Benchmarks extend losses; Realty, Metal drag

Indian equity benchmarks extended losses to continue their weak trade in the late afternoon session on account of selling in frontline counters. Investors were cautious from early trades after the World Bank scaled down its estimate for India’s economic growth this financial year to 5.5%, as compared to 6.2% in its January Report and highlighted the key risk to near-term forecast was weak monsoon because of El Nino. Investors have also started eyeing April IIP and May CPI data scheduled to be released tomorrow. Traders were seen piling up positions in IT, TECK and Bankex, while selling was witnessed in Realty, Metal and Power sector stocks. In scrip specific development, L&T Finance Holdings was trading weak after the company set a floor price at a discount to its Tuesday’s close. The company will sell up to 16.5 million shares to institutional investors at Rs 74 a share. Kotak Mahindra Bank was trading in green after foreign brokerage firm upgraded the stock to buy from hold and increased the price target.

On the global front, the Asian markets were trading mostly in green, while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,650 and 25,500 levels respectively. The market breadth on BSE was negative in the ratio of 1475:1553 while 69 scrips remained unchanged.

The BSE Sensex is currently trading at 25479.04, down by 104.65 points or 0.41% after trading in a range of 25735.87 and 25365.65. There were 10 stocks advancing against 20 stocks declining on the index.   

The broader indices were trading in red; the BSE Mid cap index was down by 1.00%, while Small cap index declined by 0.88%.   

The gaining sectoral indices on the BSE were IT up by 2.26%, TECK up by 1.27%, Bankex up by 0.40% and HealthCare up by 0.24% while, Realty down by 3.53%, Metal down by 2.70%, Power down by 2.60%, India Infrastructure Index down by 2.31% and Consumer Durables down by 2.25% were the top losing indices on BSE.   

The top gainers on the Sensex were Infosys up by 3.81%, TCS up by 1.96%, Dr. Reddy’s Lab up by 1.33%, Hero MotoCorp up by 0.94% and HDFC Bank up 0.89%. On the flip side, Tata Power down by 4.18%, Hindalco Industries down by 4.07%, BHEL down by 3.36%, NTPC down by 3.00% and SSLT down by 2.93% were the top losers.   

Meanwhile, in a move to enhance the investment in domestic equity benchmarks, the Securities & Exchange Board of India (SEBI) has urged the Finance Ministry to reduce securities transaction tax (STT) for investors.

At present, buyer and seller pay STT on any deal in the spot or cash market. The STT, which was introduced in the 2004-05 Union Budget constitutes 50% of the total transaction cost in the cash segment and also covers mutual fund units traded on exchanges. In exchange traded derivative contracts include futures and options, only the seller pays STT. Besides STT, there are other charges such as transaction charges, stump duty, service tax and brokerage fee which are discouraging investors particularly retail investors.

The market regulator is of the view that high STT tax is one of the reasons why India is losing out to overseas markets like Singapore where the transaction cost is much lower. Therefore, STT rates for different kinds of transactions on stock exchanges should be reduced.

Currently, the STT rate is 0.10% on the value of the transaction where a buyer takes delivery of shares in the spot market. Most of the stock market intermediaries are expecting a cut in STT in the coming union budget 2014-15. If the government removes one-way STT, it will reduce the transaction cost which in turn will enhance volume in domestic equity markets.

The CNX Nifty is currently trading at 7614.85, down by 41.55 points or 0.54% after trading in a range of 7,700.15 and 7,589.05. There were 16 stocks advancing against 34 stocks declining on the index.   

The top gainers on Nifty were Infosys up by 3.44%, Kotak Bank up by 2.66%, TCS up by 2.03%, Asian Paints up by 1.58% and Dr. Reddy’s Lab up by 1.05%. On the flip side, DLF down by 4.67%, Hindalco Industries down by 4.48%, Tata Power down by 4.31%, Jindal Steel down by 3.70% and BHEL down by 3.67% were the top losers.   

Asian equity indices were trading mostly in green; Shanghai Composite up by 0.12%, Jakarta Stock Index up by 0.13%, Nikkei up by 0.50% and Taiwan Weighted up by 0.08%. On the flip side, Hang Seng down by 0.25% and Straits Times down by 0.25%.

The European markets were trading in red; France’s CAC 40 lost 0.34%, Germany’s DAX was down by 0.29% while, UK’s FTSE 100 dropped 0.24%.