Indian markets continue bearish trend in noon deals

Indian equity markets continued their bearish trend in early noon session due to subdued global sentiments with regard to the elevated worries over Italian political crisis. Sentiments remained down-beat with Federation of Indian Export Organisations’ (FIEO) President Ganesh Kumar Gupta stating that refund of over Rs 20,000 crore on account of GST is pending with the government with more than half the amount stuck as input tax credit. Street was also remained concerned with a private report stating that petrol and diesel prices will continue to climb even as global prices have started to ease. Besides, foreign institutional investors (FIIs) sold shares worth a net Rs 407.33 crore on May 29, 2018, too weighed on the markets. Traders paid no heed towards Indian Meteorological Department’s (IMD) statement that monsoon season rainfall for the country as a whole is likely to be 97% of the LPA. IMD also said that rainfall in India for the 2018 southwest monsoon season is most likely to be normal and this year will be the third year for the normal monsoon with very less chance of rain deficit.

On the global front, Asian stocks were trading in red as Italy’s political crisis rippled across financial markets, toppling the euro to a 10-month low, pushing up Italian borrowing costs. Back home, consumer durable stocks remained in focus with a private report stating that price of air-conditioners, refrigerators, washing machines and microwave ovens are set to get costlier by 2-5% from June 2018 on account of rupee depreciation, rising crude oil prices and rates of key raw material steel and copper hardening up. Meanwhile, both mid and small cap indices were trading in negative territory.

The BSE Sensex is currently trading at 34782.74, down by 166.50 points or 0.48% after trading in a range of 34735.11 and 34876.13. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index edged lower 0.15%, while Small cap index down by 0.07%.

The only gaining sectoral indices on the BSE were Power up by 0.89% and Utilities up by 0.55%, while Capital Goods down by 0.68%, Oil & Gas down by 0.66%, Bankex down by 0.61%, Telecom down by 0.59% and Industrials down by 0.48% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.36%, Mahindra & Mahindra up by 1.86%, Power Grid Corporation up by 1.35%, NTPC up by 1.18% and Yes Bank up by 0.52%. On the flip side, ICICI Bank down by 1.96%, Tata Motors - DVR down by 1.70%, Tata Motors down by 1.53%, Wipro down by 1.27% and Bharti Airtel down by 1.22% were the top losers.

Meanwhile, Federation of Indian Export Organisations (FIEO) President Ganesh Gupta has said that refund of over Rs 20,000 crore is still pending with the government on account of IGST (integrated GST) and ITC (input tax credit). He also said that many exporters have not been able to file the refund of ITC due to technical glitches as input tax credit and exports happened in different months. Besides, he said that the delay in refund is mainly impacting small exporters who provide jobs in labour intensive sectors. He pointed out that liquidity is a major area of concern particularly for Micro, Small and Medium Enterprises (MSME) exporters, who constitute the bulk of exports in high employment intensive sectors.

According to Gupta, the challenges on GST front are continuing though the fortnight clearance drive, which was highly successful and gave hopes of refund on real-time basis. He noted that while claims over Rs 7,000 crore were cleared during March, 2018, the amount in April, 2018 is little over Rs 1,000 crore. He also said that the GST refund process has considerably slowed down and the federation has urged the Finance Minister to look into the refund problem and organise a clearance drive to liquidate the pendency and bring the refund process on track. He noted that majority of the problems relate to ITC refund which have to be done by the states as well.

FIEO President further said that the manual intervention in the tax credit refund process has added to the transaction time and cost of exporters. He also said that the provision that 90 percent of ITC refund will be issued within seven days is not being implemented by tax authorities. He noted that some of the states say that they do not have funds to clear the refund. Further, he said that after the incidents of bank frauds, banks have become extra cautious while providing credit to exporters. He stated that withdrawal of letter of offer and letter of comfort after the Nirav Modi fraud, has added to the cost of funds for exporters by 1-3 percent. He added that while banks should adhere to the procedure, they have to be pro-active to the needs of the sector.

The CNX Nifty is currently trading at 10577.95, down by 55.35 points or 0.52% after trading in a range of 10558.45 and 10602.15. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Coal India up by 2.27%, Mahindra & Mahindra up by 1.69%, Power Grid Corporation up by 1.38%, NTPC up by 1.21% and Tech Mahindra up by 1.02%. On the flip side, Hindalco down by 2.56%, HPCL down by 1.89%, ICICI Bank down by 1.69%, Eicher Motors down by 1.63% and BPCL down by 1.53% were the top losers.

All the Asian markets were trading in red; Hang Seng decreased 426.87 points or 1.4% to 30,057.7, Nikkei 225 slipped 339.91 points or 1.52% to 22,018.52, Taiwan Weighted plunged 142.95 points or 1.3% to 10,821.17, Shanghai Composite declined 43.43 points or 1.39% to 3,077.03, KOSPI Index decreased 41.32 points or 1.68% to 2,415.93 and Jakarta Composite was down 3.3 points or 0.05% to 6,065.02.  Market in Malaysia remain closed.