Benchmarks manage to keep head above water in early deals

Indian equity benchmarks made a cautious start on Friday, but managed to keep their head above water in early deals. Sentiments calmed down to some extent after Finance Minister P Chidambaram, who in a bid to allay investors’ fears about the rupee falling 5.5 per cent in five days, said that though the currency is undervalued and has overshot appropriate levels, there is no need for excessive and unwarranted pessimism. Some recovery in Indian rupee too aided the optimism as it was quoting at Rs 64.58 compared with previous close of Rs 64.63.

Global cues too remained supportive with the US markets ending higher overnight mainly on bargain hunting, traders even overlooked the more than three-hour halt of trading on the Nasdaq which could have added strength to the markets. Moreover, Asian markets were rallying at this point of time with Japanese Nikkei surging sharply around two and a half percent with the yen declining against the US dollar and the overnight positive close on Wall Street lifting sentiment to a significant extent and triggering heavy buying almost across the board.

Back home, on the sectoral front, consumer durables witnessed the maximum gain in trade followed by realty and auto, while technology, software and fast moving consumer goods remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks, while the market breadth on the BSE was positive; there were 936 shares on the gaining side against 334 shares on the losing side while 42 shares remain unchanged.

The BSE Sensex opened at 18386.53; about 73 points higher compared to its previous closing of 18312.94, and has touched a high and a low of 18400.08 and 18210.75 respectively.

The index is currently trading at 18330.16, up by 17.22 points or 0.09%. There were 19 stocks advancing against 11 declines on the index.

The overall market breadth has made a strong start with 71.34% stocks advancing against 25.46% declines. The broader indices were trading in green; the BSE Mid cap up by 1.08% and Small cap indices up by 1.08%. 

The top gaining sectoral indices on the BSE were, Consumer Durables up by 3.10%, Realty up by 1.79%, Auto up by 1.77%, Metal up by 1.70% and Capital Goods up by 1.67%, while TECk down by 0.38%, IT down by 0.18%, FMCG down by 0.15% and Health Care down by 0.14% were the top loser on the sectoral index.

The top gainers on the Sensex were Jindal Steel up by 5.27%, BHEL up by 3.72%, Tata Motors up by 3.40%, Tata Steel up by 1.90% and Sterlite Inds up by 1.89%. On the flip side, Bharti Airtel was down by 2.25%, Dr Reddys Lab was down by 1.72%, NTPC was down by 1.60%, ITC was down by 1.54% and Infosys was down by 1.10% were the top losers on the Sensex.

Meanwhile, in order to raise the tax revenue collection, the government is likely to clear the Direct Taxes Code (DTC) Bill 2013, which will bring in sweeping changes in the income tax regime, including a higher 35% tax for the super-rich and a wealth tax on a host of new assets such as expensive watches and paintings.

As per the new tax bill, persons earning Rs 10 crore or more a year will be taxed at a higher rate of 35% on their income. Further, an additional tax of 10% may be levied if annual earnings from dividends on mutual funds and equities exceed Rs. 1 crore. For companies, minimum alternate tax may be levied on book profit, while, the securities transaction tax is likely to stay. At present, people with an annual income less than Rs. 2 lakh are exempt from paying taxes while those earning Rs 2-5 lakh are taxed at 10%, Rs 5-10 lakh at 20% and above Rs 10 lakh at 30%. These taxes slabs are also likely to be changed in the new law.

The government is struggling to keep in control the fiscal deficit of the country which surged to 4.9% of GDP in the FY13. The government has expressed its commitment to contain the fiscal deficit to 4.8 percent of GDP in FY14 and reduce it gradually to 3 percent by FY17 and devising various additional measures to garner more revenue. Tax income is the major source of revenue for the government. In the last fiscal, the government’s direct tax collection stood at around Rs 5.65 lakh crore, while, indirect taxes collection was at around Rs 4.69 lakh crore.The CNX Nifty opened at 5,428.75; about 20 points higher as compared to its previous closing of 5,408.45, and has touched a high and a low of 5,435.20 and 5,377.80 respectively.

The index is currently trading at 5,415.25, up by 6.80 points or 0.13%. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were Jindal Steel up by 5.63%, BHEL up by 3.68%, Tata Motors up by 3.60%, Reliance Infrastructure up by 3.30% and IDFC up by 2.36%. On the flip side, UltraTech Cement down by 2.55%, Bharti Airtel down by 2.19%, NTPC down by 1.75%, Dr. Reddy's Laboratories down by 1.66% and ITC down by 1.61% were the major losers on the index.

The Asian equity indices were trading in green; Shanghai Composite rose 6.26 points or 0.30% to 2,073.38, Hang Seng strengthened 115.67 points or 0.53% to 22,011.07, Jakarta Composite surged 56.89 points or 1.36% to 4,228.31, KLSE Composite increased 7.31 points or 0.42% to 1,727.68, Nikkei 225 soared 333.27 points or 2.49% to 13,698.44, Straits Times jumped 10.05 points or 0.33% to 3,099.45, Seoul Composite added 21.91 points or 1.18% to 1,871.03 and Taiwan Weighted was up by 68.14 points or 0.87% to 7,882.52.