Indian markets trade lower on feeble global cues

Extending their previous session’s southbound journey, Indian equity benchmarks are trading with a cut of over a percentage point with frontline gauges tumbling below their crucial 5,800 (Nifty) and 19,600 (Sensex) levels tracking feeble global cues. The US markets once again ended lower on Friday on concern of a government shutdown, traders also considered the mixed economic reports and preferred to remain on sidelines. Asian markets too were trading mostly in the red with Japanese stock were trading with a cut of over a percent, tracking the weak lead from Wall Street and a stronger yen. In addition, weaker than expected local industrial production data also weighed on investor sentiment.

Back home, traders remained on sidelines ahead of current account deficit (CAD) data to be released by Reserve Bank of India (RBI) later in the day, which may have widened to 4 percent of GDP in the first quarter due to a surge in gold imports and a deteriorated trade gap. Some cautiousness also came in from RBI’s report that the listed non-financial private companies on an average posted a decline of 10.9 per cent in net profit in the first quarter of the current fiscal. Meanwhile, the rupee fell on Monday, tailing global risk-off sentiment on a potential shutdown of the US government. The rupee was trading weaker at 62.72/73 to the dollar compared to its Friday close at 62.51/52.    

On the sectoral front, software witnessed the maximum gain in trade followed by technology and healthcare, while banking, power and public sector undertaking remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the market breadth on the BSE was negative; there were 450 shares on the gaining side against 674 shares on the losing side while 42 shares remain unchanged.

The BSE Sensex opened at 19643.89; about 83 points lower compared to its previous closing of 19727.27, and has touched a high and a low of 19651.31 and 19501.55 respectively.

The index is currently trading at 19524.17, down by 203.10 points or 1.03%. There were 8 stocks advancing against 22 declines on the index.

The overall market breadth has made a weak start with 38.48% stocks advancing against 57.94% declines. The broader indices were trading in red; the BSE Mid cap index down by 0.44% and Small cap index down 0.23%. 

The few gaining sectoral indices on the BSE were, IT up by 1.11%, Teck up by 0.40% and Health Care up by 0.05%, while Bankex down by 2.29%, Power down by 2.11%, PSU down by 1.75%, Capital Goods down by 1.65% and Metal down by 1.52% were the only losers on the sectoral index.

The top gainers on the Sensex were Infosys up by 1.41%, Wipro up by 1.24%, Hindustan Unilever up by 0.87%, TCS up by 0.66% and Bajaj Auto up by 0.41%. On the flip side, Tata Steel was down by 3.84%, Bharti Airtel was down by 3.72%, BHEL was down by 3.68%, ICICI Bank was down by 3.30% and NTPC was down by 2.30% were the top losers on the Sensex.

Meanwhile, in a move to empower country’s tax authority to check tax avoidance, the government notified, much-diluted General Anti Avoidance Rule (GAAR) provisions to be implemented from April 2016. As per the Central Board of Direct Taxes (CBDT) notification, the GAAR provisions would apply to business arrangements with a tax benefit exceeding Rs 3 crore.

The anti-avoidance rule would be applicable to foreign institutional investors (FIIs) that have not taken the benefit of an agreement under Section 90 or Section 90A of the Income tax Act or Double Taxation Avoidance Agreement (DTAA). CBDT also stressed that before invoking the GAAR provisions, tax officials would have to issue a notice in writing to the assessee seeking objections if any, to its applicability. Meanwhile, in order to soothe the nerves of anxious investors, benefit of grandfathering would be given to investments made before August 1, 2010, however, only up to March 31, 2015.

The government had introduced GAAR provisions in FY13 Budget and was scheduled to come into effect from April 1, 2014, but was delayed due to protest from global and domestic business leaders and investors. These GAAR provisions are based on the recommendations of the Parthasarathi Shome Committee, which was set up to frame a roadmap on the tax avoidance proposals.

The CNX Nifty opened at 5,801.05; about 32 point lower as compared to its previous closing of 5,833.20, and has touched a high and a low of 5,810.20 and 5,764.70 respectively.

The index is currently trading at 5,772.40, down by 60.80 points or 1.04 %. There were 11 stocks advancing against 39 declines on the index.

The top gainers of the Nifty were Lupin up by 1.70%, BPCL up by 1.58%, HCL Tech up by 1.52%, Infosys up by 1.44% and Wipro up by 1.05%. On the flip side, BHEL down by 3.83%, Bharti Airtel down by 3.77%, Tata Steel down by 3.64%, Bank of Baroda down by 3.34% and ICICI Bank down by 3.23% were the major losers on the index.

Most of the Asian equity indices were trading mixed; Hang Seng declined 255.58 points or 1.10% to 22,951.46, Jakarta Composite dropped 61.00 points or 1.38% to 4,362.72, KLSE Composite shed 12.60 points or 0.71% to 1,763.56, Nikkei 225 decreased 172.44 points or 1.17% to 14,587.63, Straits Times slipped 18.09 points or 0.56% to 3,192.09, Seoul Composite contracted 6.90 points or 0.34% to 2,004.90 and Taiwan Weighted was down by 51.35 points or 0.62% to 8,179.33.

On the flip side, Shanghai Composite was up by 13.17 points or 0.61% to 2,173.19.