Weak trade prevails in late morning session

Indian equity benchmarks continued their weak trade in late morning session, tracking muted handover from global markets. Investors also stayed cautious ahead of F&O expiry due this week and GST rollout lined up for June 30 midnight. The rupee opened higher against dollar, on account of selling of American currency by banks and exporters. Foreign Portfolio Investors stood net buyers in domestic equity markets on Friday and bought shares worth Rs 508.72 crore with gross purchases and gross sales of Rs 6,638.35 crore and Rs 6,129.63 crore, respectively. The sentiments were under pressure after CRISIL enlightened that banks may have to take 60% haircut on 12 largest NPAs. The steps taken by Reserve Bank to resolve NPAs are likely to raise provisioning by a whopping 25% this year as lenders will take up to 60% hair cut while resolving these accounts. The largest 12 accounts the RBI named are - Bhushan Steel, Lanco Infra, Essar Steel, Bhushan Power, Alok Industries, Amtek Auto, Monnet Ispat, Electrosteel Steels, Era Infra, Jypaee Infratech, ABG Shipyard and Jyoti Structures. Of these, six have already been referred to the National Company Law Tribunal (NCLT). A domestic brokerage report highlighted that there was a record low bank credit growth of 5.1% in FY17 which was led by the top 1,000 listed corporates which saw their net loan outstanding decline by a whopping Rs 1 trillion in the reporting year. One-third of this massive contraction was led by just 10 companies, which cumulatively availed of Rs 33,571 crore less in the year over the previous year. Meanwhile, Finance Minister Arun Jaitley said that the Centre made a last-ditch effort to get Jammu & Kashmir on board to launch goods and services tax (GST) from July 1 suggesting that the state government had elbow room to convey its concurrence to join the new regime. He cautioned that a failure to launch GST will impact consumers and businesses in the state.

Traders were seen piling up position in Telecom and FMCG stocks, while selling was witnessed in PSU, Oil & Gas and Realty stocks. In scrip specific development, Bangalore-based Tejas Networks, an optical and data networking product company, was trading in green after debut on the bourses today. The Initial Public Offer (IPO) of the company received bids for 3.21 crore shares compared with 1.71 crore shares on offer. The IPO was subscribed 1.88 times. The price band for the IPO was fixed at Rs 250-257 per share. The IPO opened on June 14, 2017 and closed on June 16, 2017.

On the global front, Asian shares were trading mostly in red, while Japanese stocks edging towards two-year highs as exporters benefited from dollar strength. China’s Premier Li Keqiang said that the country is entirely capable of achieving its full-year growth target and controlling systemic risks despite many challenges facing its economy. Beijing is targeting economic growth of around 6.5 percent in 2017, compared with the actual 6.7 percent pace in 2016 - the slowest in 26 years. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,550 and 31,100 levels respectively. The market breadth on BSE was negative in the ratio of 599:1542, while 99 scrips remained unchanged.

The BSE Sensex is currently trading at 31053.74, down by 84.47 points or 0.27% after trading in a range of 31019.63 and 31294.96. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.10%, while Small cap index was down by 1.18%.

The top gaining sectoral indices on the BSE were Telecom up by 0.89% and FMCG up by 0.33%, while PSU down by 2.04%, Oil & Gas down by 1.44%, Realty down by 1.28%, Bankex down by 1.03% and Utilities down by 0.97% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.21%, Bharti Airtel up by 0.97%, HDFC Bank up by 0.74%, Mahindra & Mahindra up by 0.68% and Dr. Reddy’s Lab up by 0.64%.

On the flip side, SBI down by 2.70%, Axis Bank down by 2.46%, ICICI Bank down by 1.97%, Infosys down by 1.86% and Bajaj Auto down by 1.42% were the top losers.

Meanwhile, allaying fears over whether the prices of essential commodities would go up post implementation of Goods and Services Tax (GST), the Union Minister Nirmala Sitharaman has said that no fresh rates would be imposed on those goods which already come under tax ambit. She added that there is no separate explanation to public and another for traders, it is all the same and the price of essential commodities will not increase post GST.

The Commerce and Industries Minister said that rate fixed in GST is Revenue Neutral Rate which means suppose if there is a tax for a particular product, it comes under GST. If a new tax rate is fixed, it is comparatively less to the existing structure. So, the price of essential commodities will not rise. She also clarified that no additional taxes are imposed on products which already come under the tax structure. On the conferences conducted for the benefit of traders’ community, she said, in every conference an official equal to the rank of Central Excise Commissioner takes part to address the queries raised by the traders.

Noting that the traders can also get trained at various offices of Chartered Accountants, Sitharaman said the Government also conducts conferences on GST in partnership with various Chambers of Commerce. She further said that those officials who had undergone training on GST are also appointed in every district (of the State) for the benefit of traders. Besides, the government has said that the GST could add two percentage points to economic growth. It is termed as India’s most ambitious tax reform, creates a single economic zone with common indirect taxes.

The CNX Nifty is currently trading at 9526.85, down by 48.10 points or 0.50% after trading in a range of 9519.45 and 9615.40. There were 15 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were ITC up by 1.09%, Bharti Airtel up by 1.00%, Aurobindo Pharma up by 0.91%, Tech Mahindra up by 0.72% and HDFC Bank up by 0.68%.

On the flip side, BPCL down by 4.53%, Bank of Baroda down by 4.17%, Zee Entertainment down by 3.19%, Indiabulls Housing down by 3.03% and SBI down by 2.75% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 18.52 points or 0.07% to 25,853.37, Taiwan Weighted decreased 8.22 points or 0.08% to 10,505.74 and Shanghai Composite decreased 6.67 points or 0.21% to 3,178.78.

On the other hand, KOSPI Index increased 4.02 points or 0.17% to 2,392.68 and Nikkei 225 increased 59.77 points or 0.3% to 20,213.12.

Kuala Lumpur Stock Exchange and Jakarta Stock Exchange were closed on account of national holiday.