Benchmarks falter on poor IIP data

The Indian equity markets extended early losses with weak industrial output data hurting sentiment quite an extent. Though equities started off on a strong note this morning on positive global cues, they have withdrawn early gains with a section of investors turning cautious and pressing sales at higher levels. Meanwhile, India's annual industrial output growth measured by index of industrial production (IIP) with an updated base of 2004-05, has decelerated sharply to a worse than expected -5.1% pace in October to 158.1, as compared to 166.6 in the month of October 2010. The cumulative growth for the period April-October 2011-12 stands at 3.5% over the corresponding period of the previous year. On sectoral front metal, power, capital goods and bank stocks were mostly trading weak. Oil, automobile and healthcare stocks too have come off their highs. Realty stocks, which opened on a buoyant note, have pared most of their gains now. Select information technology and FMCG stocks were trading firm. On the global front, most of the markets in the Asia-Pacific region were trading firm on positive global cues.

The BSE Sensex is currently trading at 16,093.47, down by 119.99 points or 0.74%. The index has touched a high and low of 16,360.32 and 16,083.93 respectively. 6 stocks were advancing against 24 declining ones on the index.

The broader indices too tailing the trend of frontline indices, lost favor, the BSE Mid and Small cap index lost 0.63% and 0.45% respectively.

The top gainers on the BSE sectoral space were IT up by 0.73%, FMCG up by 0.20% and TECk up by 0.18%; however, top losing pivotal’s were CG down by 1.63%, Metal down by 1.39%, Power down by 1.24%, Auto down by 1.17% and Bankex down by 1.06%.

Jaiprakash Associate down by 3.16%, Tata Power down by 2.57%, Bajaj Auto down by 2.47%, Hindalco down by 2.39% and M&M down by 2.20% were the top losers of 30 share barometer index - Sensex.

On the flip side, Infosys up by 0.88%, Wipro up by 0.77%, ITC up by 0.53%, ONGC up by 0.31% and TCS up by 0.29% were the top gainers on the index.

Meanwhile, the stock market investors would not have to pay any service tax on any late payment charges paid by the them to their brokers, given such fines are showed separately in the account statement. The finance ministry has clarified the issue to the capital market watchdog Securities and Exchange Board of India (SEBI) which in turn has informed the stock exchange about the same.

With this regard, the SEBI has issued a circular to their member brokers that no service charges should be deducted on late-payment charged by them from their clients. The stock brokers normally charge a penalty or late-payment charges to their customers, if they do not make the required payments for their share purchases or to meet other obligations like payment of various fees. Although, there has been a doubt about the leviability of any service tax on such payments as a result of which few stock brokers have been deducting service tax and others have been not.

In a letter to various concerned authorities on this issue, the Central Board of Excise and Customs of the Ministry of Finance said that representations had been received by it 'seeking clarification regarding leviability of service tax on the additional amount that is collected towards the delay in making payment to the stock brokers by their customers (as delayed payment charges) in respect of stock brokers' services.'

The CBEC also said that it examined the practice in other similar segments and found that an amount collected for delayed payment of a telephone bill did not form a part of the value of taxable service. It also found that no service tax was being levied in some other similar segments. 'In a similar manner, delayed payment charges received by the stock brokers are not includible in taxable value as the same are not the charges for providing taxable service' and such charges were more in the nature of a penal charge, CBEC noted.

However, it said that the Finance Act provided for a service tax being charged on taxable value, which shall be the gross amount charged by the service providers. Therefore, a service tax would be charged on the entire amount, if account statement invoice or bill showed only the gross amount, without indicating the delayed payment charges separately.  'Delayed payment charges would not be includible in 'gross value charged' only if these charges are shown separately in the account statement/invoice/bill etc,' the CBEC note clarified.

The S&P CNX Nifty is currently trading at 4,815.35, down by 51.35 points or 1.06%. The index has touched a high and low of 4,910.25 and 4,813.50 respectively.  There were 6 stocks advancing against 44 declining ones on the index.

The gainers of the Nifty were HCL Tech up by 1.16%, Infosys up by 0.65%, Gail up by 0.64%, ONGC up by 0.55% and Wipro up by 0.42%. On the other hand, JP Associates down by 3.55%, NTPC down by 3.07%, Hindalco down by 2.88%, ACC down by 2.81% and SAIL down by 2.77% were the major losers on the index.

Most of the Asian pacific markets continued to trade with optimism, Jakarta Composite gained 1.09%, Nikkei 225 surged 1.47%, Straits Times added 0.74%, Seoul Composite accumulated 1.19% and Taiwan Weighted rose 0.81%.

However, Shanghai Composite shrugging off 0.56% and KLSE Composite down by 0.87% continued to be top losers among the Asian pack.