Post Session: Quick Review

Local equity markets collapsed liked house of cards on Wednesday and ended with a massive cut of over 2.50%, which dragged both Sensex and Nifty below psychologically crucial 26,750 and 8,100 levels respectively. The sharp sell-off was triggered by algorithmic trading platforms. The sell-off was initially sparked by a slump in Nifty futures listed on the Singapore exchange, which traded at a discount to domestic Nifty futures.

Algorithmic trading accounts for a third of the total volume on Indian cash shares and almost half of the volume in the derivatives segment. Besides, continued offloading by foreign investors amidst retrospective tax worries also weighed on the sentiment. Additionally, somber economic data also added to the pessimistic environment. Meanwhile, the session also was daunting for broader indices, which went home with massive losses of over 3%.

On the global front, sell-off in global sovereign bonds pushed Asian stocks to two-week lows on Wednesday as investors worried it might trigger profit-taking in other asset classes. Bonds have been among the best-performing asset classes in recent years thanks to the unconventional policy easing steps taken by global central banks, but signs are emerging that investors are tired of chasing ever-shrinking yields. Meanwhile, European equity indexes rebounded in choppy trade on Wednesday as strong euro zone services data and corporate results offset a sell-off in the region's government bonds and a rise in the euro.

Closer home, none of the sectoral indices on BSE concluded in positive territory, nevertheless stocks from Capital Goods, Realty and Banking counters were the top losers of the session. In stock-specific activity, Shares of public sector oil marketing companies as global crude oil prices rose.  Additionally, real estate stocks fell on reports that a united opposition forced the government to put off indefinitely the real estate bill. According to reports, a united opposition forced the government to put off indefinitely the real estate bill that proposes setting up a regulatory agency to improve the credibility of the property sector in one of the world's least transparent property markets, but which the Congress says is intended to benefit builders at the expense of middle-class homebuyers. The overall market breadth on BSE was in the favour of decliners which thumped advances in the ratio of 593:2148; while 106 shares remained unchanged.

The BSE Sensex concluded at 26717.37, down by 722.77 points or 2.63% after trading in a range of 26677.64 and 27501.15. There were 1 stocks advancing against 29 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 3.38%, while Small cap index down by 3.18%. (Provisional)

The losing sectoral indices on the BSE were Capital Goods down by 4.19%, Realty down by 4.18%, Bankex down by 3.80%, Power down by 3.58% and PSU down by 3.52%, while there were no gainers on the index. (Provisional)

The only gainer on the Sensex was Bharti Airtel up by 0.88%. On the flip side, BHEL down by 6.23%, ICICI Bank down by 5.07%, Larsen & Toubro down by 4.65%, Maruti Suzuki down by 4.33% and Axis Bank down by 4.08% were the top losers. (Provisional)

Meanwhile, the Government auditor Comptroller and Auditor General (CAG) in its report showed that tax arrears towards excise duty rose to Rs 59309 crore in 2013-14 from Rs 45463 crore a year ago. Notably, CAG in its audit report on Indirect Taxes (central excise) tabled in Parliament showed that arrears (pending recovery) have been rising since 2011-12. At the end of 2011-12, the arrears were Rs 35,964 crore, while they summed up-to rose to Rs 45,463 crore at the end of 2012-13 and further to Rs 59,309 crore in 2013-14.

During the 2013-14 fiscal, the tax department could realize only Rs 1,178 crore of arrears in central excise, which is 2.59% of the arrears at the commencement of the year which stood at Rs 45,463 crore. The collection during the previous year stood at 4.34% in 2012-13 fiscal.

The CAG report further stated that revenue foregone on account of central excise exemptions has declined to Rs 1.95 lakh crore during 2013-14 fiscal from Rs 2.09 lakh crore a year ago. The revenue forgone to the tune of Rs 1.95 crore was 115% of the total revenue collected from central excise during the fiscal.

Meanwhile, Central excise receipts during 2013-14 fiscal were over Rs 1.69 lakh crore. For 2012-13 fiscal, the central excise revenue foregone by the tax department was over Rs 2.09 lakh crore, which was 119% of the excise receipts of over Rs 1.75 lakh crore.

India VIX, a gauge for markets short term expectation of volatility zoomed 13.48% at 19.70 from its previous close of 17.36 on Tuesday. (Provisional)

The CNX Nifty settled at 8097.00, down by 227.80 points or 2.74% after trading in a range of 8083.00 and 8331.95. There were 1 stocks advancing against 49 stocks declining on the index. (Provisional)

The lone gainer on Nifty was Bharti Airtel up by 0.81%. On the flip side, BHEL down by 6.30%, Ambuja Cement down by 5.18%, Kotak Mahindra Bank down by 5.06%, ICICI Bank down by 4.96% and Larsen & Toubro down by 4.73% were the top losers. (Provisional)

European Markets were trading in the green; Germany's DAX rose 0.79%, France's CAC surged 0.50%, while UK’s FTSE was up by 31%.

The Asian markets closed mostly in red on Wednesday, while Japanese stock exchange was closed today on account of ‘Greenery Day’ holiday. The devaluation of currencies by some countries has led to sharp gains in the yuan which are hurting the competitiveness of Chinese exports. The Ministry of Commerce stated that China’s economy still faces challenges this year, and that its trade flows, especially exports, are under increased pressure.  China’s services sector grew at its fastest pace this year in April as a sizzling stock market rally helped boost consumer confidence and spending.  Yet in a sign that China’s economy still faces strong headwinds, the HSBC/Markit China Services Purchasing Managers’ Index (PMI) showed final prices of services hit a 15-month low in April as some firms were forced to cut prices to lift sales. The services PMI rose to a four-month high of 52.9 in April from 52.3 in March, comfortably above the 50-point level that separates expansion from a contraction in activity on a monthly basis. Indonesian GDP fell to a seasonally adjusted annual rate of 4.71%, from 5.01% in the preceding month.