Indian stock markets further drifted down on the back of worse than expected April month inflation data which came at 8.66% against 9.04% seen in the previous month coupled with negative cues from the global front which dampened the investor's sentiment. Economists across the world see high inflation as a key factor hindering India's growth. Meanwhile, the other global markets like European markets and Asian markets were trading with a negative bias. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,550 and 18,500 levels, respectively. The Sensex outperformed the Midcap and the Small-cap indices on the downside. The market breadth on the BSE was in favor of advances in the ratio of 962:1713 while 115 scrips remained unchanged.
The BSE Sensex drifted down 198.40 points or 1.07% at 18,332.88. The index touched a high and a low of 18,492.68 and 18,319.88 respectively.
The BSE Mid-cap index down 0.75% and Small-cap index fell by 0.83%.
On the BSE sectoral front, Health Care up 0.58% was the lone gainer. While, Metal down 1.55%, Bankex down 1.35%, FMCG down 1.31%, Realty down 1.26% and Auto down 1.13% were laggards in the BSE sectoral space.
The top gainers on the Sensex were Hero Honda up 1.59%, Bharti Airtel up 0.64%, BHEL up 0.63% and TCS up 0.36%.
On the flip side M&M down 3.06%, JP Associates down 2.86%, Tata Steel down 2.58%, Bajaj Auto down 2.56% and Jindal Steel down 2.44% were losers on the BSE index.
Meanwhile, the Commerce Ministry on May 12, 2011 announced that the demand of exporters is not going to be fulfilled by the ministry over discontinuation of the Duty Entitlement Passbook (DEPB) Scheme. However, the ministry has taken this issue with the Finance Minister to increase exports incentives under different schemes.
Exporters are concerned that if the DEPB scheme is withdrawn, exports are going to fall from $246 billion in 2010-11 to less than $200 billion. Under DEPB, exporters are given refunds of tax incidence on the import content of their export products. The benefit of DEPB schemes is available on the export products having extraneous material up to 5% by weight. In such cases, extraneous material up to 5% shall be ignored and the DEPB rate as notified for that export product is allowed.
The government payout on account of DEPB to exporters is worth Rs 8,000 crore per annum. The 14 year old scheme is the most popular among exporters, especially in the engineering including automobiles sectors. The tax refund mechanism is to end on June 30, as it was considered to be non-compliant with the World Trade Organization rules. On the other hand, Commerce Secretary Rahul Khullar stated that the exporters can always draw the tax rebates through other windows like Duty Drawback Scheme.
However, the rates of refund in the drawback scheme are much lower than those available under DEPB. Drawback scheme means the rebate of duty chargeable on any imported materials or excisable materials used in manufacture or processing of goods which are manufactured in India and exported.
The S&P CNX Nifty dropped 52.50 points or 0.94% at 5,492.55. The index touched high and low of 5,541.80 and 5,487.65 respectively.
The top gainers on the Nifty were Ranbaxy up 3.27%, Sun Pharma up 3.15%, Ambuja Cement up 2.02%, Hero Honda up 1.61% and Sesa Goa up 1.21%. While M&M down 2.93%, JP Associates down 2.80%, Tata Steel down 2.63%, Bajaj Auto down 2.62% and Dr. Reddy down 2.52% were the top losers on the index.
The Asian markets were trading in the red. Shanghai Composite down 0.73%, Hang Seng slid down 1.36%, Jakarta Composite dropped 0.86%, KLSE Composite dropped 0.29%, Straits Times down 0.86%, Nikkei 225 shed 0.94%, Seoul Composite down 0.75% and Taiwan Weighted down 1.05%.
The European markets were also trading in red. CAC 40 slipped 1.25%, DAX dropped 0.88% and FTSE 100 down 0.40%.
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