Sensex surges 260 points, Nifty jumps to 8,186

The Sensex and Nifty jumped 1 per cent in the last trading session of 2016, recovering from recent losses and ending a volatile year with gains despite fears of outflows from emerging markets and cash crunch in the domestic economy post-demonetisation.

The broader NSE index gained 3 per cent in calendar 2016, while the benchmark BSE index advanced 2 per cent, recovering from losses in 2015.

On Friday, the NSE index rose 82.2 points or 1.01 per cent to 8,185.80, while the BSE index gained 260.31 points or 0.99 per cent to 26,626.46.

Both indexes advanced more than 2 per cent over the week, but posted modest losses for December.

Among BSE sectoral indices, FMCG index gained the most by 1.67 per cent, followed by power 1.3 per cent, healthcare 1.11 per cent and realty 1.1 per cent.

Top five Sensex gainers were GAIL (+3.07%), Sun Pharma (+2.59%), ITC (+2.31%), Power Grid (+2.14%) and Infosys (+1.67%), while the major losers were Bajaj Auto (-0.81%), Dr Reddy's (-0.46%), Tata Steel (-0.34%), HDFC Bank (-0.12%) and ONGC (-0.05%).

Volatile year

2016 was marked by volatility from global events, including Britain's vote in June to exit the European Union and the US election victory of Donald Trump in November. This year's gains would mark a recovery from a decline recorded in 2015.

At home, the approval for the Goods and Services Tax Bill earlier this year helped boost sentiment, but that was offset later by the government's move to scrap higher-denomination notes, raising concerns about economic growth.

But analysts sounded optimism for the new year, with the Reserve Bank of India expected to cut rates at its next policy review in early February and the government gearing up to issue the annual budget.

“Markets remain in comfortable zone, most of the lull was over in the last month,” said Deven Choksey, managing director of KR Choksey Securities.

“Market is expecting positive outlook from budget in subsequent months.”

Global markets

Oil prices made fresh gains on Friday and were heading for their biggest annual percentage rise since 2009, with world stocks also up nearly 6 per cent over the year despite concerns over China’s slowing growth and weakening currency.

Global markets have fared surprisingly well in a year marked by major political shocks, including June’s Brexit vote and the unexpected election of Donald Trump as US president in November. US stocks have hit successive record highs and emerging equities have rebounded 8 per cent after three years in the red.

Sensex ends lower for 6th straight session

MUMBAI, DEC 21:  
The Sensex and Nifty erased early gains to close lower on Wednesday, posting their sixth straight session of declines, dragged down by FMCG, IT and TECk stocks.

The 30-share BSE index ended down 65.6 points or 0.25 per cent at 26,242.38, while the broader NSE index closed 21.1 points or 0.26 per cent lower at 8,061.30.

Among BSE sectoral indices, FMCG index fell the most by 0.95 per cent, followed by IT 0.75 per cent, TECk 0.74 per cent and capital goods 0.4 per cent. On the other hand, realty index was up 1.52 per cent, consumer durables 0.68 per cent, power 0.55 per cent and PSU 0.53 per cent.

Top five Sensex gainers were Maruti (+1.31%), M&M (+1.22%), Lupin (+1.17%), NTPC (+1.05%) and ONGC (+0.78%), while the major losers were Sun Pharma (-2.25%), ITC (-1.44%), TCS (-1.07%), Hero MotoCorp (-1.00%) and Wipro (-0.91%).

Record high

The NASDAQ Composite rose to an all-time high while the Dow Jones industrial average flirted with the 20,000 mark, in a rally fuelled by optimism about US President-elect Donald Trump's policies.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.31 per cent on Wednesday.

Investors now keep an eye out for the minutes of the Reserve Bank of India's monetary policy committee (MPC) meeting earlier this month, expected later in the day, for clues about the economy and the central bank's stance after demonetisation.

The central bank had unexpectedly kept its key policy rate unchanged on December 7, despite calls for action in the face of an intense cash shortage that threatens to slam the brakes on the world's fastest-growing large economy.

