Benchmarks reverse initial gains to enter into red terrain

Indian equity benchmarks have pared all of their gains and entered into red terrain in early deals on Tuesday, as traders opted to book profits at higher levels. Market participants failed to take any sense of relief with Central Board of Direct Taxes’ (CBDT) report of a 25 percent increase in the number of Income Tax Returns (ITRs) filed in the current fiscal, on the backdrop of economic reform, including demonetisation and the Income Tax Department’s (ITD) Operation Clean Money. Traders also failed to get any solace with SEBI allowing brokers to offer a margin funding facility that does not mandate clients to bring cash upfront to initiate a leveraged trade. Investors can now buy shares by pledging their stock portfolio with stock brokers.

On the global front, most of the Asian equity indices were trading in green at this point of time with some indices trading near their 2007 high. The US markets closed higher in the last session, with the Dow climbing to a new record closing high for the ninth consecutive session.

Back home, select stocks from coal and mining sector remained in focus, as the government has annulled the fifth round of coal mines auction due to poor response from bidders. However, the tyre stocks edged lower despite report that the government may impose anti-dumping duty of up to $452.33 per tonne on a certain variety of Chinese pneumatic radial tyres to guard domestic players from cheap imports.

The BSE Sensex is currently trading at 32102.31, down by 171.36 points or 0.53% after trading in a range of 32088.36 and 32354.77. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.90%, while Small cap index was down by 0.88%.

The only gaining sectoral indices on the BSE were Metal up by 2.14% and Basic Materials up by 0.60%, while Realty down by 1.60%, Oil & Gas down by 1.56%, PSU down by 1.53%, Power down by 1.31% and Telecom down by 1.22% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.08%, Hindustan Unilever up by 1.33%, Bajaj Auto up by 0.87%, Tata Motors up by 0.64% and Cipla up by 0.63%. On the flip side, NTPC down by 1.98%, SBI down by 1.80%, Dr. Reddy’s Lab down by 1.46%, ONGC down by 1.44% and Kotak Mahindra Bank down by 1.37% were the top losers.

Meanwhile, in order to protect domestic players from cheap imports from China, India may impose anti-dumping duty of up to $452.33 per tonne on a certain variety of Chinese pneumatic radial tyres. The Directorate General of Antidumping and Allied Duties (DGAD), which administers the anti-dumping and countervailing measures in India, in its final findings, has concluded that domestic companies have suffered material injury due to the dumped imports of these tyres from China.

DGAD, which is the commerce ministry’s investigation arm - in its notification has recommended imposition of definitive anti-dumping duties, ranges between $277.53 per tonne and $452.33 per tonne, on the imports of pneumatic radial tyres from China. Imports of these tyres increased to 52,092 tonnes in July 2014 - June 2015 from 4,146 tonnes in 2012-13. It also noted that imports of the product increased significantly in absolute terms throughout the injury period. Share of China in total imports of the product in India increased sharply to 81.52 percent during July 2014 - June 2015 from 16.03 percent in 2012-13.

The application for initiation of anti-dumping investigation and imposition of the duty concerning imports of ‘new/unused pneumatic radial tyres with or without tubes and/or flap of rubber having nominal rim dia code above 16’ used in buses and lorries/trucks’ from China, was filed by Automotive Tyre Manufacturers’ Association (ATMA) on behalf of Apollo Tyres, J K Tyre Industries and Ceat.

India has imposed similar duties on import of several other products, including steel, fabrics and chemicals from different countries, including China. Anti-dumping steps are taken to ensure fair trade and provide a level-playing field to the domestic industry. They are not a measure to restrict import or cause an unjustified increase in cost of products.

The CNX Nifty is currently trading at 10006.05, down by 51.35 points or 0.51% after trading in a range of 10006.05 and 10083.80. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 5.69%, Vedanta up by 3.13%, Tata Steel up by 3.12%, Hindustan Unilever up by 1.23% and Bajaj Auto up by 0.92%. On the flip side, Bharti Infratel down by 4.29%, Indian Oil Corporation down by 2.41%, BPCL down by 2.24%, NTPC down by 1.98% and Yes Bank down by 1.87% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.25 points or 0.01% to 1,778.16, KOSPI Index gained 1.5 points or 0.06% to 2,400.25, Taiwan Weighted increased 4.59 points or 0.04% to 10,583.97, Jakarta Composite added 25.72 points or 0.45% to 5,775.01 and Hang Seng was up by 32.34 points or 0.12% to 27,722.70.

On the flip side, Nikkei 225 decreased 47.65 points or 0.24% to 20,008.24 and Shanghai Composite was down by 6.4 points or 0.2% to 3,273.05.