Markets retain early gains amid a range bound trade

Indian equity markets retaining their early gains were trading in a range in early noon session, on value buying activities by market-participants. Sentiment got boost with the statement of finance ministry that the country will grow by 7.5 per cent in the current fiscal, slightly higher than international rating agency Standard & Poor’s latest forecast, saying the government will roll out more reforms measures to push growth. Traders were seen piling up position in Metal, TECK, IT, PSU and Power stocks, while selling was witnessed in Realty and Capital Goods sector stocks. At present, Sensex and Nifty were trading above the crucial 27,400 and 8,250 levels respectively. Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by 0.12% and 0.05% respectively.
On the global front, Asian markets were trading mostly in green, as Japan’s weak export figures boosted hopes for more central bank stimulus. Back home, in scrip specific development, shares of Mphasis was trading up by over 9% after the company reported 18.2% quarter-on-quarter (QoQ) growth in consolidated net profit at Rs 185 crore for the quarter ended September 2015, on back of strong operational performance. The company had profit of Rs 156 crore in June 2015 quarter. Biocon too was trading higher after the company reported an over three-fold jump in its consolidated net profit at Rs 306 crore for the second quarter ended September 30, 2015. The company registered a net profit of Rs 102 crore in the same period a year ago.
The market breadth on BSE was positive, out of 2458 stocks traded, 1318 stocks advanced, while 1007 stocks declined on the BSE.
The BSE Sensex is currently trading at 27418.45, up by 111.62 points or 0.41% after trading in a range of 27304.44 and 27445.24. There were 22 stocks advancing against 8 stocks declining on the index.
The broader indices were trading in green; the BSE Mid cap index was up by 0.29%, while Small cap index gained 0.23%.
The top gaining sectoral indices on the BSE were Metal up by 1.53%, TECK up by 0.83%, IT up by 0.74%, PSU up by 0.36% and Power up by 0.32%, while Realty down by 0.33% and Capital Goods down by 0.10% were the losing indices on BSE.
The top gainers on the Sensex were Vedanta up by 2.57%, Bharti Airtel up by 2.12%, Tata Steel up by 2.10%, Hindalco up by 1.90% and Infosys up by 1.31%. On the flip side, Dr. Reddys Lab down by 2.89%, Sun Pharma down by 0.63%, Larsen & Toubro down by 0.38%, Mahindra & Mahindra down by 0.32% and Maruti Suzuki down by 0.30% were the top losers.
Meanwhile, the government has notified amendments for transfer pricing calculations to incorporate range concept and use of multi-year data to reduce litigation and bring Indian laws in line with international practices. The new rules are applicable for calculating the arm’s length pricing of international transactions and specified domestic transactions from April 1, 2014. Transfer pricing is one of the main reasons for tax disputes in India. The tax department has made these changes to provide more clarity.
Finance ministry has said that the amended rules would therefore provide clarity in determination of price in transfer pricing cases and reduce disputes on transfer pricing issues. It is a part of the government’s continuing initiative of providing a stable and certain direct tax regime. The new rules also provide for use of multi-year data, which will take care of annual fluctuations.
The range concept will be applicable in certain cases for determining the price and will begin with the 35th percentile and end with the 65th percentile of the comparable prices. Transaction price shown by the taxpayers falling within the range will be accepted and no adjustment will be made. This will help reduce adjustments to only cases where transfer prices are outside the range. The use of multiple year data allows for yearly variations to be averaged out and would therefore add value to transfer pricing analysis.
Transfer pricing refers to fixing the price of goods or services transferred between two related entities, which could be cross-border or domestic. It refers to the practice of computing arms length price for transactions between group companies in different countries for determining profit and levying of taxes.
The CNX Nifty is currently trading at 8285.80, up by 24.15 points or 0.29% after trading in a range of 8255.00 and 8294.40. There were 35 stocks advancing against 15 stocks declining on the index.
The top gainers on Nifty were Vedanta up by 2.86%, Bharti Airtel up by 2.25%, Tata Steel up by 1.93%, Hindalco up by 1.89% and Bosch up by 1.42%. On the flip side, Dr. Reddys Lab down by 3.03%, Asian Paints down by 2.63%, Tech Mahindra down by 1.48%, Sun Pharma down by 0.82% and BPCL down by 0.73% were the top losers.
Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 3.78 points or 0.22% to 1,708.81, KOSPI Index increased 6.66 points or 0.33% to 2,046.02, Jakarta Composite increased 54.29 points or 1.18% to 4,640.12, and Nikkei 225 increased 369.08 points or 2.03% to 18,576.23, while Hang Seng decreased 86.39 points or 0.37% to 22,989.22, Taiwan Weighted decreased 44.37 points or 0.51% to 8,609.23 and Shanghai Composite decreased 37.49 points or 1.09% to 3,387.84.