Benchmarks continue weak trade; Sensex below 25000 mark

Indian equity benchmarks extended losses in the late afternoon session on account of selling in frontline counters and taking cues from global counterparts. The sentiments were on pessimistic mood despite Finance Secretary Arvind Mayaram stated that policies of the new government will deepen the reform process to put Indian economy back on high growth path which is in line with the G20 objective of strong, sustainable and balanced growth. Traders were seen piling up positions in Metal, PSU and Auto while selling was witnessed in FMCG, IT and TECK sector stocks. Hectic activity was witnessed in sugar stocks after the food minister stated that India will raise the import duty on sugar to 40% from 15% and will consider other incentives for mill owners if they clear dues owed to farmers. In scrip specific development, country’s biggest cigarette manufacturer ITC dropped on reports that the government may raise taxes on cigarettes aggressively in the upcoming budget in July.

On the global front, the Asian markets were trading mostly in red, while the European markets too traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,500 and 25,000 levels respectively. The market breadth on BSE was negative in the ratio of 1329:1466 while 114 scrips remained unchanged.

The BSE Sensex is currently trading at 24960.45, down by 145.06 points or 0.58% after trading in a range of 25197.50 and 24895.59. There were 17 stocks advancing against 13 stocks declining on the index.   

The broader indices were trading in green; the BSE Mid cap index was up by 0.36%, while Small cap index up by 0.28%.   

The gaining sectoral indices on the BSE were Metal up by 0.82%, PSU up by 0.62%, Auto up by 0.34%, Bankex up by 0.23% and HealthCare up 0.18% while, FMCG down by 3.41%, IT down by 1.31%, TECK down by 0.92%, Consumer Durables down by 0.33% and Power down by 0.08% were the top losing indices on BSE.   

The top gainers on the Sensex were Hero MotoCorp up by 2.30%, BHEL up by 1.90%, ONGC up by 1.51%, Mahindra & Mahindra up by 1.41% and SSLT up by 1.35%. On the flip side, ITC down by 5.28%, Infosys down by 2.41%, Gail India down by 1.33%, Hindustan Unilever down by 1.28% and Cipla down by 1.06% were the top losers.   

Meanwhile, with an aim to develop Indian capital markets, the Securities and Exchange Board of India (SEBI) has asked the government to provide clarity on tax benefits for new products like Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts and debt securities.

The capital market regulator is of the view that REITs and infrastructure bonds would allow investors to invest in specific products linked to real estate projects and infrastructure projects besides providing necessary safeguards. Further, these products would also help the corporates raise significant amounts of capital for their projects. Therefore, there is a need to remove certain anomalies in tax structure for these products.

Regarding the REITs, SEBI Chairman U K Sinha has asserted that REITs have been a significant vehicle for global investors and Indian capital markets will soon tap this opportunity as SEBI is ready with guidelines that would be announced immediately after tax clarity from the government. Sinha further added that to expand corporate bond markets, new draft for debt was already in place compromising simplified regulations. 

SEBI’s chairman also expressed the need to encourage Small and Medium Enterprises (SMEs) to get listed and get benefited from the capital markets. SEBI has also identified certain SME clusters to encourage listing. At present, the listed SME market capitalisation in India stands at over Rs 7,500 crore, while only 65 companies have got listed on SME Platform of exchanges. Furthermore, SEBI would soon put in place norms for crowd funding, which would allow start- ups to tap new platforms to raise funds.

The CNX Nifty is currently trading at 7,464.85, down by 46.60 points or 0.62% after trading in a range of 7534.80 and 7445.25. There were 28 stocks advancing against 22 stocks declining on the index.   

The top gainers on Nifty were Hero MotoCorp up by 2.37%, BHEL up by 2.01%, Jindal Steel up by 1.90%, IndusInd Bank up by 1.67% and ONGC up by 1.53%. On the flip side, ITC down by 5.27%, Kotak Bank down by 3.74%, Infyosys down by 2.49%, McDowell down by 2.47% and HCL Technologies down by 1.64% were the top losers.   

Asian equity indices were trading mostly in red; Hang Seng down by 1.68%, Taiwan Weighted down by 0.49%, Straits Times lost 0.06%, Jakarta Stock Index dropped 0.12% and Shanghai Composite down by 0.11% while, Nikkei 225 up by 0.13%.

The European markets were trading in red; Germany’s DAX lost 0.90%, UK’s FTSE 100 was down by 0.56% while France’s CAC 40 dropped 0.90%.