Benchmarks edge lower as Govt prunes FY16 growth forecast

Friday turned out to be a disappointing session for the Indian equity indices which got pounded by over a percentage point as investors sold stocks across sectors amid feeble global cues. After a negative opening, the domestic bourses never looked in recovery mood and breached their crucial support levels of 25,600 (Sensex) and 7,800 (Nifty). Traders overlooked the Finance Ministry’s statement that India is well prepared to deal with the impact of the US Federal Reserve interest rate hike and the end of uncertainties will actually help policy makers in emerging economies.

Selling got accelerated with government lowering FY16 GDP growth forecast lower to 7-7.5% from 8-8.1% earlier. Also, the government at its mid-year economic review forecasted consumer price inflation of 6% for FY16 adding that the economy had made progress but challenges remained. It also promised to hold fiscal deficit at 3.9% of total GDP, while projecting a revenue deficit of 2.8% for FY16. It cautioned that it would reassess commitment to cut fiscal deficit by 0.4% by FY2017. It also warned that the proposed wage hike for central government employees by the Seventh Pay Commission could adversely impact the fiscal deficit.

Weak opening in European counters too dampened sentiments with CAC, DAX and FTSE all were trading with a cut of around half a percent in early deals with supermarket group Casino losing more ground in the wake of a negative research note on it. Asian markets ended in red, led by Japanese Nikkei down by around two percent after the Bank of Japan tweaked its bond-buying program.

Back home, selling was both brutal and wide-based as most sectoral indices on BSE ended in red. Counters which featured in the list of worst performers included software, technology and energy. Depreciation in Indian rupee too weighed down sentiments. Rupee was trading at 66.48 per dollar at the time of equity markets closing compared with its previous close of 66.42.

Shares of IT companies finished weak after the US Congress doubled a special fee on the popular H-1B and L-1 visas raising it up to $4,500 to fund a 9/11 healthcare act and biometric tracking system that will hit Indian IT companies. Private banking stocks were subdued following the RBI directive on the new lending rate regime from April 1, 2016. Shares of oil exploration and production (E&P) companies also fell as global crude oil prices declined.

The NSE’s 50-share broadly followed index Nifty declined by over eighty points to end below the psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over two hundred and eighty points to end below its crucial 25,600 mark. Broader markets tried hard to get some traction but ended mixed. The market breadth remained in favor of decliners, as there were 1,302 shares on the gaining side against 1,401 shares on the losing side while 203 shares remain unchanged.

Finally, the BSE Sensex plunged by 284.56 points or 1.10% to 25519.22, while the CNX Nifty declined by 82.40 points or 1.05% to 7761.95.

The BSE Sensex touched a high and a low 25789.51 and 25481.51, respectively. The BSE Mid cap index was up by 0.08%, while Small cap index was down by 0.24%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.01%, Power up by 0.13%  and  Realty up by 0.07%, while IT down by 1.31%, TECK down by 1.07%, Metal down by 0.89%, Bankex down by 0.88% and Healthcare down by 0.70% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 0.63% and Coal India up by 0.13%. On the flip side, Vedanta down by 3.21%, Lupin down by 2.10%, Bajaj Auto down by 1.95%, Infosys down by 1.90% and SBI down by 1.88% were the top losers.

Meanwhile, with an aim to reduce litigations from indirect taxes, the government has raised the threshold limit for filing appeals before Customs Excise and Service Tax Appellate Tribunal (CESTAT) and High Courts to Rs 10 lakh and Rs 15 lakh, respectively. Besides, there will be withdrawal of all cases in High Courts and CESTA T where there is precedent Supreme Court decision, against which no review contemplated. 

A slew of measures were taken to enable effective and speedy dispute resolution and to facilitate the trade and industry. Finance Ministry said that the Central Board of Excise and Customs (CBEC) has taken a number of initiatives to facilitate trade and resolve disputes. The Finance Ministry further said that pre show cause notice consultation at the level of Principal Commissioner/ Commissioner has been made mandatory in all the cases where duty involved is above Rs 50 lakh.

Further, Zonal Chief Commissioners and Principal Commissioners have been directed to hold monthly or bi-monthly meetings with all the adjudicating and appellate authorities in their respective zone and also advice them on how to pass good adjudication/appellate orders. Besides, the training institute will impart intense training to train officers on the qualities of a good adjudication order, advocacy, and interpretation of statue as well as drafting of laws.

Customs Excise & Service Tax Appellate Tribunal (CESTAT) is an independent forum to hear appeals against orders and decisions passed by the Commissioners of Customs and Excise relating to service tax, customs and central excise.

The CNX Nifty touched a high and low 7836.15 and 7753.35 respectively.  

The top gainers on Nifty were Adani Ports & Special up by 1.83%, Idea Cellular up by 0.93%, Power Grid up by 0.71%, Asian paints up by 0.68% and Ambuja Cement up by 0.68%. On the flip side, Vedanta down by 3.16%, Ultratech Cement down by 2.89%, Bajaj Auto down by 2.37%, SBI down by 2.01% and Infosys down by 1.91% were the top losers. 

European Markets were trading in red; France’s CAC was down by 0.67%, Germany’s DAX was down by 0.68% and UK’s FTSE was down by 0.43%.

Asian equity markets closed in red on Friday after Wall Street suffered a setback overnight and fresh signs of inventory buildup put further downward pressure on the already low prices. While positive home price data from China spurred some buying interest, the recovery quickly petered out following the Bank of Japan's policy decision. China's home prices rose 0.9 percent in November, up from the previous month's reading of 0.1 percent, signaling further stabilization in the country's housing markets. Japanese shares ended a choppy session lower after the Bank of Japan tweaked its bond-buying program. While keeping its main target for monetary stimulus unchanged at an annual pace of about 80 trillion yen, the Bank of Japan expanded the quantitative easing program to include exchange traded funds (ETFs).