Benchmarks recoup some of initial losses; trade tad lower in early deals

Indian equity benchmarks made gap-down opening on Friday amid weak global cues and subdued foreign flows. Foreign institutional investors (FIIs) net sold shares worth Rs 710.74 crore on December 15, according to the provisional data available on the NSE. But, soon markets recouped some of their losses and turned volatile. Now, indices are trading tad lower due to selling in IT, TECK and Consumer Durables counters. Traders were concerned with a private report that India's current account deficit likely rose to its highest in nearly a decade in the July-September quarter as elevated commodity prices and a weak rupee stretched the trade gap even further. Besides, India's exports recorded a flat growth of 0.59 per cent to $31.99 billion in November, even as trade deficit widened to $23.89 billion during the month. Exports stood at $31.8 billion in November last year. Imports rose by 5.37 per cent to $55.88 billion in November as compared to $53.03 billion in the corresponding month a year ago. Meanwhile, the rupee depreciated 4 paise to 82.80 against the US dollar in early trade on Friday amid risk aversion in global markets.

Most of the Asian markets are trading lower, following the broadly negative cues from global markets overnight, with traders remaining largely cautious as aggressive interest rate hikes by global central banks will push the economy into a recession. Also, the manufacturing sector in Japan continued to contract in December, and at a faster pace, the latest survey from Jibun Bank revealed on Friday with a manufacturing PMI score of 48.8. Back home, oil & gas sector stocks were in focus with report that the Union government slashed the windfall tax on domestically produced crude oil and diesel effective December 16, 2022. The Ministry of Finance slashed the tax on crude oil produced by firms such as state-owned Oil and Natural Gas Corporation (ONGC) to Rs 1,700 per tonne from the existing Rs 4,900 per tonne. In stock specific development, Reliance Industries gained after the conglomerate's retail arm launched FMCG brand 'Independence' in Gujarat.

The BSE Sensex is currently trading at 61661.33, down by 137.70 points or 0.22% after trading in a range of 61413.65 and 61893.22. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.72%, while Small cap index was down by 0.20%.

The few gaining sectoral indices on the BSE were Energy up by 0.49%, Oil & Gas up by 0.40%, Telecom up by 0.34%, while IT down by 0.87%, TECK down by 0.71%, Consumer Durables down by 0.71%, PSU down by 0.54%, Power down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.07%, Reliance Industries up by 0.94%, Bharti Airtel up by 0.42%, Power Grid up by 0.37% and Ultratech Cement up by 0.32%. On the flip side, Asian Paints down by 1.24%, TCS down by 1.09%, Wipro down by 0.97%, Infosys down by 0.93% and ITC down by 0.84% were the top losers.

Meanwhile, with an aim that the economy gets a consumption boost, industry body Assocham has made a strong case for doubling the income tax exemption limit to Rs 5 lakh in the forthcoming Budget. Currently, the maximum amount of income which is not chargeable to income tax is Rs 2.5 lakh. In case of persons in the age bracket of 60-80 years, it is Rs 3 lakh and Rs 5 lakh for senior citizens who are above the age of 80. Assocham President Sumant Sinha opined that companies in sectors like steel and cement are now beginning to make plans to increase capacities. Talking about the downside risks, he shared that globally, the world might go into recession and that will impact the external sector, and therefore may affect India's gross domestic product (GDP).

The chamber said the government should increase the exemption limit for income tax to at least Rs 5 lakh so that more disposable income is left in the hands of consumers and the economy gets a consumption boost and further leg-up in the recovery. Sinha said buoyancy in both direct and indirect taxes should give enough elbow room to the government for raising the income tax exemption limit. He said the government must respond to the proactive steps other nations are taking to support the production of green hydrogen as India strives to become a major energy producer. Attention should be given to sustainable and green industries to promote job growth and a green economy.

The chamber said along with consumption, the other path to sustainable growth would be further promoting investment. In this direction, it said the 15 per cent corporate tax rate for new investments in manufacturing can be extended to all sectors, including services. Suggesting another relief measure, it said the interest for late payment of GST should be reduced to 12 per cent from 18 per cent. The penal interest rate of 18 per cent is too high, particularly for MSMEs.

About India Inc's investment scenario, Sinha opined that companies in sectors like steel and cement were now beginning to make plans to increase capacities which is necessary because as consumer demand picks up, if productive capacity is not increased in some of these areas then it will lead to higher inflation. Talking about the downside risks to the economy, he said that ‘the world might go into recession and that will hit our external sector, and therefore might have an impact on the gross domestic product’. However, he added that commodity prices and oil rates will come down, which will be positive for India.

The CNX Nifty is currently trading at 18382.50, down by 32.40 points or 0.18% after trading in a range of 18299.55 and 18440.95. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 1.13%, Reliance Industries up by 1.03%, ONGC up by 0.81%, Eicher Motors up by 0.59% and Power Grid Corp up by 0.37%. On the flip side, Asian Paints down by 1.23%, Infosys down by 1.03%, TCS down by 1.03%, Wipro down by 0.87% and ITC down by 0.86% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 487.58 points or 1.74% to 27,564.12, Straits Times fell 22.06 points or 0.67% to 3,251.69, Taiwan Weighted plunged 177.08 points or 1.20% to 14,557.05, KOSPI declined 7.38 points or 0.31% to 2,353.59, Jakarta Composite lost 13.98 points or 0.21% to 6,737.88 and Shanghai Composite was down by 7.98 points or 0.25% to 3,160.67, while Hang Seng was up by 0.36 points to 19,368.95.