Markets slip into red terrain; Consumer Durables stocks drag

Key Indian benchmarks erased all their gains in late morning session to enter into red terrain, on the back of heavy selling in Consumer Durables, Utilities and Basic Materials stocks. Traders were worried as the Reserve Bank of India’s (RBI) latest data showed that India’s current account deficit (CAD) doubled to 1.2 percent of gross domestic product (GDP) or $ 7.2 billion in July-September, from 0.6 percent of GDP or $ 3.4 billion reported in the same period a year ago, raising concern over the fiscal condition. Some concerns also came with the All India Solar Industries Association’s (AISIA) report highlighting that overall cost of solar project has witnessed 10-12% rise, led by implementation of goods and services tax (GST) regime. The market participants remained on sidelines ahead of Wholesale Price Index (WPI) data which is scheduled to be released later in the day.

On the global front, Asian markets were trading mostly in green, after the US Federal Reserve raised its benchmark interest rate by a quarter point as widely expected, and struck a dovish tone on future rate hikes amid stubbornly low inflation. Back home, in scrip specific development, Yes Bank was trading higher after the bank entered into partnership with FundsIndia.com, a premier investment platform for mutual funds and equities.

The BSE Sensex is currently trading at 32972.68, down by 80.36 points or 0.24% after trading in a range of 32947.50 and 33169.74. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.48%, while Small cap index was down by 0.72%.

The only gaining sectoral indices on the BSE were Energy up by 0.08% and Oil & Gas up by 0.01%, while Consumer Durables down by 0.93%, Utilities down by 0.76%, Basic Materials down by 0.70%, Power down by 0.68% and Metal down by 0.67% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 1.74%, Mahindra & Mahindra up by 0.84%, Asian Paints up by 0.57%, Infosys up by 0.37% and Lupin up by 0.25%. On the flip side, TCS down by 2.52%, Tata Motors - DVR down by 1.38%, Wipro down by 1.01%, Sun Pharma down by 0.99% and Tata Steel down by 0.82% were the top losers.

Meanwhile, the All India Solar Industries Association (AISIA) has stated that overall cost of solar project has witnessed 10-12% rise, led by implementation of goods and services tax (GST) regime. While urging the government to remove uncertainty, it said that solar power cost will see an upward escalation under the new tax regime. Besides, it pointed out that while solar power generating systems fall under 5 percent tax bracket, procurement and supply of equipment like module mounting structures, trackers, inverters, transformers and cables are being charged the GST at varying rates.

The association further said that the equipments are charged GST as applicable on individual items rather than treating them as a part of solar power generating system. It also said that solar modules were exempt from all duties in the pre-GST regime but since July 1 they are being charged 5 percent GST. It also indicated that inverters, cables and transformers were levied by 2 percent central sales tax and excise was exempt but post GST they are charged 5-8 percent tax. It added that likewise, the tax incidence on services and civil work has risen to 18 percent from 15 per cent and 6 percent respectively previously.

AISIA has said that presently, the power developers cannot avail the benefit of GST for the electricity produced leading to a detrimental effect towards achieving target of National Solar Mission. Under National Solar Mission, the target for setting up solar capacity increased from 20 GW to 100 GW by 2021-22. Further, it suggested re-introduction of MNRE-certification or self-certification supported by an undertaking that such equipment is required for the setting up of a solar power generating system. It stated that since solar power generating systems are already charged to 5 percent GST, there should be no GST on such equipments which are part and parcel of the generating system. It also feels that an urgent intervention is required in an effort to maintain the cost of solar power low and incentivise renewable energy deployment.

The CNX Nifty is currently trading at 10162.00, down by 30.95 points or 0.30% after trading in a range of 10160.30 and 10230.65. There were 15 stocks advancing against 34 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Dr. Reddy’s Lab up by 1.87%, HCL Tech. up by 1.45%, Tech Mahindra up by 1.45%, HPCL up by 1.02% and Mahindra & Mahindra up by 0.98%. On the flip side, TCS down by 2.69%, Bajaj Finance down by 1.90%, UPL down by 1.68%, GAIL India down by 1.53% and Ambuja Cement down by 1.17% were the top losers.

Asian markets were trading in mostly in green; FTSE Bursa Malaysia KLCI increased 15.67 points or 0.9% to 1,753.33, Jakarta Composite increased 16.83 points or 0.28% to 6,071.43, KOSPI Index increased 16.93 points or 0.68% to 2,497.48 and Taiwan Weighted increased 67.31 points or 0.64% to 10,538.01.

On the flip side, Hang Seng decreased 110.34 points or 0.38% to 29,111.76, Nikkei 225 decreased 92.89 points or 0.41% to 22,665.18 and Shanghai Composite decreased 15.7 points or 0.48% to 3,287.34.