Late selling drag markets near intra-day low levels

Selling in last leg of trade mainly played spoil sports for the Indian equity benchmarks, where key gauges erased all of their gains and settled in red on Wednesday, with cut of one third of a percent. Benchmarks started the session with jubilation on the back of positive macro-economic data. India’s industrial growth measured by IIP inched up to 2.4% in the month of December 2018, after hitting a 17-month low in November, while retail inflation based on CPI continued its southward journey for another month and eased further to 2.05% in the month of January 2019, the lowest in the last 19 months. The markets traded in green for the most part of the session, as Finance Minister Piyush Goyal said that now individuals earning up to Rs 9.5 lakh can escape liability by taking advantage of saving schemes, stressing that tax concessions have been provided with a view to help poor and middle class people living on a tight budget. Investors also got comfort with reports that the Cabinet is expected to soon consider a proposal of FDI-linked relaxation for mandatory 30 per cent local sourcing norms for foreign single brand retailers by allowing them more time to comply with regulations. The commerce and industry ministry has already circulated a draft cabinet note seeking views of different ministries including the department of economic affairs on the proposal.

However, in the last hours of the trade, the key indices erased all of their losses to end in red terrain, as traders got cautious after the Comptroller and Auditor General (CAG) pointed out irregularities in the way part of goods and services tax (GST) revenue was transferred to states in 2017-18. It said the devolution of Integrated GST (IGST), which is collected on the inter-state supply of goods and services and imports, to states did not happen according to provisions of the law. Some concerns also came with a report that suspicious income tax refund claims have gone up in last three years and scrutiny assessments have been initiated against taxpayers claiming high refunds inconsistent with the pattern of income and investments. The number of suspicious refund claims selected for scrutiny stood at 20,874 in 2018-19, 11,059 in 2017-18 and 9,856 in 2016-17. The market participants took note of the Minister of State for Micro, Small and Medium Enterprises (MSMEs) Giriraj Singh’s statement that there is need for financial inclusion of small entrepreneurs, underlying that without whom the country cannot develop.

On the global front, European markets were trading in green, as Portugal's inflation eased further in January to its lowest level in nine months. The preliminary data from Statistics Portugal showed that the consumer price inflation slowed to 0.5 percent in January from 0.7 percent in December. However, core inflation, which excludes energy and unprocessed food products, rose slightly to 0.8 percent from 0.6 percent in December. Asian markets ended in green, after US President Donald Trump indicated he could extend a March 1 deadline for raising tariffs on China, if the two sides are near an agreement. US tariffs on $200 billion of Chinese imports are scheduled to increase from 10 to 25 percent if a deal is not struck before then.

Back home, airlines stocks ended mixed, with the Centre for Asia Pacific Aviation’s (CAPA) report stating that current competitive dynamics of the Indian aviation industry are not aligned with a profitable structure. The CAPA in its outlook for Indian aviation market for the next fiscal also pointed out that a clear long-term strategy is not visible for some carriers. Stocks of real estate companies remained in focused, as the Comptroller and Auditor General (CAG) report showed that the Registrar of Companies did not have information about PAN of 95 per cent of the real estate companies. Further, port sector stocks remained also in limelight, amid reports that major ports of the country together handled 578.86 million tonnes (MT) of cargo during April-January 2019, representing a growth of 3.11%.

Finally, the BSE Sensex fell 119.51 points or 0.33% to 36,034.11, while the CNX Nifty was down by 37.75 points or 0.35% to 10,793.65.

The BSE Sensex touched a high and a low of 36,375.80 and 35,962.68, respectively and there were 11 stocks advancing against 20 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost by 0.52%, while Small cap index was down by 0.38%.

The few gaining sectoral indices on the BSE were IT up by 0.67%, TECK up by 0.48% and Realty up by 0.32%, while PSU down by 2.16%, Oil & Gas down by 2.11%, Capital Goods down by 1.76%, Power down by 1.46% and Utilities down by 1.39% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.18%, TCS up by 0.88%, HDFC up by 0.76%, HCL Tech up by 0.68% and Infosys up by 0.61%. On the flip side, ONGC down by 2.84%, SBI down by 2.60%, Power Grid down by 2.51%, Larsen & Toubro down by 2.00% and Yes Bank down by 1.91% were the top losers.

Meanwhile, Minister of State for Finance Shiv Pratap Shukla has said that a Non-performing asset (NPA) worth Rs 7,277.31 crore of public sector banks (PSBs) under Pradhan Mantri Mudra Yojana (PMMY) have turned bad at the end of March 2018. He also said that loans extended under PMMY from inception of the scheme up to March 2018 by all member lending institutions (MLIs) were Rs 5.71 lakh crore. He added that loans under PMMY can be covered under Credit Guarantee Fund for Micro Units (CGFMU).

Shukla has stated that CGFMU has been formed with the purpose of guaranteeing payment against default in micro loans up to Rs 10 lakh extended to eligible borrowers by the MLIs. He also indicated that as on February 01, 2019, over 15.73 crore loans amounting to Rs 7.59 lakh crore have been extended by MLIs under PMMY, since inception of the scheme. He added that almost 73 percent of the loans under PMMY have been extended to women borrowers.

The minister further said the RBI has apprised that the list of suit-filed defaulters of Rs 1 crore and above and the list of suit-filed wilful defaulters of Rs 25 lakh and above are available in public domain on the websites of Credit Information Companies (CICs). Also, RBI has apprised that the list of non-suit filed defaulters of Rs 1 crore and above and non-suit filed wilful defaulters of Rs 25 lakh and above is confidential in nature and is exempted from disclosure under section 45E of the Reserve Bank of India Act, 1934. He also stated that the RBI has further apprised that the list of suit-filed wilful defaulters is compiled on quarterly basis and compilation of the list as on December 31, 2018 is under process.

The CNX Nifty traded in a range of 10,891.65 and 10,772.10. There were 15 stocks advancing against 34 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 4.82%, Indiabulls Housing Finance up by 3.61%, UPL up by 2.30%, Tata Motors up by 2.21% and HCL Tech. up by 0.96%. On the flip side, Eicher Motors down by 4.82%, Indian Oil Corporation down by 3.90%, HPCL down by 3.87%, BPCL down by 3.09% and SBIN down by 3.05% were the top losers.

All European markets were trading in green; UK’s FTSE 100 gained 30.98 points or 0.43% to 7,164.12, France’s CAC added 13.51 points or 0.27% to 5,069.86 and Germany’s DAX was up by 18.57 points or 0.17% to 11,144.65.

Asian markets ended mostly in green on optimism the United States and China might be able to hammer out a deal to resolve their nearly year-long trade dispute. US President Donald Trump said that he could see letting the March 1 deadline for reaching a trade agreement with China slide a little if the two sides were close to a complete deal. Officials in Washington and Beijing had expressed hopes that a new round of talks which began this week would bring them nearer to easing their seven-month trade war. Seoul and Japanese stocks extended gains for a third straight session amid easing trade tensions. On the economic front, the Bank of Japan said that producer prices in Japan were down 0.6 percent on month in January, unchanged from the December reading but well shy of expectations for a decline of 0.2 percent. Export prices were down 2.5 percent on month and 3.3 percent on year, the bank said, while import prices sank 5.0 percent on month and 1.6 percent on year.