Benchmarks open negative tracking weak global equities

The Indian equity markets have made a negative start tracking weakness in the global equities. The global cues remained unsupportive as the US markets lost its way in the late hours overnight after Fed trimmed its economy growth forecast while, most of the Asian counterparts were trading in the red at this point of time, indicating somber investors' sentiments. Back home, on the sectoral front, oil and gas and fast moving consumer goods remained the only gainers while, consumer durables, healthcare and metal remained the top losers on the BSE sectoral space. The broader indices were bleeding badly in the early trade. Meanwhile, Sugar stocks like, Shree Renuka Sugar, Balrampur Chini, Bajaj Hndustan and Rana Sugar all surged more than a percent ahead of a meeting of Empowered Group of Ministers on food in the later part today to take a call on allowing the export of more sugar. The market breadth on the BSE was negative; there were 494 shares on the gaining side against 1,121 shares on the losing side while 64 shares remained unchanged.

The BSE Sensex opened at 17,526.92; about 25 points lower compared to its previous closing of 17,550.63, and has touched a high and a low of 17,554.49 and 17,482.21.

The index is currently trading at 17,512.99, down by 37.64 points or 0.21%. There were 19 stocks advancing against 11 declines on the index.

The overall market breadth has made a negative start with 29.42% stocks advancing against 66.77% declines. The broader indices were bleeding badly in the trade; the BSE Mid cap and Small cap indices were down by 0.69% and 0.61% respectively.  

Oil and Gas up by 0.26% and FMCG up by 0.17% were the only gaining sectoral indices on the BSE. While, CD down 1.28%, HC down 1.01%, Metal down 0.94%, Realty down 0.90% and Auto down by 0.85% remained the top losers on the index.

The top gainers on the Sensex were RCom up by 1.43%, ITC up by 0.76%, RIL up by 0.64%, Tata Power up by 0.56% and SBI up by 0.51%.

Maruti Suzuki down by 1.79%, Cipla down by 1.66%, Hindalco down by 1.37%, Hero Honda down by 1.01% and Sterlite Industries down by 1.00%, were the top losers on the index.

Meanwhile, with the increasing pressure from the civil society for transparency in governance, the government is getting ready for adoption of new accounting system, where transactions will be recorded in the book of accounts even if cash changes hand later. The Finance Minister Pranab Mukherjee on June 21 said, the task of shifting from the current cash-based accounting system to "accrual based financing reporting" will not be easy. 

At the conference of state finance ministers, Pranab Mukherjee said, 'Based on the knowledge gained through pilot studies and the experience of some other countries, it is clear that introduction of accrual accounting is not going to be an easy task".

Under the accrual-based accounting, revenue is reported in the financial year when it is earned, irrespective of when revenue is actually received and expenses are deducted when they are incurred, regardless of when they are paid. On the other hand, in the cash accounting, the income is recorded when revenue is actually received and expenses are shown in the books when they are actually paid, regardless of when they were actually invoiced.

The 12th Finance Commission had recommended the introduction of accrual-based accounting for both central and state governments, these suggestions were accepted by the central government in principle. 'The relevance of accrual accounting has to be looked at from the overall perspective of public financial management,' finance minister said. He also said accrual accounting has to be assessed against the prevalent accounting practices, for improving the effectiveness of planning, policy making and budgeting process of public resources.

Many central government organizations like the railways and department of posts are conducting pilot studies to move toward new accounting system. Vinod Rai said, several municipal corporations have moved over to maintenance of accounts in accrual format. So far, 21 state governments have conveyed their acceptance, in principle, to move towards accrual accounting.

The S&P CNX Nifty opened at 5,269.10; about 9 points lower compared to its previous closing of 5,278.30, and has touched a high and a low of 5,274.90 and 5,252.25 respectively.

The index is currently trading at 5,264.50, down by 13.80 points or 0.26%. There were 14 stocks advancing against 36 declines on the index.

The top gainers of the Nifty were RCom up by 1.48%, ITC up by 0.94%, Reliance Industries up by 0.77%, SBI up by 0.58% and GAIL up by 0.57%.

The top losers of the index were Maruti Suzuki down by 2.23%, Sun Pharma down by 1.75%, Ambuja Cement down by 1.74%, Sesa Goa down by 1.67% and Cipla was down by 1.63%.

Most of the Asian markets were trading in the red; Hang Seng was down 171.90 points or 0.79% to 21,688.07, Jakarta Composite was down 9.36 points or 0.25% to 3,812.47, KLSE Composite was down 3.38 points or 0.22% to 1,563.97, Nikkei 225 was down 2.99 points or 0.03% to 9,626.44, Seoul Composite was down 5.82 points or 0.28% to 2,058.08 and Taiwan Weighted was down by 53.43 points or 0.62% to 8,567.61.

On the flip side, Shanghai Composite was up 6.38 points or 0.24% to 2,655.70 and Straits Times was up by 5.20 points or 0.17% to 3,048.03.

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