Benchmarks failed to hold early gains; banking drags

Benchmarks failed to hold early gains and continued to trade in red in late morning trade weighed down by banking sector. Investors remained concerned on macro numbers, as retail inflation gauged by CPI, reversed its declining trend to hit a near-double-digit mark to 9.84% on-year in September. The looming US debt ceiling concerns also kept the investors jittery. However, the loss on the down -side remained capped as Planning Commission Deputy Chairman, Montek Singh Ahluwalia’s statement that inflation will soften in coming months, as the steps taken by government to destock the excess food stocks would result in cooling-off of prices in few weeks ahead.

On the global front, most of the Asian equity benchmarks were trading in the green terrain at this point of time with Japanese Nikkei trading higher with a weaker yen. Back home, traders were buying, Teck , IT and Realty while selling were seen in Bankex, Capital Goods and FMCG on the BSE. Banking shares were trading under pressure after higher-than-expected inflation data dents hopes for a rate cut. The market breadth on BSE remains negative with advances to declines in the ratio of 708: 957. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,000 and 6,000 levels respectively. 

The BSE Sensex is currently trading at 20541.46, down by 66.08 points or 0.32% after trading in a range of 20759.58 and 20498.10. 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 0.53% and Small cap index lost 0.54%.

The top gaining sectoral indices on the BSE were, Teck up by 0.49%, IT up by 0.45%, Realty up by 0.18%,  Health Care up by 0.12% and Oil & Gas up by 0.04%, while Bankex down by 1.22% , Capital Goods down , by 0.96%, FMCG down by 0.61% , Auto down by 0.60  and PSU down by 0.38%  were the top losers on the sectoral index.

The top gainers on the Sensex were Wipro up by 1.66%, Bharti Airtel up by 1.55%, Tata Steel up by 1.51%, Mahindra & Mahindra up by 0.92% and NTPC up by 0.70%.On the flip side, Hero MotoCorp was down by 2.39% , Hindalco Industries was down by 2.03%, Coal India was down by 1.56%, Tata Motors was down by 1.22%  and  ICICI Bank was down by 1.21%, were the top losers on the Sensex.

Meanwhile, in a bid to help special economic zone (SEZ) units amid prevailing global economic slowdown, the Commerce Ministry has planned to seek tax concessional structure for SEZ units under which the duty forgone towards sale of products in domestic tariff area (DTA) could be recovered once the economic situation improves.

The tax concession would be given to SEZ units to sell their products in the domestic market as several of these units in sectors like auto components, textiles and pharmaceuticals are not able to export due to global demand slowdown. Presently, SEZ units have to pay full duty if they sell goods in the DTA. The move will also help SEZs in boosting their manufacturing process, which in turn will create jobs and revive India's economic growth. Indian industrial output has slowed down sharply to 0.6 percent in August mainly due to contraction in manufacturing and mining.

The government has approved 576 such zones out of which 173 have commenced exports. Presently, SEZs units are struggling with global economic slowdown and so far this fiscal, around 58 SEZ developers have surrendered their projects.  Further, imposition of Minimum Alternate Tax, Dividend Distribution Tax in 2011 and certain provisions in the proposed Direct Tax Code has also been denting the attractiveness of these units. During April-June period, exports from these zones stood at Rs 1.13 lakh crore as compared to Rs 4.05 lakh crore of country's overall exports in the reported period. Meanwhile, the government has announced various incentives like easing of land requirement norms to revive investor confidence in SEZs.

The CNX Nifty is currently trading at 6,095.45 down by 17.25 points or 0.28% after trading in a range of 6,156.30 and 6,075.55. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were JP Associate up by 5.41%, Wipro up by 1.77%, Tata Steel up by 1.66%, Bharti Airtel up by 1.46% and DLF up by 1.40%. On the flip side, IndusInd Bank down by 3.63%,  Hindalco down by 1.49%, coal India down by 1.60%, and Ranbaxy down by 1.51% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng rose 133.52 points or 0.58% to 23,351.84, Nikkei 225 gained 25.56 points or 0.18% to 14,430.30, Seoul Composite strengthened 14.22 points or 0.70% to 2,034.49 and Taiwan Weighted was up by 71.74 points or 0.87% to 8,345.70.

On the flip side, Shanghai Composite was down by 3.23 points or 0.14% to 2,234.54.

Markets in Indonesia, Malaysia and Singapore remained closed for the trade today on account of holiday.