Post Session: Quick Review

Indian equity benchmarks altered between positive and negative territory for most part of the day and ended on a flat note on Thursday, with frontline gauges holding their crucial 36,700 (Sensex) and 11,050 (Nifty) levels. Domestic indices made a slightly positive start, on the back of strengthening rupee coupled with falling crude prices. 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. However, some selling crept in with Process Plant and Machinery Association of India (PPMAI) expressing concern on surge in metal and capital goods imports from countries such as Korea, Indonesia, Malaysia and Japan with whom India has pacts to promote free trade. It said that the Free Trade Agreements (FTAs) along with lack of reciprocity is adversely hurting the steel manufacturers as well as the capital goods industry.

After that, markets traded on flat note in afternoon session, as Organisation for Economic Co-operation and Development (OECD) warned that trade tensions and political uncertainty including BREXIT are weighing on the world’s economy. OECD lowered its forecast 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. Key indices regained traction in the last leg of trade, as optimism remained among traders with credit rating agency, CARE Ratings’ latest report showing that debt quality of Indian companies improved during January-August 2018. CARE Ratings’ Debt Quality Index (CDQI) remained positive in the reported period. However, markets gave up most of their gains in dying hour of trade to come off their intraday high points, as selling appeared in Healthcare, Realty, Oil & Gas and Metal stocks.

On the global front, Asian markets ended mostly lower on Thursday, as the Organisation for Economic Co-operation and Development (OECD) cut its global growth forecasts again and the US trade deficit surged to a 10-year high in 2018, despite more than two years of President Trump's ‘America First’ policies. European markets were trading in red, ahead of a European Central Bank meeting that is expected to slash growth forecasts and hint at a new round of ultra-cheap loans for euro zone banks.

The BSE Sensex ended at 36726.63, up by 90.53 points or 0.25% after trading in a range of 36590.88 and 36830.25. There were 14 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell0.32%, while Small cap index was down by 0.17%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 1.54%, Industrials up by 0.85%, FMCG up by 0.50%, Bankex up by 0.41% and Telecom up by 0.26%, while Healthcare down by 0.98%, Realty down by 0.95%, Oil & Gas down by 0.91%, Metal down by 0.84% and IT down by 0.64% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Larsen & Toubro up by 2.83%, Axis Bank up by 1.84%, Mahindra & Mahindra up by 1.51%, ITC up by 1.49% and SBI up by 1.48%. (Provisional)

On the flip side, Coal India down by 3.32%, Sun Pharma down by 1.96%, ONGC down by 1.81%, Yes Bank down by 1.59% and NTPC down by 1.55% were the top losers. (Provisional)

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 ended at 11053.05, up by 0.05 points after trading in a range of 11027.10 and 11089.05. There were 17 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Larsen & Toubro up by 2.35%, Mahindra & Mahindra up by 1.96%, Axis Bank up by 1.90%, ITC up by 1.33% and SBI up by 1.33%. (Provisional)

On the flip side, Indian Oil Corp. down by 3.45%, Coal India down by 3.44%, Zee Entertainment down by 3.16%, Wipro down by 2.99% and NTPC down by 2.25% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 36.56 points or 0.51% to 7,159.44, France’s CAC dropped 19.73 points or 0.37% to 5,269.08 and Germany’s DAX was down by 61.10 points or 0.53% to 11,526.53.

Asian markets ended mostly lower on Thursday as the Organisation for Economic Co-operation and Development (OECD) cut its global growth forecasts again and the US trade deficit surged to a 10-year high in 2018, despite more than two years of President Trump's ‘America First’ policies. US private sector job growth also moderated in February, keeping investors cautious ahead of the European Central Bank (ECB) meeting later in the day and the monthly US jobs report due on Friday. Chinese shares ended higher as Huawei Technologies filed a lawsuit against the US government for banning its equipment from certain networks in the US. Further, Japanese shares hit one-week low, dragged down by banks and chipmakers. Meanwhile, the Indonesia market is closed for a public holiday.