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Benchmarks witness bloodbath in early deals
Oct-19-2018

Indian equity benchmarks made a gap-down opening and are trading with deep cut of over a percentage point in early deals on Friday, with frontline gauges breaching their crucial 34,400 (Sensex) and 10,350 (Nifty) levels. Traders were cautious with SBI’s research report - Ecowrap stating that the rupee depreciation has neither helped in improving exports nor in slowing imports, leading to an incremental trade deficit of $4 billion in the first half of the current fiscal. Sentiments also were dampened with private report that the impact of the current tightness in the credit market is unlikely to impact economic growth in any meaningful way beyond the next two quarters, notwithstanding the cautious view on the domestic equity market. Traders reacted negatively to a report that even as India clocked a good growth of 6.7% in the financial year 2018-19, job creation by corporate India dropped to just 3.8%, which can be seen as confirming fears of jobless growth in the country.

Global cues too remained pitiful with all the Asian markets trading in red terrain at this point of time, as global trade worries, higher US interest rates and growth concerns in China are likely to weigh on investors’ risk appetite. The US markets ended sharply lower on Thursday, on worries about global growth and as investors continued to weigh minutes of the Federal Reserve’s September meeting, which were viewed as hawkish.

Back home, stocks related to gems and jewellery sector edged higher on report that the government is expected to come out with a comprehensive gold policy soon to promote the metal industry and the gems and jewellery sector, which is a major contributor to the export basket. The policy also aims at creating jobs in the gold sector. Stocks related to steel sector are exhibiting mixed trend with Union Minister Birender Singh’s statement that the government has no plans to scale down its target for steel production unlike other countries as consumption of the alloy in India is growing slower than expected.

The BSE Sensex is currently trading at 34372.92, down by 406.66 points or 1.17% after trading in a range of 34288.25 and 34563.29. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.40%, while Small cap index was down by 0.91%.

The few gaining sectoral indices on the BSE were Utilities up by 0.45%, PSU up by 0.26% and Telecom was up by 0.21%, while Energy down by 3.36%, IT down by 2.61%, TECK down by 2.28%, Auto down by 1.11% and Capital Goods was down by 0.91% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.31%, Asian Paints up by 1.17%, NTPC up by 0.71%, Tata Steel up by 0.42% and ICICI Bank up by 0.35%. On the flip side, Reliance Industries down by 5.29%, Yes Bank down by 4.55%, Infosys down by 2.97%, Hero MotoCorp down by 2.20% and TCS down by 1.81% were the top losers.

Meanwhile, with an aim to boost exports in India, the commerce ministry is working on a new World Trade Organisation (WTO)-compliant export incentive scheme for merchandise shipments to replace the existing Merchandise Exports from India Scheme (MEIS). Currently, exporters of goods avail incentives under the MEIS. In this, the government provides duty benefits depending on product and country. The new scheme could be named as rebate of levies.

The formulation of the new export incentive scheme also assumes significance as the US has dragged India to the WTO’s dispute settlement mechanism over export subsidies and said that these incentives were harming American companies. The US has challenged India’s export subsidy programmes such as MEIS in the WTO, asserting that these initiatives harm its companies by creating an uneven playing field. Other export benefit programmes including Export Oriented Units Scheme, Electronics Hardware Technology Parks Scheme; Special Economic Zones; Export Promotion Capital Goods Scheme; and duty free imports have been challenged by the US.

As per the Federation of Indian Export Organisations (FIEO), the new scheme should include refund of indirect taxes like on oil and power; state levies such as ‘mandi’ tax and embedded tax. FIEO President Ganesh Gupta said the new scheme would help boost the country’s exports. Besides, India’s exports entered the negative zone after five months, contracting 2.15% in September to $27.95 billion even though the trade deficit narrowed to a five-month low of about $14 billion.

The CNX Nifty is currently trading at 10318.65, down by 134.40 points or 1.29% after trading in a range of 10304.60 and 10380.10. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.74%, HPCL up by 2.29%, Sun Pharma up by 1.42%, Bharti Infratel up by 1.38% and Indian Oil up by 1.28%. On the flip side, Indiabulls Housing down by 7.78%, Reliance Industries down by 5.32%, Yes Bank down by 4.79%, HCL Tech down by 4.47% and Infosys down by 3.06% were the top losers.

Asian markets are trading in red; Nikkei 225 declined 226.54 points or 1.01% to 22,431.62, Taiwan Weighted decreased 61.77 points or 0.62% to 9,891.96, Straits Times dropped 7.30 points or 0.24% to 3,062.37, Jakarta Composite slipped 6.42 points or 0.11% to 5,838.82, Hang Seng shed 87.79 points or 0.35% to 25,366.76, KOSPI dipped 2.81 points or 0.13% to 2,145.50 and Shanghai Composite was down by 0.43 points or 0.02% to 2,485.99.
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