Benchmarks continue to trade in negative zone

Indian bourses continue to trade in red terrain in noon session with Sensex and Nifty trading down by 121 and 23 points respectively. Stocks from Energy and Bankex counters were trading lower, while Telecom, Utilities and Power counters were supporting the markets. Sentiments were dampened as the RBI kept the monetary policy rate unchanged at 4 per cent and continued with the ‘accommodative’ policy stance. The central bank pegged real GDP growth forecast for FY22 at 9.5 per cent and at 17.2 per cent for FY23. Adding more pessimism, foreign institutional investors (FIIs) stood as net sellers in the capital market as they offloaded shares worth Rs 719.88 crore on Thursday, as per provisional exchange data. Meanwhile, Prime Minister Narendra Modi met former Australian premier Tony Abbott with the two leaders emphasising that enhanced economic cooperation between India and Australia would help the two countries in realising their shared vision of a stable, secure and prosperous Indo-Pacific region.

On the global front, Asian markets were trading mostly lower as investors waited for U.S. jobs data for an update on how coronavirus flareups are affecting the biggest global economy. Back home, in scrip specific development, Future Retail declined after the Supreme Court ruled in favour of Amazon in the Future Retail-Reliance Retail case, in a big win for the US-ecommerce giant.

The BSE Sensex is currently trading at 54372.03, down by 120.81 points or 0.22% after trading in a range of 54256.98 and 54633.58. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.59%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were Telecom up by 1.83%, Utilities up by 1.52%, Power up by 1.21%, Industrials up by 0.64% and PSU was up by 0.54%, while Energy down by 1.29%, Realty down by 0.25% and Bankex was down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.57%, Bharti Airtel up by 2.20%, Maruti Suzuki up by 1.62%, Tech Mahindra up by 1.53% and NTPC was up by 1.33%. On the flip side, Reliance Industries down by 1.96%, Nestle down by 1.18%, Ultratech Cement down by 1.14%, HDFC down by 0.84% and SBI was down by 0.76% were the top losers.

Meanwhile, after the government brought a bill in Parliament to withdraw all back tax demands, Revenue Secretary Tarun Bajaj has said that the bill will give confidence to the investor community regarding India's stable tax regime. Finance Minister Nirmala Sitharaman introduced 'The Taxation Laws (Amendment) Bill, 2021' in the Lok Sabha that seeks to withdraw tax demands made using a 2012 retrospective legislation to tax the indirect transfer of Indian assets. The bill provides for the withdrawal of tax demand made on ‘indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012 (i.e. the day the retrospective tax legislation came into being).’ It is also proposed to refund the amount paid in these cases without any interest thereon,' it said.

Bajaj said the government has voluntarily taken the decision to nullify all retro tax demands. He added ‘After reaching some conclusion in arbitration proceedings, we have taken this bold step to assure investor community about predictability in tax regime. The retrospective taxation continued to be a sore point and hence the government has voluntarily decided to bring in this bill’. The Indian government has lost two separate arbitrations brought by Cairn Energy Plc and Vodafone Group against the levy of retrospective taxes. While the government has virtually no liability in the Vodafone case, it has to refund $1.2 billion to Cairn Energy for the shares of the company it had sold, tax refund withheld and dividends confiscated.

Revenue Secretary said the bill would give confidence to the investor community about the government's commitment that it does not believe in retrospective taxation. Currently, demands have been raised under the 2012 retrospective tax law in 17 cases, of which in four cases enforcement actions have been undertaken. While the total demand in the 17 cases is to the tune of Rs 1.08 lakh crore, recovery of around Rs 8,100 crore has been made in four cases. This includes Rs 7,900 crore from Cairn UK and about Rs 200 crore from three other companies. As per the bill introduced in the Lok Sabha, the government will refund this Rs 8,100 crore, without any interest. He noted ‘It is not a question of Rs 8,000 crore (which has been collected though this retro tax), but the intent of the government that it does not believe in retro taxation’.

The CNX Nifty is currently trading at 16272.05, down by 22.55 points or 0.14% after trading in a range of 16235.55 and 16336.75. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Adani Ports &Special up by 3.45%, Indusind Bank up by 2.56%, Tata Consumer Produc up by 2.20%, Bharti Airtel up by 2.09% and Indian Oil Corp. up by 1.73%. On the flip side, Cipla down by 3.23%, Reliance Industries down by 2.07%, Shree Cement down by 1.42%, Ultratech Cement down by 1.15% and Nestle down by 1.14% were the top losers.

Asian markets were trading mostly lower; Shanghai Composite declined 14.92 points or 0.43% to 3,451.63, Hang Seng decreased 10.76 points or 0.04% to 26,193.93, Taiwan Weighted dropped 76.84 points or 0.44% to 17,526.28, KOSPI fell 5.77 points or 0.18% to 3,270.36 and Jakarta Composite was down by 2.04 points or 0.03% to 6,203.38.

On the other hand, Straits Times advanced 0.03 points or 0% to 3,175.13 and Nikkei 225 was up by 91.92 points or 0.33% to 27,820.04.