Weak trade persists; Sensex drops over 100 points

The benchmark indices extended their losses in late afternoon session in absence of any positive trigger which could lifts the markets higher, rather prevailing caution ahead of the derivatives expiry of the June series scheduled for tomorrow. Negative opening in European stocks and ongoing weakness in Asian stocks also spoiled investors’ sentiment. Traders remained concerned with Finance Minister Arun Jaitley’s statement that people may have to face some difficulty initially during the Goods and Services Tax (GST) is rolled out, but in the long run the new indirect tax regime would help cut tax evasion and check price rise. Some concerns also came with the report that the credit rating agency Fitch maintained its negative outlook on Indian banks because of erosion of the sector's core capitalisation, even as they enter the final phase of Basel III migration. This is based on its assessment that the sector’s core capitalization, which has been eroded in the last few years, will remain challenged unless it is boosted by adequate capital support from the authorities or equity raising from capital markets. Investors paid no heed to Union Power Minister Piyush Goyal’s statement that the GST will reduce the work of businesses by reducing the number of taxes from 11 to one. He added that the Goods and Services Tax Network (GSTN) will make filing returns and make book keeping very easy. The broader markets gained some strength, with the BSE Midcap and Smallcap indices rising 0.14% and 0.01% respectively in an otherwise lower market.

On the global front, European markets were trading in red amid concerns whether the Trump administration will be able to deliver pledged tax cuts and infrastructure spending. Asian markets were also trading in red. Back home, in scrip specific development, HCL Infosystems traded higher after the company entered into a strategic partnership with Parablu, a new-age cloud data protection and management solutions provider. Under the partnership, HCL Infosystems will offer Parablu’s products and solutions including BluVault, a powerful data backup solution that protects on-premise data by backing it up to the Cloud.

The BSE Sensex is currently trading at 30837.23, down by 121.02 points or 0.39% after trading in a range of 30798.70 and 31000.48. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.14%, while Small cap index was up by 0.01%.

The top gaining sectoral indices on the BSE were Metal up by 1.52%, Realty up by 0.69%, Basic Materials up by 0.59%, Utilities up by 0.55% and Power up by 0.51%, while Consumer Durables down by 1.31%, Energy down by 1.10%, Capital Goods down by 0.40%, FMCG down by 0.40% and Oil & Gas down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.97%, Power Grid Corporation up by 1.44%, ICICI Bank up by 1.18%, Maruti Suzuki up by 0.82% and Wipro up by 0.78%. On the flip side, Reliance Industries down by 2.41%, Asian Paints down by 2.23%, HDFC down by 1.32%, SBI down by 1.18% and ONGC down by 1.16% were the top losers.

Meanwhile, construction equipment industry body, Indian Construction Equipment Manufactures’ Association (ICEMA) has said that higher tax rate and cheaper imports under the Goods and Services Tax (GST) regime will affect sales and so has slashed the industry’s growth forecast for the current financial year to 5 per cent from 20 per cent. It said that the cheaper import of construction equipment will hurt domestic industry in the long run and there will be cash flow issues in the short term. Besides, ICEMA forecasted that sales of the industry likely to be affected by 10-15 per cent.

ICEMA further said that the allowance given by the government to take tax credit on imported construction equipment under the new tax regime, will lead to reduction in the landed cost and as a result imported construction equipment will become much cheaper and domestic manufacturers will struggle. The industry body hopes that the government will take a relook at the GST rate for the construction equipment industry keeping in mind the interest of domestic manufacturers.

As per ICEMA, under the new tax regime 80 per cent of construction equipment machinery has been put under 28 per cent tax slab, while the remaining will be taxed at 18 per cent. At present, around 50 per cent of the total construction equipment has a tax incidence of 15 per cent, while around 30 per cent has 18 per cent rate, and the remaining 20 per cent around 28 per cent.

The CNX Nifty is currently trading at 9490.65, down by 20.75 points or 0.22% after trading in a range of 9474.35 and 9522.50. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.30%, Tech Mahindra up by 2.30%, Vedanta up by 2.23%, Tata Steel up by 2.05% and Ultratech Cement up by 1.83%. On the flip side, Reliance Industries down by 2.47%, Asian Paints down by 2.39%, Zee Entertainment down by 1.54%, ONGC down by 1.34% and HDFC down by 1.27% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 156.49 points or 0.61% to 25,683.50, Taiwan Weighted decreased 121.51 points or 1.16% to 10,390.55, Nikkei 225 decreased 94.68 points or 0.47% to 20,130.41, Shanghai Composite decreased 18 points or 0.56% to 3,173.20, KOSPI Index decreased 9.39 points or 0.39% to 2,382.56 and FTSE Bursa Malaysia KLCI decreased 6.96 points or 0.39% to 1,772.49.

All European markets were trading in red; Germany’s DAX decreased 128.6 points or 1.01% to 12,542.42, France’s CAC dropped 54.68 points or 1.04% to 5,203.90 and UK’s FTSE 100 was down by 49.18 points or 0.66% to 7,385.18.