Benchmarks trim losses; trade continues in red

Indian equity markets trimmed losses and continued their weak trade in the late afternoon session on account of selling in front line blue chip counters. The sentiments were on pessimistic note after yesterday’s humiliating defeat for the BJP-led led NDA in the Bihar assembly election which made the markets worried about increased political opposition for key reforms such as the Goods and Services Tax (GST). Traders were seen piling position in Consumer Durables, FMCG and Auto stocks, while selling was witnessed in Realty, TECK and Bankex sector stocks. In the scrip specific development, Dena Bank was trading in red after the company reported higher non-performing loans (NPL) in the second quarter of FY16. Nestle India was trading in green after it re-launched its popular Maggi noodles in India, five months after they were banned due to alleged presence of excessive lead content.

On the global front, the Asian markets were trading mostly in red, while the European markets were trading mostly on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,900 and 26,100 levels respectively. The market breadth on BSE was negative in the ratio of 1190:1264 while 103 scrips remained unchanged.

The BSE Sensex is currently trading at 26023.81, down by 241.43 points or 0.92% after trading in a range of 25656.90 and 26034.68. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.13%, while Small cap index up by 0.38%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.28%, FMCG up by 0.85% and Auto up by 0.59%, while Realty down by 2.29%, TECK down by 1.07%, Bankex down by 1.02%, Capital Goods down by 0.95% and Power down by 0.83% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.78%, Maruti Suzuki up by 1.92%, SBI up by 1.03%, ITC up by 0.91% and Lupin up by 0.69%.

On the flip side, Sun Pharma down by 5.50%, Dr. Reddys Lab down by 4.03%, BHEL down by 3.91%, Wipro down by 2.28% and HDFC Bank down by 2.02% were the top losers.

Meanwhile, in a bid to meet the fiscal deficit target, the government is likely to take up a step to mop up additional resources by hiking duties and seeking higher dividends from PSUs to make up for the anticipated shortfall in disinvestment and direct tax proceeds.

The disinvestment department was able to garner Rs 12,600 crore so far this fiscal due to volatile market conditions. It has a target of Rs 69,500 crore to be garnered from minority stake sale in PSUs as well as strategic stake sale. With seven months of the current financial year already over, the Department of Disinvestment has already indicated to the Finance Ministry that it would not be possible to meet the ambitious target.

Making up for the shortfall in disinvestment through other sources is essential for meeting the fiscal deficit target of 3.9 per cent of GDP. Finance Minister Arun Jaitley has already delayed the fiscal consolidation programme by a year in order to fuel growth. Jaitley has proposed to bring down the fiscal deficit to 3 per cent of GDP by 2017-18 as against the earlier target of 2016-17.  Fiscal deficit in the first half of the current fiscal stood at Rs 3.78 lakh crore or 68.1 per cent of the Budget estimate for the whole year.

For dividend, the government is pushing blue-chip PSUs to either step up their capex or pay higher dividends and not sit on cash pile. The government had budgeted to collect Rs 36,174 crore by way of dividend from the public sector enterprises, higher than last year's realisation of Rs 28,423 crore.  It has already received a dividend of Rs 65,896 crore from RBI, which is higher than this year's budget projection of Rs 64,477 crore.

As per government estimates, in the current fiscal the total tax revenues are likely to fall short by Rs 50,000 crore from the budget estimates. Tax revenues collected in the current fiscal could be around Rs 14 lakh crore as against the budgeted Rs 14.50 lakh crore Although indirect tax collections are showing a healthy growth, the collections of direct taxes have remained subdued.

Recently, the Finance Ministry has raised excise duty on petrol and diesel by Rs 1.60 per litre and 40 paise per litre respectively. This move is expected to fetch the exchequer additional revenue of about Rs 3,200 crore during the rest of the fiscal and also help the government in partly meeting the shortfall in disinvestment and direct tax realisation.

The CNX Nifty is currently trading at 7878.35, down by 75.95 points or 0.95% after trading in a range of 7771.70 and 7882.40. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.78%, Bank of Baroda up by 2.27%, Maruti Suzuki up by 1.80%, Asian Paints up by 1.51% and Tata Power up by 1.48%.

On the flip side, Sun Pharma down by 5.33%, Cairn India down by 4.61%, Dr. Reddy’s Lab down by 4.18%, Idea Cellular down by 3.80% and BHEL down by 3.76% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 140.56 points or 0.61% to 22,726.77, Jakarta Composite decreased 70.12 points or 1.54% to 4,496.43, Taiwan Weighted decreased 51.09 points or 0.59% to 8,642.48, KOSPI Index decreased 15.37 points or 0.75% to 2,025.70 and FTSE Bursa Malaysia KLCI decreased 4.08 points or 0.24% to 1,681.62.

On the other hand, Shanghai Composite increased 56.85 points or 1.58% to 3,646.88 and Nikkei 225 increased 377.14 points or 1.96% to 19,642.74.

The European markets were trading mostly in red; Germany’s DAX decreased 24.73 points or 0.23% to 10,963.30, France’s CAC decreased 24.57 points or 0.49% to 4,959.58 while, UK’s FTSE 100 increased 9.72 points or 0.15% to 6,363.55.