Markets continue to listlessly trade into negative territory

Markets continued to listlessly trade into negative territory, with losses of around 0.25%, which dragged Sensex and Nifty below the psychologically crucial 25,850 and 7,750 levels respectively. Profit-booking which crept into after two consecutive sessions of splendid gains tailing somber regional counterparts, mainly led to downbeat session at Dalal Street. However, broader indices staging different trend, were up with gains in the range of 0.30%-0.75%.

Nevertheless, losses to some extent were capped after the government proposed that new indirect tax regime, Goods and Services Tax (GST), was likely to be introduced shortly. Minister of State for Finance Nirmala Sitharaman has said that Centre in consultation with states had decided to phase out CST to facilitate introduction of GST.

On the global front, Asian stocks fell broadly on Wednesday while the U.S. dollar held firm after a slump on Wall Street and tensions over Ukraine instilled a mood of risk aversion across markets. Geopolitical concerns overshadowed upbeat U.S. economic data which included a spike in service-sector activity to a nine-year peak and a surprisingly large increase in factory orders.

Closer home, majority of the sectoral indices on BSE were reeling under pressure, with prominent ones being banking, Metal and Auto counters. On the flip side, losses of Indian equity markets were restricted by gains in stocks from Power, Capital Goods and Consumer Durable counters. While, hawkish language of RBI in its third bi-monthly monetary policy review perturbed banking shares, disappointing Q1 numbers of Hero MotoCorp dragged Auto pivotal. Meanwhile, sugar stocks were trading higher for the session. The 95-odd private sugar mills in Uttar Pradesh (UP) have decided to crush no sugarcane in the 2014-15 season, scheduled to start from October until the state government gives in to two of their demands, with the first being linking mandated price to the market price of sugar and the other being, stopping its ongoing coercive action against mills for not clearing past arrears to farmers for cane. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1073:753; while 43 shares remained unchanged.

The BSE Sensex is currently trading at 25841.59, down by 66.42 points or 0.26% after trading in a range of 25821.59 and 25901.68. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.31%, while Small cap index up by 0.74%.

The gaining sectoral indices on the BSE were Power up by 0.99%, Capital Goods up by 0.90%, Consumer Durables up by 0.45%, IT up by 0.42% and Realty up by 0.29% while, Bankex down by 0.82%, Metal down by 0.30%, Auto down by 0.18%, Oil & Gas down by 0.12% and FMCG down by 0.07% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 2.17%, Infosys up by 1.33%, Hindustan Unilever up by 1.31%, Mahindra & Mahindra up by 0.86% and Coal India up by 0.72. On the flip side, Tata Motors down by 1.38%, ICICI Bank down by 1.14%, Hero MotoCorp down by 1.08%, Axis Bank down by 0.99% and ITC down by 0.97% were the top losers.

Meanwhile, yet again in loggerheads with the state governments, 95-odd private sugar mills in Uttar Pradesh (UP) have decided to crush no sugarcane in the 2014-15 season, scheduled to start from October until the state government gives in to two of their demands, with the first being linking mandated price to the market price of sugar and the other being, stopping its ongoing coercive action against mills for not clearing past arrears to farmers for cane.

Linking the state-set price of cane to that for sugar was one recommendation in the October 2012 report of the committee headed by C Rangarajan, then the chairman of the Prime Minister’s Economic Advisory Council. As far as cane arrears to farmers were concerned, the mills clarified that there was no pay that could pay such hefty amount, especially since the floor price set for the cane by the state government was unrealistic. 

In India, the central government suggests a ‘Fair and Remunerative Price (FRP)’ each season for cane, however it’s up to the State governments to follow this and to compel mills to pay a higher price for cane. UP, the country’s second biggest sugar producing state (Maharashtra is first), had fixed a cane rate for the 2013-14 season which was almost Rs 50 a quintal more than the Centre’s FRP, even as the mills claimed that the sugar prices had fallen both in home and foreign markets, leading to mounting losses. Interestingly, the mills claim that while the UP governments in the past four years have raised the sugarcane SAP (State Advised Price) by almost 70%, sugar prices have increased by only 7% to 10%.

Further, the millers also stood pat at their decision after the promises made during the previous sugar season, went unfulfilled, which included constitution of a committee to recommend a rational cane pricing formula by April, financial assistance of Rs 9 a quintal of cane and, above all, a stay on all coercive action by the government on mills to compel payment of arrears.   

The CNX Nifty is currently trading at 7724.00, down by 22.55 points or 0.29% after trading in a range of 7715.80 and 7739.60. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were BHEL up by 2.17%, Hindustan Unilever up by 1.30%, Infosys up by 1.19%, Asian Paints up by 1.12% and Power Grid Corpn up by 1.02%. On the flip side, Tata Motors down by 1.42%, Sun Pharma Inds down by 1.39%, PNB down by 1.34%, ICICI Bank down by 1.25% and Axis Bank down by 1.15% were the top losers.

Asian markets continued to reel under pressure; Nikkei 225 slid by 161.21 points or 1.05% to 15,159.10; Hang Seng lost 150.38 points or 0.61% to 24,497.88; Jakarta Composite plunged 55.96 points or 1.1% to 5,053.13; Shanghai Composite descended by 10.16 points or 0.46% to 2,209.79; KOSPI Index declined by 8.57 points or 0.41% to 2,057.69; Straits Times shed 7.48 points or 0.22% to 3,320.19; FTSE Bursa Malaysia KLCI down by 4.36 points or 0.23% to 1,872.33; Taiwan Weighted edged lower by 2.43 points or 0.03% to 9,139.01