Markets turn weak after a positive start

Indian markets after making a positive start have lost way and were trading with modest cuts in the early morning session on Wednesday. Traders seem to be still reeling under pressure of RBI’s decision of keeping its key policy rates unchanged. However, any major fall was restricted with Finance Minister Arun Jaitley’s statement that the government was committed to going ahead with reforms measures to take India back to original potential of 8 per cent economic growth. The PSU oil marketing companies are recovering from their last session’s plunge as the international crude prices slumped once again in last session. The stocks were under pressure after the government raised excise duties on petrol by Rs2.25 per litre and on diesel by Re1 per litre with immediate effect. PSU stocks were in jubilant mood today, after the Finance Minister said that disinvestment in PSBs in phased manner is under consideration.

The BSE Sensex is currently trading at 28430.23, down by 13.78 points or 0.05% after trading in a range of 28370.73 and 28504.65. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices outperforming the benchmarks were trading in green; the BSE Mid cap index was up by 1.15%, while Small cap index gained 0.99%.

The top gaining sectoral indices on the BSE were Power up by 1.29%, Auto up by 1.10%, Consumer Durables up by 0.93%, PSU up by 0.89%, INFRA up by 0.79% while, IT down by 0.84%, TECK down by 0.65%, FMCG down by 0.48% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 3.41%, Mahindra & Mahindra up by 1.58%, Tata Motors up by 1.31%, NTPC up by 1.18% and SBI up by 1.10%. On the flip side, Infosys down by 1.69%, Dr. Reddys Lab down by 1.29%, ITC down by 1.15%, Sesa Sterlite down by 0.87% and HDFC down by 0.67% were the top losers.

Meanwhile, with an aim to boost power generation capacity of India, the Heavy Industry Ministry pitched for doubling the basic import duty on power generation equipment. The Ministry demanded that duty to be raised to 10 per cent from 5 per cent and the countervailing duty to be brought to nil.

In 2012, the previous government had ended the difference on basic import duty between power projects, underscoring that the same rate of duty would apply to all projects in the sector, irrespective of capacity. After that, electricity generation equipment for mega power projects / ultra mega power projects of 1,000 MW and above also attracted duty. The duty imposed was 5 per cent basic Customs duty, 12 per cent countervailing duty (CVD) and 4 per cent special additional duty (SAD) taking the duty to 21 per cent. In addition to this, there was education cess and the final rate stood at 22.85 per cent.

The Ministry is of the view that if the basic import duty is raised to 10 per cent, and the countervailing duty brought to ‘nil’, domestic manufacturers will get effective protection, in comparison with foreign manufacturers. Besides import duty, all other taxes and charges are paid by both foreign and domestic manufacturers. If CVD is nil, domestic companies will not be required to pay excise duty, thus raising the effective protection from current around 4.7 per cent. Further, the ministry also highlighted the need to exempt more power projects from paying higher duty as they accounted for the bulk of power generation capacity to be added during the 12th Plan period.

The CNX Nifty is currently trading at 8525.25, up by 0.55 points or 0.01% after trading in a range of 8508.35 and 8540.60. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were BHEL up by 3.44%, Asian Paints up by 3.08%, Jindal Steel & Power up by 2.36%, Mahindra & Mahindra up by 1.70% and Bank of Baroda up by 1.47%. On the flip side, Infosys down by 1.67%, Dr. Reddys Lab down by 1.36%, ITC down by 1.27%, Sesa Sterlite down by 0.79% and HDFC down by 0.72% were the top losers.

The Asian markets were mostly in green, Straits Times was up by 1.73 points or 0.05% to 3,324.05, KOSPI Index gained 5.44 points or 0.28% to 1,971.27, Shanghai Composite was higher by 12.93 points or 0.47% to 2,776.48, Taiwan Weighted moved up by 141.61 points or 1.57% to 9,176.40 and Nikkei 225 surged by 143.81 points or 0.81% to 17,807.03. On the other hand, Hang Seng lost 98.31 points or 0.42% to 23,555.99, FTSE Bursa Malaysia KLCI was down by 14.77 points or 0.83% to 1,771.20 and Jakarta Composite was lower by 11.86 points or 0.23% to 5,163.94.