Indian bourses continue to trade in negative terrain; Metal drag

Indian bourses continued their weak trade in the afternoon session on broad based selling, with frontline gauges trading below their crucial 26,700 (Sensex) and 8,250 (Nifty) levels. The sentiments were pessimistic after the domestic rating agency ICRA said that with consumption being affected by the demonetisation of higher currency old notes, tax revenues of the state governments for the current financial year is likely to be weaker than budgeted. Investors were also worried that volatile global markets could prevent the Reserve Bank of India from cutting rates next year, even after data showed that consumer inflation cooled to a two-year low of 3.63 percent in November. Meanwhile, investors were unable to get any respite with data showing that India’s wholesale price inflation eased in the month of November, falling for the third straight month. Wholesale Price Index rose 3.15 percent compared to 3.8 percent in September. In scrip specific development, Coal India plunged over 3 per cent after the company reported a steep fall in its net profit for the second quarter ended September 30.

On the global front, Asian markets were trading mixed as investors remained cautious ahead of the crucial Fed meet to decide on the interest rate policy in the world largest economy. The Fed is widely expected to increase interest rates by 25 basis points, reflecting the first rate hike in a year.

The BSE Sensex is currently trading at 26667.63, down by 30.19 points or 0.11% after trading in a range of 26624.66 and 26736.34. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.18%, while Small cap index was up by 0.01%.

The top gaining sectoral indices on the BSE were Realty up by 1.10%, IT up by 0.62%, TECK up by 0.44% and Consumer Durables up by 0.18%, while Metal down by 0.97%, PSU down by 0.76%, Capital Goods down by 0.55%, FMCG down by 0.37% and Bankex down by 0.18% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.85%, Reliance Industries up by 1.67%, Tata Motors up by 0.99%, Asian Paints up by 0.94% and Wipro up by 0.84%. On the flip side, Coal India down by 3.16%, Cipla down by 1.31%, ONGC down by 1.19%, Hero MotoCorp down by 1.15% and HDFC down by 0.97% were the top losers.

Meanwhile, Union Finance Minister Arun Jaitley has indicated that both direct and indirect taxes rates could come down at some stage due to higher tax collections from digital payments. He said that future transactions would be substantially digital and once they are digital, they would come in the tax net. Therefore, the future taxation level would be much higher than what is currently being collected, which would enable the government at some stage to make taxes more reasonable applying to both direct and indirect taxes.

Jaitley also stated that with this demonetisation move, the banking system will have lot more cash in it and therefore, its ability to support economy with low-cost cash that is cash whose capital is much lesser, would be much higher. He also said that currency withdrawal along with many other reforms such as GST and the restrictions on cash spending subjected to PAN declaration, will help to bring down the levels of corruption in society. He added that it is also going to bring down cash transaction in society as well as to bring down levels of evasion as far as taxation is concerned.

He said that it’s our strategy that from high cash-dominated economy, we should become a less cash economy where the amount of paper currency comes down. Cash will still exist and there would be a greater digitization. He also warned of a “very heavy price” that unscrupulous elements will have to pay for amassing large amounts of cash unlawfully. He said that it has come to the notice of the government that some unscrupulous people, including some in the banking system and others, have been trying to subvert the system once again and have accumulated large amounts of cash unlawfully. Obviously, there is a breach of law in this and this is a step which hurts the economy.

The CNX Nifty is currently trading at 8202.60, down by 19.20 points or 0.23% after trading in a range of 8190.70 and 8229.40. There were 18 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 2.79%, Reliance Industries up by 1.82%, HCL Tech. up by 1.50%, Tata Power up by 1.42% and Asian Paints up by 1.15%. On the flip side, Coal India down by 3.15%, Aurobindo Pharma down by 2.31%, Bosch down by 1.68%, Hero MotoCorp down by 1.49% and Cipla down by 1.45% were the top losers.

Asian markets were trading mixed; Taiwan Weighted decreased 13.62 points or 0.15% to 9,368.52, Jakarta Composite decreased 10.24 points or 0.19% to 5,283.38, Shanghai Composite decreased 5.58 points or 0.18% to 3,149.45 and FTSE Bursa Malaysia KLCI decreased 3.25 points or 0.2% to 1,642.03. On the flip side, KOSPI Index increased 0.89 points or 0.04% to 2,036.87, Nikkei 225 increased 3.09 points or 0.02% to 19,253.61 and Hang Seng increased 60.76 points or 0.27% to 22,507.46.