Benchmarks extend losses in morning session

Indian equity benchmarks extended their losses in morning session on account of selling in frontline blue chip counters. The rupee opened lower against dollar on account of buying of American currency by banks and importers. Foreign Portfolio Investors stood net sellers in secondary markets and sold shares worth Rs 157.71 crore with gross purchases and gross sales of Rs 4,875.04 and Rs 5,032.75 crore, respectively. The sentiments were dampened after the industrial production growth hit a three-month low of 2.2% in October this year, mainly due to subdued performance of manufacturing and mining sectors coupled with a contraction in output of consumer durables. The IIP grew 4.14% in September this year. Industrial output rose by a meager 2.5% in April-October this fiscal as compared to 5.5% in the same period of 2016-17. Separately, consumer inflation rose to 4.88% in November from 3.58% in October and 3.63% in the year earlier, exceeded the RBI’s forecast of 4.2-4.6% for the second half of the year. The higher-than-expected retail inflation effectively rules out any rate cuts in the near future by the Reserve Bank of India even as industrial growth remains muted.

The downside was, however, capped with a private survey report, stating that India is the third most optimistic nation in hiring intentions as 22 percent of employers are expected to add more staff in the next three months. It further said that workforce gains were expected across all seven industry sectors monitored and in all four regions. Separately, another private report enlightened that the gap between China and India’s prosperity has narrowed by four ranks since 2016 and to a quarter of what it was in 2012. The upward trend in India’s prosperity is significant in view of the fact that India registered lower GDP growth following demonetization and implementation of the GST reform in 2017. India closed in on China through gains in business environment, economic quality and governance.

Meanwhile, select stock specific action is expected in today’s trade as with December 13 being the RBI deadline to resolve the 28 large stressed accounts that the regulator had identified in its second list, banks are set to refer as many as 23 of them for insolvency proceedings. These 28 accounts together account for 40% of the system wide bad loans or worth around Rs 4 trillion.  Investors took note of government’s Chief Statistician T.C.A. Anant statement that he has no worries that the government may breach the fiscal deficit target of 3.2 per cent of the GDP for the current fiscal. In fact, he feels revenue would be buoyant by year-end and that the targeted deficit would be bridged.

Traders were seen piling up position in Oil & Gas, Consumer Durables and Energy stocks, while selling was witnessed in Metal, FMCG and Basic Materials sector stocks. Select stocks from tourism and hotel industry remained in focus on a tourism ministry report that more than 10 lakh foreign tourists visited India in November 2017, a rise of 14.4 per cent over the same period last year. In scrip specific development, Dish TV India was trading in green on positive sentiment after the deal to stake sale in direct-to-home arm by Airtel with Warburg Pincus. Warburg Pincus, a global private equity firm, would acquire up to a 20 percent equity stake in Bharti Telemedia, the direct-to-home subsidiary of Bharti Airtel, for approximately $350 million.

On the global front, Asian markets were trading mostly in green. Japanese machinery orders bounced back in October with a faster increase than expected, re-affirming the resilience of capital spending - a key driver in the economy’s near two-year expansion. Core machinery orders, a volatile data series regarded as an indicator of capital spending in the coming six to nine months, climbed 5.0 percent in October from the previous month. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 33,200 and 10,250 levels respectively. The market breadth on BSE was positive in the ratio of 1190:1050, while 114 scrips remained unchanged.

The BSE Sensex is currently trading at 33173.08, down by 54.91 points or 0.17% after trading in a range of 33123.44 and 33248.92. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.09%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.24%, Consumer Durables up by 0.94%, Energy up by 0.81%, Telecom up by 0.63% and TECK up by 0.26%, while Metal down by 0.82%, FMCG down by 0.62%, Basic Materials down by 0.46%, Bankex down by 0.43% and Realty down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.64%, Mahindra & Mahindra up by 0.67%, Bharti Airtel up by 0.50%, Reliance Industries up by 0.48% and Hero MotoCorp up by 0.46%.

On the flip side, ITC down by 1.43%, Adani Ports & Special Economic Zone down by 1.29%, ICICI Bank down by 1.19%, Tata Steel down by 0.80% and Power Grid down by 0.76% were the top losers.

Meanwhile, the Finance Ministry has concluded that several businesses have claimed high transitional input tax credit under the GST regime without any bonafide explanation to back such claims. The conclusion was arrived on the Central Board of Excise and Customs (CBEC)  enquiry who had three months ago asked its chief commissioners to specifically verify claims of input tax credit of more than Rs1 crore in a time-bound manner.

The ministry said that some taxpayers have availed 'extraordinarily high transitional credit' of Central GST which is neither commensurate with the trend of input tax credit of the industry nor as maintained by the taxpayer himself in the past.

The Revenue Department has, therefore, given an opportunity for those taxpayers who have claimed transitional credit erroneously to revise their Form TRAN-1by December 27. Further, an official release of the Finance Ministry has said that failure to revise TRAN-1 by December 27 would “constrain” the tax administration to initiate audit and enforcement action against the identified unit. A tax payer could file Form TRAN-1 and avail input tax credit on the basis of closing balance of the input tax credit declared in the last return under the pre-GST regime.

The CNX Nifty is currently trading at 10225.20, down by 14.95 points or 0.15% after trading in a range of 10210.55 and 10247.40. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were HPCL up by 2.23%, Indian Oil Corporation up by 1.75%, BPCL up by 1.66%, ONGC up by 1.45% and GAIL India up by 1.44%.

On the flip side, Vedanta down by 2.03%, Adani Ports & Special Economic Zone down by 1.64%, ITC down by 1.43%, ICICI Bank down by 1.33% and Bajaj Finance down by 1.22% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.19 points or 0.07% to 1,730.76, KOSPI Index increased 13.42 points or 0.55% to 2,474.42, Taiwan Weighted increased 13.46 points or 0.13% to 10,456.74 and Hang Seng increased 79.33 points or 0.28% to 28,873.21.

On the other hand, Nikkei 225 decreased 125.94 points or 0.55% to 22,740.23, Jakarta Composite decreased 7.69 points or 0.13% to 6,024.68 and Shanghai Composite decreased 3.98 points or 0.12% to 3,276.83.