Domestic indices trade firm in early deals

Indian equity benchmarks magnified previous session’s gains with positive start on Friday tracking broadly overnight gains on Wall Street. Domestic indices are trading firm with gains of around one third of a percent each in early deals as traders went for buying in beaten down but fundamentally strong stocks. Sharp fall in oil prices overnight coupled with continued FII inflows aided the domestic sentiments. The provisional data from the National Stock Exchange showed foreign institutional investors (FIIs) bought shares worth Rs 589.10 crore on May 25. Traders took encouragement with report that India’s services exports are expected to overtake merchandise exports in the next five years on the back of above-par growth in emerging areas of service economy. Traders also took note of Chief Economic Adviser V Anantha Nageswaran’s statement that there are signs of private sector investment cycle unfolding and sectors like steel and cement have reached a stage where greenfield investment will take place.

On the global front, Asian markets are trading mixed as lingering concerns about economic slowdown, and fears of a U.S. debt default rendered the mood bearish. Some relief is seen as lawmakers move closer to a deal to raise debt limit and cap spending for two years. Meanwhile, the Ministry of Internal Affairs and Communications said overall consumer prices in the Tokyo region of Japan were up 3.2 percent on year in May. Besides, the Bank of Japan said producer prices in Japan were up 1.6 percent on year in April. Hong Kong is closed for Vesak Day holiday.

Back home, metal stocks are in focus with report that around 40 million tonne (MT) of new steel-making capacity will be commissioned by 2025-26. In stock specific developments, Vodafone Idea gained after consolidated net loss narrows in Q4FY23. On the other hand, Page Industries plunged after it reported a weak set of numbers for the March quarter of FY23.

The BSE Sensex is currently trading at 62074.05, up by 201.43 points or 0.33% after trading in a range of 61911.61 and 62104.75. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.30%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were IT up by 0.85%, TECK up by 0.64%, Realty up by 0.62%, Auto up by 0.57% and FMCG up by 0.54%, while Oil & Gas down by 0.20%, Utilities down by 0.13%, Bankex down by 0.06% and Power down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.70%, Tech Mahindra up by 1.48%, Wipro up by 1.20%, Maruti Suzuki up by 1.12% and Ultratech Cement up by 1.03%. On the flip side, Power Grid down by 0.48%, HDFC down by 0.45%, Axis Bank down by 0.37%, Bharti Airtel down by 0.35% and Sun Pharma down by 0.29% were the top losers.

Meanwhile, the Finance Ministry has notified 21 countries, including the US, UK and France, from where non-resident investment in unlisted Indian startups will not attract angel tax. However, the list excludes investment from countries like Singapore, Netherlands and Mauritius. The government had in the Budget brought overseas investment in unlisted closely held companies, except DPIIT recognised startups, under the Angel Tax net. Following that, the startup and venture capital industry sought exemption for certain overseas investor classes.

The Central Board of Direct Taxes (CBDT) has notified classes of investors who would not come under the Angel Tax provision. Excluded entities include those registered with SEBI as Category-I FPI, Endowment Funds, Pension Funds and broad-based pooled investment vehicles, which are residents of 21 specified nations, including the US, UK, Australia, Germany and Spain, as per the notification. The other nations mentioned in the notification are Austria, Canada, Czech Republic, Belgium, Denmark, Finland, Israel, Italy, Iceland, Japan, Korea, Russia, Norway, New Zealand and Sweden. The CBDT notification comes into effect on April 1.

The CBDT is expected to come out with valuation guidelines for valuing non-resident investment in unrecognised startups for the purpose of levying income tax. Under the existing norms, only investments by domestic investors or residents in closely held companies were taxed over and above the fair market value. This was commonly referred to as an angel tax. The Finance Act, 2023, has said that such investments over and above the FMV will be taxed irrespective of whether the investor is a resident or non-resident. Post the amendments proposed in the Finance Bill, concerns have been raised over the methodology of calculation of fair market value under two different laws.

The CNX Nifty is currently trading at 18375.90, up by 54.75 points or 0.30% after trading in a range of 18333.15 and 18383.70. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 1.64%, Tech Mahindra up by 1.55%, Wipro up by 1.21%, Tata Consumer Products up by 1.15% and Maruti Suzuki up by 1.11%. On the flip side, ONGC down by 2.08%, Grasim Industries down by 1.04%, Power Grid down by 0.50%, Axis Bank down by 0.42% and Bharti Airtel down by 0.39% were the top losers.

Asian markets are trading mixed; Nikkei 225 surged 221.57 points or 0.71% to 31,022.70, Taiwan Weighted rose 180.14 points or 1.09% to 16,472.14 and KOSPI was up by 6.79 points or 0.27% to 2,561.48. On the other hand, Shanghai Composite weakened 4.37 points or 0.14% to 3,196.89, Jakarta Composite fell 2.9 points or 0.04% to 6,701.33 and Straits Times was down by 1.95 points or 0.06% to 3,205.77.