Markets continue to trade sluggish in late afternoon session

Indian equity markets continue to trade lower in late afternoon session ahead of US election fears. Investors cut down their bets tracking European and Asian cues. Sentiment remained downbeat with the private report stating that India has exported goods and services worth over Rs 17 trillion over the last 44 years but have not remitted an equal amount in foreign exchange. Market participants failed to get any sense of comfort with the another private report that India's gross-value added growth is expected to quicken to 7.6 per cent this year from 7.2 per cent in 2015-16, driven by sustained support from public capex spending.

Weak opening in European counter too dampened sentiments. European markets are set for their eighth day of straight losses, with sentiment hit by jitters ahead of the U.S. presidential election next week and a fall in A.P. Moller-Maersk after results. Back home, both the key indices, Sensex and Nifty, plummeted by over one a percent. Most of the sectoral indices were trading in negative territory with Oil & Gas as the top losing indices down by over 2 percent after Prime Minister Narendra Modi today chaired a high-level meeting to discuss a roadmap to reduce dependency on import of oil and gas.

The BSE Sensex is currently trading at 27595.51, down by 281.10 points or 1.01% after trading in a range of 27535.02 and 27679.32. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.45%, while Small cap index was down by 1.47%.

The gaining sectoral indices on the BSE was Consumer Durables up by 0.42%, while Oil & Gas down by 2.27%, PSU down by 1.72%, Realty down by 1.60%, Bankex down by 1.17%, Capital Goods down by 0.98% were the losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.59%, Hindustan Unilever up by 1.33% and NTPC up by 1.29%. On the flip side, ONGC down by 3.89%, Tata Motors down by 2.64%, SBI down by 2.59%, ICICI Bank down by 2.27% and Sun Pharma down by 2.19% were the top losers.

Meanwhile, arguing against the levy of cess, the Associated Chambers of Commerce & Industry of India (Assocham) has urged Finance Minister Arun Jaitley to hike the proposed Goods and Services Tax (GST) by 1-2 percent instead of levying cess to compensate states for revenue loss under the GST regime. Assocham Secretary General D S Rawat has said that even if multiple rates are accepted by the GST Council, additional cess should not be made applicable as this would lead to distortion and cascading of taxes. He further said that the idea behind the levying cess is to make a corpus for compensation to states does not seem to be feasible. The additional revenue required for such compensation can be collected by increasing the proposed tax rates by 1-2 per cent instead of levying a cess. 

However, the suggestion is at variance with Jaitley's contention, who had favoured levy of cess on tobacco and luxury products to compensate states, saying the cost of funding that through an additional tax would be exorbitantly high and almost unbearable. Assocham has also suggested that essential commodities of mass consumption like fruits, vegetables, grains etc should be taxed at zero rate. Processed food products for mass consumption like dairy products, rice, edible oil, biscuits should attract 6 per cent duty. It further suggested that mobile phones, computers, fruit juices, pet foods be taxed at 12 per cent and other items at 18 per cent. Luxury cars, tobacco and pan masala should be taxed at 26 per cent.

Earlier, GST council meeting had discussed four slab tax rate structure of 6 per cent, 12 per cent, 18 per cent and a peak rate of 26 per cent, which will mostly apply to FMCG and consumer durables. Also, a cess is likely to be levied on demerit or sin goods and polluting items. Under this structure, the items which are currently taxed between 3-9 per cent will fall in the 6 per cent bracket and those in 9-15 per cent range will come under 12 per cent rate. Moreover, the products which are currently taxed between 15-21 per cent will attract 18 per cent levy, while above 21 per cent will be taxed at the peak rate of 26 per cent. The next meeting of the GST Council, chaired by Finance Minister Arun Jaitley, is scheduled on November 3-4.

The CNX Nifty is currently trading at 8532.45, down by 93.80 points or 1.09% after trading in a range of 8515.65 and 8549.50. There were 6 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 4.08%, Mahindra & Mahindra up by 3.44%, Indusind Bank up by 1.51%, NTPC up by 1.29% and Hindustan Unilever up by 1.22%. On the flip side, ONGC down by 3.86%, Tata Motors - DVR down by 3.49%, Yes Bank down by 3.23%, Bank of Baroda down by 3.03% and Bosch down by 2.84% were the top losers.

Asian market were trading in red; Hang Seng decreased 336.57 points or 1.45% to 22,810.50, Nikkei 225 slumped 307.72 points or 1.76% to 17,134.68, Taiwan Weighted dropped 133.66 points or 1.44% to 9,139.04, KOSPI Index declined 28.45 points or 1.42% to 1,978.94, Jakarta Composite decreased 21.08 points or 0.39% to 5,394.92, Shanghai Composite decreased 19.7 points or 0.63% to 3,102.73 and FTSE Bursa Malaysia KLCI was down by 11.77 points or 0.7% to 1,659.16.

European markets were trading in red; Germany’s DAX decreased 82.08 points or 0.78% to 10,444.08, France’s CAC dropped 30.62 points or 0.68% to 4,439.66 and UK’s FTSE 100 declined 29.61 points or 0.43% to 6,887.53.