Benchmarks end a volatile day with around half a percent cut

Indian benchmark indices were unable to recover after plunging in last session after witnessing a volatile day of trade, finally closing in red with around half a percent cut, extending the declining trend for yet another session. Sentiments remained down-beat with the report that monsoon rains in India were 18 per cent below average in the week to June 8, as the onset of rainfall was delayed by nearly a week from its usual arrival on June 1, 2016.  Besides, weakness in the global equities amid decline in crude oil prices also dented sentiments. Incremental pessimism crept in since rupee was trading lower against the US dollar due to higher demand for the American currency from importers and banks. Indian rupee was trading lower by 8 paise at 66.79 against the US dollar at the time of equity markets closing on Friday. Further, Investors remained anxious ahead of Industrial production data slated to be announced later in the day, the IIP for March 2016 was just 0.1 per cent higher as compared to the level in March 2015. However, losses remained capped with report that a group of central and state government officials set up to frame the law for the proposed goods and services tax (GST) has submitted its final draft that could be taken up at a meeting of the empowered committee of state finance ministers next week. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 234.20 crore on June 09, 2016. Meanwhile, sugar stocks witnessed some spurt despite food minister Ram Vilas Paswan stating that India plans to impose a 25% tax on sugar exports to maintain adequate supplies of the sweetener in the local market. Shares of logistics companies extended gains for the fourth straight session on hopes of clearance of the GST Bill in the upper house of the Parliament. Further, Rail stocks gave a mixed reaction to Railway Minister Suresh Prabhu’s announcement that the Indian Railways will invest $140 billion over the next five years in infrastructure and improving the mobility of its services.

On the global front, Asian markets ended the final day of week in negative territory as investors shied away from risky assets before the release of Chinese economic data and a Fed policy meeting, as fears loomed that Britain could vote to leave the European Union. The latest figures for Chinese retail sales, industrial production and fixed asset investment are expected this weekend. The numbers will provide further clues on the direction of the protracted slowdown of the world's second-biggest economy. Meanwhile, European shares slipped for a third straight day to a two-week low, with weaker commodities prices putting further pressure on mining and energy stocks.

Back home, the local benchmark indices got off to a somber opening, extending the downtrend for the second straight session as pessimistic sentiments prevailed across Asian markets. But the frontline indices slowly but steadily started gathering steam and surged by over half a percent by noon trades. Sentiments got some support with the report that Indirect tax collections rose by about 37 per cent during April-May compared to the same period of the last fiscal. However, the key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Thereafter, the key indices failed to show any kind of resistance due to lack of encouraging leads. Finally the NSE’s 50-share broadly followed index Nifty, suffered a cut of around half a percent to settle around the crucial 8,150 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex- slipped over hundred points and closed above the psychological 26,600 mark. On the BSE sectoral space, barring the Power counters, all the gauges closed in the negative territory with indices like Realty, Auto and PSU suffering nasty lacerations of 1.03%, 0.95% and 0.77% respectively. The market breadth remained pessimistic as there were 1206 shares on the gaining side against 1363 shares on the losing side, while 196 shares remained unchanged.

Finally, the BSE Sensex ended lower by 127.71 points or 0.48% to 26635.75, while the CNX Nifty dropped 33.55 points or 0.41% to 8,170.05. 

The BSE Sensex touched a high and a low 26972.06 and 26620.50, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.40%, while Small cap index lower by 0.20%.

The only gaining sectoral index on the BSE was Power up by 0.60%, while Realty down by 1.03%, Auto down by 0.95%, PSU down by 0.77%, Consumer Durables down by 0.71% and Oil & Gas down by 0.69% were the top losing indices on BSE.

The top gainers on the Sensex were BHEL up by 2.02%, Lupin up by 0.64%, NTPC up by 0.50%, Reliance Industries up by 0.43% and Bharti Airtel up by 0.17%. On the flip side, GAIL India down by 2.09%, Tata Steel down by 2.08%, Tata Motors down by 2.04%, Coal India down by 1.98% and SBI down by 1.81% were the top losers.

Meanwhile, Moving a step further in the implementation of the long pending goods and services tax (GST) bill, a group of central and state government officials set up to frame the law for the proposed GST, has submitted its final draft that could be taken up at a meeting of the empowered committee of state finance ministers in Kolkata on June 14-15. The draft law may be made public after it's deliberated by the empowered panel.

The upcoming Empowered Committee meeting may also discuss issues such as the proposed additional 1 per cent tax on inter-state sales, a proposal that is opposed by Congress. Discussions may also be taken up on the Congress demand of putting the GST rate in the Constitutional (amendment) Bill.

The government is expected to make a renewed push for the passage of the constitutional amendment bill to roll out GST in the upcoming monsoon session of Parliament. This will be the first time that West Bengal Finance Minister Amit Mitra will chair an Empowered Committee meeting after being appointed as the head of this panel in February. There is strong chance of the Constitutional Bill getting Parliament nod in the upcoming monsoon session with Mamata Banerjee backing this reform. After the Bill passage by Parliament, a majority of the State assemblies will have to ratify it for the Constitutional amendment to be a reality.

The CNX Nifty traded in a range of 8,265.60 and 8,162.85. There were 21 stocks advancing against 30 stocks decliners on the index.

The top gainers on Nifty were Hindalco up by 4.24%, Yes Bank up by 2.30%, BHEL up by 1.98%, ACC up by 1.75% and Ambuja Cement up by 1.55%. On the flip side, Tata Motors - DVR down by 2.83%, Tata Steel down by 2.24%, GAIL down by 2.25%, Tata Motors down by 2.09% and Coal India down by 2% were the top losers.

European markets were trading in red terrain; Germany’s DAX tumbled 190.66 points or 1.89% to 9,898.21, UK’s FTSE 100 declined 88.97 points or 1.43% to 6,142.92 and France’s CAC was down by 66.56 points or 1.51% to 4,339.05.

Asian equity markets ended lower on Friday in thin holiday trade, as uncertainty over Brexit referendum and caution ahead of a slew of Chinese data due this weekend and central bank meetings in the US and Japan next week, kept investors on edge. Singapore's Trade Minister Lim Hng Kiang reportedly said that a British vote to leave the European Union would have a significant impact on the United Kingdom and do nothing positive for the global economy. Nobuteru Ishihara, the Japanese economy minister, recently said he was ‘closely watching’ the impact of the referendum. A Brexit vote could have significant economic repercussions, Fed Chair Janet Yellen said in a speech on June 6. Japanese shares retreated as the yield on 10-year government bonds fell to a fresh record low of minus 0.14 percent and the yen strengthened on safe-haven bids ahead of the Fed and BOJ meetings due next week. Hong Kong stocks suffered their biggest one-day drop in more than three weeks, as traders were rattled by a report that billionaire investor George Soros, a noted China sceptic, was making big, bearish bets again. Markets in mainland China and Taiwan remained closed for the Dragon Boat Festival.