Feeble global cues drag benchmarks near intraday lows

Indian equity benchmarks ended Tuesday’s session on pessimistic note, following weakness in the global peers on US-China trade tensions. After a negative opening, the markets traded lackluster throughout the session as domestic sentiments remained cautious with Commerce and Industry Minister Suresh Prabhu’s statement that global trade is facing headwinds and these challenges are needed to be tackled properly to boost world economy. He also said that the US decision to impose high import duties on certain steel and aluminium products have led to a trade war kind of situation, with other countries too raising their tariff walls. Adding some pessimism, Commerce Secretary Rita Teaotia said that exporters, particularly from the food and agriculture sectors, should strictly comply with global norms for quality and standards, or else they might lose their export market share to other countries. Separately, former chairman of the empowered committee on GST, Amit Mitra said that around Rs 25,000 crore refund is pending for the exporters while more than 3 lakh applications seeking refunds have piled up with the central government. He also said that the exporters are suffering hugely for this.

Further, in the last leg of the trade, the key indices extended their losses to end near their intraday low points, as sentiments weakened further amid India Ratings’ report that the adverse conditions in the interest rate market, increasing risk aversion by state-run banks, volatile external environment and limited access to alternative financing options as critical drivers for corporate credit quality in FY19, especially for weak entities. Traders failed to take any sense of relief with Union Minister Arun Jaitley’s statement that Indian economy may maintain the tag of fastest growing major economy for some years. The markets participants even overlooked Interim Finance Minister Piyush Goyal’s statement that the government is hopeful of achieving double-digit gross domestic product (GDP) growth in the country by the fourth quarter of the ongoing financial year. He stated that there is a demand uptick in the economy and India is a market place of billions of aspirational consumers. Meanwhile, Finance Ministry said that the Goods and Service Tax (GST) has resulted in formalization of economy and consequently information flow would eventually augment not only the Indirect Tax collections but also Direct Tax collections.

On the global front, European markets were trading in red, as US President Donald Trump threatened more tariffs on Chinese goods in an escalating tit-for-tat trade war between the world’s two biggest economies. Asian markets ended in red, as concerns about a global trade war after the US and China announced plans to impose tariffs on billions of dollars’ worth of imported goods weighted on the sentiments.

Back home, cements stocks ended in red, despite a private report stating that cement demand in India is expected to grow by 7 per cent this year but intense competition and ‘not enough’ consumption will lead to excess capacity, while banking stocks also ended in red, despite Reserve Bank’s data report that bank credit grew 3.4 per cent on a sequential basis in the December 2017 quarter, helped by better performance by private sector banks and an uptick in industrial credit after two successive quarters of declines. Further, shares of metal companies remained under pressure with the Nifty Metal index hitting an over eight month low on the National Stock Exchange (NSE).

Finally, the BSE Sensex declined 261.52 points or 0.74% to 35,286.74, while the CNX Nifty was down by 89.40 points or 0.83% to 10,710.45.

The BSE Sensex touched a high and a low of 35,552.47 and 35,249.06, respectively and there were 4 stocks on gaining side as against 27 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.98%, while Small cap index was down by 1.29%.

The top losing sectoral indices on the BSE were Metal down by 1.69%, Energy down by 1.67%, Basic Materials down by 1.62%, Realty down by 1.33% and Oil & Gas was down by 1.22%, while there were no gainers on the BSE sectoral front.

The top gainers on the Sensex were ITC up by 0.76%, ONGC up by 0.30%, HDFC Bank up by 0.20% and HDFC up by 0.11%. On the flip side, Vedanta down by 3.55%, Adani Ports & SEZ down by 2.00%, Mahindra & Mahindra down by 1.94%, Reliance Industries down by 1.91% and Indusind Bank down by 1.90% were the top losers.

Meanwhile, highlighting various benefits of historic tax reform, the Goods and Service Tax (GST), Finance Ministry has said that the new tax reform has resulted in formalization of economy and consequently information flow would eventually augment not only the Indirect Tax collections but also Direct Tax collections. Besides, the Ministry said that under the GST, there will be now seamless flow of availability of common set of data to both the Centre and the States making Direct and Indirect Tax collections more effective.

The Ministry further mentioned that GST is creating employment in formal sector and also eliminating transactions which are not recorded earlier in the books of accounts and thus, were outside the tax net so far.  Besides, it said that the major tax reform is aimed to bring better tax compliance, transparency in tax system and it would make increasingly difficult for businesses to remain outside the tax net.

It also underlined the efforts being taken by the government for further simplification of GST structure, with an aim to facilitate the tax payers and to extend benefit to the customers, adding that an extensive exercise was undertaken for tax payers education & facilitation by way of knowledge sharing, dissemination of information and replies to FAQs among others.

The CNX Nifty traded in a range of 10,789.45 and 10,701.20. There were 8 stocks in green as against 42 stocks in red on the index.

The top gainers on Nifty were Bajaj Finance up by 1.17%, GAIL India up by 1.14%, ITC up by 0.59 %, HDFC up by 0.46% and Power Grid up by 0.23%. On the flip side, Vedanta down by 3.51%, Indian Oil Corporation down by 3.05%, HPCL down by 3.03%, UPL down by 2.64% and Mahindra & Mahindra down by 2.29% were the top losers.

The European markets were trading in red; Germany’s DAX declined 162.15 points or 1.28% to 12,671.96, France’s CAC decreased 56.89 points or 1.05% to 5,393.59 and UK’s FTSE 100 was down by 36.76 points or 0.48% to 7,594.57.

Asian equity markets ended in red on Tuesday as a trade dispute between China and the US intensified and oil turned volatile ahead of a critical meeting of crude-producing nations that will determine whether it's time to ramp up production. Traders eyed looming trade wars after US President Donald Trump threatened new tariffs on $200 billion of Chinese goods and Beijing vowed to ‘immediately’ retaliate. Chinese stocks hit two-year low and the yuan weakened after the Ministry of Commerce vowed to retaliate with ‘strong’ counter measures against US companies, deepening a trade dispute between the world's two biggest economies. Further, Japanese shares posted their biggest single-day loss in three months to reach 2-1/2-week lows as a strong yen amid escalating global trade tensions soured investors' appetite for risk. Meanwhile, Indonesian markets remain closed for Eid-ul-Fitr holiday.