Key indices continue to trade lower in afternoon deals

Indian equity benchmarks continued their weak trade in afternoon session, on the back of sustained selling activities by market-participants amid weakness across Asian peers. The mood on the street remained cautious with ICRA’s research report stating that the earnings released by 642 companies in the Indian corporate sector revealed that the revenue growth in the fourth quarter (January-March) of FY18-19 hit a six-quarter low at 10 percent. It added that weak consumer sentiments and softening of commodity prices led to a fall in the revenue growth in the last quarter of FY19. However, further fall got restricted on the back of easing wholesale price index (WPI) inflation data. Wholesale price-based inflation slipped to a 22-month low of 2.45% in May helped by falling prices of food articles, fuel and power items.

On the global front, Asian markets were trading mostly in red, ahead of key Chinese data that could provide more clues on how heavily the US-Sino trade war is weighing on the economy, while oil prices were supported by supply concerns after attacks on tankers in the Gulf of Oman. Back home, the BSE Sensex is currently trading at 39592.22, down by 149.14 points or 0.38% after trading in a range of 39514.72 and 39799.90. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.41%, while Small cap index down by 0.34%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.44%, Metal up by 0.27%, PSU up by 0.18%, Industrials up by 0.09% and Oil & Gas was up by 0.03%, while Realty down by 1.82%, Telecom down by 0.96%, Healthcare down by 0.89%, Bankex down by 0.74% and Auto was down by 0.59% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 0.85%, ONGC up by 0.83%, Tata Steel up by 0.72%, Vedanta up by 0.65% and Power Grid was up by 0.62%. On the flip side, Indusind Bank down by 4.75%, Tata Motors - DVR down by 1.93%, Bharti Airtel down by 1.67%, Kotak Mahindra Bank down by 1.62% and Sun Pharma was down by 1.47% were the top losers.

Meanwhile, the Labour Ministry has said that the government has reduced the total rate of contribution made by workers and employers towards the Employees’ State Insurance (ESI) scheme to 4 percent from the existing 6.5 percent for the first time in over two decades. A move would results in an estimated annual saving of around Rs 5,000 crore for firms. The reduced rates will be effective from July 1, 2019. This would benefit 3.6 crore employees and 12.85 lakh employers.

The ministry has stated that said that the reduced rate of contribution will bring about a substantial relief to workers and facilitate further enrollment of workers under the Employees’ State Insurance (ESIC) scheme and bring more and more workforce into the formal sector. Similarly, reduction in the share of contribution of employers will reduce the financial liability of the establishments leading to improved viability of these establishments. This shall also lead to enhanced Ease of Doing Business. It is also expected that reduction in rate of ESI contribution shall lead to improved compliance of law. 

The ESI Act provides for medical, cash, maternity, disability and dependent benefits to the Insured Persons under the Act. The ESI Act is administered by Employees’ State Insurance Corporation (ESIC). Benefits provided under the ESI Act are funded by the contributions made by the employers and the employees. Under the ESI Act, employers and employees both contribute their shares respectively. The Government of India through Ministry of Labour and Employment decides the rate of contribution under the ESI Act.

The CNX Nifty is currently trading at 11867.80, down by 46.25 points or 0.39% after trading in a range of 11839.35 and 11911.85. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 1.12%, Bharti Infratel up by 1.03%, ONGC up by 1.01%, Tata Steel up by 0.92% and Vedanta was up by 0.86%. On the flip side, Zee Entertainment down by 5.46%, Indusind Bank down by 4.22%, Bharti Airtel down by 1.87%, Kotak Mahindra Bank down by 1.51% and Bajaj Auto was down by 1.33% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 215.01 points or 0.79% to 27,079.70, Taiwan Weighted dropped 36.34 points or 0.34% to 10,524.67, Jakarta Composite lost 22.30 points or 0.36% to 6,250.78, Shanghai Composite declined 30.26 points or 1.04% to 2,880.48, KOSPI fell 7.74 points or 0.37% to 2,095.41 and Straits Times was down by 5.95 points or 0.18% to 3,214.71. On the flip side, Nikkei 225 was up by 84.89 points or 0.4% to 21,116.89.