Benchmarks continue weak trade in morning session

Indian equity benchmarks continued their weak trade in morning session on account of selling in frontline blue chip counters. The Indian rupee slipped in the early trade on Wednesday. The dollar stood near a three-week high against a basket of currencies, after Federal Reserve chairman Jerome Powell’s upbeat views on the economy bolstered bets on further Fed interest rate hikes this year. The sentiments were dampened on report that the total revenue collection under GST for the month of January, till February 25, stood at Rs 86,318 crore compared to Rs 86,703 crore collected in December 2017. The average GST revenue collections seem to have settled around Rs 86,000 crore. About 30% taxpayers registered with GST are still not filing their returns. Separately, Care Ratings highlighted that the Punjab National Bank (PNB) scam could negatively impact around 10,000 people working in the gems and jewellery sector as business woes of Gitanjali Group and Nirav Modi firms continue. In addition, the banking sector’s non-performing assets (NPAs) in the gems and jewellery sector may surge to 30 percent from the current 11 percent of loans disbursed in the troubled segment.

Meanwhile, banking stocks continued reeling under pressure as the impact of PNB scam continued to hit. Corporation Bank has reported fraud amounting Rs 6.77 crore to the Central Bureau of Investigation (CBI). The alleged fraud comes amid CBI’s probe into recent complaints of massive frauds in the Punjab National Bank, Bank of Baroda and Oriental Bank of Commerce. The Finance Ministry has directed managing directors (MDs) of public sector banks (PSBs) to examine all NPAs or bad loans over Rs 50 crore for possible fraud and refer the same to the CBI. The street overlooked RBI data that showed after five quarters of low growth, bank credit resumed double-digit growth at 10.7 percent in the quarter to December, led by private sector banks. In the September quarter, bank credit had grown at 6.5 percent while in the June quarter it was up by 8 percent.

The street shrugged off Moody’s Investors Service report which estimated that India will grow 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetization and GST. The report added that the Budget for 2018-19 includes some measures that could stabilize the rural economy that was disproportionately hit by the demonetization policy and is yet to recover.  Separately, a private poll showed that India might have regained the status of the world’s fastest-growing major economy in the October-December quarter, driven by higher government spending and a pick-up in manufacturing and services. Select amusement and entertainment related stocks were trading in green as Indian Association of Amusement Parks and Industries said that the domestic amusement park industry is estimated to grow to at least Rs 4,000 crore by 2020, boosted by rising disposable incomes, focus on safety standards and hygiene. Separately, a report highlighted that the entertainment industry in the country is projected to be more than $62.2 billion by FY2025.

Traders were seen buying in Realty, IT and Healthcare stocks, while selling was witnessed in Metal, Bankex and Capital Goods sectors stocks. In scrip specific development, ABC India was trading firm on being awarded an order of Rs 141.93 crore from BHEL for Multimodal Transportation of Export Project Cargo from India to the MSTPP Rampal Project in Bangladesh. Spice Mobility was trading in green with its step down subsidiary - Spice Labs divesting its entire stake in Exponentially I Mobility, a Limited Liability Partnership (LLP).

On the global front, Asian markets were trading in red. Japan’s factory output fell by the most in nearly seven years in January, badly missing forecasts. Retail sales also dropped more than expected. Even so, the economy’s export-driven growth trend remains intact. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 34,200 and 10,550 levels respectively. The market breadth on BSE was negative in the ratio of 872:1325, while 120 scrips remained unchanged.

The BSE Sensex is currently trading at 34192.92, down by 153.47 points or 0.45% after trading in a range of 34076.45 and 34197.86. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.35%, while Small cap index was down by 0.23%.

The top gaining sectoral indices on the BSE were Realty up by 0.82%, IT up by 0.56%, Healthcare up by 0.45% and TECK up by 0.34%, while Metal down by 1.20%, Bankex down by 1.02%, Capital Goods down by 0.83%, Basic Materials down by 0.71% and PSU down by 0.61% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.22%, Dr. Reddy’s Lab up by 1.02%, Sun Pharma up by 0.92%, Hero MotoCorp up by 0.56% and Bajaj Auto up by 0.51%.

On the flip side, Yes Bank down by 2.29%, ICICI Bank down by 1.77%, Larsen & Toubro down by 1.26%, NTPC down by 1.15% and Adani Ports & Special Economic Zone down by 1.14% were the top losers.

Meanwhile, the finance ministry has given its nod to the much-awaited policy for scrapping vehicles that are older than 15-years. The document will now go to the Goods and Services Tax (GST) Council for fixing concessions by the states and the Centre. The development comes after Road, Transport and Highways Minister Nitin Gadkari has affirmed that the aim of bringing this policy is to curb the menace of rising vehicular pollution in India. He also said that the policy was needed to curb vehicular pollution as well as given the annual 22 percent growth rate of the automobile industry that will require an additional highway lane every third year, costing Rs 800 billion.

Gadkari has said that India has the potential to become a global hub for automobile industry once this proposal is implemented because the prices will become cheaper as scrap collected from these vehicles will be used for the production of auto parts among other things. Earlier, he had sent a concept note on Voluntary Vehicle Fleet Modernisation Programme (V-VMP) to the Committee of Secretaries. This note talked about the creation of an ecosystem, wherein, voluntary scrapping and replacement of old polluting vehicles was proposed. The policy has proposed to push 28 million decade-old vehicles off the road.

The transport minister had earlier said that the Prime Minister is very keen on the proposal and once it is implemented, pollution would be checked considerably as 65 percent of the pollution is caused by heavy vehicles more than 15 years old. As per an earlier proposal, a relief of about Rs 0.5 million was to be provided to people who purchase new commercial vehicle of about Rs 1.5 million, if they surrender their over 15-year old commercial vehicles. Gadkari has said that once the proposal is accepted it is bound to result in Rs 100 billion boost in tax revenue as the automobile sector will benefit from it.

The CNX Nifty is currently trading at 10501.40, down by 52.90 points or 0.50% after trading in a range of 10461.55 and 10504.45. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Cipla up by 1.44%, Infosys up by 1.16%, Dr. Reddy’s Lab up by 0.98%, Sun Pharma up by 0.95% and UPL up by 0.69%.

On the flip side, HPCL down by 3.42%, ICICI Bank down by 2.51%, Yes Bank down by 2.40%, Hindalco down by 1.86% and Vedanta down by 1.48% were the top losers.

The Asian markets were trading in red; Hang Seng decreased 474.76 points or 1.52% to 30,793.90, Nikkei 225 decreased 203.33 points or 0.91% to 22,186.53, Shanghai Composite decreased 39.51 points or 1.2% to 3,252.56, KOSPI Index decreased 25.34 points or 1.03% to 2,430.80, FTSE Bursa Malaysia KLCI decreased 8.28 points or 0.44% to 1,863.18 and Jakarta Composite decreased 6.34 points or 0.1% to 6,592.59.

Taiwan Stock Exchange was closed on account of National holiday.