Late hour sell-off drag benchmarks lower; Nifty slips below 10,500 mark

Indian equity benchmarks ended the lackluster day of trade in red terrain on Wednesday with frontline gauges ending below their crucial 34,000 (Sensex) and 10,500 (Nifty) levels. Selling which emerged in last leg of trade mainly played spoil sport for the markets and dragged the markets lower. Markets after a cautious start gained traction and traded in green terrain for most part of the day’s trade, as sentiments remained up-beat on report that the Securities and Exchange Board of India (SEBI) board will consider proposals to ease compliance norms for insolvent firms - especially with regard to trading, listing and de-listing, and declaring results-at its meeting on Thursday. Traders also took some encouragement with rating agency ICRA’s expectations that gross value added (GVA) growth to rise by 50 basis points in 2018-19 to 7 per cent, on the back of normal monsoon, a commitment towards fiscal consolidation at the Central and State level, and the commencement of broader efficiency gains related to Goods and Services Tax (GST). Some support also came from report that the State Bank of India’s Composite Index, an indicator of manufacturing activity that helps estimate periods of contraction and expansion, has showed that Indian manufacturing activity in December improved marginally over the previous month taken over a yearly period, while the index fell more sharply on a month-wise comparison, amid the worries of GST rollout weighing down the manufacturing sector.

However, sharp sell-off in dying hour of trade dragged key gauges lower, as traders opted to book profit with markets trading at all time high levels. Traders also remained concerned with GST collections slipping to their lowest in November as rates were cut on dozens of goods to make the new national sales tax regime more acceptable. Total collections under the GST in November slipped for the second straight month to Rs 80,808 crore, down from over Rs 83,000 crore in the previous month. Investors took note that Grant Thornton in its latest International Business Report (IBR) has said that business leaders in India remained largely positive, but their level of optimism has dropped to its lowest level in four years.

On the global front, European markets were trading mostly in green amid light trade across markets worldwide due to the holiday period. Asian markets ended mostly in green with investors indulging in some selective buying despite a lack of any big catalysts.

Back home, India looks set to leapfrog Britain and France next year to become the world’s fifth-largest economy in dollar terms. The report highlighted that despite temporary setbacks, India’s economy has still caught up with that of France and the UK and in 2018 will have overtaken them both to become the world’s fifth largest economy in dollar terms. On the sectoral front, select tech stocks remained under pressure following their global counter parts, while the energy stocks too lost shine on report of the spike in international crude prices. Sugar stocks remained under pressure in today’s trade on CRISIL’s report that Indian sugar industry is expected to witness a drop in margins due to an increase in cane cost coupled with higher production of sugar, expected to pull down the retail prices. In scrip specific development, Reliance Communications extended rally for the second straight session after the company yesterday announced its exit from the Reserve Bank of India’s Strategic Debt Restructuring (SDR) framework, with zero equity conversion and zero loan write-offs for lenders and bond holders.

Finally, the BSE Sensex declined 98.80 points or 0.29% to 33,911.81, while the CNX Nifty was down by 40.75 points or 0.39% to 10,490.75.

The BSE Sensex touched a high and a low of 34,137.97 and 33,839.51, respectively and there were 6 stocks on gaining side as against 24 stocks on losing side, while 1 stock remained unchanged on the index.

The broader indices ended in red; the BSE Mid cap index slipped 0.19%, while Small cap index was down by 0.33%.

The lone gaining sectoral index on the BSE was Healthcare up by 1.84%, while Oil & Gas down by 0.81%, Energy down by 0.73%, Capital Goods down by 0.72%, PSU down by 0.69% and Realty was down by 0.63% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 6.89%, Dr. Reddy’s Lab up by 1.71%, Mahindra & Mahindra up by 0.77%, Wipro up by 0.69% and Hindustan Unilever up by 0.48%. On the flip side, Bharti Airtel down by 1.62%, ICICI Bank down by 1.53%, Larsen & Toubro down by 0.87%, SBI down by 0.85% and TCS down by 0.82% were the top losers.

Meanwhile, a commerce ministry-appointed panel has recommended that the Board of Approval (BoA), the highest decision making body for special economic zones (SEZs), should be accorded extra powers to exempt units and developers from certain rules to promote these zones. Justifying its proposal for change, the panel said that under the current SEZ rules, the BoA has no power to relax any rule. It also said that even when the BoA considers it appropriate, it has to take approval of commerce and industry minister. Therefore, it pointed that wherever BoA feels that there is genuine hardship to the trade and industry and relaxation in SEZ rule is required, it should be empowered to do so.

In order to align the SEZ Rules, 2006 with the Goods and Services Tax (GST) regime as well as for removal of various difficulties faced, a committee under the Chairmanship of Dr. L. B. Singhal, Development Commissioner, Noida, SEZ was constituted by the Department of Commerce, Ministry of Commerce and Industry to review the SEZ Rules, 2006 and to make necessary recommendations. The committee further suggests submission of GST registration certificate in place of sales tax registration, along with obtaining national security clearance as per guidelines issued by the home affairs ministry.

Besides, it has asked for setting up of an SEZ Rules Interpretation Committee to help in ease of operations, as well as suggestions to reduce paper work for setting up of SEZ units. India’s exports from SEZs jumped 15.4% to Rs 1.35 lakh crore during the first quarter (April-June) of the financial year 2017-18. Besides, till September 7, the government has approved as many as 424 zones, of which 222 are operational.

The CNX Nifty traded in a range of 10,552.40 and 10,469.25. There were 13 stocks in green as against 37 stocks in red on the index.

The top gainers on Nifty were Sun Pharma up by 5.99%, Tech Mahindra up by 1.63%, Dr. Reddy’s Lab up by 1.47%, Wipro up by 1.22% and Aurobindo Pharma was up by 1.07%. On the flip side, Indian Oil Corporation down by 2.18%, Bharti Airtel down by 1.82%, ICICI Bank down by 1.78%, Ultratech Cement down by 1.57% and Bosch down by 1.38% were the top losers.

The European markets were trading mostly in green; France’s CAC rose 1.07 points or 0.02% to 5,365.79 and UK’s FTSE 100 was up by 7.38 points or 0.1% to 7,600.04, while Germany’s DAX was down by 5.3 points or 0.04% to 13,067.49.

Asian equity markets ended mostly in green on Wednesday, with investors indulging in some selective buying despite a lack of any big catalysts. Higher commodity prices triggered fairly strong buying in mining and energy stocks in the region. Overall, the volume of business was mostly thin across the region. Crude oil prices rose to two-year highs overnight and as iron ore, gold and copper prices also strengthened. Japanese shares ended higher, with a rally in crude prices supporting oil-related shares. Though, Chinese shares ended lower amid signs of slowing economic growth and year-end liquidity tightness. Earnings at China’s industrial firms grew at their slowest pace in seven months in November, official data showed. Separately, growth in wages and hiring slowed at industrial firms, according to a survey by the China Beige Book International (CBB). Meanwhile, benchmark rates in the banking systems kept climbing in signs of liquidity stress.