“The feel-good factor has been missing from the market post-demonetisation,” said Neeraj Dewan, director at Quantum Securities.

“We will have to wait and watch if the government announces anything substantial early next year to lift investor sentiment. We can then expect a pre-budget rally.”

Analysts are of the view that markets will trade in a narrow range until the effects of demonetisation pan out with better clarity.

Sensex, Nifty Drop Near 1-Month Low

Closing Bell

Indian shares declined for a sixth straight session, with key benchmarks falling close to their one-month lows, amid waning turnover as capital goods and technology companies led losses.

The S&P BSE Sensex declined 0.2 percent to 26,242 while the NSE Nifty dropped 0.2 percent as well as to 8,061. The market breadth was skewed in favour of the bears once again with 886 stocks declining, 707 advancing and 293 remaining unchanged.

The country’s largest drug maker Sun Pharma declined for a fourth straight session and was the worst performer on the Sensex.

ndian shares are set for a second straight monthly loss on concerns that the government’s decision to recall high denomination currency bills will dampen demand and slow economic growth. Global funds have pulled over $160 million from local shares in December, adding to the $2.6 billion they withdrew last month

Sensex loses, Nifty breaches 8100 mark

TCS was the biggest gainer of the day and was up by 2.23%, while Mahindra & Mahindra Financial, Bharat Financial Inclusion, Bajaj Finance were down by 2-6%.

Nifty PSU Bank index extended its losses and fell by 3% to a one month low even as Finance Minister Arun Jaitley said the RBI is releasing adequate amount of currency everyday. TCS was the biggest gainer of the day and was up by 2.23%, while Mahindra & Mahindra Financial, Bharat Financial Inclusion, Bajaj Finance were down in the range of 2-6%.

The BSE Sensex ended with a loss of 66.72 points at 26,307.98, while the NSE Nifty closed at 8,082.40, down 21.95.

TCS, Ambuja Cement, ACC, ZEEL, ITC, NTPC, Infy and Wipro were among the biggest gainers, while Idea, Aurobindo Pharma, Bosch, Yes Bank and Bank of Baroda were among the biggest losers.

The India VIX (Volatility) index was down 2.02% at 14.53. The BSE Midcap closed at 12004.16 , down 1.40% and Smallcap indices closed at 11947.14, a dip of 0.92%. Out of 1447 stocks traded on the NSE, 1040 declined and 356  advanced today.

A total of 14 stocks registered a fresh 52-week high in trade today, whereas 20 stocks touched a new 52-week low on the NSE.

Non-banking finance companies witnessed a fall. Experts said they have taken a hit due to uncertainty over earnings after demonetisation and as Maharashtra government said it will set up a probe on violations by microfinance companies in the state.

Public banks have been under pressure for the past few sessions as some of the measures announced by the RBI to incentivise digital payments are seen increasing their cost of operations.

The stocks of Mahindra & Mahindra Financial, Bharat Financial Inclusion, Bajaj Finance, Can Fin homes, Dewan Housing Finance were down 2-6%.

Most Asian indices ended down as shares in the emerging markets declined after the Bank of Japan kept its key policy rates unchanged. However, rates in Japan rose after the country's central bank upgraded its outlook for the Japanese economy.

Straits Times traded at 2,911.31 and Hang Seng was at 21,729.06, both in red, whereas Nikkei 225 traded in green at 19,494.53 at the time of the filing of this report.

Gold was at Rs 27120 and silver was at Rs 39085.

Reliance Communications fell 2.4% as Fitch cut its debt rating to B+. Oil and Natural Gas Corp hit a low as oil ministry seeks to halve crude oil cess to 10% in the budget.

The Indian rupee was down as foreign banks buy dollars, likely for FPI's outflow from domestic markets. Dollar demand from oil importers and a rise in dollar globally were the factors that contributed to the downfall.

The price of India's crude oil basket rose 94 cents on Monday to $53.29 a barrel, data released by the petroleum ministry stated

Sensex extends losses, down 81 points

The 30-share barometer was down 0.31 per cent to 26,408.74 in early trade.

