Benchmarks continue to trade lower in late morning

Indian equity benchmarks were trading lower after hitting a record high in early trade on Thursday, as investors opted to book profits on report that the India’s March HSBC Services Purchasing Manager's Index (PMI) has declined three-month low at 47.5 versus 48.8 in previous month while Composite PMI slipped to 48.9 as against 50.3 during the same period. Further, depreciating rupee also added to pessimistic sentiments. On the global front, the Asian markets were trading mostly in the green as the Japanese yen weakened to a two-month low and China’s government announced stimulus policies to support growth.

Back home, traders were buying, Metal, Consumer Durables and Healthcare stocks, while selling was seen in Capital Goods, Realty and Bankex. Select sugar stocks continue their upmove despite a report of industry body ISMA, which said that the country's sugar production has dropped by 7 percent to 21.5 million tonnes in the first six months of the current marketing year due to lower output in key producing states. Shares of IDFC soared 2 percent as it got Reserve Bank of India’s in-principle nod for a bank licence.

The market breadth on BSE remains negative with advances to declines in the ratio of 960:1026. BSE Sensex and NSE Nifty were comfortably trading near their psychological 22,500 and 6,700 levels respectively.

The BSE Sensex is currently trading at 22507.99 down by 43.50 points or 0.19% after trading in a range of 22620.65 and 22485.96. There were 14 stocks advancing against 16 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.33% and Small cap index down by 0.11%.

The top gaining sectoral indices on the BSE were, Metal up by 1.10%, Consumer Durables up by 0.79%, Healthcare up by 0.44%, IT up by 0.13% and Auto up by 0.07% while Capital Goods down by 1.28%, Realty down by 0.86%, Bankex down by 0.79%, Power down by 0.70% and Oil & Gas down by 0.62% were the top losers on the sectoral index.

The top gainers on the Sensex were Dr Reddys Lab up by 1.32%, SSLT up by 1.27, Hindalco up by 0.84%, Infosys up by 0.64% and Tata Motors up by 0.59%. On the flip side, BHEL was down by 2.24%, SBI was down by 2.04%, Gail India was down by 1.63%, L&T was down by 1.55% and Coal India was down by 1.55% were the top losers on the Sensex.

Meanwhile, In an attempt to replace the half-a-century-old Income Tax Act and overhaul the taxation system, the finance ministry released a draft Direct Taxes Code (DTC), which recommends the change along with a new income tax bracket that would require rich people to pay higher taxes.

However, The value of Merger & Acquisition (M&A) deals involving Indian companies increased marginally by 2.8 per cent at $5.2 billion during the first quarter of 2014 from a year earlier, however declined by 27.4 percent as compared to the previous quarter of current fiscal.

The deal count dropped by 29.5 percent to 232 in the reported quarter as compared to 329, which announced during the first quarter of 2013. However, completed M&A deals involving Indian companies recorded at $8.4 billion, which was 37 percent higher as against same quarter of previous year. The average M&A deal size for transactions with disclosed values involving India also increased to $56.3 million during the Jan-Mar 2014 against $34 million over the same period last year.

Further, the domestic M&A stood in the first quarter of 2014 stood at $2.7 billion, up 111.2 per cent compared to the first quarter of 2013. On sector wise, Energy & Power sector recorded 71.3 percent of India’s domestic M&A activity with $1.9 billion, an eleven-fold increase from the same period last year. However, the cross-border M&A fell 38.7 percent to $1.9 billion compared to the first quarter of 2013. The inbound M&A in India declined 49.4 percent, while outbound M&A increased 57.2 per cent over the same period last year.

Merger and acquisitions (M&A) have now become important features of corporate restructuring and plays an important role in the external growth of companies. M&A helps the firms to enhance competition, breaking of trade barriers, free flow of capital across countries and globalisation of businesses.

The CNX Nifty is currently trading at 6,738.40 down by 14.15 points or 0.21% after trading in a range of 6,776.75 and 6,727.90. There were 21 stocks advancing against 29 declines on the index.

The top gainers of the Nifty were NMDC up by 3.03%, Jindal Steel up by 3.00%, IDFC up by 2.31%, Hindalco up by 1.25% and DR Reddy up by 1.51%. On the flip side, IndusInd Bank down by 2.32%, Bank of Baroda down by 2.26%, BHEL down by 2.04%, SBI down by 1.99% and PNB down by 1.95% were the top losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng increased by 91.15 points or 0.40% to 22,615.09, Jakarta Composite advanced 19.22 points or 0.39% to 4,889.43, KLSE Composite rose 0.10 points or 0.01% to 1,852.10, Nikkei 225 soared 193.79 points or 1.30% to 15,140.11, Straits Times surged by 26.82 points or 0.84% to 3,219.60 and KOSPI Composite was up by 2.50 points or 0.01% to 1,997.37. On the flip side, Shanghai Composite dropped 1.72 points or 0.08% to 2,057.27 and Taiwan Weighted was down by 26.95 points or 0.30% to 8,878.50.