Markets trade slightly in green in early deals

Indian equity markets made a cautious start and are trading slightly in green in early deals on Thursday as traders opted to buy beaten down but fundamentally strong stocks. Besides, strengthening rupee coupled with falling crude prices supported the domestic sentiment. Some optimism also came in with report that the income tax (I-T) department has notified the modified norms for startups to enable them to seek angel tax exemption for investments of up to Rs 25 crore. The modified norms, which are aimed at encouraging budding entrepreneurs, will be effective retrospectively from February 19, when the Department for Promotion of Industry and Internal Trade (DPIIT) relaxed the norms for startups. Traders took note of a report that India is exploring various options, including approaching the WTO dispute body, to deal with the US decision to withdraw import incentives for about 2,000 domestic goods under the trade preference scheme.

However, weak global cues capped further gains on the street. Asian markets were trading mostly in red, with no fresh reports on the China-US trade front and as investors turned their attention to further signs of weakness in the global economy. The Organisation for Economic Co-operation and Development (OECD) has lowered its 2019 forecast for global economic growth to 3.3 per cent for this year, down from the 3.5 per cent it predicted in November, which was itself a downgrade from a previous 3.7 per cent. It added that high policy uncertainty, ongoing trade tensions, and a further erosion of business and consumer confidence are all contributing to the slowdown.

Back home, wind energy sector stocks were buzzing with Crisil Research’s report that the country's wind energy sector is likely to see a slow growth with regard to capacity addition over the next five years. It added that the shift to a competitive bidding mechanism has slowed industry growth due to a significant fall in tariffs, triggering a decline in both bid response and profitability for original equipment manufacturers (OEMs).

The BSE Sensex is currently trading at 36688.37, up by 52.27 points or 0.14% after trading in a range of 36650.71 and 36749.30. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.05%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Utilities up by 0.95%, Telecom up by 0.79%, Power up by 0.75%, FMCG up by 0.67% and Energy was up by 0.56%, while Metal down by 1.00%, Auto down by 0.55%, Basic Materials down by 0.42%, IT down by 0.04% and Consumer Disc was down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.38%, Hindustan Unilever up by 0.92%, Larsen & Toubro up by 0.92%, Reliance Industries up by 0.91% and SBI was up by 0.85%. On the flip side, Vedanta down by 2.66%, Yes Bank down by 1.34%, Coal India down by 1.07%, ONGC down by 0.91% and Hero MotoCorp was down by 0.82% were the top losers.

Meanwhile, with an aim to encourage budding entrepreneurs, the income tax (I-T) department has notified the modified norms for startups to enable them to seek 'angel tax' exemption for investments of up to Rs 25 crore. The modified norms will be effective retrospectively from February 19, 2019, when the Department for Promotion of Industry and Internal Trade (DPIIT) relaxed the norms for startups.

The DPIIT, under the commerce and industry ministry, had raised the investment limit for 'angel tax' exemption to Rs 25 crore and extended the period of availing benefits to 10 years for startups. Earlier, the investment limit for a start-up to seek exemption under Section 56(2)(viib) of Income Tax Act, 1961, was Rs 10 crore and they were permitted to avail the benefits only for seven years.

The decision by the DPIIT came after several startups said they have received angel tax notices, impacting their businesses. Such notices, sent under Section 56(2)(viib) of the Income Tax Act, demanded taxes on angel funds received by startups. With regard to cases where tax demands have been raised, the CBDT has already asked the field formations to expeditiously clear them.

Section 56(2)(viib) of the Income Tax Act provides that the amount raised by a start-up 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 start-up ventures.

The CNX Nifty is currently trading at 11053.90, up by 0.90 points or 0.01% after trading in a range of 11044.45 and 11077.95. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were HPCL up by 2.25%, Bharti Infratel up by 1.62%, Larsen & Toubro up by 1.40%, Hindustan Unilever up by 1.09% and Power Grid Corporation up by 0.98%. On the flip side, Vedanta down by 2.30%, Indian Oil Corporation down by 2.23%, Wipro down by 2.14%, Coal India down by 1.30% and Indiabulls Housing Finance down by 1.24% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 slipped 183.98 points or 0.85% to 21,412.83, Hang Seng decreased 133.26 points or 0.46% to 28,904.34, Taiwan Weighted dropped 32.40 points or 0.31% to 10,324.75, KOSPI fell 6.73 points or 0.31% to 2,168.87 and Shanghai Composite was down by 0.50 points or 0.02% to 3,101.60. On the other hand, Straits Times was up by 8.47 points or 0.26% to 3,231.31.