Lackluster trade continues on Dalal Street

Key Indian benchmarks remained lackluster in late morning session, with Sensex and Nifty falling by around 1,000 and 300 points respectively. Sharp sell-off continues in the markets, amid weak cues from other Asian markets. All the sectoral indices were trading lower with the losses of more than 3 percent and the broader markets too continued their fall following the sluggish larger peers. Sentiments remained downbeat with the private report stating that GDP growth will slip down to 7 percent in the second half of the next fiscal, however the economy will grow 7.5 percent level in the first half on a lower base. Besides, investors were cautious ahead of the RBI policy meet this week as they feel that repo rate might be increased amid inflation concerns. On the sectoral front, aviation stocks were trading in red, despite IATA’s latest report stating that India remained the world's fastest growing domestic aviation market for the third straight year in 2017 as economic and network expansion bolstered the sector.

On the global front, Asian markets were trading in red, following the overnight sell-off on Wall Street amid concerns about rising bond yields and potentially higher interest rates. The benchmark S&P 500 as well as the Dow Jones Industrial Average suffered their biggest percentage drops since 2011 and erased all of their gains for 2018.

The BSE Sensex is currently trading at 33764.22, down by 992.94 points or 2.86% after trading in a range of 33482.81 and 33941.34. There were 31 stocks declining on the index, while there were no gaining stocks on BSE.

The broader indices were trading in red; the BSE Mid cap index was down by 3.23%, while Small cap index was down by 3.74%.

The top losing sectoral indices on the BSE were Realty down by 4.91%, Consumer Durables down by 4.06%, Basic Materials down by 3.72%, Metal down by 3.62% and Bankex down by 3.44%, while there were no gaining sectoral indices on the BSE.

The top losers on the Sensex were Tata Motors down by 5.47%, Tata Motors - DVR down by 4.66%, Axis Bank down by 4.56%, Yes Bank down by 4.16% and Hindustan Unilever down by 3.71%.

Meanwhile, in line with the government’s earlier promises, Finance Minister Arun Jaitley has said that the basic rate of corporate tax can be brought down to 25 percent from the current 30 percent only after all the exemptions given to the industry have ended. He also said that it would not be proper to end exemptions midway as some industries may have been set up based on them. Therefore, he noted that the opportunity to reduce the corporate tax rate to 25 percent will arise when all the exemptions end in the due course.

In the Union Budget 2018-19, Jaitley announced that corporate tax would be reduced to 25 percent from the coming fiscal for companies which had a turnover up to Rs 250 crore during 2016-17. He said that for the remaining 7,000-odd companies, the average effective tax rate after considering the exemptions comes to about 22 percent. Talking about fiscal deficit, he said that the target of trimming it down to 3.2 percent of the gross domestic product (GDP) in the fiscal year ending March 2018, was missed mainly due to goods and services tax (GST) revenues accruing only for 11 months as against the expenditure being accounted for 12 months.

The minister further stated that revenues under the GST, which replaced 17 central and state levies including excise duty, service tax and VAT, accrue only after a month in which the sales are made. He also said that in contrast, the revenue from excise used to accrue just as the products left the factory. So, he pointed out that for the current fiscal, the government accounted for revenue for only 11 months, with the accruals of March coming in only in April. He mentioned that next year onwards, the 12 month cycle would be complete, and added that the buoyancy in GST collections as well as indirect taxes gave him confidence that it would be easier to meet the fiscal deficit target of 3.3 percent set for 2018-19.

The CNX Nifty is currently trading at 10368.85, down by 297.70 points or 2.79% after trading in a range of 10276.30 and 10423.70. There were no stocks advancing against 50 stocks declining on the index.

The top losers on Nifty were Tata Motors down by 5.29%, Axis Bank down by 4.66%, GAIL India down by 4.08%, Yes Bank down by 4.03% and Indiabulls Housing Finance down by 3.93%.

All the Asian markets were trading in red; Hang Seng decreased 1250.96 points or 3.88% to 30,994.26, Nikkei 225 decreased 1211.41 points or 5.34% to 21,470.67, Taiwan Weighted decreased 542.25 points or 4.95% to 10,404.00, Jakarta Composite decreased 162.86 points or 2.47% to 6,426.82, Shanghai Composite decreased 96 points or 2.75% to 3,391.49, FTSE Bursa Malaysia KLCI decreased 50.04 points or 2.7% to 1,803.03 and KOSPI Index decreased 43.4 points or 1.74% to 2,448.35.