Local equity markets continue to trade choppy ahead of Reserve Bank of India's (RBI) meet on Tuesday, May 3, 2011. On the global front, except stock markets in China, Hong Kong, Malaysia, Singapore and Taiwan, which remained closed on account of Labor Day holiday; other key Asian markets were trading in the positive territory. US index futures too were trading in the green after the US president Obama made the announcement that al-Qaeda leader - Osama bin Laden, the perpetrator of the September 11, 2001 terrorist attacks, is dead. Bin Laden was killed in a US military operation, along with other members of his family in a mansion outside Islamabad. Back home, bank, public sector undertakings, metal and auto stocks are among the notable losers in early trades. Capital goods stocks are also mostly down in negative territory; while a few stocks from consumer durables, realty, healthcare and fast moving consumer goods sectors have moved higher.
Broader indices too are trading in the negative territory; the BSE Mid cap and Small cap indices declined 0.60% and 0.55%, respectively. The market breadth on the BSE was negative; the losers thrashed the gainers in a ratio 1452:999 and 100 shares were unchanged.
The BSE Sensex dropped 56.98 points or 0.30% at 19,078.98. The index has touched a high of 19,253.87 and a low of 19,038.10, respectively.
The BSE Mid cap and Small cap indices declined 0.60% and 0.55%, respectively.
The top gainers on the BSE sectoral space were Consumer Durables (CD) up 1.26%, Realty up 1.15%, Healthcare (HC) up 0.83%, Fast Moving Consumer Goods (FMCG) up 0.61% and TECk up 0.23%.
On the flip side, Bankex down 1.62%, Public Sector Undertakings (PSU) down 0.88%, Metal down 0.83%, Auto down 0.81% and Capital Goods (CG) down 0.21% were the major losers on the BSE sectoral space.
The top gainers of the Sensex were DLF up 2.18%, Cipla up 1.54%, Tata Power up 1.40%, Reliance Infra up 0.90% and Infosys Technologies up 0.63%.
On the flip side, SBI down 2.91%, Maruti down 1.79%, Sterlite Inds down 1.41%, Jindal Steel down 1.16% and Bajaj Auto down 1.13% were the major losers on the index.
The textile ministry is all set to take up the issue of excise duty on branded garments with the finance ministry at an official level. The finance ministry had earlier slapped a 10% excise duty on branded garments and there has been a massive protest against the move in textile players, particularly in wake of already surging cost of production.
Finance Minister Pranab Mukherjee had proposed in the FY-12 General Budget that a 10% excise duty be applicable on branded apparels. This was applicable with a 45% abatement that would have meant an effective tax of 10% on 55% of the MRP. Following the opposition from the industry, finance ministry Pranab Mukherjee while replying to the debate on finance bill increased the rate of abatement from 40% to 55%, this brought down the effective rate of duty to 4.5% of MRP.
The industry however continues to protest given the difficult operating atmosphere in which textile players are currently operating. The industry is facing a lot of cost escalation as cotton prices have increased significantly in last 3-4 quarters and continue to remain close to the higher range seen in recent months. Other costs including labour and energy costs too have increased significantly. This has been putting pressures on textile companies' margins.
The industry contends that at a time when cost of production is already surging, the additional duty has further added to its woes. Although the textile sector has seen a good recovery over last one year or so, margins remain thin owing to overall rise in costs. Besides, the industry is also worried that the abatement given by the government for now would be reduced in future and hence effective duty will rise. As such, textile players continue to demand for a dropping the duty altogether and ministry of textile is now set to take up the matter with Mukherjee.
The S&P CNX Nifty dipped 23.25 points or 0.40% at 5726.25. The index has touched a high and a low of 5775.25 and 5714.35, respectively.
The top gainers of the Nifty were DLF up 2.33%, Dr Reddy's up 1.85%, Tata Power up 1.66%, Cairn India up 1.65% and Ranbaxy up 1.62%.
On the flip side, PNB down 3.26%, SBI down 2.81%, Ambuja Cement down 2.72%, Kotak Mahindra Bank down 2.48% and IDFC down 2.20% were the major losers on the index.
Rest of the Asian markets were trading in the green. Jakarta Composite jumped 0.49%, Nikkei 225 surged 1.67% and Seoul Composite gained 1.60%.
Stock markets in China, Hong Kong, Malaysia, Singapore and Taiwan remained shut on account of Labor day holiday
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