Benchmarks trade in red in early deals

Indian equity benchmarks made pessimistic start and are trading with cut of over half a percent each in early deals on Monday after oil prices jumped to their highest level in nearly four months following an attack on Saudi Arabia's oil facilities on Saturday. Some cautiousness crept in as the commerce ministry’s data showed that India's exports dropped by 6.05 per cent to $26.13 billion in August compared to the year-ago month. Imports too declined by 13.45 per cent to $39.58 billion, narrowing trade deficit to $13.45 billion in August. Traders are eyeing the inflation data based on wholesale price index (WPI) slated to be announced later in the day. Though, investors failed to take any sense of relief as finance minister Nirmala Sitharaman announced reforms to boost the export and housing sector in the country. She announced a slew of measures including a new attractive scheme to refund the duties and taxes on exports that will replace all existing schemes in a bid to stimulate exports and the economy. The revenue forgone is projected at upto Rs 50,000 crore. Traders also overlooked a report that foreign portfolio investors (FPIs) turned net buyers in the first half of September, pumping in Rs 1,841 crore into the capital markets, after remaining sellers for the previous two months.

Global cues also remained sluggish as Asian markets were trading mixed amid fears about a surge in crude oil prices and a slowdown in global economic growth after multiple drone attacks over the weekend on Saudi Arabia's crude oil production facilities. Concerns over the ongoing economic slowdown and weak industrial output data from China also kept investors. Meanwhile, the Japanese market is closed for a holiday.

Back home, oil marketing companies came under pressure amid surge in oil prices. In scrip specific development, Mahindra & Mahindra (M&M) came under pressure amid report that it is planning to suspend production at its automotive manufacturing plants in the ongoing quarter, ranging between 8-17 days, in order to adjust production with sales requirements. However, Bharat Electronics rose after the company signed the contract with Ministry of Defence, Government of India on 13 September 2019 for procurement of Seven Squadrons of Akash Missile System for Indian Air Force.

The BSE Sensex is currently trading at 37152.57, down by 232.42 points or 0.62% after trading in a range of 37111.29 and 37242.13. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.48%, while Small cap index was down by 0.20%.

The few gaining sectoral indices on the BSE were IT up by 0.90%, TECK up by 0.67%, FMCG up by 0.14% and Healthcare was up by 0.08%, while Energy down by 2.20%, Oil & Gas down by 1.76%, PSU down by 1.03%, Bankex down by 0.91% and Auto was down by 0.88% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.21%, TCS up by 1.33%, Tech Mahindra up by 0.87%, Infosys up by 0.83% and Hindustan Unilever up by 0.61%. On the flip side, Tata Motors - DVR down by 3.02%, Yes Bank down by 2.77%, Asian Paints down by 2.66%, Reliance Industries down by 2.45% and Tata Motors down by 2.08% were the top losers.

Meanwhile, with an aim to boost dwindling outward shipments, the government has relaxed Priority Sector Lending (PSL) norms to provide additional export credit of up to Rs 68,000 crore and announced a Rs 50,000 crore scheme to reimburse taxes and duties paid by exporters. In addition, it said the insurance cover under the Export Credit Insurance Scheme (ECIS) has been enhanced, which will provide banks more comfort to give loans to exporters, especially those in the MSME sector. The expanded ECIS will offer higher insurance cover to banks lending working capital for exports, and premium incidence for MSMEs will be moderated suitably. The government expects the initiative to cost about Rs 1,700 crore per annum.

Finance Minister Nirmala Sitharaman has said exporters need handholding and the steps will give them additional advantage at a time when the rupee has depreciated against the US dollar. She said scheme for Remission of Duties or Taxes on Export Product (RoDTEP) will replace MEIS (Merchandise Exports from India Scheme) and expanded to all segments in addition to textiles. The RoDTEP scheme will be implemented from January 01, 2020.

Textiles and all other sectors which currently enjoy incentives up to 2% over MEIS will transit into RoDTEP from January 01. She added that in effect, RoDTEP will more than adequately incentivise exporters than existing schemes put together. The move assumes significance as MEIS was not in compliance with global trade rules. The US has already filed a complaint against this and similar other export promotion schemes being given by India in the WTO. Under the World Trade Organisation (WTO) rules, certain duties like state taxes on power, oil, water, and education cess are allowed to be refunded.

Sitharaman has announced another important measure so that exporters can exploit duty benefits under free trade agreements (FTAs) India has entered into with different countries. For the purpose, FTA Utilisation Mission, headed by a senior officer in the Department of Commerce, will be set up. The government also said there would effective monitoring of export financing by the Department of Commerce, and a fully automated electronic refund route will be set up for input tax credit (ITC) in GST to help exporters.

The CNX Nifty is currently trading at 10992.30, down by 83.60 points or 0.75% after trading in a range of 10988.80 and 11026.00. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.13%, Indiabulls Housing Finance up by 1.62%, TCS up by 1.38%, GAIL India up by 1.08% and Tech Mahindra up by 1.00%. On the flip side, BPCL down by 5.67%, Indian Oil Corporation down by 3.54%, Yes Bank down by 2.70%, Asian Paints down by 2.65% and Reliance Industries down by 2.53% were the top losers.

Asian market were trading mixed; Taiwan Weighted strengthened 67.01 points or 0.62% to 10,894.56, KOSPI rose 8.87 points or 0.43% to 2,058.07 and Shanghai Composite gained 3.17 points or 0.1% to 3,034.41. On the flip side, Straits Times trembled 1.74 points or 0.05% to 3,209.75, Jakarta Composite lost 103.65 points or 1.64% to 6,231.19 and Hang Seng was down by 273.53 points or 1% to 27,079.16.