Benchmarks trim losses; trade continues in red

Indian equity benchmarks trimmed minor losses but continued their weak trade in the late afternoon session on account of selling in frontline blue chip counters taking cues from weak global counterparts. The sentiments were on pessimistic mood following reports that Russia is building up its military presence on the border with Ukraine. Traders were seen piling up positions in IT, Power and Capital Goods while selling was witnessed in Bankex, Metal and PSU sector stocks. In scrip specific development, JB Chemicals & Pharmaceuticals were trading firm after net profit jumped 56.44% to Rs 31.79 crore on 12.01% growth in net sales to Rs 256.71 crore in Q1 June 2014 over Q1 June 2013.

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 7,750 and 25,900 levels respectively. The market breadth on BSE was positive in the ratio of 1557:1291 while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 25815.73, down by 92.28 points or 0.36% after trading in a range of 25743.33 and 25901.68. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading on a mixed note; the BSE Mid cap index was down by 0.17%, while Small cap index up by 0.47%.

The gaining sectoral indices on the BSE were IT up by 0.87%, Power up by 0.72%, Capital Goods up by 0.59%, TECK up by 0.36%, Consumer Durables up by 0.21% while, Bankex down by 1.14%, Metal down by 1.03%, PSU down by 0.55%, FMCG down by 0.53%, Auto down by 0.47% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.68%, BHEL up by 1.91%, Hindustan Unilever up by 0.90%, Mahindra & Mahindra up by 0.90% and Reliance Industries up by 0.88%. On the flip side, Tata Motors down by 2.24%, ICICI Bank down by 1.99%, ONGC down by 1.84%, Bharti Airtel down by 1.63% and ITC down by 1.62% 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 7717.05, down by 29.50 points or 0.38% after trading in a range of 7694.25 and 7740.95. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.48% and BHEL up by 1.78% and Asian Paints up by 1.53% and Power Grid Corporation of India up by 1.25% and Mahindra & Mahindra up by 1.10%. On the flip side, Tata Motors down by 2.38%, ICICI Bank down by 1.99%, ONGC down by 1.92%, Jindal Steel & Power down by 1.90% and ITC down by 1.74% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 160.52 points or 1.05% to 15,159.79; Hang Seng decreased 64.13 points or 0.26% to 24,584.13; Jakarta Composite decreased 45.96 points or 0.9% to 5,063.13; Straits Times decreased 6 points or 0.18% to 3,321.67; FTSE Bursa Malaysia KLCI decreased 5.87 points or 0.31% to 1,870.82; KOSPI Index decreased 5.53 points or 0.27% to 2,060.73 and Shanghai Composite decreased 2.48 points or 0.11% to 2,217.47.

On the flip side, Taiwan Weighted increased 2.53 points or 0.03% to 9,143.97.

The European markets were trading in red; Germany’s DAX decreased 81.87 points or 0.89% to 9,107.87; UK’s FTSE 100 decreased 37.1 points or 0.56% to 6,645.38 and France’s CAC decreased 22.66 points or 0.54% to 4,210.22.