Benchmarks continue weak trade; Sensex below 27,900 mark

Indian equity indices drifted lower and were trading weak in a pessimistic note hovering around the lowest point of the day in absence of buying, as investors were reluctant to pick stocks. Yesterday’s weakness extended in today’s session as traders remained cautious after Raghuram Rajan at his last monetary policy review meeting as RBI governor hinted upside risks to inflation, while keeping key policy rates unchanged. The central bank expects the prices of pulses and cereals will be rising and services inflation remains somewhat sticky. Further, the sentiments also weighed down by the report that noted that the gross non-performing assets (GNPAs) of the public sector banks increased Rs 2.16 lakh crore in 2013-14 to Rs 4.76 lakh crore in 2015-16.  The report also said that the top 100 borrowers of public sector banks owe nearly Rs 14 lakh crore to them. Meanwhile, investors failed to draw any sense of relief with the report that tax collections have grown up at a robust pace in the first four months of the current fiscal with central excise and personal income tax showing impressive gains. Direct tax collections grew 24% in April-July over corresponding period last year, while indirect taxes returned a 29.9% increase over the same period.

On the global front, Asian markets were trading mostly higher in early trade as investors pared expectations slightly for a Federal Reserve interest rate increase following weak US productivity data.

Back home, all sectoral indices on the BSE were trading in the red with Realty index emerging as the top loser down by over one and half percent followed by Oil & Gas, Consumer Durables and Auto indices among others. In scrip specific development, Indian Overseas Bank has declined after the bank reported a net loss of Rs 1450.50 crore for the quarter ended June 30, 2016 as compared to a net profit of Rs 14.76 crore for the same quarter in the previous year. On the other hand, Adani Ports and Special Economic Zone (APSEZ) has rallied after the company reported 31% year-on-year jump in its consolidated net profit at Rs 836 crore for the quarter ended June 30, 2016.

The market breadth remained pessimistic as there were 690 shares on the gaining side against 1699 shares on the losing side, while 119 shares remained unchanged.

The BSE Sensex is currently trading at 27851.71, down by 233.45 points or 0.83% after trading in a range of 27843.69 and 28143.28. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.09%, while Small cap index down by 0.91%.

The top losing sectoral indices on the BSE were Realty down by 1.77%, Oil & Gas down by 1.60%, Consumer Durables down by 1.32%, Auto down by 1.27% and Bankex down by 1.27%, while there were no gainers on BSE sectoral front.

The top gainers on the Sensex were Adani Ports &Special up by 7.49%, NTPC up by 0.75%, TCS up by 0.75%, Bajaj Auto up by 0.31% and Bharti Airtel up by 0.17%. On the flip side, Lupin down by 3.15%, ICICI Bank down by 2.12%, Reliance Industries down by 1.98%, Tata Motors down by 1.69% and Tata Steel down by 1.69% were the top losers.

Meanwhile, government has taken action and issued regular demands to recover dues from India’s top six telecom operators-Reliance Communications, Tata Telecom, Vodafone, Airtel, Idea and Aircel, who as per a Comptroller and Auditor General (CAG) report this year, understated their revenue by Rs 46,045.75 crore during the four fiscal years running from 2006-07 to 2009-10 and also caused the exchequer a loss of Rs. 12,488.93 crore.
Minister of State for Finance Santosh Kumar Gangwar has said that as per the CAG report the shortfall in licence fee amounts to Rs 3,752.37 crore, in spectrum usage charges amounts to Rs 1,460.23 crore and interest on short fall up to March 2015 amounts to Rs 7,276.33 crore on the government exchequer, with the six telecom firms under-invoicing their gross revenues.

The government has issued regular demands for all the four financial years and special audit demands for two financial years 2006-07 and 2007-08, for these two financial years, the CAG had pointed out a short fall of licence fees of Rs 1,269.36 crore but Department of Telecom (DoT) had already issued demands for license fee amounting to Rs 896.07 crore in 2012, based upon the report of special auditors.

As per CAG report, the financial impact due to understatement of revenues are of the order of Rs 3,728.54 crore for Reliance Communications; Rs 3,215.39 crore for Tata Teleservices; Rs 2,651.89 crore for Bharti Airtel; Rs 1,665.39 crore for Vodafone, Rs 964.89 crore for Idea and Rs 262.83 crore for Aircel.
The CNX Nifty is currently trading at 8599.50, down by 78.75 points or 0.91% after trading in a range of 8593.60 and 8690.10. There were 6 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Adani Ports &Special up by 7.61%, TCS up by 0.84%, NTPC up by 0.72%, Bajaj Auto up by 0.28% and Bharti Airtel up by 0.17%. On the flip side, Grasim Industries down by 5.83%, Lupin down by 3.31%, Indusind Bank down by 2.68%, Ambuja Cement down by 2.13% and Reliance Industries down by 2.06% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI was up by 0.06%, KOSPI Index rose 0.07%, Taiwan Weighted increased 0.22%, Nikkei 225 jumped 0.12% and Hang Seng was up by 0.49%. On the flip side, Jakarta Composite decreased 0.57% and Shanghai Composite was down by 0.03%.