Weak trade persists on Dalal Street

Sluggish trade continued on the Dalal Street in late afternoon session, on account of weak opening of European markets. In line with the larger peers, the broader indices were too lingering under pressure. Anxiety remained among traders, amid SBI report stating that the contemporary issue for macroeconomists is to exclusively focus on assuring adequate aggregate demand as the current slowdown cannot be tackled by monetary policy in isolation. 

On the global front, European markets were trading in red, as Finland's economic growth slowed in July. The data from Statistics Finland revealed that output of the national economy grew 1.7 percent year-on-year in July, slower than the revised 2.5 percent increase logged in June. Asian markets were also trading mostly in red.

Back home, realty stocks were in watch, as India's apex realtors group CREDAI said it is disappointed with the government's measures to support the sector, as it did not address the key demands such as tax rebate and lower interest rate for home buyers and developers.

The BSE Sensex is currently trading at 37072.65, down by 312.34 points or 0.84% after trading in a range of 37028.94 and 37302.06. There were 5 stocks advancing against 26 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.42%, while Small cap index was up by 0.46%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.73%, FMCG up by 0.45% and Healthcare up by 0.15%, while Oil & Gas down by 1.86%, Energy down by 1.57%, PSU down by 1.54%, Auto down by 1.14% and Metal down by 0.93% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.09%, Tech Mahindra up by 1.06%, Hindustan Unilever up by 0.62%, Sun Pharma up by 0.50% and HCL Tech. up by 0.20%. On the flip side, Mahindra & Mahindra down by 2.66%, SBI down by 2.30%, HDFC down by 2.04%, Yes Bank down by 1.97% and Asian Paints down by 1.87% 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 10982.80, down by 93.10 points or 0.84% after trading in a range of 10968.20 and 11052.70. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Titan up by 1.58%, Tech Mahindra up by 1.06%, ONGC up by 1.05%, Britannia up by 0.87% and Sun Pharma up by 0.53%. On the flip side, BPCL down by 6.87%, Mahindra & Mahindra down by 2.59%, SBI down by 2.38%, UPL down by 2.21% and Tata Steel down by 2.06% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 322.30 points or 1.18% to 27,030.39, Jakarta Composite lost 126.10 points or 1.99% to 6,208.74, Shanghai Composite declined 7.06 points or 0.23% to 3,024.18 and Straits Times trembled 0.48 points or 0.01% to 3,211.01. On the flip side, KOSPI rose 13.02 points or 0.64% to 2,062.22 and Taiwan Weighted strengthened 70.58 points or 0.65% to 10,898.13.

All European markets were trading in red; FTSE lost 10.86 points or 0.15% to 7,356.60, CAC fell 34.27 points or 0.61% to 5,621.19 and DAX was down by 95.83 points or 0.77% to 12,372.70.