Benchmarks extend losses in late afternoon session

Indian equity markets extend losses and continued its weak trade in the late afternoon session on account of selling in frontline blue chip counters. The sentiments were on cautious note ahead of the much-anticipated US Fed’s 2-day policy meeting starting tomorrow, as investors preferred profit-taking despite positive CPI data released after market hours yesterday. Traders were seen piling position in FMCG stocks while selling was witnessed in Metal, Capital Goods and Consumer Durables sector stocks. Hectic selling activity was witnessed in banking sector stocks after the deputy governor of the Reserve Bank of India R. Gandhi told a group of bankers and asset reconstruction companies (ARCs) at an event that the rate of growth of bad loans of Indian banks in 2011-15 was higher than credit expansion. Gross bad debt of 41 listed banks have jumped to Rs 3.3 lakh crore in June compared to Rs 91,178 crore on March 2011. In the scrip specific development, Bharat Forge was trading in red after foreign brokerage firm lowered its target price on the stock, citing concerns over non-auto export growth.

On the global front, the Asian markets were trading mostly in red, while the European markets were also trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,850 and 25,700 levels respectively. The market breadth on BSE was negative in the ratio of 965:1461 while 100 scrips remained unchanged.

The BSE Sensex is currently trading at 25684.58, down by 172.12 points or 0.67% after trading in a range of 25652.89 and 25909.83. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.87%, while Small cap index down by 0.65%.

The gaining sectoral index on the BSE was FMCG up by 0.24% while, Metal down by 2.26%, Capital Goods down by 1.84%, Consumer Durables down by 1.40%, Auto down by 1.38%, Bankex down by 0.92% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.27%, Hindustan Unilever up by 0.80%, Maruti Suzuki up by 0.68%, Sun Pharma up by 0.66% and ITC up by 0.21%.

On the flip side, Tata Steel down by 4.31%, Vedanta down by 3.86%, Tata Motors down by 3.46%, Hindalco down by 3.18% and Larsen & Toubro down by 2.61% were the top losers.

Meanwhile, in order to protect the domestic steel industry from rising cheap imports, the government has imposed 20 per cent provisional safeguard duty of certain types of steel on the recommendations of the Directorate General of Safeguards (DGS). This duty comes into immediate effect and will be applicable for a period of 200 day. Safeguard duty is a WTO-compatible temporary measure that is brought in for a certain timeframe to avert any damage to a country's domestic industry from cheap imports.

Finance Minister Arun Jaitley said that the duty will be applied on specified categories of steel from all countries, adding that the power of imposing provisional duty was invoked in view of sudden surge in imports and subsequent injury to domestic producers. The duty will provide temporary relief to domestic industry by making imports costlier. Safeguard duty will be the latest imports of specific steel products from China, Japan and Korea for 200 days.

Earlier, DGS had recommended imposition of safeguard duty on hot-rolled flat steel products for 200 days to protect interests of the domestic industry. Such products account for almost 80 per cent of India’s steel imports. The major steel producers, like JSW Steel, Essar Steel and SAIL, representing 50 percent of the domestic production, have complained of surge in imports of steel products like hot-rolled steel and other variants from China, Korea, Japan and Russia and they had moved DGS, for imposition of the levy on imports of hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 mm or more for four years.

In 2014-15, steel imports jumped 71% to 9.32 mt from 5.42 mt. China, Japan and Korea accounted for 76% of total imports which almost doubled to 7 mt from 3.8 mt. Imports of Chinese steel grew by 232%, Japan by 18% and Korea by 46%, according to steel ministry data. During April-June 2015, steel imports from China and Korea went up by 49 per cent and 105 per cent from Japan.Total imports (including semifinished steel) during Q1 FY16 surged by 57 per cent to 2.7 mt, this time on a higher base.

This year, basic customs duties on steel were raised twice in June and in August by 2.5% each time. In June, India imposed anti-dumping duty of up to $316 per tonne on imports of certain steel products from three countries, including China, to protect domestic producers from below-cost inbound shipments.

The CNX Nifty is currently trading at 7810.30, down by 61.95 points or 0.79% after trading in a range of 7809.70 and 7880.00. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.04%, NTPC up by 1.23%, Power Grid up by 1.18%, Hindustan Unilever up by 0.79% and Sun Pharma up by 0.73%.

On the flip side, Tata Steel down by 4.43%, Vedanta down by 4.29%, Tata Motors down by 3.73%, Ambuja Cement down by 3.38% and Hindalco down by 3.05% were the top losers.

The Asian markets were trading mostly in red; Shanghai Composite decreased 109.63 points or 3.52% to 3,005.17, Hang Seng decreased 106.67 points or 0.49% to 21,455.23, Jakarta Composite decreased 48.28 points or 1.1% to 4,342.09, Taiwan Weighted decreased 47.3 points or 0.57% to 8,259.99 and Straits Times decreased 27.03 points or 0.94% to 2,844.44.

On the other hand, FTSE Bursa Malaysia KLCI increased 4.96 points or 0.3% to 1,644.59, KOSPI Index increased 6.1 points or 0.32% to 1,937.56 and Nikkei 225 increased 60.78 points or 0.34% to 18,026.48.

The European markets were trading in red; UK’s FTSE 100 decreased 52 points or 0.85% to 6,032.59, Germany’s DAX decreased 28.55 points or 0.28% to 10,103.19 and France’s CAC decreased 8.67 points or 0.19% to 4,509.48.