Mumbai: Falling for the fourth straight session, the benchmark BSE Sensex surrendered another 81 points to quote at 26,408.74 in early trade today on sustained selling by investors and funds amid weak Asian cues.

The 30-share barometer was down 80.82 points, or 0.31 per cent, to 26,408.74 in early trade, with sectoral indices led by consumer durables, auto, realty and banking trading lower.

The index had lost 208.26 points in previous three sessions.

The NSE Nifty dropped 25.20 points, or 0.30 per cent, to 8,114.25.

Brokers said apart from continued outflows by foreign funds, a weak trend in Asia tracking a sell-off on Wall Street and extending last week's losses on concerns of an expected jump in US interest rates next year mainly pulled the indices down.

Japan's Nikkei fell 0.22 per cent while Hong Kong's Hang Seng shed 0.84 per cent in early trade today. Shanghai Composite too shed 0.19 per cent.

The Dow Jones Industrial Average ended 0.04 per cent lower in Friday's trade.

stocks may come under long

stocks may come under long-term capital gains tax net

Blocking the penny stock loophole is likely to stop the misuse of stock markets to launder black money
Mumbai: The government plans to withdraw tax exemption on long-term capital gains (LTCG) made on the sale of penny stocks to end the use of stock markets for tax evasion as part of a series of steps to eradicate black money, two people familiar with the development said.

“The government had called for a meeting last week that was attended by market participants including fund managers, exchanges and consultants to gauge whether securities transaction tax (STT) can be removed from low-value stocks or penny stocks. This would take away the LTCG benefit, which was being misused to evade taxes,” said one of the two people cited above on condition of anonymity.

The Narendra Modi government has already withdrawn high-value bank notes to crack down on people holding unaccounted cash and counterfeiters. Blocking the penny stock loophole may potentially end the misuse of stock markets to launder black money and check corruption. 

Currently, any capital gains from shares held for more than a year are fully exempt from paying taxes.  The taxability of LTCG depends on whether STT was paid at the time of sale of shares. LTCG will be tax-exempt only if the investor had paid STT at the time of sale of shares on a recognized stock exchange.  STT is a tax payable on the value of securities transacted through a recognized stock exchange. As of 2016, it is 0.1% for delivery-based equity trading.

Current rules, the tax department claims, were being misused by entities to book fake LTCG gains and manipulate markets.Income tax department investigations estimate a sum of Rs45,000 crore may have been evaded by manipulating trading in penny stocks, said an income tax official, who is the second person cited earlier in the story. The person declined to be named.

Many of these entities have declared their income under the Income Declaration Scheme (IDS), 2016, and they would receive immunity from the tax department. However, others are being assessed to pass penalty orders, which could be up to 120% of the tax payable.

Stockbrokers, market operators and promoters of penny stock companies are among entities being investigated by the capital markets watchdog, Securities and Exchange Board of India (Sebi), Mint reported on 20 October. This group has declared at least Rs5,000 crore worth of illegal income under the scheme. That is about 8% of the total Rs65,000 crore declared under the income declaration scheme.

Sebi, through interim orders in 2014 and 2015, had suspended over 200 firms and barred close to 1,500 entities for using the stock exchange platform to evade taxes.

Typically, penny stocks are used for tax evasion and market manipulation by first allotting preferential stock to non-promoters who are trying to evade taxes. Their associates would then drive up the price of these shares through circular trading, where buyers and sellers are connected.

After a year, the preferential allottee cashes out at a much higher price. The entity buying the stock is generally funded by the preferential allottee, thus helping in bringing black money into the system.

“Such provision could help in reducing instances of tax evasion using the stock market route. However, the classification of penny stocks itself is not clear. One way to do it would be to declare a threshold, say, for instance, a stock whose price is less than Rs5 would not attract STT and, thus, can’t get LTCG benefit,” said Riaz Thinga, partner, Grant Thornton LLP. 

A penny stock trades at a very low price, usually below Rs10, or is issued by a firm whose market capitalization is less than Rs100 crore, according to market participants.