Indian benchmarks settle with moderate cuts; Sensex slips below 30,200 mark

Indian markets finished last trading session of the week on a pessimistic note, as investors remained cautious ahead of macroeconomic data - industrial production numbers for March and inflation data for April based on Consumer Price Index (CPI) - to be announced later in the day. CPI is expected to have eased to a three-month low of 3.49% in April from 3.81% the previous month. The government will release the new series of Index of Industrial Production (IIP) as well as Wholesale Price Index (WPI), with 2011-12 as the base year, so as to map economic activities more accurately. Also, there was some profit taking in the high fliers of the recent rally that once led Sensex slip below the crucial level of 30,200, but despite the rallies losing fizz, downside remains capped with SBI Research's Ecowrap report, indicating that the easing of crude oil prices will have positive effect not only on inflation but also on GDP growth. It said that average crude oil prices will be around $45 for the next half of this year and this, coupled with positive macro fundamentals, could translate into better growth numbers for the country. Some support also came with Finance Secretary Ashok Lavasa’s statement that India can clock a GDP growth of over 7.5 percent in the fiscal 2017-18 and the country's macro-economic fundamentals, including fiscal deficit and inflation, are all very sound. Lavasa also said that while there has been a general climate of economic slowdown in the last few years across the world, India has managed to maintain a healthy rate of growth. In scrip specific development, the top loser in Nifty was Yes Bank, which came under selling pressure after the bank disclosed that it had reported lower non-performing assets (NPAs) than what was judged by the banking regulator for the year ended March 31, 2016. According to its annual report, the bank had reported gross NPAs worth Rs 748.9 crore as on March 31, 2016, while the RBI, as part of its annual supervisory action, had asked the lender to report gross NPAs worth Rs 4,925.6 crore. Furthermore, Asian Paints shed around three percent even after the company reported 10.13% rise in consolidated net profit to Rs 479.61 crore for the March quarter of last fiscal. On the other hand, Reliance Infrastructure surged after the company won Rs 2,950 crore arbitration award against Delhi Metro Rail Corporation (DMRC) for the alleged breach by the latter of the agreement on the Airport Express line.

On the global front, Asian market ended mixed on Friday, tracking overnight weakness in Europe and the US markets, amid disappointing earnings reports. Heightened political uncertainty in Washington triggered by President Donald Trump's abrupt firing of FBI chief James Comey and the improving odds of a June rate hike also kept underlying sentiment cautious. Japanese shares eased from 17-month highs as a slightly stronger yen triggered selling in futures markets while investors focused on a slew of corporate earnings such as from automaker Nissan on a surprise hike in dividend. However, Chinese shares ended higher after China's central bank injected fresh funds through a medium-term lending facility to keep liquidity stable. Meanwhile, Crude oil prices were steady with international benchmark Brent still above $50/barrel, reportedly as traders now expect production cuts to extend beyond the middle of this year.

Back home, after getting a cautious start, the local benchmarks immediately slipped into negative territory and continued their weak trade throughout the session. Finally, the NSE's 50-share broadly followed index Nifty, suffered a moderate cut of around quarter percent to settle just above the crucial 9,400 support level, while Bombay Stock Exchange's Sensitive Index-Sensex- slipped around sixty-two points and closed below the psychological 30,200 mark. On the BSE sectoral space, Consumer Durables index remained the top laggard in the space and settled with around a percent laceration followed by the Banking, Power and Healthcare pockets, which went home with over half a percent cuts. However, the high beta Realty along with export driven software and technology counters remained the top gainers in the space with gains of around a percent.

The market breadth remained pessimistic, as there were 993 shares on the gaining side against 1784 shares on the losing side, while 182 shares remained unchanged.

Finally, the BSE Sensex decreased 62.83 points or 0.21% to 30188.15, while the CNX Nifty was down by 21.50 points or 0.23% to 9,400.90. 

The BSE Sensex touched a high and a low of 30299.74 and 30111.45, respectively and there were 14 stocks on gainers side as against 16 stocks on the losers side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.69%, while Small cap index was down by 0.80%.

The top gaining sectoral indices on the BSE were IT up by 1.16%, Realty up by 0.81%, TECK up by 0.68%, Auto up by 0.12% and Oil & Gas up by 0.09%, while Consumer Durables down by 0.98%, Bankex down by 0.89%, Power down by 0.81%, Healthcare down by 0.66% and Utilities down by 0.61% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.12%, Hero MotoCorp up by 2.11%, Cipla up by 1.22%, Sun Pharma Inds. up by 0.81% and Tata Motors up by 0.70%. On the flip side, Asian Paints down by 3.04%, Axis Bank down by 2.80%, ICICI Bank down by 1.23%, Adani Ports &Special down by 1.20% and HDFC down by 0.96% were the top losers.

Meanwhile, after the Real Estate (Regulation and Development) Act, 2016, (RERA), came into effect, the Central Board of Direct Taxes (CBDT) has released the draft Income Computation and Disclosure Standard (ICDS) on real estate transactions for public consultation, requesting stakeholders to submit their comments on draft by 26th May, 2017.

The proposed ICDS which is based on the guidance note issued by Institute of Chartered Acountants of India (ICAI) will be applicable from assessment year 2017-18 for specified assessees to compute income under the head ‘profits and gains of business or profession’ or ‘income from other sources’ and is also aimed at providing uniformity, certainty and harmonising the same norms with the provision of the Income Tax Act.

According to the draft, transactions will include sale of plots of land with or without development of common facilities, development & sale of residential and commercial units, transfer of development rights, re-development of existing buildings & structures and joint development agreements for any of the mentioned activities.

The ICDS will be applicable for determination of income from all forms of transactions in real estate, including land and buildings. It also proposes recognition of transferable development rights (TDR) at the fair value against fair market value or net book value. Further, the proposed ICDS does away with the ceiling for revenue recognition based on stage of completion determined with reference to the project cost incurred.

The CNX Nifty traded in a range of 9,437.75 and 9,372.55. There were 19 stocks in green as against 32 stocks in red on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.61%, Infosys up by 2.26%, Kotak Mahindra Bank up by 1.84%, Tech Mahindra up by 1.44% and IOC up by 1.15%. On the flip side, Yes Bank down by 5.47%, Zee Entertainment down by 3.24%, Asian Paints down by 2.70%, Axis Bank down by 2.51% and Bharti Infratel down by 1.68% were the top losers.

European markets were trading in green; France’s CAC increased 4.15 points or 0.08% to 5,387.57, Germany’s DAX added 17.22 points or 0.14% to 12,728.28 and UK’s FTSE 100 was up by 17.9 points or 0.24% to 7,404.53.

Asian equity markets made a mixed closing on Friday, after weak earnings from Macy's sent shares of American retailers plunging overnight and stoked worries about weak consumer spending in the US. Heightened political uncertainty in Washington triggered by President Donald Trump's abrupt firing of FBI chief James Comey and the improving odds of a June rate hike also kept underlying sentiment cautious. Japanese shares eased from 17-month highs as the yen rose against the dollar ahead of the G7 summit in Italy due this weekend and investors digested a slew of corporate earnings. Meanwhile, Chinese shares ended higher after China's central bank injected fresh funds through a medium-term lending facility to keep liquidity stable.