Weak trade persist; Auto, Realty drags

Indian equity markets pared losses but continued its weak trade in red in the late afternoon session. The markets trimmed losses after government released figures for fiscal spending and receipts, showing fiscal deficit for April-February at Rs 5.07 lakh crore, or 97.4% of the target for the current financial year. Finance Minister P Chidambaram had set a target for fiscal deficit for FY13 at 5.3% of GDP. Investors are however cautious and eyeing release of nation’s current-account balance for the three months ended December 31, which is widely expected to come at an all time high of 6.4% against 5.4% in the July-September period. Traders were seen piling some position in Consumer Durables, Metal and PSU sector stocks while selling was witnessed in Auto and Realty sector stock. In scrip specific development, FMCG major Hindustan Unilever (HUL) was trading in red after CLSA downgraded the company to sell from underperform following a sharp run-up in the stock price recently. IDBI Bank was trading in red after touching 52-week low on reports that the bank is eyeing sale in as many as 100 unlisted companies in April. Tech Mahindra and Mahindra Satyam were trading in green after Goldman Sachs initiated coverage of both companies with buy ratings.

On the global front, most of the Asian markets were trading in red while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,650 and 18,700 levels respectively. The market breadth on BSE was positive in the ratio of 1332:1241 while 135 scrips remain unchanged.

The BSE Sensex is currently trading at 18,684.86, down by 19.67 points or 0.11% after trading in a range of 18,708.22 and 18,568.43. There were 13 stocks advancing against 17 declines on the index.

The broader indices were trading in green; the BSE Mid cap index and Small cap indices were trading higher by 0.62% and 0.51% respectively.

The top gaining sectoral indices on the BSE were Consumer Durable up by 2.41%, Metal up by 1.33%, PSU up 1.24%, Health Care up by 0.67% and Capital Goods up by 0.64%, while Auto down by 1.33% and Realty down by 0.58% were the only losers on the BSE.

The top gainers on the Sensex were Gail India up by 3.90%, Hindalco Industries up by 3.47%, Sterlite Industries up by 3.40%, ONGC up by 2.81% and Coal India up by 2.04%.

On the flip side, Jindal Steel down by 3.17%, Hero MotoCorp down by 2.89%, Tata Motors was down by 2.38% Bharti Airtel was down by 1.78% and Mahindra & Mahindra was down by 1.44% were the top losers on the Sensex.

Meanwhile, real estate developers are likely to move the finance ministry against a proposed tax on property sales, as they feel that the prevailing economic slowdown is impacting the sector’s growth. The government has proposed a new Section 43CA in the I-T Act, in which the developers have to pay the tax on the basis of assessed valuation of a property at the time of transfer, instead of levying tax on the basis of sale price, fixed when the project was initiated.

As per the new Section 43CA in the I-T Act, if the consideration for the transfer of an asset (other than capital asset), being land or building or both, is less than the stamp duty value, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration for the purposes of computing income under the head profits and gains of business or profession.

The real estate developers are of the view that the proposed tax is presumptive and questioned the constitutional validity. The government’s recent move may put buyers in a spot and reduce property sale in a slowing economy, which may impact the government's plan to revive the real estate sector that is linked to a number of industries like steel and cement and create jobs for thousands of construction workers.

The housing prices in India have been escalating over the period of time. Pursuant to which the government planned to raise additional resources by way of this move. The new tax will come into effect from April 1, 2014.

The CNX Nifty is currently trading at 5,632.85, down by 8.75 points or 0.16% after trading in a range of 5,647.80 and 5,604.85. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were GAIL up by 4.12%, Hindalco up by 3.51%, Sesa Goa up by 3.46%, ONGC up by 2.82% and HCL Tech up by 2.53%.

On the flip side, Jindal Steel down by 3.24%, Hero MotoCorp down by 2.93%, DLF down by 2.69%, Tata Motors down by 2.59% and Cairn India down by 2.47% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite tumbled 2.82%, Hang Seng declined 0.74%, Jakarta Composite dipped 0.33%, Nikkei 225 dropped 1.26%, and Taiwan Weighted was down by 0.35%.

On the flip side, KLSE Composite was up by 0.29%, Straits Times increased by 0.16% and KOSPI Composite was trading flat with positive bias.

The European markets were trading in green; France’s CAC 40 added 0.14%, Germany’s DAX ascended 0.33% and United Kingdom’s FTSE 100 jumped 0.24%.