Weak trade persists; Nifty below 5,700 mark

Indian equities added losses to continue its weak trade in the late afternoon session on back of profit booking in frontline counters and taking cues from European counterparts. The sentiments in the market also turned pessimistic after reports emerged that service sector activity in India expanded at the slowest pace in six months in October, as weakness in the United States and Europe hurt orders and forced firms to hire fewer workers. According to the seasonally adjusted HSBC Business Activity Index, the service sector activity slowed to 53.5 in October, against September's seven-month high of 55.8. Traders were seen piling some position in Health Care, FMCG and Consumer Durables sector while selling was witnessed in Auto, Power and Metal sector.

In the scrip specific development, Kingfisher Airline is locked in lower circuit limit on reports that government will not renew the airline company’s licence to fly if the ailing carrier fails to provide a turnaround plan by December end. Hectic activity was noticed in IT stocks after CLSA in its reports remained cautious on the IT sector as its sees business conditions for customers of Indian IT vendors to remain difficult. The brokerage maintains 'underperform' on Infosys Technologies, HCL Tech, Tech Mahindra and Wipro while downgrading TCS to 'sell'.

On the global front, most Asian markets were trading in red while the European markets were too trading on pessimistic note. The UK economy will contract slightly this year and is likely to grow just over 1% in 2013, the National Institute of Economic and Social Research stated in a quarterly report. The report estimated consumer price inflation to reach 2.7% this year and 2% in 2013. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,700 and 18,800 levels respectively. The market breadth on BSE was negative in the ratio of 1235:1451 while 147 scrips remain unchanged.

The BSE Sensex is currently trading at 18,707.63 down by 47.82 points or 0.25% after trading in a range of 18,794.63 and 18,683.25. There were 10 stocks advancing against 20 declines on the index.

The broader indices were trading under pressure; the BSE Mid cap index was down by 0.24% while, Small cap index was down by 0.10%.

The few gaining sectoral indices on the BSE were, Health Care up by 0.47%, FMCG up by 0.45% and Consumer Durables up by 0.03%. While, Auto down by 0.90%, Power down by 0.66%, Metal down by 0.55%, Realty down by 0.47% and IT down by 0.34% were the few losers on the index.

The top gainers on the Sensex were Dr Reddy’s Lab up by 1.60%, ITC up by 1.00%, BHEL up by 0.96%, Cipla up by 0.86% and Coal India up by 0.36%.

On the flip side, Bajaj Auto was down by 2.45%, Hindalco Industries was down by 2.38%, Bharti Airtel was down by 1.27%, Jindal Steel was down by 1.25% and Tata Steel was down by 1.15% were the top losers on the Sensex.

Meanwhile, amid sluggish revenue collection so far and as Rs 35,000 crore dip in indirect tax collection is anticipated this fiscal, the Ministry of Finance is reported to have started looking into several measures to shore up revenue, including raising tariff rates in both customs and excise for a few items which are below the peak duty rates. The ministry is planning to hike the effective rate to the tariff rate level, as the action does not require Parliament’s approval. The effective rates are duty rates which are scaled down below tariff rates, in view of exempting certain goods in public interest.

The decline in revenue collection during the last financial year marked at Rs 2, 12,167 crore, about 10.37% increase with respect to 2009-10. The centre points out that financial slowdown has largely impacted the revenue collection, while indirect tax mop up growing 15.6% to Rs 2.17 lakh crore in the April-September period against the annual target of 27%. As, the excise duty collection during the period amounted to Rs 80,000 crore, with customs duty mop up about Rs 77,000 crore and the service tax collection notched Rs 60,000 crore during the period.

Amid current sluggish economic condition, Vijay Kelkar committee has opined that the gross revenue collection during 2012-13 might dip by Rs 60,000 crore, even though the centre has envisaged the indirect tax collection to reach at Rs 5.05 lakh crore in the current financial year, nearly 27% climb from 2011-12 target. The industrial output growth during April-August 2012-13 has marked 0.4%, compared to 5.6% same month last year.

Shortfall in revenue realization has concerned the government, albeit it has revised the fiscal deficit target to an ambitious 5.3% as against 5.1% budgeted for the current fiscal. The direct tax collection for the first six months this fiscal has attained only 5.87% increase year-on-year with Rs 2.72 lakh crore, while to attain the target of Rs 5.7 lakh crore this year, a hike of 15% is needed.

The S&P CNX Nifty is currently trading at 5,686.90, down by 10.80 points or 0.19% after trading in a range of 5,709.20 and 5,679.50. There were 18 stocks advancing against 32 declines on the index.

The top gainers of the Nifty were ACC up by 1.64%, Kotak Bank up by 1.58%, Dr Reddy’s Lab up by 1.43%, ITC up by 1.31% and Ambuja Cement up by 1.10%.

On the flip side, Bajaj Auto down by 2.51%, Hindalco Industries down by 2.51%, JP Associates down by 1.92%, IDFC down by 1.66% and DLF down by 1.48% were the major losers on the index.

All the Asian equity indices were trading in the red; Kospi Composite was down by 0.55%, Taiwan Weighted down by 0.35%, Jakarta Composite down by 1.20%, Straits Times was down by 0.26%, KLSE Composite down by 0.34%, Hang Seng was down by 0.47%, Shanghai Composite was down by 0.14% and Nikkei 225 down by 0.48%.

The European markets were trading in red with, France’s CAC 40 lost 0.57%, Germany’s DAX descended 0.65% and the United Kingdom’s FTSE 100 declined 0.66%.