Sensex, Nifty continues negative trade amid volatility

Following a positive opening and subsequent retreat, Indian equity markets erased some early gains but still trading in negative territory in the late morning session on Friday. Markets remained volatile ever since the Dravida Munnetra Kazhagam (DMK) party pulled out of India's ruling coalition, increasing worries about the fate of government's reforms. In currency market, rupee depreciated against greenback on Friday amid increasing dollar demand from oil importers. Meanwhile, investors were expecting inflows from share auction by the government to sell 5.8% stake in state-owned steelmaker Steel Authority of India. On the sectoral front, consumer durables, realty and information technology sectors were trading weak, while select stocks from banking, capital goods and power sectors were up in positive territory. On the global front, most Asian shares were trading lower hovering near their lowest in nearly three months on Friday amid increasing worries about a possible debt default by Cyprus and worsening economic activity in the euro zone. Back home, the market breadth was favoring negative trend; there were 1,694 shares on the losing side against 686 shares on the gaining side while 106 shares remain unchanged.

The BSE Sensex is currently trading at 18,757.97, down by 34.90 points or 0.19% after trading in a range of 18,838.94 and 18,707.30. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.78% and Small cap index was down by 1.16%.

The top gaining sectoral indices on the BSE were Bankex up by 0.40%, Power up by 0.24% and Capital Goods up by 0.21% while, Consumer Durables down by 1.98%, Realty down by 1.00%, Oil & Gas down by 0.84%, PSU down by 0.80% and TECk down by 0.74% were the top losers on the BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.67%, Hero MotoCorp up by 1.97%, Tata Power up by 1.64%, Hindalco up by 1.13% and NTPC up by 1.09%.

On the flip side, Bharti Airtel was down by 2.40%, ONGC was down by 2.08%, Tata Motors was down by 1.32%, SBI was down by 1.25%, Tata Steel was down by 1.21% were the top losers on the Sensex.

Meanwhile, as per the Union Finance Ministry advisor Parthasarathi Shome, there is no need to move from the current value added tax (VAT) regime prevailing in states to the proposed unified GST regime unless the distortions in indirect taxation for industry and commerce are reduced. While, addressing an event with industry on the GST, Shome said ‘what we need to see at the bottom-line is whether the new tax is going to become seamless for production decision-making, investment decision-making, getting input tax credit in the right manner, minimising wrong accumulation of input tax credit, facilitating inter-State trade and getting refunds from one State to the other’.

By adding further, he said that if the distortions in the indirect taxes are smoothened out then the decision-making in productive sector would become better and as a result, production would increase and eventually helping the GDP to rise. The onus would be on the productive sector and the private sector to analyse the impact of the GST in day-to-day decision-making issues and then making an investment despite having an indirect tax.

Dr. Shome said that the GST implementation is a step in the positive direction and more dialogues are expected between the Centre and States in the coming months on some issues related to Goods and Services Tax (GST). Shome did not fix a timeline for introduction of GST. 

Regarding the Direct Taxes Code (DTC), Shome said the proposed new legislation is a fundamental churning of the income tax law and it is interested to see whether it will able to come up with a real informed income tax or not. As part of structural reforms, there is some exercise going on reassessment of large taxpayer units to see what more improvements could be done in GST format. “We cannot just stick with GST and DTC but all kinds of structural administrative reforms at the field level are important because they are the real pillars supporting the overall major fundamental changes like GST and DTC” he said.

The CNX Nifty is currently trading at 5,651.00 down by 7.75 points or 0.14% after trading in a range of 5,676.80 and 5,641.00. There were 24 stocks advancing against 26 declines on the index.

The top gainers of the Nifty were IDFC up by 3.00%, Bajaj Auto up by 2.71%, Bank of Baroda up by 2.36%, Hero MotoCorp up by 2.16% and Ambuja Cement up by 2.04%.

On the flip side, Ranbaxy down by 3.15%, DLF down by 2.51%, Bharti Airtel down by 2.35%, ONGC down by 2.01% and Tata Steel down by 1.43% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite down by 0.05%, Hang Seng declined by 0.62%, Jakarta Composite decreased 0.13%, Nikkei 225 was down by 2.35%, Straits Times declined 0.07%, KOSPI Composite fell by 0.11% and Taiwan Weighted was down by 0.20%.

On the flip side, KLSE Composite increased 0.10% was the only gainer.