Benchmarks trade lower; Nifty breaches 8,700 mark

Indian equity benchmarks have extended their losses in early deals after a cautious start, breaching crucial 28,100 (Sensex) and 8,700 (Nifty) levels. Markets participants failed to get any sense of relief with NITI Aayog Vice-Chairman Arvind Panagariya’s statement where he has defended the Centre’s proposal for four-tier rate structure and a cess under the Goods and Services Tax and said that said these would ensure less inflationary implications and lower tax rates for consumers as well as revenue predictability for the exchequer. Depreciation in Indian currency too dampened sentiments. The rupee today lost 8 paise to 66.93 against the US dollar in early deals at the forex market in the wake of increased demand for the American unit amid foreign capital outflows.

On the global front, Asian markets turned mostly in red after a positive start as traders opted to book profit at higher levels. Japan's Nikkei continue to trade higher as a softening yen burnished the outlook for the country's exporters. Back home, foreign portfolio investors (FPIs) sold shares worth a net Rs 325.13 crore yesterday as per provisional data released by the stock exchanges. Shares of Tata group companies were reeling under pressure, as Tata Sons, the holding company of the Tata Group, said its board of directors had removed Cyrus Pallonji Mistry, as chairman of the conglomerate. Idea cellular declined around two percent after reported 88% fall in its consolidated net profit at Rs 91.46 crore for the quarter ended September 30, 2016 as compared to Rs 762.28 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 28060.73, down by 118.35 points or 0.42% after trading in a range of 28028.59 and 28211.41. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.57%, while Small cap index was down by 0.34%.

The top losing sectoral indices on the BSE were Metal down by 1.09%, Oil & Gas down by 0.77%, Realty down by 0.77%, Power down by 0.59% and PSU down by 0.58%, while Healthcare was up by 0.51% was the lone gainer on the BSE sectoral front.

The top gainers on the Sensex were ICICI Bank up by 1.46%, Sun Pharma Inds. up by 1.23%, Axis Bank up by 0.95%, Cipla up by 0.83% and Maruti Suzuki up by 0.65%. On the flip side, Tata Steel down by 2.39%, HDFC down by 1.71%, HDFC Bank down by 1.54%, GAIL India down by 1.39% and TCS down by 1.15% were the top losers.

Meanwhile, the Finance Ministry is likely to propose to the Cabinet at least five different methods for valuation of over a dozen Public Sector Undertakings (PSUs) across sectors identified for strategic stake sale. The ministry has proposed different valuation methodologies, including balance sheet method, transaction multiple, and asset valuation procedure, for these PSUs which will be up for outright sale or involves lowering of government equity below 50 per cent. The use of a particular method of valuation will depend on health of the company, the sector in which it operates and the company's intrinsic strength. The Cabinet in its next meeting is likely to consider the strategic stake sale proposal.

With the privatization of PSUs being considered after a gap of over 12 years, the ministry feels that valuation of equity becomes important in the case of strategic sale of companies that are not listed or in cases where capital markets may not fully reflect the intrinsic worth of a share disinvested earlier. Further, NITI Aayog has prepared a list of PSUs where the government can sell its majority stake to private companies in order to bring in greater efficiency and professionalism in functioning. Based on its suggestions, the Department of Investment and Public Asset Management (DIPAM) has finalized a model of strategic disinvestment.

PSUs identified for strategic sale include profit-making Bharat Earth Movers and Certification Engineers International as well as loss-making Scooters India. While valuing a company, the officials will analyze its historical performance, its competitive positioning in the industry, inherent strengths/weaknesses of the business and the opportunities/threats presented by the environment, forecasting operating performance and the global industry outlook, among others.

The CNX Nifty is currently trading at 8678.05, down by 30.90 points or 0.35% after trading in a range of 8665.75 and 8722.65. There were 15 stocks advancing against 35 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Aurobindo Pharma up by 1.52%, ICICI Bank up by 1.48%, Bharti Infratel up by 1.39%, Sun Pharma Inds. up by 1.16% and Cipla up by 0.93%. On the flip side, Tata Steel down by 2.24%, Hindalco down by 1.76%, HDFC Bank down by 1.46%, GAIL India down by 1.44% and Tata Power down by 1.43% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 28.77 points or 0.12% to 23,575.31, KOSPI Index declined 11.13 points or 0.54% to 2,036.61, Shanghai Composite slipped 3.35 points or 0.11% to 3,124.89, FTSE Bursa Malaysia KLCI shed 2.22 points or 0.13% to 1,675.54 and Jakarta Composite was down by 1.63 points or 0.03% to 5,419.37.

On the flip side, Taiwan Weighted increased 67.05 points or 0.72% to 9,389.55 and Nikkei 225 was down by 132.51 points or 0.77% to 17,366.93.