Benchmarks pare most of losses in late trade

Indian equity benchmarks pared most of their losses to trade with marginal cut as traders opted to buy fundamentally strong stocks at intraday low levels. Traders took some solace with FICCI’s report that India’s GDP growth is expected at 7.1% for the January-March quarter of the last fiscal and 6.6% for the entire 2017-18. The Central Statistics Office (CSO) is scheduled to release GDP numbers for the fourth quarter as well as the 2017-18 fiscal on May 31. However, markets continued to trade lower after Moody’s Investors Service has cut India's GDP growth forecast to 7.3% in 2018, from previous forecast of 7.5% due to higher oil prices and tighter financial conditions. It, however, kept growth expectation for 2019 unchanged at 7.5%. Meanwhile, India Meteorological Department (IMD) said that the southwest monsoon may be slightly below normal in southern and northeastern parts of the country in 2018, but normal in the northwestern and central regions. The region-wise forecast comes with a model error of plus and minus 8%.

On the global front, European markets are trading mostly in red in early deals, as investors await the latest political developments in Italy. However, traders shrugged off Germany’s better-than-expected unemployment rate which at record low since reunification. The unemployment rate fell to 5.2%, down from 5.3% and the lowest since the reunification of West and East Germany in 1990. Asian markets were trading in red at this point of time.

The BSE Sensex is currently trading at 34907.66, down by 41.58 points or 0.12% after trading in a range of 34735.11 and 35017.45. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.03%, while Small cap index was down by 0.13%.

The top gaining sectoral indices on the BSE were Power up by 0.33%, Utilities up by 0.27%, Metal up by 0.27%, Auto up by 0.11% and Bankex up by 0.07%, while Capital Goods down by 0.58%, Healthcare down by 0.55%, Oil & Gas down by 0.50%, Industrials down by 0.50%, Consumer Durables down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.48%, Coal India up by 2.39%, Yes Bank up by 1.34%, Kotak Mahindra Bank up by 1.32% and Power Grid Corporation up by 1.30%. On the flip side, Tata Motors - DVR down by 1.94%, ICICI Bank down by 1.65%, Tata Motors down by 1.46%, Axis Bank down by 1.02% and Larsen & Toubro down by 1.00% 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 10616.40, down by 16.90 points or 0.16% after trading in a range of 10558.45 and 10648.70. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 3.37%, Coal India up by 2.44%, Bajaj Finance up by 1.73%, Tech Mahindra up by 1.71% and Kotak Mahindra Bank up by 1.47%. On the flip side, HPCL down by 2.35%, Hindalco down by 1.81%, ICICI Bank down by 1.57%, Tata Motors down by 1.53% and BPCL down by 1.41% were the top losers.

All Asian markets are trading in red; Hang Seng declined 427.79 points or 1.4% to 30,056.79, Nikkei 225 dropped 339.91 points or 1.52% to 22,018.52, Taiwan Weighted decreased 142.95 points or 1.3% to 10,821.17, Shanghai Composite tumbled 79.02 points or 2.53% to 3,041.44, Jakarta Composite shed 58.8 points or 0.97% to 6,009.52, FTSE Bursa Malaysia KLCI fell 50.68 points or 2.85% to 1,725.16 and KOSPI Index was down by 48.22 points or 1.96% to 2,409.03.

European markets are trading mostly in red; France’s CAC decreased 47.73 points or 0.88% to 5,390.33 and UK’s FTSE 100 was down by 8.4 points or 0.11% to 7,624.24, while Germany’s DAX was up by 4.12 points or 0.03% to 12,670.63.