Benchmarks slump to day’s low after showing some signs of recovery

After showing some signs of recovery, benchmark equity indices slumped to day’s low yet again on sustained selling pressure which got aggregated with the negative start of European counterparts. Sulking at day’s low, both Sensex and Nifty were trading below the crucial 25,800 and 7,750 levels respectively, with losses of around half a percent. On the broader front, Midcap index also surrendering all its gains was trading flat at this point of time, while Small-cap index was trading higher with gains of around half a percent.

Globally, receiving a negative handover from Asian counterparts, European shares got off to a negative start after deterioration in the situation in Ukraine prompted a sell-off in equities globally. Meanwhile, Asian shares extended fall after reports that Russian troops were massing at the eastern Ukrainian border, where pro-Moscow rebels are in conflict with the Ukrainian government - ratcheting up geopolitical tension in the region.

Closer home, with most of the sectoral indices succumbing to selling pressure, brutal losses were witnessed by banking, Metal and Auto counters. On the flip side, Power, Capital Goods and Information Technology counters were restricting the further downside of the markets. Depreciation of Indian currency to five month low mainly aided the up-move of IT counter, on the flip side hawkish language of RBI in its third bi-monthly policy review dragged banking stocks lower. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1515:1147; while 105 shares remained unchanged.

The BSE Sensex is currently trading at 25785.01, down by 123.00 points or 0.47% after trading in a range of 25758.01 and 25901.68. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; with BSE Mid cap index trading flat and Small cap index inching higher by 0.51%.

The gaining sectoral indices on the BSE were Power up by 0.73%, Capital Goods up by 0.63%, IT up by 0.41% and Consumer Durables up by 0.26% while, Bankex down by 1.13%, Metal down by 0.81%, Auto down by 0.49%, PSU down by 0.41% and FMCG down by 0.39% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 2.15%, Infosys up by 1.62%, Hindustan Unilever up by 0.87%, Reliance Industries up by 0.55% and NTPC up by 0.46%. On the flip side, Tata Motors down by 2.06%, Bharti Airtel down by 1.95%, ICICI Bank down by 1.90%, ONGC down by 1.51% and ITC down by 1.45% were the top losers.

Meanwhile, the government has stated that the proposed new indirect tax regime, Goods and Services Tax (GST) is likely to be introduced shortly. The central government in consultation with states had decided to phase out Central Sales Tax (CST) in order to facilitate introduction of GST and to give compensation to the states for revenue loss on this account.

GST, the proposed new indirect tax regime and one of the biggest taxation reforms in India will replace existing state and federal levies such as excise duty, service tax and value-added tax (VAT) and will integrate State economies and boost overall growth. Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions. The industry is awaiting its introduction, as GST would remove the cascading effect, boost revenues and aid economic growth.

In a leg up to the early implementation of the goods and services tax (GST) reform, the government is presently engaged to address states’ concerns over its design and compensation for revenue loss to ensure early implementation of this singular tax reform. States are insisting that petroleum be kept out of the purview of the GST are also opposed to subsuming of entry tax within GST, especially that entry tax which is in lieu of octroi. States are also upset with the centre for non-payment of Central Sales Tax (CST) compensation from the year 2011-12.

The previous UPA Government had brought a Constitutional Amendment Bill to introduce the GST, but failed to get it through, owing to the lack of consensus. Since the basic framework is ready, new Government does not require much effort to re-introduce the Bill. Further, it would not have a problem passing the Bill, given its strength in the Lok Sabha.  

The CNX Nifty is currently trading at 7706.15, down by 40.40 points or 0.52% after trading in a range of 7698.35 and 7740.95. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were BHEL up by 1.95%, Infosys up by 1.56%, Power Grid Corpn. up by 1.21%, Asian Paints up by 1.20% and Hindustan Unilever up by 0.82%. On the flip side, Tata Motors down by 2.11%, ICICI Bank down by 1.94%, Bharti Airtel down by 1.93%, Ultratech Cement down by 1.93% and Grasim Industries down by 1.86% were the top losers.

Asian markets looked set for red close; with Nikkei 225 down by 160.52 points or 1.05% to 15,159.79; Hang Seng down by 132.45 points or 0.54% to 24,515.81; Jakarta Composite down by 55.37 points or 1.08% to 5,053.72; Straits Times down by 11.14 points or 0.33% to 3,316.53; Shanghai Composite down by 6.61 points or 0.3% to 2,213.33; KOSPI Index down by 5.53 points or 0.27% to 2,060.73 and FTSE Bursa Malaysia KLCI down by 4.58 points or 0.24% to 1,872.11.

European shares got off to a mostly negative start; with UK’s FTSE 100 losing 48.26 points or 0.72% to 6,634.22; France’s CAC sliding by 31.81 points or 0.75% to 4,201.07, while Germany’s DAX was trading higher by 35.6 points or 0.39% to 9,189.74