Benchmarks extend losses in late morning session

Indian equity benchmarks extend their losses in late morning session on account of selling in frontline blue chip counters. The losses were on account of tracking mixed global cues, even as data showed that China’s manufacturing sector expanded at a faster-than-expected pace in March - raising hopes that the world’s second-largest economy was picking momentum. The rupee opened unchanged against dollar on Friday as market participants avoided taking long positions ahead of the end of the financial year 2017. Investors awaited fourth quarter earnings due next month. Meanwhile, according to data available with the Securities and Exchange Board of India (SEBI), listed firms raised Rs 4,837 crore through Qualified Institutional Placement (QIP) route in the first 11 months of current fiscal, as compared to Rs 14,488 crore in the same period of 2015-16, translating into a drop of 67 percent. The funds have been raised for business expansion plans, repayment of loan, to meet working capital requirements and for other corporate purposes. Traders were seen piling position in Oil & Gas, Energy and Metal stocks, while selling was witnessed in Telecom, FMCG and TECK sector stocks. In scrip specific development, debt-ridden Jindal Steel and Power (JSPL) was trading in green after its board approved issuance of 4.8 crore convertible warrants to Opelina and Investment, a promoter group entity, on preferential basis. MIRC Electronics was trading in green after the National Company Law Tribunal Mumbai Bench approved the scheme of amalgamation between Akasaka Electronics with MIRC Electronics.

On the global front, Asian shares were trading mostly in red, as investors digested a mixed set of economic data out of East Asia and President Trump’s tense tweets about his meeting with China’s Xi Jinping next week. Japanese manufacturers’ business outlook likely improved for a second straight quarter in March to its strongest since mid-2015, buoyed by a weak yen and a pickup in exports. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,200 and 29,600 levels respectively. The market breadth on BSE was positive in the ratio of 1336:837, while 153 scrips remained unchanged.

The BSE Sensex is currently trading at 29574.20, down by 73.22 points or 0.25% after trading in a range of 29570.79 and 29665.24. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.59%, while Small cap index was up by 0.54%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.49%, Energy up by 1.30%, Metal up by 1.05%, Basic Materials up by 1.03% and PSU up by 0.66%, while Telecom down by 1.45%, FMCG down by 0.48%, TECK down by 0.46%, Bankex down by 0.45% and IT down by 0.40% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.15%, Tata Steel up by 1.11%, Maruti Suzuki up by 0.69%, Power Grid up by 0.49% and Larsen & Toubro up by 0.48%.

On the flip side, HDFC Bank down by 1.33%, ITC down by 1.06%, Cipla down by 1.00%, Wipro down by 0.94% and Bharti Airtel down by 0.91% were the top losers.

Meanwhile, the share of Foreign Portfolio Investments (FPI) through Participatory notes (P-notes) has decreased to Rs 1.70 lakh crore at the end of February. According to Securities and Exchange Board of India (SEBI) data, total value of P-Notes investments in Indian markets including equity, debt and derivatives, at February-end declined to Rs 1,70,191 crore, from Rs 1,75,088 crore at the end of January.

Of the total, P-Note holdings in equities at February-end were at Rs 103,712 crore, while in debts and derivatives, were at Rs 11,700 crore and Rs 54,778 crore respectively. The quantum of FPI investments via P-notes decreased to 6.6 percent in February, from 7.1 percent in the preceding month. Last year, in December, investment through P-notes was the lowest since July 2013, when the aggregate value of such investment stood at Rs 148,188 crore. Investment through the route had been declining since September last year when it was at Rs 212,509 crore. It fell to Rs 199,987 crore at October-end and further to Rs 179,648 crore in November.

P-notes are typical instruments issued by registered FPIs to overseas investors who wish to participate in Indian markets without registering themselves directly in the country to save time. Meanwhile, the Indian government's new tax treaty with Singapore and Mauritius will come into effect from April 1, 2017, and the capital inflow into the Indian market via P-notes is likely to see a sharp fall. According to the changed double taxation anti-avoidance agreements (DTAAs), all investments made from these jurisdictions would attract short-term capital gains as the exemptions would get removed. As per SEBI data, nearly 90 percent of P-note investments are routed through Singapore and Mauritius, with which the Indian government has reworked tax arrangements.

As per the new treaty, capital gains that arise from shares purchased after April 1 by foreign investors based in these countries can be taxed in India. Accordingly, a capital gains tax of at least 7.5 percent can be charged on short-term gains from equity of investors from Mauritius and Singapore over the next two years and 15 percent after that. Besides the higher tax outgo, issuers of P-notes are more worried about operational difficulties.

The CNX Nifty is currently trading at 9154.55, down by 19.20 points or 0.21% after trading in a range of 9153.40 and 9181.25. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corporation up by 3.64%, Hindalco up by 2.10%, BPCL up by 2.08%, ACC up by 1.38% and Ambuja Cement up by 1.26%.

On the flip side, Bharti Infratel down by 3.52%, HDFC Bank down by 1.54%, ITC down by 1.18%, Cipla down by 1.12% and Wipro down by 1.03% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 124.88 points or 0.51% to 24,176.21, Nikkei 225 decreased 24.24 points or 0.13% to 19,038.98, Taiwan Weighted decreased 21.44 points or 0.22% to 9,826.71, FTSE Bursa Malaysia KLCI decreased 5.6 points or 0.32% to 1,743.65, Jakarta Composite decreased 3.36 points or 0.06% to 5,589.59 and KOSPI Index decreased 1.16 points or 0.05% to 2,163.48.

On the other hand, Shanghai Composite increased 10.26 points or 0.32% to 3,220.50.