Benchmarks continue to trade lower; Nifty slips below 8,500 mark

Indian equity benchmarks continued to trade in the red in noon deals with frontline gauges breaching their crucial 8,500 (Nifty) and 28,000 (Sensex) levels as investors remained on sidelines ahead of key macroeconomic numbers due to be released later in the week. Sentiments remained dampened on Moody's report which stated that India’s sovereign credit profile is more exposed to the negative effects of a drought than most other Baa rated sovereigns because of relatively high share of agriculture in overall employment, weak rural infrastructure and irrigation, inefficient food distribution, large proportion of Indian household spending that goes towards food, and share of food subsidy costs in the government's fiscal deficits.

On the global front, European counters have made a weak start with CAC, DAX and FTSE all trading in red in early deals. Asian markets were trading mostly in red at this point of time as investors weighed the implications of the surprise move, which seemed to end months of officially sanctioned yuan strength. Back home, depreciation in Indian rupee too weighed down the sentiments. The rupee fell to the lowest against the dollar in two weeks on Tuesday after China devalued the yuan by nearly 2 per cent. On the sectoral front, software and technology remained the only gainers in trade, while metal, capital goods and power remained the top losers on the BSE sectoral space. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 915 shares on the gaining side against 1,660 shares on the losing side while 93 shares remain unchanged.

The BSE Sensex is currently trading at 27972.56, down by 129.16 points or 0.46% after trading in a range of 27940.48 and 28205.12. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.43%, while Small cap index down by 0.69%.

The only gaining sectoral indices on the BSE were IT up by 1.30% and TECK up by 0.93%, while Metal down by 1.97%, Capital Goods down by 1.41%, Power down by 1.01%, Oil & Gas down by 0.93% and Auto down by 0.90% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.12%, SBI up by 1.27%, Cipla up by 0.99%, TCS up by 0.92% and Maruti Suzuki up by 0.32%. On the flip side, Tata Steel down by 2.89%, Hindalco down by 2.87%, Tata Motors down by 2.03%, Coal India down by 1.86% and Hindustan Unilever down by 1.61% were the top losers.

Meanwhile, the Government has capped the subsidy payout on kerosene at Rs 12 per litre and Rs 18 per kg for LPG while deciding to foot the entire bill on domestic cooking gas and also notifies that at current prices the upstream companies to bear about Rs 5,000-6,000 crore kerosene subsidy for the current fiscal year. In the budget 2015-16, government had provided for Rs 22,000 crore towards LPG subsidy and 8,000 crore on kerosene.

Currently, in public distribution system (PDS) kerosene is sold at Rs 14.96 per litre against its actual cost of Rs 29.91, where the difference Rs 14.95 per litre, is called as under-recovery or revenue loss. This under recovery loss of Rs 14.95 per litre initially was paid by government to state owned retailer ONGC and Oil India. As per the new cap, the government will pay Rs 12 per liter where the difference of Rs 2.95 will be borne by oil producers ONGC and Oil India.

For LPG cylinder government has fixed subsidy of Rs 18 per kg and as many as 12 LPG cylinders of 14.2-kg are provided to  every household at a subsidized rate of Rs 417.82 against  market price of Rs 585. There is an under-recovery of Rs 167.18 per cylinder which will be paid entirely by the government under the Direct Benefit Transfer (DBT) scheme, under which the cash subsidy is transferred from the exchequer in the bank account of the consumer so that they can purchase the cylinders at market price.

For the first quarter of FY16, the government will provide Rs 1,733 crore cash subsidy as per the new formula to Indian Oil Corp (IOC), Rs 404 crore to Bharat Petroleum Corp (BCPL) and Rs 451 crore to Hindustan Petroleum Corp (HPCL). On LPG, the subsidy support to IOC would be Rs 2,506 crore, BPCL Rs 1,155 crore and HPCL Rs 1,183 crore.

The CNX Nifty is currently trading at 8485.40, down by 40.20 points or 0.47% after trading in a range of 8471.40 and 8556.25. There were 10 stocks advancing against 39 stocks declining on the index while 1 stock remained unchanged.

The top gainers on Nifty were Tech Mahindra up by 1.80%, Infosys up by 1.76%, SBI up by 1.36%, Cipla up by 1.01% and TCS up by 0.93%. On the flip side, Tata Steel down by 3.04%, Hindalco down by 2.78%, BPCL down by 2.60%, Bosch down by 2.20% and Tata Motors down by 2.19% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite declined 102 points or 2.15% to 4,646.95, Nikkei 225 decreased 87.94 points or 0.42% to 20,720.75, Taiwan Weighted dropped 72.7 points or 0.86% to 8,394.14, Straits Times shed 31.31 points or 0.98% to 3,165.35, KOSPI Index dipped 16.52 points or 0.82% to 1,986.65 and FTSE Bursa Malaysia KLCI was down by 13.83 points or 0.84% to 1,640.54.

On the flip side, Shanghai Composite increased by 26.68 points or 0.68% to 3,955.09 and Hang Seng was up by 159.22 points or 0.65% to 24,680.34.

European Markets were trading in the red; Germany’s DAX lost 0.39%, France’s CAC declined 0.32% and UK’s FTSE was down by 0.40%.