Benchmarks continue to trade lower on global growth concerns

Indian equity benchmarks continue to trade lower on global growth concern with front line gauges trading below their crucial 24,000 (Sensex) and 7,300 (Nifty) levels. Sentiment remained weak in the absence of any positive trigger amid sustained capital outflows by foreign funds. Weak Q3 earnings from Punjab National Bank (PNB) too dampened sentiments. The company has reported a net profit of Rs 51.01 crore for Q3FY16 as compared to a net profit of Rs 774 crore in the corresponding quarter previous year. Besides, there was a weak trend in other Asian markets following overnight losses in the US following as oil prices tanked again on fears of a deepening economic slowdown.

Closer home, software counter playing spoil sport for the domestic benchmarks, down by around three and a half percent after Cognizant Technology Solutions said at the time of announcement of its Q4 December 2015 results that the company expects revenue to remain flat on sequential basis in Q1 March 2016. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 556 shares on the gaining side against 1,750 shares on the losing side while 85 shares remain unchanged.

The BSE Sensex is currently trading at 23976.45, down by 310.97 points or 1.28% after trading in a range of 23919.47 and 24076.85. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.68%, while Small cap index down by 1.45%.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.20% while, IT down by 3.44%, TECK down by 2.94%, Metal down by 2.43%, Auto down by 1.81%, Realty down by 1.51% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.79%, Lupin up by 1.70%, NTPC up by 1.14%, ONGC up by 0.65% and Bharti Airtel up by 0.35%. On the flip side, Coal India down by 4.02%, TCS down by 4.01%, Infosys down by 3.58%, Tata Motors down by 3.09% and Maruti Suzuki down by 2.47% were the top losers.

Meanwhile, with an aim to meet the targets in 2016-17, the government is revamping the disinvestment process, when a tighter budget is expected to leave little room for missing revenues as the Centre has done in the current fiscal. In order to broaden the decision-making process and quickly identify companies for sale, the disinvestment department has roped in the Department of Economic Affairs from the finance ministry and the Department of Public Enterprises who is the nodal agency for all central public sector enterprises. The new disinvestment policy will not be in isolation and only from the view of selling small stake in already listed firms. The government is looking to bring more firms so that they have a ready pipeline.

Besides, the government plans to push profitable subsidiaries of central public sector enterprises to list on the bourses. The government is already pushing firms such as Nalco and Coal India to go for buybacks. The other companies that the government may seek to persuade in this manner include Bharat Heavy Electricals and mining firm NMDC. In this fiscal, the government had kick-started the disinvestment process early with a 5% stake sale in Rural Electrification Corporation in April, followed possible to meet fiscal targets while meeting Seventh Pay Commission obligations

Earlier, Finance Minister Arun Jaitley has said that during the financial year 2016-17, the central government has to make provision for about Rs 1.10 lakh crore in order to meet the liabilities on account of implementation of Seventh Pay Commission recommendations and One Rank One Pension Scheme. The government is committed to keep the fiscal deficit at 3.5% of the gross domestic production in 2016-17.

Since the beginning of the current fiscal, the government has raised about Rs 13,300 crore from divestment against the target of Rs 69,500 crore, of which Rs 28,500 crore was to come through strategic sale.

The CNX Nifty is currently trading at 7287.15, down by 100.10 points or 1.36% after trading in a range of 7275.15 and 7319.70. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 1.84%, Lupin up by 1.52%, BPCL up by 1.25%, NTPC up by 1.22% and ONGC up by 1.07%. On the flip side, Tech Mahindra down by 4.36%, PNB down by 4.35%, Coal India down by 4.10%, TCS down by 3.98% and Infosys down by 3.81% were the top losers.

Asian markets were trading in red; Nikkei 225 crumbled 918.86 points or 5.4% to 16,085.44 and Jakarta Composite shed 33.34 points or 0.69% to 4,765.61.