Indian equity markets add losses; Nifty below 5,900 mark

Indian equity markets added losses to continue its weak trade hovering near the lowest point of the day in the late afternoon session on account of selling in frontline counters. Investors have started eyeing March monetary policy on hopes that the Reserve Bank of India (RBI) may switch its stance to revive growth after inflation fell to its lowest level in more than three years in January. Traders were seen piling some position in FMCG sector while selling was witnessed in Oil & Gas, Realty and Metal sector. PSU oil marketing companies, viz. BPCL, HPCL and IOC, were trading in red even as reports suggest of petrol and diesel prices to go higher over the weekend. Hectic activity has been noticed in sugar stocks which were seen trading mostly in green on reports that decision on partial sugar decontrol will be taken within 15 days. On the global front, the Asian markets were trading on a mixed note while the European markets were too trading mixed. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,900 and 19,400 levels respectively. The market breadth on BSE was negative in the ratio of 870:1816 while 119 scrips remain unchanged.

The BSE Sensex is currently trading at 19,393.80, down by 103.38 points or 0.53% after trading in a range of 19,487.24 and 19,381.82. There were 9 stocks advancing against 21 declines on the index.

The broader indices were trading in red; the BSE Mid cap and Small cap indices were trading lower by 0.60% and 1.23% respectively.

The top losers on sectoral front on the BSE were, Oil & Gas down by 1.85%, Realty down by 1.64%, Metal down by 0.93%, Consumer Durables down by 0.89% and Health Care down by 0.83% while, Fast Moving Consumer Goods (FMCG) up by 0.18% remained the lone gainer on the index.

The top gainers on the Sensex were Tata Power up by 0.95%, NTPC up by 0.84%, Sun Pharma up by 0.79%, Wipro up by 0.40% and ITC up by 0.22%.

On the flip side, Dr Reddy’s Lab down by 3.10%, Reliance Industries down by 2.25%, Tata Steel down by 2.08%, Bajaj Auto down by 1.51% and Jindal Steel down by 1.40% were the top losers on the Sensex.

Meanwhile, in the forthcoming union budget, the sates are likely to get around Rs 12,000 crore as compensation for losses they have incurred on reduction in central sales tax (CST) rate. However, the Centre and States are yet to agree on the mechanism. This move by the government could be seen as another positive development for the introduction of Goods and Services Tax (GST), which could send a clear signal to the states that centre will address their concerns.

During the meeting between Union Finance Minister P Chidambaram and the Empowered Committee of State Finance Ministers, Chidambaram assured that he will make a provision towards compensation for 2010-11. However, finance minister did not specify the quantum of provision in the budget. Approximately Rs 34,000 crore is to be given, which will compensate CST losses of states for three years beginning 2010-11. It includes 100 per cent compensation for 2010-11, 75 per cent for 2011-12 and 50 per cent for 2012-13.

As per Chidambaram, the GST legislation could be brought in by December this year and if the GST implementation takes a longer time then the government will revisit the CST compensation issue again or look at reverting to original CST rate of 4 per cent. While, on the contours of the new tax, Chidambaram is keen to unveil some steps in indirect taxes structure in the coming budget and also give a time frame on its roll-out.

CST is levied on inter-State trade. Since there is no final date for the introduction of GST, states are now seeking clarity on CST compensation for 2013-14. Some States sought 100 per cent compensation, while some others wanted a rise in CST to four per cent. Earlier, the centre and states had agreed to phase out CST from April 2007 over a period of three years. Accordingly, the CST rate was reduced in two phases to two per cent from four per cent, while the reduction plan was put on hold after the financial crisis of 2008.  

The S&P CNX Nifty is currently trading at 5,860.25 down by 36.70 points or 0.62% after trading in a range of 5,889.45 and 5,853.90. There were 10 stocks advancing against 40 declines on the index.

The top gainers of the Nifty were Tata Power up by 0.89%, NTPC up by 0.87%, Sun Pharmaceuticals up by 0.77%, Wipro up by 0.47% and Kotak Bank up by 0.40%.

On the flip side, Cairn down by 4.51%, DLF down by 4.18%, BPCL down by 3.72%, Dr Reddy's Laboratories down by 2.90% and Reliance Industries down by 2.38%, were the major losers on the index.

Asian equity indices were trading mixed; KLSE Composite dipped 0.17%, Nikkei 225 tumbled 1.18% and Straits Times was down by 0.40%.

On the flip side, Hang Seng rose 0.13%, Jakarta Composite rose 0.43% and KOSPI Composite was up by 0.08%. Markets in China and Taiwan remained shut for the Lunar New Year holiday.

The European markets were trading on a mixed note; France’s CAC 40 added 0.01%, Germany’s DAX lost 0.40% and United Kingdom’s FTSE 100 edged lower by 0.13%.