Benchmarks continue to trade higher in late morning

Benchmark indices rallied more than 0.30 percent in late morning trade on Wednesday on back of value buying in select blue chips stocks. Sentiments remained up- beat on CII report that India can achieve 6.5 percent economic growth in the next financial year if a strong reform-minded government comes to power after the upcoming parliament elections. Further, Capital inflows by foreign funds and appreciating rupee also steadied the sentiments.

On the global front, Asian markets too were trading higher at this point of time, as investors chose to accentuate the positive in a mixed bag of global economic data, pressuring the safe haven yen to a 10-week trough. Back home, traders were buying, Teck, Healthcare and Consumer Durables stocks, while selling was seen in FMCG and Metal. Axis Bank has declined 1.07% as the Reserve Bank of India after market hours on Tuesday notified that the no further purchase of shares of this company would be allowed through stock exchanges in India on behalf of Foreign Institutional Investors (FIIs) as foreign share holding by FIIs in Axis Bank has crossed the overall limit of 49% of its paid-up capital.

The market breadth on BSE remains positive with advances to declines in the ratio of 1412:580. BSE Sensex and NSE Nifty were comfortably trading near their psychological 22,500 and 6,700 levels respectively.

The BSE Sensex is currently trading at 22530.92 up by 84.48 points or 0.38% after trading in a range of 22592.10 and 22482.21. There were 20 stocks advancing against 10 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.91% and Small cap index up by 0.95%.

The top gaining sectoral indices on the BSE were, Teck up by 1.22%, Healthcare up by 1.06%, Consumer Durables up by 0.97%, IT up by 0.92%, Realty up by 0.87%, while FMCG down by 1.24% and Metal down by 0.33% were the top losers on the sectoral index.

The top gainers on the Sensex were Bharti Airtel up by 3.63%, ICICI Bank up by 1.67%, Tata Motors up by 1.46%, Wipro up by 1.14% and RIL up by 1.25%. On the flip side, ITC was down by 2.01%, Hindalco was down by 1.52%, Axis Bank was down by 1.28%, SSLT was down by 1.22% and BHEL was down by 0.72% were the top losers on the Sensex.

Meanwhile, In an attempt to replace the half-a-century-old Income Tax Act and overhaul the taxation system, the finance ministry released a draft Direct Taxes Code (DTC), which recommends the change along with a new income tax bracket that would require rich people to pay higher taxes.

However, the bill fails to provide any relief to the salaried class by retaining personal income tax (IT) exemption limit at Rs 2 lakh, though it has accepted the recommendation that the age for senior citizens be relaxed from 65 years to 60 years. At present, for citizens over 65 years, income tax kicks in at Rs 2.5 lakh, while the cut-off is Rs 2 lakh for the younger population.

The bills mainly targets high net worth individuals and foreign companies. To tax the super-rich, it has introduced a fourth slab of 35 per cent on income exceeding Rs 10 crore. Additionally, the revised draft law proposes that if 20% of the total assets of a company are located in India, then the income arising from such a transaction will be taxed in the country. Notably, previous version of the Bill had said such transactions would be taxed if 50% of the total assets were located in India. The move is to ensure India gets its due when foreign companies buy and sell subsidiaries or units that are based in India. To add to this, those earning over Rs 1 crore through dividend income will now face an additional tax of 10%. Under the Income-tax Act as well as in the DTC Bill, 2010, the dividend distribution tax is to be levied at the rate of 15%.

A new DTC has been in the works since UPA took office in 2004 but surprisingly latest draft comes weeks before its second term comes to an end, thereby raising the prospects of the document being junked when probably a new finance minister takes charge next month.

The CNX Nifty is currently trading at 6,742.60 up by 21.55 points or 0.32% after trading in a range of 6,763.50 and 6,729.70. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 3.58%, IDFC up by 3.37%, ICICI Bank up by 1.65%, Tata Motors up by 1.48% and Lupin up by 1.47%. On the flip side, ITC down by 1.93%, Hindalco down by 1.81%, SSLT down by 1.51%, Axis Bank down by 1.39% and Asian Paint down by 1.20% were the top losers on the index.

The Asian equity indices were trading in green; Shanghai Composite increased by 5.58 points or 0.27% to 2,053.04 ,Hang Seng gained 46.89 points or 0.21% to 22,495.43, Jakarta Composite climbed 4.10 points or 0.08% to 4,878.03, KLSE Composite soared 4.77 points or 0.26% to 1,852.53, Nikkei 225 spurted by 208.57points or 1.41% to 15,000.56, Straits Times added 3.48 points or 0.11% to 3,202.00, KOSPI Composite strengthened by 4.22 points or 0.21% to 1,996.20 and Taiwan Weighted was up by 24.48 points or 0.28% to 8,897.63.