Benchmarks trade flat in morning trade; Rupee recoups from day’s low

Downtrend continued on the Dalal Street as investors’ sentiments remained bearish on Tuesday’s Morning, following the slump across the global markets due to political turmoil in Eurozone and depreciation in rupee to 54 a dollar. Markets, however, trimmed losses to move around its previous closing levels as it appeared to be priced in all negatives globally and locally. Moreover, the rupee too recouped from day’s low to trade at 53.78 a dollar, gaining 19 paise from previous close at 53.97 a dollar. On the global front, the US markets extended their somber mood in the new week and despite some recovery attempt in the latter half of the trade closed sharply lower, while most of the Asian counters exhibiting choppy trade at this point of time. Back home, the trading sentiments remained bearish on continued selling by funds and retail investors on concerns that the rise in inflation has reduced chances of further rate cuts by the Reserve Bank coupled with the downgrading of ICICI Bank, HDFC Bank and Axis Bank by rating agency Moody’s. Meanwhile, the government and the central bank are pondering over a plan to move bulk dollar purchases by oil marketing companies out of the currency market to make the weakening rupee less volatile.

The broader indices were trading in the red and struggling to get some traction moreover, the market breadth on the BSE was negative; there were 684 shares on the gaining side against 783 shares on the losing side while 87 shares remained unchanged.

The BSE Sensex opened at 16,146.90; about 69 points lower compared to its previous closing of 16,215.84, and has touched a high and a low of 16,259.42 and 16,123.04 respectively. The index is currently trading at 16,228.64, up by 12.80 points or 0.08%. There were 11 stocks advancing against 19 declines on the index.

The overall market breadth has made a negative start with 44.02% stocks advancing against 50.39% declines. The broader indices were struggling to get some traction; the BSE Mid cap and Small cap indices dips 0.12% and 0.21% respectively.

The top gaining sectoral indices on the BSE were, CG up by 2.17%, Metal up by 0.14%, IT up by 0.13%, TECk up by 0.03% and HC was up by 0.01%. While, Auto down by 0.52%, Realty down by 0.36%, PSU down by 0.34%, Oil and Gas down by 0.30% and CD down by 0.12% were the top losers on the index.

The top gainers on the Sensex were L&T up by 3.12%, Wipro up by 1.13%, Jindal Steel up by 0.92%, BHEL up by 0.74% and Cipla was up by 0.63%.

On the flip side, Maruti Suzuki was down by 2.37%, Coal India was down by 1.05%, NTPC was down by 0.78%, ONGC was down by 0.54% and RIL was down by 0.49% were the top losers on the Sensex.

Meanwhile, to do away with the unfair business practice, the traders from small and medium scale enterprises (SMEs) have sought government intervention with the setting up of a full-fledged regulator which will ensure the timely payment of all invoices by the big players - the biggest problem faced by the SMEs.

It is reported that the problem of late payment is continuously affecting the cash flows of several SMEs and severely restricting the efficiency of their business. Hard hit mid-sized companies have demanded the authorities to put into effect some rigorous regulation and play a proactive part in doing away with this disorder. The deteriorating cash flow of the small scale units is mainly due to payment irregularities of large players.

The SMEs say that there are very few big firms who follow the payment norms of 45 days and give a pathetic excuse of not receiving the bills, which is always sent along with delivery of goods. Further, the large companies attribute the delays in settlement of payment of bills to lengthy and complex bill passing procedures, following the cheque preparation, signing and handing-over procedure, which entails a few weeks to months to come up with a final payment. Moreover, the interest reclaiming is another matter of concern for the mid-sized companies.

In order to control the growing threat of overdue invoices, the representatives of several small firms have submitted their suggestions in a survey, thereby helping the small traders to get their accounts paid much more quickly while keeping all of their clients happy without facing any disagreement.

Among the suggested policy, the introduction of credit policy in an organization has been voted as the best way to protect the revenue of the business. The credit policy not only guarantees good commercial practice but also protects the revenue. The creation of credit policy involves a secured copy of all invoices in a file, along with a weekly check on them and acts accordingly.

Further, the establishment of an SME certificate-issuing body has also been suggested as the measure to break the late payment chain, which would have powers to keep a close watch on big firms, conduct audit at regular intervals, and issue No Objection Certificates (NOCs). In addition, the industry also wants the body to come up with defined credit-period among the parties and in case the period has not been mentioned, it should include the maximum number of days to clear the payments. The system should also include the lenders to offer a collective system of operation of settling the payment and the credit period.

The S&P CNX Nifty opened at 4,869.85; about 38 points lower compared to its previous closing of 4,907.80, and has touched a high and a low of 4,915.95 and 4,868.55 respectively.

The index is currently trading at 4,909.05, up by 1.25 points or 0.03%. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were L&T up by 2.90%, Sesa Goa up by 1.77%, Wipro up by 1.10%, Jindal Steel up by 0.96% and Siemens up by 0.93%.

On the flip side, Maruti Suzuki down by 2.50%, IDFC down by 1.14%, Coal India down by 1.14%, Dr Reddy down by 0.92% and Ambuja Cement down by 0.86%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite was down 19.28 points or 0.81% to 2,361.44, Jakarta Composite was down 46.83 points or 1.16% to 4,006.24, KLSE Composite was down 13.91 points or 0.88% to 1,561.17, Nikkei 225 was down 102.74 points or 1.14% to 8,871.10, KOSPI Composite was down 22.52 points or 1.18% to 1,891.21 and Taiwan Weighted was down by 18.84 points or 0.26% to 7,358.34.

On the flip side, Hang Seng was up 23.69 points or 0.12% to 19,758.73 and Straits Times was up by 6.83 points or 0.24% to 2,870.95.