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Weak trade continues on Dalal Street
Oct-19-2018

Indian equity benchmarks continued their weak trade in afternoon deals, on the back of sustained selling activities by market-participants. The mood of the markets remained impacted by 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. Investors’ sentiments also dented 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. Adding the pessimism among investors, the report showed that the Consumer Confidence Index plummeted 6.6 percentage points as consumers were worried about various factors such as personal finances for day to day running of the household, savings and investments. On the sectoral front, non-bank financial companies (NBFCs) stocks were trading in red even as the Reserve Bank on Friday announced more measures to increase liquidity flows to the NBFCs. The RBI permitted banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements. 

On the global front, Asian markets were trading mostly in green, as China’s efforts to bolster investor confidence helped its share markets rally, although data showing the world’s second-largest economy growing at the slowest pace since 2009 capped broader gains. Back home, the BSE Sensex is currently trading at 34426.54, down by 353.04 points or 1.02% 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 fell 0.72%, while Small cap index was down by 1.39%.

The top gaining sectoral indices on the BSE were Telecom up by 0.84%, FMCG up by 0.47%, Utilities up by 0.35% and Metal up by 0.31%, while Energy down by 3.22%, IT down by 2.57%, TECK down by 2.29%, Auto down by 1.25% and Consumer Disc down by 1.09% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.52%, Asian Paints up by 1.20%, Hindustan Unilever up by 1.15%, Bharti Airtel up by 1.06% and ICICI Bank up by 1.02%. On the flip side, Yes Bank down by 5.50%, Reliance Industries down by 4.82%, Infosys down by 3.35%, Hero MotoCorp down by 3.15% and Tata Motors - DVR down by 2.85% were the top losers.

Meanwhile, in order to promote the metal industry and the gems and jewellery sector, which is a major contributor to India's export basket, the government may soon roll out a comprehensive gold policy. The policy also aims at creating jobs in the gold sector. The policy likely to focus on promoting domestic gold industry and exports of gems and jewellery, which contributes about 15 percent to total merchandise outbound shipments.

Finance Minister Arun jaitley, in February, had announced formulation of a comprehensive gold policy to develop gold as an asset class. Besides, in order to create a tax compliant system within the gold sector, the government think tank Niti Aayog has recommended the government to reduce the basic customs duty on gold from the existing level of 10% to as low as possible. It also suggested that slash the Goods and Services Tax rate on the precious metal from the current 3%. It had recommended the government to review and revamp of the gold monetisation scheme, sovereign gold bond scheme besides setting up of a gold board and bullion exchanges across the country to have greater financialisation of the yellow metal.

To promote exports, the Gems and Jewellery Export Promotion Council (GJEPC) has asked for support in terms of increasing incentives under the Merchandise Exports from India Scheme (MEIS) to boost shipments. Under Merchandise Exports from India Scheme (MEIS), the government provides duty benefits depending upon the product and country. Rewards under the scheme are payable as percentage of realised free-on-board value and MEIS duty credit scrip can be transferred or used for payment of a number of duties including the basic customs duty.

The CNX Nifty is currently trading at 10336.15, down by 116.90 points or 1.12% after trading in a range of 10290.75 and 10380.10. There were 14 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.43%, HPCL up by 1.91%, Bharti Infratel up by 1.69%, Sun Pharma up by 1.57% and Indian Oil Corp. up by 1.21%. On the flip side, Indiabulls Housing Finance down by 11.85%, Yes Bank down by 5.56%, Reliance Industries down by 5.04%, HCL Tech. down by 3.75% and Infosys down by 3.44% were the top losers.

Asian markets were trading mostly in green; KOSPI increased 7.95 points or 0.37% to 2,156.26, Straits Times was down by 0.61 points or 0.02% to 3,070.28, Shanghai Composite surged 60.55 points or 2.38% to 2,546.97 and Hang Seng added 224.06 points or 0.87% to 25,678.61.

On the flip side, Nikkei 225 decreased 126.08 points or 0.56% to 22,532.08, Jakarta Composite was down by 3.63 points or 0.06% to 5,841.61 and Taiwan Weighted shed 34.47 points or 0.35% to 9,919.26.
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