Markets turn negative in late afternoon session

Indian benchmarks erased all the gains to turn negative in late afternoon session. Both Sensex and Nifty were trading below their crucial 52,100 and 15,650 marks, respectively.  Selling was witnessed in Capital Goods, Telecom and Auto sector stocks. Sentiment on the street weakened after India Ratings and Research (Ind-Ra) in its latest report has warned that the burden of taxation, particularly indirect taxes, on households has worsened lately and the excise hike has led to retail prices of petrol and diesel hitting record levels and impacting household budgets both directly and indirectly. Traders overlooked report that India's exports grew by 52.39 per cent to USD 7.71 billion during the first week of this month on account of healthy growth in shipments in sectors including engineering, gems and jewellery and petroleum products. Sector wise, insurance sector remained in focus, as ICRA Ratings in a report said that the general insurance industry is likely to clock a 7-9 per cent growth in gross direct premium income (GDPI) in the financial year 2021-22.

On the global front, Asian markets were trading mostly in red with focus firmly on the release of US inflation data later in the week, which could have a huge bearing on the Federal Reserve's plans for monetary policy, while the European Central Bank's latest meeting will also be keenly watched. European markets were trading lower with investors holding off on taking big bets ahead of a policy decision from the European Central Bank and U.S. inflation reading later this week. 

The BSE Sensex is currently trading at 52,015.77, down by 259.8 points or 0.50% after trading in a range of 51858.21 and 52446.92. There were 10 stocks advancing against 19 stocks declining on the index, while 1 stock remains unchanged.

The broader indices were trading in red; the BSE Mid cap index declined 0.08%, while Small cap index was down by 0.10%.

The top gaining sectoral indices on the BSE were Utilities up by 1.58%, Power up by 1.44%, PSU up by 0.82%, Consumer Durables up by 0.35% and Metal was up by 0.07%, while Capital Goods down by 0.89%, Telecom down by 0.83%, Auto down by 0.81%, Energy down by 0.77% and Industrials was down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 3.63%, NTPC up by 2.50%, ONGC up by 1.84%, HCL Tech up by 0.86% and Titan Company up by 0.39%. On the flip side, Larsen & Toubro down by 1.69%, Maruti Suzuki down by 1.28%, Bajaj Finance down by 1.21%, ICICI Bank down by 1.14% and Axis Bank down by 1.05% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has warned that the burden of taxation, particularly indirect taxes, on households has worsened lately and the excise hike has led to retail prices of petrol and diesel hitting record levels and impacting household budgets both directly and indirectly. It noted that unlike the corporates who are enjoying a rationalisation in income tax, no such move has been introduced for the households who continue paying elevated taxes.

According to the report, the share of total tax burden on households has risen to 75 percent from 60 percent in FY10, and this was largely due to the combination of a higher excise duty on fuel and a reduction in corporate tax. It said corporation tax has been rationalised to augment job creation and attracting direct foreign investments, and also backed the move calling it a legitimate change because it made exports uncompetitive.

The report further said indirect taxes are not progressive by nature and lead to a disproportionately higher welfare loss to households that are at the lower end of the pyramid. It also stressed that unlike the corporates who benefitted through tax rationalization, no such measure has been given to the end-consumers. It said consumption had been going down before the COVID hit us as well, adding that the job or salary losses, coupled with increased expenditure for COVID illness came as a double whammy for households during the pandemic.

The CNX Nifty is currently trading at 15,642.65, down by 97.45 points or 0.62% after trading in a range of 15608.40 and 15800.45. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 4.38%, NTPC up by 2.41%, SBI Life up by 2.03%, Coal India up by 1.57% and ONGC up by 1.24%. On the flip side, Adani Ports down by 1.66%, Larsen & Toubro down by 1.43%, Shree Cement down by 1.40%, Bajaj Finance down by 1.38% and Maruti Suzuki down by 1.28% were the top losers.

Asian markets were trading mostly in red, Taiwan Weighted dropped 109.99 points or 0.64% to 16,966.22, Nikkei 225 slipped 102.76 points or 0.35% to 28,860.80, Hang Seng decreased 38.75 points or 0.13% to 28,742.63, KOSPI fell 31.65 points or 0.97% to 3,216.18 and Straits Times was down by 10.43 points or 0.33% to 3,156.71. On the flip side, Shanghai Composite gained 11.29 points or 0.32% to 3,591.40 and Jakarta Composite was up by 48.11 points or 0.8% to 6,047.48.

European markets were trading lower, UK’s FTSE 100 decreased 37.99 points or 0.54% to 7,057.10, France’s CAC decreased 0.92 points or 0.01% to 6,550.09 and Germany’s DAX was down by 29.31 points or 0.19% to 15,611.29.