Benchmarks continue to trade in negative bias

Indian equity benchmarks continued to trade in red in a narrow range in the late afternoon session on account of selling in frontline blue chip counters. Investors maintained cautious approach ahead of the GDP data for the March quarter and fiscal deficit data for the month of March slated to be announced later today. The downside is however capped as traders are getting some encouragement on International Institute for Management and Development (IMD)’s World Competitiveness Center report, which has stated that India climbed three spots and China dropped an equal number of places in the 2016 rankings. Traders were seen piling position in Auto, Metal and Realty stocks while selling was witnessed in IT, TECK and Consumer Durables sector stocks. Hectic buying activity was witnessed in gold jewellery stocks like Tribhovandas Bhimji Zaveri, PC Jeweller, Gitanjali Gems, Ganesh Jewellery House and Tara Jewels on reports that the government has rolled back its decision to levy 1% tax collection at source on cash purchase of gold jewellery of Rs 2 lakh and above. In scrip specific development, Rolta India was trading in red as S&P Global Rating and Fitch Ratings cut the company’s credit score since Rolta has missed a $6.8 million interest payment on its 10.75% 2018 unsecured notes. Unitech was trading in red after the company reported consolidated net loss of Rs 539.46 crore in Q4 March 2016 compared with consolidated net loss of Rs 162.54 crore in Q4 March 2015. The result was announced after market hours yesterday i.e. May 30, 2016.

On the global front, the Asian markets were trading mostly in green while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,200 and 26,700 levels respectively. The market breadth on BSE was negative in the ratio of 901:1535 while 163 scrips remained unchanged.

The BSE Sensex is currently trading at 26628.69, down by 96.91 points or 0.36% after trading in a range of 26608.52 and 26837.20. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.14%, while Small cap index down by 0.28%.

The gaining sectoral indices on the BSE were Auto up by 1.93%, Metal up by 1.39% and Realty up by 1.01%, while IT down by 1.33%, TECK down by 1.32%, Consumer Durables down by 1.02%, Oil & Gas down by 0.53% and Capital Goods down by 0.46% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 7.57%, Tata Steel up by 4.07%, Adani Ports &Special up by 1.87%, Maruti Suzuki up by 1.27% and NTPC up by 1.08%.

On the flip side, Sun Pharma down by 6.38%, GAIL India down by 2.82%, TCS down by 1.93%, Infosys down by 1.60% and Bharti Airtel down by 1.37% were the top losers.

Meanwhile, giving a big relief to the jewellers and customers, the government has rolled back its budget decision to apply 1 percent tax on cash purchase of gold jewellery of Rs 2 lakh and above and raised the threshold to the earlier Rs 5 lakh, the revised rules will come to effect from June 1. India is the world's largest gold jewellery consumer and the Rs 5 lakh relief is expected to create some demand in the thin wedding season.

The jewellers had earlier been on a 45-day strike after Finance Minister Arun Jaitley in his Budget speech in February proposed 1 percent excise tax on non-silver jewellery. The decision has come at a right time when the jewellers are finding it difficult to offload their inventory that piled up following the strike. Gold demand in the country hit a seven-year low in the first quarter of 2016 when sales declined 41% year on year at 88.4 tonnes.

TCS, introduced as a measure to curb tax evasion and check black money transactions is collected by the seller from the buyer at the time of sale and is deposited with the government. The person from whom the TCS is collected gets credit for the same amount in his income tax return. TCS of 1% was imposed on cash purchase of jewellery worth Rs 5 lakh or more and of bullion worth Rs 2 lakh or more in 2012. However, in this year’s budget the government had reduced the TCS threshold on jewellery to Rs 2 lakh.

The CNX Nifty is currently trading at 8160.95, down by 17.55 points or 0.21% after trading in a range of 8144.90 and 8213.60. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Tata Motors - DVR up by 9.56%, Tata Motors up by 7.41%, Aurobindo Pharma up by 5.01%, Tata Steel up by 4.54% and Hindalco up by 1.89%.

On the flip side, Sun Pharma down by 6.37%, GAIL India down by 3.03%, TCS down by 1.98%, Bharti Infratel down by 1.70% and Tata Power down by 1.40% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 16.27 points or 0.83% to 1,983.40, Shanghai Composite increased 94.17 points or 3.34% to 2,916.62, Nikkei 225 increased 166.96 points or 0.98% to 17,234.98 and Hang Seng increased 185.7 points or 0.9% to 20,815.09.

On the other hand, Jakarta Composite decreased 39.97 points or 0.83% to 4,796.06, FTSE Bursa Malaysia KLCI decreased 0.62 points or 0.04% to 1,629.25 and Taiwan Weighted decreased 0.28 points or 0% to 8,535.59.

The European markets were trading in red; UK’s FTSE 100 decreased 5.04 points or 0.08% to 6,265.75, Germany’s DAX decreased 29.5 points or 0.29% to 10,303.73 and France’s CAC decreased 13.07 points or 0.29% to 4,516.33.