Bourses trade lower in late afternoon session

In a volatile trading session, Indian equity markets continued to trade lower in late afternoon session ahead of Union Budget. Traders were cautious as GDP of India is expected to grow at 6.5 to 7 per cent in FY24-25, according to the Economic Survey 2023-24 tabled by Union Finance Minister in the Parliament. This is lower than the economic growth rate of 8.2 per cent estimated for the previous financial year. However, the broader indices, the BSE Mid cap index and Small cap index traded higher. On the global front, Asian markets were trading mostly in red after President Joe Biden exited the 2024 race. The downbeat start to the week followed losses Friday on Wall Street as businesses around the world scrambled to contain disruptions from a massive technology outage. However, European markets were trading higher rebounding from steep losses in the previous session, while investors assessed the implications of President Joe Biden's exit from the U.S. presidential election race.

The BSE Sensex is currently trading at 80511.92, down by 92.73 points or 0.12% after trading in a range of 80100.65 and 80800.92. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.29%, while Small cap index was up by 0.72%.

The top gaining sectoral indices on the BSE were Power up by 1.63%, Utilities up by 1.41%, PSU up by 1.37%, Basic Materials up by 1.37% and Capital Goods was up by 1.35%, while Energy down by 0.60%, Realty down by 0.43%, Bankex down by 0.30%, IT down by 0.20% and Oil & Gas was down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.69%, Ultratech Cement up by 2.43%, Mahindra & Mahindra up by 2.05%, HDFC Bank up by 1.98% and Power Grid up by 1.85%. On the flip side, Kotak Mahindra Bank down by 3.76%, Reliance Industries down by 3.33%, ITC down by 1.33%, SBI down by 1.16% and HCL Tech. down by 0.89% were the top losers.

Meanwhile, the Global Trade Research Initiative (GTRI) in its latest report has said that issues like complex procedures of the Director General of Foreign Trade (DGFT) and customs, import restrictions and domestic vested interests are holding up the export growth of the Indian garment sector. At the root of the exporters' problem is difficulty in obtaining quality raw fabric, particularly synthetic fabric. Unlike in Bangladesh and Vietnam, where exporters easily access quality imported fabrics, Indian exporters struggle daily. 

The report stated that the imposition of mandatory quality norms on raw materials like polyester and viscose staple fibres is complicating imports as the BIS (Bureau of Indian Standards) slowly registers foreign suppliers, and this delay compels exporters to buy from domestic monopolies at higher prices. It alleged that the procedures of DGFT and customs are archaic, and it requires exporters to meticulously account for every square centimetre of fabric, buttons, and zippers used. A complex maze discourages even the most enterprising exporters. So, there is an urgent need for a comprehensive overhaul and to modify the production-linked incentive (PLI) scheme for the textiles sector. On the procedures, it said that these issues create serious problems for industry players, and that needs to be resolved.

GTRI also said firms obtain advance authorisations from DGFT for importing duty-free inputs for export production, and the directorate currently requires that unutilised authorisations surrendered to them must be accompanied by a non-utilisation letter/certificate from Customs. This requirement increases transaction costs and effort for the authorisation holder, and Customs is often reluctant to issue such letters, causing delays. Further, the DGFT system allows up to 500 characters to describe export items in an authorisation, but the Customs Shipping Bill only allows 120 characters, so this discrepancy leads to incomplete descriptions being visible to DGFT. As a result, DGFT asks exporters to obtain attested invoices or shipping bills with full descriptions from customs, which customs does not entertain.

The CNX Nifty is currently trading at 24509.30, down by 21.60 points or 0.09% after trading in a range of 24362.30 and 24595.20. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.66%, Ultratech Cement up by 2.46%, Grasim Industries up by 2.43%, Mahindra & Mahindra up by 2.20% and HDFC Bank up by 1.96%. On the flip side, Wipro down by 8.97%, Kotak Mahindra Bank down by 3.72%, Reliance Industries down by 3.39%, ITC down by 1.44% and SBI Life down by 1.32% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted lost 612.27 points or 2.75% to 22,256.99, Nikkei 225 slipped 464.79 points or 1.17% to 39,599.00, KOSPI dropped 31.95 points or 1.16% to 2,763.51, Shanghai Composite weakened 18.09 points or 0.61% to 2,964.22 and Straits Times was down by 1.66 points or 0.05% to 3,445.90. On the flip side, Jakarta Composite gained 30.72 points or 0.42% to 7,325.22 and Hang Seng was up by 218.2 points or 1.24% to 17,635.88. 

European markets were trading higher; UK’s FTSE 100 increased 44.25 points or 0.54% to 8,199.97, France’s CAC rose 90.92 points or 1.21% to 7,625.44 and Germany’s DAX was up by 191.95 points or 1.06% to 18,363.88.