Markets continue to trade in red on profit booking

Following a lower opening, Indian equity markets continue languishing in negative territory in the late morning session on Monday, amid sustained selling at several counters. The Sensex lost 175 points, while Nifty fell 51 points. Meanwhile, investors remained cautious ahead of the RBI's policy review on Tuesday where it is widely expected to cut rates by at least 25 basis points. In currency markets, rupee depreciated against greenback on the back of increased dollar demand from importers. On sectoral front, Sugar stocks bucking the trend were going northward, on reports that government may consider partial sugar decontrol as early as today. However, oil and gas stocks were on seller's list as the companies did not hiked diesel prices on Friday, contrary to expectations of a monthly hike. Metal stocks were among the biggest losers. PSU, bank, realty and automobile stocks too were mostly down with notable losses, while only FMCG stocks were trading higher.

On the global front, Asian markets were trading in red on Monday and the yen climbed as euro zone’s fears returned on news that Cyprus was planning to tax bank depositors as part of a controversial bailout. Back home, the market breadth was favoring negative trend; there were 1542 shares on the losing side against 791 shares on the gaining side while 115 shares remain unchanged.

The BSE Sensex is currently trading at 19251.61, down by 175.95 points or 0.91% after trading in a range of 19317.88 and 19232.23. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.62% and Small cap index was down by 0.78%.

The only gaining sectoral index on the BSE was, FMCG up by 0.19%, while Metal down by 2.47%, PSU down by 1.71%, Realty down by 1.41%, Auto down by 1.38% and Bankex down by 1.36% were the top losers on the BSE.

The few gainers on the Sensex were Cipla up by 1.31%, Hindustan Unilever up by 1.30%, Sun Pharma up by 0.49% and L&T up by 0.10%.

On the flip side, Coal India was down by 5.56%, Sterlite Industries was down by 2.85%,  Tata Power was down by 2.75%, ICICI Bank was down by 2.75% and GAIL India  down by 2.68% were the top losers on the Sensex.

Meanwhile, the Centre for Monitoring Indian Economy (CMIE), in its recent report on Indian economy has said that the government’s move to provide investment allowance of 15 per cent to manufacturing companies will give the much-needed push to the industry as well as the economy. 

In the Union Budget, 2013-14, the finance minister has proposed the allowance of 15 per cent to manufacturing companies that invest more than Rs 100 crore in plant and machinery between April 1, 2013 to March 31, 2015. The growth in output of manufacturing sector declined from 9 per cent in FY11 to 3 per cent in FY12 and has now gone down further to a mere 0.9 per cent in the first eleven months of this fiscal.

The report has further stated that the investment demand in India has been declining from the last two years, which is reflected in the slowing growth of gross fixed capital formation (GFCF), fall in production of capital goods, a dramatic fall in announcement of new projects and a consequent slowdown in bank credit. ‘As implementation of manufacturing projects gathers pace, the demand for steel, cement, machinery and other construction-related items is expected to pick up. Also, the process of implementation of these projects will generate fresh employment, which in turn will boost consumption demand. Around 250 manufacturing projects worth Rs 3.1 lakh crore, with investment of over Rs 100 crore each, are scheduled to get completed in FY14, while the other 158 projects worth Rs 1.8 lakh crore are expected to be completed by FY15.

It also pointed out that those projects which have already incurred expenditure and are scheduled for completion in FY14 and FY15 may not be able to avail of this benefit. These are some projects, which are scheduled for completion in FY14, have already incurred two-third of their expenditure, while those expected to complete in 2014-15 must have incurred at least half of their expenditure by now. Hence, projects with total investment of less than Rs 300 crore may not qualify for the investment allowance in 2013-14 and those with total investment of less than Rs 200 crore may not qualify for the allowance in FY15.

The CNX Nifty is currently trading at 5,821.75 down by 50.85 points or 0.87% after trading in a range of 5,842.45 and 5,814.35. There were 9 stocks advancing against 41 declines on the index.

The top gainers of the Nifty were Cipla up by 1.34%, Hindustan Unilever up by 1.18%, HCL Tech up by 1.02%, Lupin up by 0.92% and Cairn up by 0.75%.

On the flip side, Coal India down by 5.61%, Maruti Suzuki down by 2.96%, ICICI Bank down by 2.77%, Ambuja Cement down by 2.61% and Tata Power down by 2.61%, were the major losers on the index.

All Asian equity indices were trading in the red; Shanghai Composite declined 1.21%, Hang Seng tumbled down 2.14%, Jakarta Composite slipped 0.08%, KLSE Composite dropped 0.39%, Nikkei 225 crumbled 2.59%, Straits Times contracted by 0.86%, KOSPI Composite decreased 0.86% and Taiwan Weighted was down by 1.47%.