Markets trade subdued ahead of derivative contract expiry

Local equity markets continued to trade subdued in absence of positive trigger and prevailing caution on final session of F&O expiry and also ahead of the release of Q2 GDP data on Friday, which is estimated to have grown at 5% or even lower in the second quarter of 2014-15, sharply lower than the 5.7% witnessed in the first quarter. At day’s low, both Sensex and Nifty were trading above psychologically crucial 28,300 and 8,450 levels respectively, with losses of over one tenth of a percent. Meanwhile, broader indices also outperforming larger counterparts were trading with gains in the range of 0.40%-0.50%.

On the global front, Asian shares meandered on Thursday as data showed a drop in Chinese industrial profits, but expectations for further stimulus moves from China and Europe helped to limit losses.

Closer home, most of the sectoral indices on BSE were holding in green, nevertheless the prominent gainers were the stocks from Information Technology, Healthcare and power counters. On the flip side, much of the drubbing was witnessed by stocks from Consumer Durable, FMCG and Realty counters which were the weak links of the trade. All the rates sensitive were reeling under pressure on reports which suggested that Reserve Bank of India would not oblige by slashing its rates in its upcoming monetary policy on December 2. On the flip side, other defensive pockets like IT and Health Care emerged as the top buy favorites. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1145:824; while 30 shares remained unchanged.

The BSE Sensex is currently trading at 28339.74, down by 46.45 points or 0.16% after trading in a range of 28339.23 and 28432.45. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.38%, while Small cap index up by 0.48%.

The gaining sectoral indices on the BSE were IT up by 0.64%, Healthcare up by 0.56%, Power up by 0.51%, TECK up by 0.32% and PSU up by 0.31%, while, Consumer Durables down by 0.54%, FMCG down by 0.39%, Realty down by 0.30%, Capital Goods down by 0.29% and Bankex down by 0.21% were the losing indices on BSE.

The top gainers on the Sensex were Hindalco up by 3.13%, Hindustan Unilever up by 1.81%, Infosys up by 1.34%, Mahindra & Mahindra up by 1.18% and Sun Pharma Inds. up by 0.99%. On the flip side, Bharti Airtel down by 1.69%, ITC down by 1.49%, Sesa Sterlite down by 1.35%, Tata Motors down by 1.30% and HDFC down by 0.88% were the top losers.

Meanwhile, Indirect tax collection is likely to fall short of annual target by an estimated Rs 90,000 crore in the current fiscal, mainly because of subdued industrial activities. Indirect taxes include customs duty, central excise duty and service tax.

Indirect tax revenue during the month of October rose 7.5% to Rs 44,384 crore from Rs 41,290 crore in the corresponding month a year ago, indicating woes of economic slowdown might not be over yet. Customs collection grew 19.5% to Rs 16,800 crore in October on high imports and softening crude oil prices. Excise collection grew 1.4% to Rs 14,169 crore in October because of the slowdown in manufacturing sector even in the festival month. Services tax collection also rose 1.2% to Rs 13,415 crore.

Further, indirect tax collection so far this fiscal is 45.7% of the Budget estimate of Rs 6.23 lakh-crore. For the first seven months of FY15, customs revenue rose 7.5 % to Rs 1.06 lakh-crore, 52.6 % of the Rs 2.02 lakh-crore Budget estimate. Excise collection shrunk 1.2 % to Rs 88,330 crore, 43% of the Rs 2.05-lakh-crore estimate and, service tax collection was only 42% of the target Rs 2.16 lakh-crore.

Tax collection is the major source of revenue for the government. The Budget aims to mobilise Rs 6.23 lakh crore in FY15, which requires a growth rate of 25% over FY14. If indirect tax collection does not rise in coming months, with disinvestment and spectrum sales not forthcoming, it could become difficult for the government to contain the fiscal deficit at 4.1% of the gross domestic product (GDP) without big spending cuts. India’s fiscal deficit widened to 82.6% to cross Rs 4.38 lakh crore during April-September this fiscal as against Rs 5.31 trillion Budget Estimates for 2014-15. In the corresponding year-ago period, fiscal deficit was 76% of the budget estimate.

The CNX Nifty is currently trading at 8467.95, down by 7.80 points or 0.09% after trading in a range of 8465.30 and 8489.25. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.10%, PNB up by 2.17%, BPCL up by 1.86%, Power Grid Corpn up by 1.83% and Hindustan Unilever up by 1.73%. On the flip side, Zee Entertainment down by 2.54%, Bharti Airtel down by 1.69%, DLF down by 1.68%, ITC down by 1.50% and Jindal Steel & Power down by 1.46% were the top losers.

Asian markets were trading mixed; with KOSPI Index trading higher by 1.25 points or 0.06% to 1,982.09; Jakarta Composite gaining 7.87 points or 0.15% to 5,140.90; Shanghai Composite rising by 14.76 points or 0.57% to 2,619.11; Taiwan Weighted advancing by 42.92 points or 0.47% to 9,165.31.

On the flip side, Nikkei 225 declined by 135.08 points or 0.78% to 17,248.50; Hang Seng shed 104.16 points or 0.43% to 24,007.82; FTSE Bursa Malaysia KLCI slid by 10.92 points or 0.59% to 1,831.25 and  Straits Times dropped 1.94 points or 0.06% to 3,347.72.