Markets pare gains on prevailing caution ahead of derivative contracts settlement

Indian equity markets have pared some early gains on account of prevailing volatility ahead of settlement of derivative contracts on Thursday, with markets remaining closed for trading tomorrow, i.e, December 25 on account of ‘Christmas’. Further, even caution ahead of political stalemate in the US over a deal to avert the fiscal cliff, were keeping bulls under check. However, stocks from Information Technology, Health Care and Realty counters, enticing buyer’s traction, were keeping the mood upbeat at D-street. On the flip side, stocks from Oil & Gas, Bankex and Capital Goods continued to be laggards on BSE sectoral front. In the range-bound session of trade, 30 share barometer index, Sensex, hanging with gains of over quarter points, was trading sub 19300 mark, however 50 share index, Nifty, despite trading near to its neutral line, was trading above  5850 mark. Broader indices, outperforming frontline equity indices, were trading with gains of over quarter percent.

On the global front, Asian shares steadied in quiet pre-holiday trade on Monday from a slump late last week, with prices capped by nervousness about the risk of the United States failing to avert a fiscal crisis. The White House on Friday tried to rescue stalled talks but there was little progress as lawmakers and President Barack Obama abandoned Washington for Christmas. Meanwhile, European stocks are seen inching higher on Monday in a quiet half-session ahead of the Christmas break.

Back home, the BSE Sensex is currently trading at 19274.87, up by 32.87 points or 0.17% after trading in a range of 19347.64 and 19261.66. There were 20 stocks advancing against 10 declines on the index.

The broader indices too pared gains; the BSE Mid cap and Small cap index were trading up by 0.36% and 0.37% respectively.

 The top gaining sectoral indices on the BSE were, IT up by 1.13%, TECk up by 1.03%, Health Care up by 0.90%, Realty up by 0.77% and Auto up by 0.53%. While, Oil & Gas down by 0.41%, Bankex down by 0.19%, Capital Goods down by 0.18% and Consumer Durables down by 0.05% were the only losers on the index.

The top gainers on the Sensex were Sun Pharma up by 1.71%, Tata Motors up by 1.57%, Infosys up by 1.37%, Tata Steel up by 1.21% and Wipro up by 1.19%.  On the flip side, ONGC down by 1.80%, Jindal Steel was down by 1.38%, Maruti Suzuki down by 1.32%, ICICI Bank down by 0.59% and BHEL down by 0.44% were the top losers on the Sensex.

Meanwhile, in signs of slowing growth eating into profit margins of corporates, Advance tax collection registered a marginal increase of 7.5 per cent in the third quarter to Rs 78,000 crore. Advance corporate tax collections have shown 7 per cent growth year-on-year, while advance tax collections from individuals and firms registered 12 per cent growth during the period.

Companies pay advance taxes in four installments. In the current quarter, they have to pay 30 per cent of their annual tax liability. However, lots of major names like RIL, L&T and SBI paid lower amount compared to same quarter last year, indicating that the slowdown in economic activity is affecting profitability. Barring few, most of the banks paid higher Q3 advance tax, the private and global banks surpassed their PSU counterparts and Deutsche Bank even paid double of what it paid in same quarter last year.

Further, the Cement companies gave a mixed view, while the pharma sector showed their continued bullishness and paid higher advance taxes for the third quarter. There was some disappointment too, as one of the top companies, Reliance Industries paid around 10% lower advance tax, while the construction major L&T’s tax outgo too were lower by around 5%.

Further, the rise is advance tax collection at 7.5 per cent during the quarter was lower than the annual increase of 15 per cent in direct taxes that is envisaged for the current fiscal in the budget. However, the IT department is expected to approach a non-adversarial approach in realizing the direct tax target of Rs 5.70 lakh crore for 2012-13. 

The S&P CNX Nifty is currently trading at 5,857.65, up by 9.95 points or 0.17% after trading in a range of 5,871.90 and 5,848.30. There were 32 stocks advancing against 17 declines on the index and one remained unchanged.

The top gainers of the Nifty were Sun Pharma up by 1.74%, Tata Motors up by 1.70%, BPCL up by 1.66%, HCL Technologies up by 1.40% and DLF up by 1.32%.

On the flip side, ONGC down by 1.97%, Ultra Cement down by 1.44%, Maruti Suzuki down by 1.42%, Jindal Steel down by 1.30% and  JP Associates down by 1.14% were the major losers on the index.

Most Asian equity indices were trading in green; Shanghai Composite, Hang Seng and Straits Times advanced 0.16%, while KOSPI Composite was up by 0.07%. On the flip side, KLSE Composite declined 0.23% and Taiwan Weighted slid 0.06%, were the losers amongst Asian pack. Meanwhile, Japanese and Indonesian markets remain closed on Monday for public holidays.