Negative trade continues over Dalal Street

Negative trade continued over the Dalal Street in late morning session, with both Sensex and Nifty trading in red terrain, on the back of mixed cues from other Asian markets. Traders were worried, amid reports that consumers may have to pay more for their daily essential items with FMCG companies mulling another round of price hike to offset the impact of an unprecedented level of inflation in commodity prices such as wheat, palm oil and packaging materials. Besides, the ongoing war between Russia and Ukraine has also added another blow to FMCG makers as they expect a rise in the prices of wheat, edible oil and crude. The street overlooked the latest payroll data report stating that retirement fund body EPFO added 15.29 lakh subscribers on a net basis in January 2022, an increase of over 21 per cent compared to 12.60 lakh in December 2021.

On the global front, Asian markets were trading mixed, after Japan's tertiary activity dropped for the first time in five months in January. The data from the Ministry of Economy, Trade and Industry showed that the tertiary activity index declined 0.7 percent month-on-month in January, after a 0.1 percent increase in December.

The BSE Sensex is currently trading at 57799.08, down by 64.85 points or 0.11% after trading in a range of 57569.85 and 58127.95. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.26%, while Small cap index was up by 0.95%.

The top gaining sectoral indices on the BSE were Metal up by 2.48%, Consumer Durables up by 1.26%, Basic Materials up by 1.24%, Healthcare up by 1.17% and Telecom up by 0.45%, while Utilities down by 1.32%, Power down by 1.23%, Bankex down by 0.62%, FMCG down by 0.45% and PSU down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.52%, Titan Co up by 2.09%, Tata Steel up by 1.82%, Sun Pharma up by 1.81% and Wipro up by 1.50%. On the flip side, Power Grid down by 1.65%, Kotak Mahindra Bank down by 1.58%, SBI down by 1.38%, Mahindra & Mahindra down by 1.35% and Hindustan Unilever down by 1.25% were the top losers.

Meanwhile, the government is working on classification of cryptocurrency as goods or services under the ambit of Goods & Services Tax (GST), so that tax can be levied on the entire value of transactions. Currently, Crypto exchanges are taxed at 18% slab of GST on services provided to users under the financial services category.

GST officers are of the view that cryptos, by nature, are similar to lottery, casinos, betting, gambling, horse racing, which have 28 per cent of GST on the entire value. Besides, GST at 3 per cent is levied on the entire transaction value in case of gold. Discussions are in a nascent stage on the rate of tax, whether it would be 0.1 per cent or 1 per cent. First a decision on classification will have to be finalised and then rate will be discussed.

The GST law does not clearly state about classification of cryptocurrency and in the absence of a law on regulating such virtual digital currencies, the classification has to take into account whether the legal framework classifies it as actionable claim. An actionable claim is a claim which can be made by a creditor, for any type of debt other than a debt secured by mortgage of immovable property.

The CNX Nifty is currently trading at 17258.15, down by 28.90 points or 0.17% after trading in a range of 17209.05 and 17353.35. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.04%, Coal India up by 2.52%, Maruti Suzuki up by 2.49%, Titan Co up by 2.11% and Wipro up by 1.80%. On the flip side, Britannia down by 2.12%, Power Grid down by 2.08%, SBI Life Insurance down by 2.08%, Indian Oil Corp. down by 1.77% and Tata Consumer Products down by 1.65% were the top losers.

Asian markets were trading mixed; Taiwan Weighted strengthened 114.93 points or 0.66% to 17,571.45, Straits Times advanced 5.93 points or 0.18% to 3,336.56 and Shanghai Composite gained 0.51 points or 0.02% to 3,251.58. On the flip side, KOSPI fell 14.48 points or 0.53% to 2,692.54, Jakarta Composite lost 14.64 points or 0.21% to 6,940.33 and Hang Seng decreased 18.13 points or 0.08% to 21,394.27.