Benchmark continue to trade choppy;broader markets mixed

The benchmark indices continue to trade choppy with negative bias in late afternoon session as investors and traders remained cautions after the negative opening of European markets and sustained selling by funds and reports of a weakening trend on other Asian bourses amid growing unrest in Libya mainly influenced the trading sentiment. Meanwhile cautiousness prevails ahead of the F&O expiry on Thursday and Union Budget on Monday. Also, the ongoing political turmoil and a big jump in oil prices are weighing on the investors' minds. Back home in BSE sectoral space, Information Technology (IT), Bankex, Consumer Durables (CD) , Healthcare (HC) and TECk  counters were dragging the markets downwards while  Oil & Gas , Auto , Power up and Capital Goods (CG) stocks were trying to hold their neck in the green. The broader markets trading weak, the BSE Mid-cap was down by 0.34% and Small-cap index was up by 0.04%. The market breadth on the BSE was in favour of declines in the ratio of 1439:1313 while 106 scrips remained unchanged.

Reliance infra was top gainer, went up by more than 12% as Reliance Infrastructure's chairman Anil Ambani has reportedly met the Maharashtra Chief Minister Prithviraj Chavan in the backdrop of the Maharashtra State Road Development Corporation (MSRDC) plan for a coastal road from Worli to Haji Ali and from Haji Ali to Nariman Point. The coastal road option is being discussed to save cost. As per sources the coastal road option will help save the government over Rs 3000 crore.

The BSE Sensex declined 19.92 points or 0.11% at 18,276.24. The index touched a high and a low of 18,377.48 and 18,226.40, respectively.

The BSE Mid-cap index declined 0.34%, while the Small-cap index gained only 0.04%. 

In BSE sectoral space Oil & Gas up 0.45%, Auto up 0.47%, Power up 0.14% and Capital Goods (CG) up 0.10 % were the only gainers.

On the flip side, Information Technology (IT) down 1.04%, Bankex down 1%, Consumer Durables (CD) down 0.93%, Healthcare (HC) down 0.93% and TECk down 0.60% were the major losers on the BSE sectoral space.

The top gainers on the Sensex were Rel Infra up 9.66%, HDFC up 12.08%, HDFC up 2.14%, Hero Honda up 2.11%, Reliance Communication up 1.74% and Sterlite Inds up 1.22%.

Tata Power down 2.41%, SBI down 3.01%, DLF down 1.01% , Tata power  down 1.92%,Infosys down 1.62% and Bajaj Auto down 1.54% and were the top losers on the index.

Given the high inflation that has been witnessed by Indian economy over last one year or so, the government may increase the tax exempted income limit in the forthcoming General Budget to be released on Feb 28, said the financial services conglomerate Goldman Sachs.

'Income tax relief can be provided to lower income brackets to compensate for inflation. This could take the form of raising the tax exemption limit from the current Rs 1.6 lakh,' it said in a report. Currently, income of Rs 1,60,000 is exempted from tax for individuals. However, the limit is higher at Rs 1,90,000 crore for women and Rs 2,40,000 for senior citizens.

In the direct tax code (DTC) to be applicable in next fiscal year according to the finance ministry, the tax exempted income ceiling has been pegged at Rs 2 lakh. However, inflation has been surging over last one year which has eroded the real income of individuals, particularly those at the lower end of the income pyramid. This has led to suggestions that tax exemption limit should be hiked for the coming fiscal itself which will help counter the impact of inflation by raising disposable income. 

However, the finance ministry also faces some serious constraints on how much relief it affords to give to the public. First, as per the revised fiscal consolidation path envisaged in the fiscal responsibility and budget management act, the government has to cut the fiscal deficit to 4.8% in 2011-12 as against 5.5% budgeted in the current year. Further, its spending on flagship social sector schemes like the Mahatma Gandhi National Rural Employment Guarantee Act etc will increase. This obviously necessitates raising the level of revenue and hence limits how much tax relief can be provided. The finance ministry therefore will have to draw a very fine balance between tuning taxation in line with inflation and ensuring buoyancy in revenue. 

The S&P CNX Nifty trimmed 7.50 points or 0.14% to 5461.70. The index touched a high and a low of 5495.20 and 5446.35, respectively. 

The top gainers of the Nifty were Rel Infra up 11.61%, Reliance Capital up 3.74%,Hero Honda up 2.62%, HDFC down 2.17% and Dr Reddy's up 2.15%.

The top losers of the index were Ranbaxy down 5.13%,  SBi down 3.37%, IDFC down 2.77%, Tata Power down 2.19% and DLF down 1.96%.

Other regional peers settled in the red. Hang Seng dipped 0.36%, KLSE Composite lost 0.17%, Nikkei 225 slid 0.80%, Straits Times declined 0.57%, Seoul Composite shed 0.42% and Taiwan Weighted slipped 1.67% while Shanghai Composite surged  0.25% and Jakarta Composite climbed  0.67%.

European markets were trading in red. FTSE declined 0.57%, DAX tumbled 0.23% and CAC-40 shed 0.09%.

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