Benchmarks trim losses in early noon deals

Indian equity benchmarks trimmed some of their losses in early noon session, but continued to trade below the neutral lines. Traders were seen in selling position for Bankex, Telecom and Basic Materials stocks, while buying was witnessed in Healthcare and Realty stocks. Sentiments on the street remain dampened as India Ratings lowered the country's growth forecast to six-year low of 6.7% for the current fiscal from an earlier estimate of 7.3% on account of slowdown in consumption and moderation in industrial growth among other factors. This would be the third consecutive year of subdued growth. However, downside remain capped with report that the government relaxed foreign direct investment (FDI) rule for foreign single-brand retailers and also permitted foreign investment in contract manufacturing and coal mining to boost the ailing economy.

On the global front, Asian markets were trading mixed in tandem with worries as the uncertainty over US-China trade negotiations continues. Back on street, in scrip specific developments, shares of Yes Bank tumbled as Global rating agency Moody's has downgraded the bank's long-term foreign- currency issuer rating to Ba3 from Ba1. However, Sun Pharmaceutical Industries surged on the bourses on reports that the market regulator Securities and Exchange Board of India (SEBI) has found no merit in the allegations of fraud against the company.

The BSE Sensex is currently trading at 37192.01, down by 259.83 points or 0.69% after trading in a range of 37130.66 and 37381.80. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.49%, while Small cap index was down by 0.60%.

The only gaining sectoral indices on the BSE were Healthcare up by 0.27% and Realty was up by 0.08%, while Bankex down by 1.15%, Telecom down by 0.91%, Basic Materials down by 0.76%, Power down by 0.74% and Utilities was down by 0.72% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.04%, Vedanta up by 1.82%, ONGC up by 0.54%, Hindustan Unilever up by 0.40% and Maruti Suzuki was up by 0.38%. On the flip side, Yes Bank down by 5.63%, ICICI Bank down by 2.23%, HDFC down by 1.71%, Tata Steel down by 1.48% and Bharti Airtel was down by 1.17% were the top losers.

Meanwhile, Central Board of Direct Taxes (CBDT) has said that rollback of enhanced surcharge on short-term and long-term capital gains earned by foreign portfolio investors (FPIs) and domestic investors (DIs) announced by finance minister Nirmala Sitharaman, has not created a differential regime between FPIs and DIs. It noted that this differential regime existed even prior to the 2019 Budget, therefore it was not the creation of the Finance (No 2) Act, 2019, or the announcement made by the Finance Minister.

CBDT said the perception that the withdrawal of enhanced surcharge has created the differential regime in certain sections of media is completely misplaced. It also stated that even before Budget 2019, income arising from derivatives for the domestic investors including AIF category-III as well as for foreign investors who are not FPIs, has been treated as business income and not as capital gains, and taxed at applicable normal income tax rates. Hence, it said the announcement by the Finance Minister has not created a differential regime between FPIs and DIs.

In case of FPIs, it explained that Income Tax Act, 1961 (the Act) contains special provisions [section 115AD read with section 2(14) of the Act] for taxation of income from derivatives. Under this regime, it said income of FPIs arising from derivatives was treated as capital gains and liable for special rate of tax as per section 115AD of the Act.

The CNX Nifty is currently trading at 10970.40, down by 75.70 points or 0.69% after trading in a range of 10952.65 and 11020.15. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 3.06%, Vedanta up by 1.89%, Eicher Motors up by 1.67%, BPCL up by 0.50% and ONGC was up by 0.50%. On the flip side, Indiabulls Housing down by 6.57%, Yes Bank down by 5.46%, ICICI Bank down by 2.28%, HDFC down by 1.69% and Grasim Industries was down by 1.67% were the top losers.

Asian markets were trading mixed; Nikkei 225 slipped 29.15 points or 0.14% to 20,450.27, KOSPI fell 7.51 points or 0.39% to 1,933.58, Hang Seng decreased 42.10 points or 0.16% to 25,573.38 and Shanghai Composite was down by 0.86 points or 0.03% to 2,892.90. On the flip side, Taiwan Weighted strengthened 32.59 points or 0.31% to 10,466.88, Jakarta Composite soared 9.33 points or 0.15% to 6,290.98 and Straits Times was up by 8.65 points or 0.28% to 3,065.12.