Benchmarks make gap down opening on Thursday after two days of rally

Indian equity markets have made a gap down opening and are now trading with the cut of around one and half a percent, as traders booked some profits after two days of rally, amid weak global cues with Japan’s key gauge of capital spending unexpectedly fell for a second straight month in July indicating that the economy is struggling to stabilize. The sentiments were further weighed down by Indian rupee depreciating 31 paise to 66.72 against the US dollar in early trade on account of foreign fund outflows amid appreciation in the US currency overseas. Further, foreign portfolio investors (FPIs) sold shares worth a net Rs 452.13 crore yesterday, as per provisional data released by the stock exchanges that too pressurized the markets. At present, Sensex and Nifty were trading below the crucial 25,400 and 7,750 levels respectively.  Apart from blue chips, broader indices too were weak with mid cap and small cap indices trading down by 1.69% and 1.95% respectively. Shares of logistics companies such as Patel Integrated Logistics, Gati, VRL Logistics, Snowman Logistics, Transport Corporation of India, Sical Logistics and Navkar Corporation were trading lower as the government abandoned plans to hold an extended monsoon session of Parliament to pass the Goods and Service Tax (GST) Bill.

On the global front, US markets ended lower as downturn in crude-oil prices overshadowed hopes for new stimulus measures by China and Japan. The Asian markets were trading mostly in red following the weak cues overnight from Wall Street, while lower commodity prices dragged down resource stocks. Weak economic data from Japan added to concerns about a global economic slowdown and dampened investors' appetite for riskier assets.

Closer home, all the sectoral indince on BSE were trading in red led by Realty, Consumer Durables, Bankex, Metal and INFRA. The market breadth on BSE was negative in the ratio of 286:1297 while 38 scrips remained unchanged. 

The BSE Sensex is currently trading at 25365.35, down by 354.23 points or 1.38% after trading in a range of 25287.50 and 25522.96. There were just 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.69%, while Small cap index lost 1.95%.

The top losing sectoral indices on the BSE were Realty down by 2.92%, Consumer Durables down by 2.47%, Bankex down by 2.09%, Metal down by 2.05% and INFRA down by 2.05%, while there were no losers.

The two gainers on the Sensex were Infosys up by 0.16% and TCS up by 0.15%. On the flip side, Hindalco down by 3.82%, Vedanta down by 3.66%, SBI down by 2.76%, BHEL down by 2.65% and Tata Steel down by 2.57% were the top losers.

Meanwhile, amid the global growth concern and weakening domestic economic conditions, one thing is likely to boost the morale of the government, Centre's indirect tax collection growth despite slowing a bit in August compared to July, remained robust with a sharp pick-up in excise duty collection on account of additional revenue measures. Indirect tax collections are considered a good measure of the underlying demand in the economy.

As per the data of ministry of finance, the Indirect taxes excise duty, service tax and customs duty - rose 36.7 per cent in August to Rs 54,396 crore over the same month in 2014, though in July the growth was 39.1 per cent. However, a big part of the buoyancy was because of the additional resource measures such as increase in duty on petroleum products, increase in clean energy cess, withdrawal of exemptions for motor vehicles, capital goods and consumer durables, and the increase in service tax from 12.36 per cent to 14 per cent from June this year.

Indirect tax collections rose 36.5 per cent in the first five months of the financial year, to Rs 2.63 lakh crore. The April-August collections were about 40 per cent of what has been budgeted for the year by the government. Customs duty rose 21.1 per cent to Rs 81,138 crore in April-August. Customs collections were aided by the rupee depreciation of six per cent in the period. Excise duty collections rose 70 per cent during the five months, to Rs 1.02 lakh crore and Service tax collection posted a 21.6 per cent growth in the five months, to Rs 75,006 crore.

Chief Economic Advisor (CEA) Arvind Subramanian said that the GDP and indirect tax numbers seem to suggest that directionally the economy is recovering. He added that when tax collections are growing at over double digits, it suggests that the underlying tax base or the nominal GDP seems to be healthy and moving upwards. The government is targeting close to 25 per cent growth in this tax over the year.

The CNX Nifty is currently trading at 7700.25, down by 118.35 points or 1.51% after trading in a range of 7678.50 and 7729.05. There were 4 stocks advancing against 46 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.13%, Tech Mahindra up by 0.66%, Infosys up by 0.21% and TCS up by 0.19%. On the flip side, NMDC down by 3.93%, Hindalco down by 3.88%, PNB down by 3.76%, Vedanta down by 3.70% and Bank Of Baroda down by 3.21% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 477.68 points or 2.54% to 18,292.83, Hang Seng decreased 443.06 points or 2% to 21,688.25, Straits Times decreased 41.37 points or 1.41% to 2,886.81, Taiwan Weighted decreased 38.48 points or 0.46% to 8,248.44, Shanghai Composite decreased 31.16 points or 0.96% to 3,211.93, FTSE Bursa Malaysia KLCI decreased 7.39 points or 0.46% to 1,595.97 and Jakarta Composite decreased 6.45 points or 0.15% to 4,340.83.

On the flip side, KOSPI Index increased 3.72 points or 0.19% to 1,937.92.