Benchmarks extend intraday losses ahead of Q1 CAD data

Benchmarks extended intraday losses in late morning trade ahead of the current account deficit (CAD) data and weak cues from Asian peers.  Sentiments got dampened as the rupee fell on Monday, tailing global risk-off sentiment on a potential shutdown of the US government. The rupee was trading weaker at 62.72/73 to the dollar compared to its Friday close at 62.51/52. Some cautiousness also came in from RBI’s report that the listed non-financial private companies on an average posted a decline of 10.9 per cent in net profit in the first quarter of the current fiscal. Meanwhile, investor will be eyeing the current account deficit (CAD) data to be released by RBI later in the day, which may have widened to 4 percent of GDP in the first quarter due to a surge in gold imports and a deteriorated trade gap.

Government aims to contain current account 3.7 percent of GDP for the entire fiscal. The oil companies will be reacting to the draft report of the panel of experts led by former Planning Commission member Kirit S Parikh who suggested continuation of the current system of calculating revenue losses on the basis of trade parity and has asked to deregulate diesel prices in two years. On the global front, The US markets once again ended lower on Friday on concern of a government shutdown, traders also considered the mixed economic reports and preferred to remain on sidelines. Asian markets too were trading mostly in the red with Japanese stock were trading with a cut of over a percent, tracking the weak lead from Wall Street and a stronger yen. In addition, weaker than expected local industrial production data also weighed on investor sentiment.

Back home, traders were buying, IT and Teck while selling were seen in Banking, Power and Capital Goods on the BSE. Banking stocks fall on worries about higher non-performing loans and the possibility of RBI raising rates one more time with its new found focus on inflation. BSE Sensex and NSE Nifty were comfortably trading near their psychological 5,750 and 19,400 levels respectively.

The market breadth on BSE remains positive with advances to declines in the ratio of 583: 882. The BSE Sensex is currently trading at 19487.95, down by 239.32 points or 1.21% after trading in a range of 19651.31and 19474.86. There were 7 stocks advancing against 23 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.57% and Small cap index lost 0.32%.

The few gaining sectoral indices on the BSE were, IT up by 0.75% and Teck up by 0.14% ,while Bankex down by 2.43%, Power down by 2.27%, Capital Goods down by 2.08% ,PSU down by 2.01%, and Metal down by 1.43% were the top losers on the sectoral index.

The top gainers on the Sensex were Infosys up by 1.51%, Wipro up by 0.93%, Sesa Goa up by 0.87%, Hindustan Unilever up by 0.77% and Bajaj Auto up by 0.30%. On the flip side, Tata Steel was down by 4.08%, BHEL was down by 3.96%,  Bharti Airtel was down by 3.57%, ICICI Bank was down by 3.45% and Mahindra & Mahindra was down by 3.17% were the top losers on the Sensex.

Meanwhile, In a move to contain the county’s fiscal deficit within the target limit, the government will restart its disinvestment programme in the month of October. The government had put on hold its disinvestment programme amid concerns over weakening rupee and tapering of the quantitative easing (QE) in the US. At present, disinvestment proceeds are of great importance to the government as it has set target to contain fiscal deficit at 4.8 percent of GDP in the current financial year. However, the government is likely to scale back the disinvestment target for the current fiscal by 10,000 crore to 30,000 crore.

As per the government’s disinvestment plan, 10% stake sale in Indian Oil Corporation (IOC) will start in the first week of October and the offer-for-sale could be wrapped by next month. The government expects to raise around 5,000 crore from IOC issue. The government will disinvestment 4% stake sale in Power Grid Corporation and 10% in Engineers India Limited through a follow-on offer before December 15, helping it to raise around 3,000 crore from these two issues. Further, disinvestment will also take place in Coal India, NHPC Limited and NMDC Limited, which will help the government to raise around 12,000 crore.

So far this fiscal, the government has raised only Rs 1,325 crore by divesting stake in public sector undertakings include Neyveli Lignite Corporation (NLC), State Trading Corporation (STC), MMTC, and ITDC. The government has raised Rs 23,920 crore through disinvestment in the previous fiscal.

The CNX Nifty is currently trading at 5,764.65 down by 68.55 points or 1.18% after trading in a range of 5,810.20 and 5,757.45. There were 10 stocks advancing against 39 declines while 1 stock remained unchanged on the index. The top gainers of the Nifty were BPCL up by 1.84%, HCL Tech up by 1.70%, Infosys up by 1.45%, Lupin up by 1.43%, and Wipro up by 0.87%. On the flip side, Tata Steel down by 4.02%, BHEL down by 3.90%, ICICI Bank down by 3.55% ,Bharti Airtel down by 3.49% and  JP Associates  down by 3.28%  were the major losers on the index.

Most of the Asian equity indices were trading red; Hang Seng declined 255.58 points or 1.10% to 22,951.46, Jakarta Composite dropped 61.00 points or 1.38% to 4,362.72, KLSE Composite shed 12.60 points or 0.71% to 1,763.56, Nikkei 225 decreased 222.78 points or 1.51% to 14,537.29, Straits Times slipped 18.09 points or 0.56% to 3,192.09, Seoul Composite contracted 11.41 points or 0.57% to 2,004.90 and Taiwan Weighted was down by 51.35 points or 0.62% to 8,179.33.

On the flip side, Shanghai Composite was up by 13.17 points or 0.61% to 2,173.19.