Markets come off the day’s low; still trade in red

Markets continue to show a sluggish trend in the noon deals, with not much respite in sight, though the selling has got arrested and the benchmarks have recovered a bit from the day’s low, but the major benchmarks continue to trade lower tracking the steep fall in some regional equity markets. Traders seem to have overlooked the better-than-expected indirect tax collection data. The indirect tax collection growth slowed a bit in August compared to July but remained robust on account of a sharp pick-up in excise duty collection on account of additional revenue measures. 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. Sentiment also weighed down on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 452.13 crore yesterday, as per provisional data released by the stock exchanges.

On the global front, European counters have made a weak start and CAC, DAX and FTSE were trading with a cut of over half a percent in early deals. Asian markets are trading mostly in red at this point of time after lacklustre Chinese and Japanese economic data added to heightened worries about slackening global growth, sapping investors’ appetite for riskier assets. Back home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include consumer durables, realty and power. Sectors like banking, metal, oil and gas and software too were trading with huge losses. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 684 shares on the gaining side against 1,600 shares on the losing side while 70 shares remain unchanged.

The BSE Sensex is currently trading at 25521.49, down by 198.09 points or 0.77% after trading in a range of 25287.50 and 25550.69. 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 0.07%, while Small cap index down by 0.73%.

The losing sectoral indices on the BSE were Consumer Durables down by 1.88%, Realty down by 1.77%, Power down by 1.66%, Bankex down by 1.55% and INFRA down by 1.43%, while there were no gainers on the index.

The top gainers on the Sensex were Tata Motors up by 0.55%, TCS up by 0.50% and ITC up by 0.16%. On the flip side, Hindalco down by 4.01%, SBI down by 2.66%, Hindustan Unilever down by 2.26%, ONGC down by 2.04% and HDFC down by 1.98% 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 7743.80, down by 74.80 points or 0.96% after trading in a range of 7678.50 and 7758.05. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 1.88%, BPCL up by 1.82%, Tata Motors up by 0.81%, Tata Power up by 0.76% and TCS up by 0.56%. On the flip side, Hindalco down by 3.82%, Power Grid down by 3.33%, Bank of Baroda down by 2.91%, NMDC down by 2.78% and PNB down by 2.54% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 498.56 points or 2.25% to 21,632.75, Nikkei 225 tumbled 470.89 points or 2.51% to 18,299.62, Straits Times declined 35.98 points or 1.23% to 2,892.20, Shanghai Composite decreased 26.09 points or 0.8% to 3,217.00, Taiwan Weighted slipped 18.24 points or 0.22% to 8,268.68, Jakarta Composite shed 16.14 points or 0.37% to 4,331.14 and FTSE Bursa Malaysia KLCI was down by 2.78 points or 0.17% to 1,600.58. On the flip side, KOSPI Index was up by 27.91 points or 1.44% to 1,962.11.

European Markets were trading in red; Germany’s DAX lost 0.69%, France’s CAC declined 0.88% and UK’s FTSE was down by 0.86%.