Indian equities add losses amid weak global cue

Indian equity benchmarks continued to trade lower in afternoon session, as selling momentum in the equities persisted. Sentiment on the street weakened further with Moody’s Investors Service’s statement that India could prune its capital expenditure to avoid any slippage of its fiscal deficit target of 3.3% of GDP in the current fiscal, but warned any reduction in the excise duty on petroleum products would exert negative pressure on the country’s sovereign credit profile. Some pessimism also came in with Union Minister Dharmendra Pradhan’s statement that with petrol and diesel kept out of the purview of GST, the state owned oil industry is losing Rs 200 billion annually in terms of input credit. besides, domestic sentiment was hit as the rupee declined by 41 paise to hit a fresh 1-month low of 67.53 per dollar in early trade due to appreciation of the American currency overseas and foreign fund outflows. However, broader indices managing to hold their heads above water and were trading with gains of over 0.10%. On the sectoral front, stocks related to sugar were trading lower despite the CCEA fixing the MSP of sugar at Rs 29 per kg. It also imposed stock holding limits on sugar mills for the current sugar season (up to September 2018) as a safeguard mechanism to keep retail sugar prices range bound. These decisions are aimed at helping cash-starved industry to clear cane arrears which have crossed Rs 22,000 crore.

On the global front, Asian markets were trading in red, with major markets in the region recording slight declines after the mixed close on Wall Street amid uncertainty over trade relations ahead of a key G7 meeting. Back home, the BSE Sensex is currently trading at 35303.62, down by 159.46 points or 0.45% after trading in a range of 35260.00 and 35415.19. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.18%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.59%, IT up by 0.52%, TECK up by 0.49%, Telecom up by 0.22% and Consumer Durables up by 0.16%, while Utilities down by 0.96%, Power down by 0.93%, Bankex down by 0.73%, Capital Goods down by 0.67% and Metal down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 5.95%, Dr. Reddys Lab up by 3.73%, Tata Motors - DVR up by 2.98%, Tata Motors up by 2.55% and ONGC up by 0.84%. On the flip side, Power Grid down by 2.42%, HDFC down by 1.73%, Larsen & Toubro down by 1.56%, ICICI Bank down by 1.50% and Mahindra & Mahindra down by 1.22% were the top losers.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) has fixed the minimum selling price (MSP) of white/refined sugar at Rs 29 per kg. It also imposed stock holding limits on sugar mills for the current sugar season (up to September 2018) as a safeguard mechanism to keep retail sugar prices range bound. These decisions are aimed at helping cash-starved industry to clear cane arrears which have crossed Rs 22,000 crore.

No producer of sugar shall sell or agree to see or otherwise dispose of or deliver or agree to deliver white or refined sugar in the domestic market or remove white or refined sugar from the godowns of the factory in which it is produced for sale in the domestic market at a rate below Rs 29 per kg till further orders. The ministry also issued an order directing the quantity of white/refined sugar stock that every producer of sugar shall hold at the end of June 2018.

The food ministry notified the Sugar Price (Control) Order, 2018 to empower itself to fix the MSP of the sweetener. While fixing the price, the Centre will take into consideration the Fair and Remunerative Price (FRP) of sugarcane, conversion cost to produce sugar and realisation of profit from bye-products. This order empowers the government to inspect records, enter and conduct searches in factories, and seizure of stocks.

The Centre has come out with a bailout package of Rs 8,500 crore to boost farmers’ incomes by creating a buffer stock for sugar, enhancing ethanol production capacity and fixing a minimum selling price to cut mill losses. The Cabinet approved Rs 4,440 crore soft loan for building ethanol production capacity to absorb the cane and a buffer stock of 3 million tonnes, besides for the first time fixing Rs 29 per kg as the minimum price below which mills cannot sell sweetener. 

The CNX Nifty is currently trading at 10718.80, down by 49.55 points or 0.46% after trading in a range of 10709.45 and 10750.45. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 6.04%, Dr. Reddys Lab up by 3.56%, Lupin up by 3.39%, Tata Motors up by 2.65% and Cipla up by 2.27%. On the flip side, Power Grid down by 2.56%, Hindalco down by 2.27%, BPCL down by 2.01%, HDFC down by 1.88% and ICICI Bank down by 1.62% were the top losers.

All the Asian markets were trading in red; Hang Seng decreased 538.37 points or 1.71% to 30,974.26, Nikkei 225 shed 128.76 points or 0.56% to 22,694.50, Taiwan Weighted was down by 95.33 points or 0.85% to 11,156.42, Jakarta Composite dipped 51.07 points or 0.84% to 6,055.63, Shanghai Composite decreased 48.79 points or 1.57% to 3,060.70, KOSPI Index dropped 19 points or 0.77% to 2,451.58 and FTSE Bursa Malaysia KLCI decreased 11.4 points or 0.64% to 1,774.41.