Markets continue to trade in red; Sensex slips below 29000 mark

Indian equity markets continued to trade in red in the noon session on Tuesday as investors remained wary over the latest tumult surrounding the Trump administration and geopolitical tensions emanating from North Korea. Market participants are also grappling with the likelihood of an interest rate hike by the US Federal Reserve at its meeting next week. Sentiments remained subdued with Deputy Governor of the Reserve Bank of India’s (RBI) statement that the impact of demonetisation on the informal sector is not fully captured in the GDP data and the effects of demonetisation is expected to spill over to certain segments of the economy in this quarter. However, he also said that the impact of the notes ban would only be temporary and would help in bringing informal sector into the mainstream economy. Some support came with the Global rating agency Fitch’s report that Indian economy will grow by 7.1% in the current financial year before stepping up to 7.7% in the next two financial years. It said the December quarter GDP number suggests that economic activity was ‘hardly hit’ by the cash crunch after the government's move to remove 86 per cent of currency in circulation overnight.

On the global front, Asian markets trading mostly higher on Tuesday, despite increased expectations of an interest rate hike by the US Federal Reserve next week. Further, Japan's Nikkei share average declined following Wall Street's lead, with investors deterred by geopolitical tensions after the North Korean missile tests, though the dollar-yen stayed in a well-worn range. On Monday, US stocks posted losses of as much as 0.37% after Trump signed a revised executive order, effective March 16, banning citizens from six Muslim-majority countries from travelling to the United States for 90 days.

Back home, stocks from Consumer Durables, Power and Oil & Gas counters were supporting the markets, while those from Metal, Telecom and Healthcare counters were adding to the underlying cautious undertone. In scrip specific development, Mahindra & Mahindra declined after the company reported 1.22 % fall in its production to 44401 units in February 2017 as compared to 44950 units in same month last year. On the other hand, Den Networks surged after the company entered into an agreement with DEN Digital Cable Network (DDCN) for increasing equity stake of the company in DDCN from 51.00% to 88.57%.

The market breadth remained pessimistic, as there were 1045 shares on the gaining side against 1369 shares on the losing side, while 150 shares remained unchanged.

The BSE Sensex is currently trading at 28994.28, down by 53.91 points or 0.19% after trading in a range of 28979.09 and 29098.17. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.20%, while Small cap index down by 0.03%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.83%, Power up by 0.51%, Oil & Gas up by 0.41%, Industrials up by 0.27% and Utilities up by 0.26%, while Metal down by 1.36%, Telecom down by 0.65%, Healthcare down by 0.44%, Basic Materials down by 0.42% and FMCG down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 1.64%, TCS up by 1.08%, ONGC up by 1.03%, HDFC Bank up by 0.41% and GAIL India up by 0.41%. On the flip side, Tata Steel down by 1.69%, Infosys down by 1.43%, Axis Bank down by 1.23%, Bharti Airtel down by 1.22% and Sun Pharma down by 0.97% were the top losers.

Meanwhile, coming in support of low cost housing projects, Union Urban Development and Housing Minister M Venkaiah Naidu has proposed to exempt them from service tax under the Goods and Services Tax (GST) regime. Naidu also asked state governments to exempt affordable houses from stamp duty and rationalise it for others. He said that the GST Constitutional Amendment Act also does not provide for it.

While assuring that the GST would not lead to rise in prices and certainly not for the affordable housing segment. Naidu said that at present, affordable housing is exempt from service tax and the ministry is also addressing the need to continue this exemption under GST. Naidu said that there is no clarity on the inclusion of real estate within the ambit of GST, the real estate sector would be benefited from this big reform 'One Nation One Tax'. He also added that after implementation of GST, tax on tax would become a thing of the past. Input tax credit will be available, thus creating a huge incentive to bring all transactions in the sector within the formal system.

Besides, the ministry also recommended that the real estate sector should be taxed at a rate which is revenue neutral and not at a higher tax rate. Further, he stated that with the infrastructure status granted to affordable housing in the Budget, this will act as catalyst for the development of such projects. The GST Council recently approved draft of key supporting legislations to enable rollout of the new indirect tax regime from July 1.

The CNX Nifty is currently trading at 8943.95, down by 19.50 points or 0.22% after trading in a range of 8935.80 and 8977.85. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.54%, Adani Ports & SEZ up by 1.37%, ONGC up by 1.03%, TCS up by 1.00% and Tata Power up by 0.67%. On the flip side, Hindalco down by 3.06%, Tata Steel down by 1.66%, Infosys down by 1.44%, Yes Bank down by 1.34% and Axis Bank down by 1.19% were the top losers.
The Asian markets were trading mostly higher; FTSE Bursa Malaysia KLCI was up by 0.08%, KOSPI Index gained 0.61%, Taiwan Weighted was higher by 0.57% and Hang Seng increased 0.43%.

On the other hand, Nikkei 225 declined by 0.27%, Jakarta Composite was down by 0.25% and Shanghai Composite was tad lower by 0.02%.