Weak trade persist in late morning session

Indian equity benchmarks continued their weak trade in late morning session on account of selling in frontline blue chip counters. The rupee opened higher against dollar on Monday on account of selling of American currency by banks and exporters. The robust inflows by Foreign Institutional Investors in both equities and debt market are boosting sentiment in currency market whereas weakness in Dollar index and crude oil is another trigger for strength of rupee. Weak trade prevailed in equity market as traders remained concerned over US President Donald Trump’s economic growth agenda. The street failed to draw support on report that government is planning to table four legislations for the implementation of the Goods and Services Tax in the Lok Sabha today. The Union Cabinet has already cleared the four supplementary GST legislations - CGST, IGST, UTGST and Compensation Law - for introduction and passage in the ongoing session of Parliament.

Traders were seen piling position in Consumer Durables, IT and TECK stocks, while selling was witnessed in Metal, Energy and Oil & Gas sector stocks. In scrip specific development, Reliance Industries (RIL) was trading in red after the Securities and Exchange Board of India (SEBI) on Friday banned RIL from accessing the equity derivatives market for a year, and directed the company to disgorge the profits made by violating the rules on unfair trade practices when it sold a stake in its erstwhile unit Reliance Petroleum. Jindal Steel & Power (JSPL) was trading in red after the CBI on Friday filed a supplementary charge sheet naming five more persons as accused in a coal scam case against Congress leader and industrialist Naveen Jindal and others. CBI has alleged that Koda had favoured Jindal group firms -- JSPL and Gagan Sponge Iron (GSIPL) -- in allocation of Amarkonda Murgadangal coal block in Jharkhand. Airline stocks like SpiceJet, Jet Airways and InterGlobe Aviation was trading in green taking support from a report by Sydney-based aviation think-tank Centre for Asia Pacific Aviation (CAPA) which highlighted that India has become the third largest aviation market in terms of domestic passenger traffic. India’s domestic air passenger traffic stood at 100 million in 2016 and was behind only the US (719 million) and China (436 million).

On the global front, Asian shares were trading mostly in red, after US President Donald Trump suffered a legislative defeat last Friday when Republican leaders pulled a bill to overhaul the US health care system with the dollar weaker and gold prices up. The Bank of Korea (BOK) survey showed that South Korean manufacturers are expected to spend more on capital investment this year than they did last year, although those expenditures will be conservative and mostly geared towards maintaining facilities than expansion. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,100 and 29,300 levels respectively. The market breadth on BSE was negative in the ratio of 1087:1149, while 158 scrips remained unchanged.

The BSE Sensex is currently trading at 29258.66, down by 162.74 points or 0.55% after trading in a range of 29247.56 and 29420.70. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.13%, while Small cap index was up by 0.10%.

The gaining sectoral indices on the BSE were Consumer Durables up by 0.50%, IT up by 0.19% and TECK up by 0.07%, while Metal down by 1.62%, Energy down by 1.45%, Oil & Gas down by 0.86%, Telecom down by 0.71% and Healthcare down by 0.65% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 0.79%, SBI up by 0.62%, Hindustan Unilever up by 0.48%, Power Grid up by 0.44% and TCS up by 0.11%.

On the flip side, Coal India down by 2.32%, Reliance Industries down by 2.30%, Tata Steel down by 2.22%, Sun Pharma down by 1.38% and Tata Motors down by 1.37% were the top losers.

Meanwhile, the Comptroller and Auditor General (CAG) Shashi Kant Sharma has said that they are planning to audit the impact of note ban and the effect it has had on the government’s tax revenues. He said that the auditor is preparing to audit tax revenues under the new Goods and service tax (GST) regime and has started reconstruction of capacity building and reorienting its audit methodology and procedures.

Under the special audit, the CAG has already completed the audit of agricultural crop scheme and flood control and flood estimates. Now it is conducting audit of Right to Education, National Rural Health Mission, Defence Pensions and Ganga Rejuvenation. Sharma added that their audit reports will be ready by the end of the current year.

Sharma asserted that the CAG has the right to audit the bodies or authorities having any kind of relationship with the revenue and expenditure of the government, and expenditure and resistance by some like city development bodies, DISCOMs and metro corporations will wither away. He said that they plan to audit some issues related to the financial impact of filing, especially its impact on tax revenues. The government had withdrawn old 500 and 1,000 rupee notes from circulation on November 8 last year, and announced a new tax amnesty scheme for those holding unaccounted junked currency. Thus, CAG audit may look into expenditure on printing of notes, the Reserve Bank of India dividend payout and banking transaction data.

Apart from this, the CAG has also conveyed the government its stand on the recent move of the GST Council to delete section 65 of the preliminary draft that authorized CAG to audit GST. Sharma has said that their mandate covers GST just like the earlier taxation regimes were covered. They have already started work on restructuring of their revenue audit arrangements to meet this likely challenge when GST is introduced. This exercise would include issues of capacity building, data access and analysis, reorientation of audit methodology and procedures and developing end-to-end IT solutions.

The CNX Nifty is currently trading at 9055.55, down by 52.45 points or 0.58% after trading in a range of 9047.95 and 9094.85. There were 11 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 1.24%, Infosys up by 0.85%, Bharti Infratel up by 0.60%, Power Grid up by 0.59% and SBI up by 0.45%.

On the flip side, Idea Cellular down by 3.14%, Reliance Industries down by 2.34%, Coal India down by 2.30%, Tata Steel down by 2.27% and Hindalco down by 1.90% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 282.42 points or 1.47% to 18,980.11, Hang Seng decreased 81.99 points or 0.34% to 24,276.28, Taiwan Weighted decreased 29.03 points or 0.29% to 9,873.95, Jakarta Composite decreased 19.88 points or 0.36% to 5,547.26 and KOSPI Index decreased 13.55 points or 0.62% to 2,155.40.

On the other hand, FTSE Bursa Malaysia KLCI increased 3.49 points or 0.2% to 1,749.24 and Shanghai Composite increased 4.69 points or 0.14% to 3,274.14.