

Meanwhile, with an aim to help budding entrepreneurs, the government is considering giving complete exemption to startups from angel tax once they are certified by the Commerce and Industry Ministry. The consideration assumes significance as several startups have claimed to receive angel tax notices, impacting their businesses. Various startups have raised concerns on notices sent to them under the Section 56(2)(viib) of Income Tax Act to pay taxes on angel funds received by them. Besides, in order to address the angel tax issue, officials of the department for promotion of industry and internal trade (DPIIT) and Central Board of Direct Taxes (CBDT) are holding series of meetings.

This move may be gelled with capping the investment to a much higher level of angel funds so that a good number of startups do not face the taxmen. A notification in this regard is expected to be issued by the department and board soon. Giving relief to budding entrepreneurs last year, the government allowed startups to avail tax concession only if total investment, including funding from angel investors, does not exceed Rs 10 crore.  Though startups are demanding complete exemption from this tax, the government may increase investment limit for tax exemption to Rs 25-40 crore.

Section 56(2)(viib) of the Income Tax Act provides that the amount raised by a startup in excess of its fair market value would be deemed as income from other sources and would be taxed at 30 per cent. Touted as an anti-abuse measure, this section was introduced in 2012. It is dubbed as angel tax due to its impact on investments made by angel investors in startup ventures.

Recently, the government eased the procedure for seeking income tax exemption by startups on investments from angel funds and prescribed a 45-day deadline for a decision on such applications of budding entrepreneurs. The new procedure says that to seek exemption, a startup should apply, with all documents, to DPIIT. The application of the recognised startup shall then be moved to the CBDT. Startups will have to provide account details and return of income for last three years. Similarly, investors would also have to give their net worth details and return of income.

The CNX Nifty ended at 10832.05, down by 56.75 points or 0.52% after trading in a range of 10823.80 and 10910.90. There were 20 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were JSW Steel up by 3.92%, Zee Entertainment up by 3.88%, Dr. Reddys Lab up by 2.05%, Eicher Motors up by 2.04% and NTPC up by 1.99%. (Provisional)

On the flip side, Bharti Infratel down by 3.23%, Hero MotoCorp down by 3.01%, HDFC down by 2.17%, SBI down by 2.03% and ICICI Bank down by 1.90% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 rose 23.78 points or 0.33% to 7,152.89, France’s CAC added 43.06 points or 0.86% to 5,057.53 and Germany’s DAX was up by 111.40 points or 1.01% to 11,125.99.

Asian markets ended mostly higher on Tuesday as another round of US-China trade talks got underway in Beijing and US congressional negotiators reached an agreement in principle to fund the government and avoid another shutdown ahead of a Friday midnight deadline. Chinese shares ended higher as Beijing vowed policy support for the healthcare sector. Further, Japanese shares led regional gains as markets reopened after being closed for the National Foundation Day holiday on Monday.