Benchmarks extend losses; Sensex below 28,000 mark

Indian equity markets extended their losses in late afternoon session on account of selling in frontline blue chip counters and in absence of any upside triggers. The sentiments were under pressure after Moody’s Investors Service stated that although India may avoid drought this year, its economy remains vulnerable to future drought or fluctuations in rainfall, and its sovereign credit profile is more exposed to the negative effect of drought than those of most ‘Baa’ rated sovereigns. Traders were seen piling position in IT and TECK stocks, while selling was witnessed in Metal, Realty and PSU sector stocks. In scrip specific development, Syngene International, an arm of biotechnology major Biocon, was trading firm after making a stellar debut over its issue price of Rs 250. SBI was trading in red post Q1 numbers. The bank’s net non-performing assets as percentage of total advances jump to 2.24 percent from 2.12 percent during the previous quarter. Gross bad loans as a percentage of total loans marginally rose to 4.29 percent in the June quarter from 4.25 percent in the previous quarter.

On the global front, the Asian markets traded in red, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,500 and 28,000 levels respectively. The market breadth on BSE was negative in the ratio of 870:1878 while 88 scrips remained unchanged.

The BSE Sensex is currently trading at 27906.26, down by 195.46 points or 0.70% after trading in a range of 27876.07 and 28205.12. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.79%, while Small cap index down by 1.11%.

The gaining sectoral indices on the BSE were IT up by 1.31% and TECK up by 0.85%, while Metal down by 2.42%, Realty down by 1.84%, PSU down by 1.67%, Capital Goods down by 1.48% and Auto down by 1.43% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.19%, TCS up by 1.08%, Cipla up by 0.73% and NTPC up by 0.19%.

On the flip side, SBI down by 4.01%, Tata Steel down by 3.70%, Tata Motors down by 3.10%, Hindalco down by 2.87% and Coal India down by 2.46% were the top losers.

Meanwhile, 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 8462.75, down by 62.85 points or 0.74% after trading in a range of 8455.10 and 8556.25. There were 8 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.88%, Tech Mahindra up by 1.80%, TCS up by 1.07%, Cipla up by 0.73% and Zee Entertainment up by 0.52%.

On the flip side, SBI down by 3.91%, Tata Steel down by 3.77%, Tata Motors down by 3.11%, BPCL down by 2.79% and Hindalco down by 2.78% were the top losers.

The Asian markets were trading in red; Jakarta Composite decreased 116.25 points or 2.45% to 4,632.70, Nikkei 225 decreased 87.94 points or 0.42% to 20,720.75, Taiwan Weighted decreased 72.7 points or 0.86% to 8,394.14, Straits Times decreased 47.23 points or 1.48% to 3,149.43, Hang Seng decreased 22.91 points or 0.09% to 24,498.21, FTSE Bursa Malaysia KLCI decreased 17.39 points or 1.05% to 1,636.98, KOSPI Index decreased 16.52 points or 0.82% to 1,986.65 and Shanghai Composite decreased 0.51 points or 0.01% to 3,927.91.

The European markets were trading in red; Germany’s DAX decreased 94.8 points or 0.82% to 11,509.98, France’s CAC decreased 36.97 points or 0.71% to 5,158.44 and UK’s FTSE 100 decreased 30.68 points or 0.46% to 6,705.54.