Markets continue to languish in red; Nifty hovering near 5,600 level

Indian equity markets continued languishing in red in the late morning session on Monday, on the back of sustained selling at several front line counters. The Sensex dropped down by 158 points, while Nifty index of the National Stock Exchange was down by 55.60 points. Investors were trading cautiously ahead of current account deficit data due this week. Meanwhile, the government's decision to curb gold imports is likely to affect the sector's growth, as traders are going on a selling spree in the jewellery section as well. In currency market, rupee resumed its weakening streak on Monday, hovering near a record low hit last week as worries about China's economic and financial stability hit global risk assets. On the sectoral front, realty stocks were taking a fairly severe beating, while consumer durables, capital goods, PSU, power and automobile stocks were among the other prominent losers.

On the global front, Asian stock markets were trading notably lower on Monday as investors mostly indulging in selling amid increasing worries about the near-term outlook for the global economy following recent weak data out of China. Back home, the market breadth was favoring negative trend; there were 1,292 shares on the losing side against 544 shares on the gaining side, while 111 shares remain unchanged.

The BSE Sensex is currently trading at 18,616.17, down by 158.07 points or 0.84% after trading in a range of 18,714.06 and 18,582.55. There were 9 stocks advancing against 21 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.90% and Small cap index was down by 1.24%.

The top losing sectoral indices on the BSE were, Realty down by 4.08%, Consumer Durables down by 3.01%, Capital Goods down by 2.07%, PSU down by 1.94%, and Auto down by 1.47%, while there were no gainers on the BSE sectoral space.

The top gainers on the Sensex were Tata Power up by 1.10%, Hindalco Industries up by 1.01%, Tata Steel up by 0.87%, ITC up by 0.67% and Sun Pharma up by 0.25%.

On the flip side, Gail India was down by 4.25%, Mahindra & Mahindra was down by 2.60%, BHEL was down by 2.55%, Bajaj Auto was down by 2.49% and SBI was down by 2.33% were the top losers on the Sensex.

Meanwhile, in an attempt to increase jewellery exports, the finance ministry hiked the duty drawback rate on gold jewellery by 72 percent to Rs 173.70 per gram of net gold content in jewellery from Rs 100.70 per gram earlier. Duty drawback is the reimbursement of customs duty and the recent step will also provide relief to the jewellers as they were protesting the government’s move to raise customs duty on gold imports to eight per cent.

Further, under the duty drawback scheme, the revenue department refunds the duty incidence such as excise, customs, and service tax on the imported inputs used in the manufacture of exported goods. Reacting to the drawback duty hike, the Federation of India Export Organisations (FIEO) president Rafeeque Ahmed said that recent move along with the recent rupee depreciation would add to the competitiveness of jewellery exports and expressed confidence that gems and jewellery exports will bounce back this year.

However, the government is concerned over the rising gold import, which touched 162 tonnes mark in May, while in April, it was around 100-120 tonnes, higher than the average monthly import level of 70-80 tonnes. High gold import has also become main reason for widening current account deficit (CAD), which broadened to a record high of 6.7 percent in the third quarter of FY13. 

The CNX Nifty is currently trading at 5,612.05 down by 55.60 points or 0.98% after trading in a range of 5,640.00 and 5,602.25. There were 11 stocks advancing against 39 declines on the index.

The top gainers of the Nifty were Lupin up by 0.96%, ITC up by 0.82%, Tata Steel up by 0.66%, Tata Power up by 0.61% and Hindalco Industries up by 0.43%.

On the flip side, JP Associate down by 8.33%, DLF down by 5.91%, Ranbaxy down by 4.71%, Kotak Bank down by 4.04%, and GAIL down by 3.78% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite tumbled 5.03%, Hang Seng declined 2.20%, Jakarta Composite slipped 0.32%, KLSE Composite dropped 0.55%, Nikkei 225 contracted 1.10%, Straits Times decreased 1.09%, KOSPI Composite dropped 1.02% and Taiwan Weighted was down by 0.45%.