A divergent trend was witnessed between the two key benchmark indices in morning trade, with the barometer index, the S&P BSE Sensex, trading slightly higher and the Nifty 50 trading a tad lower. At 10:16 IST, the Sensex was up 2.66 points or 0.01% at 26,768.31. The Nifty was down 5.60 points or 0.07% at 8,198.10. In overseas stock markets, Asian stocks witnessed a mixed trend as investors remained on the edge ahead the Brexit referendum. Brexit refers to the referendum on 23 June 2016 by British voters to decide whether the country should remain a member of the European Union or leave it.
The Sensex rose 47.92 points, or 0.18% at the day's high of 26,813.57 in early trade. The index fell 26.53 points, or 0.10% at the day's low of 26,739.12 in morning trade. The Nifty rose 8.65 points, or 0.11% at the day's high of 8,212.35 in early trade. The index fell 15.50 points, or 0.19% at the day's low of 8,188.30 in morning trade.
The market breadth indicating the overall health of the market was weak. On BSE, 1,174 shares fell and 677 shares rose. A total of 103 shares were unchanged. The BSE Mid-Cap index was currently down 0.18%. The BSE Small-Cap index was currently down 0.34%. Both these indices underperformed the Sensex.
In overseas stock markets, Asian stocks witnessed a mixed trend as investors remained on the edge ahead the Brexit referendum. Brexit refers to the referendum on 23 June 2016 by British voters to decide whether the country should remain a member of the European Union or leave it. Opinion polls indicate that the vote is expected to a nail-biter. Referendum results from the first counting areas are expected around 12:30 a.m. London time on Friday, 24 June 2016. Voting will close at 10 p.m. London time. US stocks finished slightly lower yesterday, 22 June 2016, as opinion polls showed the outcome of the Brexit remained too close to call a day ahead of the vote.
If the UK votes to leave the EU, it could send British pound and euro tumbling, with ripple effects across global asset classes.
Closer home, the Reserve Bank of India (RBI) has assured liquidity support to ensure orderly conditions in financial markets if the Brexit poll outcome causes turbulence in global financial markets. The RBI said a statement issued yesterday, 22 June 2016, that it is maintaining a close vigil on developments, and will take all necessary steps, including liquidity support, to ensure orderly conditions in financial markets.
Power generation stocks fell across the board. JSW Energy (down 2.33%), Reliance Power (down 1.46%), Tata Power (down 1.36%), Adani Power (down 0.85%), CESC (down 0.83%), Reliance Infrastructure (down 0.76%), NHPC (down 0.61%), GMR Infrastructure (down 0.56%), Jaiprakash Power Ventures (down 0.2%) and Torrent Power (down 0.03%) edged lower.
The Union Cabinet yesterday, 22 June 2016, approved the extension of the timeline for taking over 50% of the outstanding debt of state-government run power distribution companies or DISCOMs by the respective state government under the Ujwal DISCOM Assurance Yojana called UDAY by one year from the earlier stipulated date of 31 March 2016. Some states were unable to join the scheme due to time constraints in completing the processes or inability to take major policy decisions such as joining UDAY due to on-going election processes. The extension of the timeline will enable states to participate in this scheme by allowing adequate time to complete the multi-stakeholder process required for joining and/or issuing bonds. In addition, Jammu & Kashmir will be able to float further bonds.
UDAY is a scheme for the operational and financial turnaround of DISCOMs, which are the weakest link in the power value chain. It provides DISCOMs with a clear roadmap and opportunity to become profitable in the next 3 years.
NTPC was down 3.12% to Rs 147.50. The company announced after market hours yesterday, 22 June 2016, that in accordance with the approval accorded by Cabinet Committee on Economic Affairs on 13 May 2015, Government of India (GOI) has offered 2.06 crore shares to the eligible employees of NTPC at discounted price of Rs 115.90 per share i.e. 5% discount to the cut off price of Rs 122 discovered through the offer for sale of shares of NTPC carried out by GOI on 23 February 2016 and 24 February 2016.
Most textile stocks rose after the Union Cabinet yesterday, 22 June 2016, approved a special package for employment generation and promotion of exports in textile and apparel sector. Gokaldas Exports (up 2.26%), Bombay Dyeing and Manufacturing Company (up 0.76%), Vardhman Textile (up 0.69%), Hanung Toys and Textiles (up 0.25%) and Raymond (up 0.14%) edged higher. Arvind (down 0.28%), Century Textiles and Industries (down 0.91%), Nitin Spinners (down 2.44%) and Alok Industries (down 3.9%) edged lower.
The package includes a slew of measures which are labour friendly and would promote employment generation, economies of scale and boost exports. The steps will lead to a cumulative increase of $30 billion in exports and investment of Rs 74000 crore over next 3 years. The majority of new jobs are likely to go to women since the garment industry employs nearly 70% women workforce.
The Government of India will bear the entire 12% of the employers' contribution of the Employers Provident Fund Scheme for new employees of garment industry for first 3 years who are earning less than Rs 15,000 per month. At present, 8.33% of employers' contribution is already being provided by the government under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY). The Ministry of Textiles will provide additional 3.67% of the employer's contribution amounting to Rs 1170 crores over next 3 years. EPF shall be made optional for employees earning less than Rs 15,000 per month. This shall leave more money in the hands of the workers and also promote employment in the formal sector.
Looking at the seasonal nature of the industry, fixed term employment shall be introduced for the garment sector. A fixed term workman will be considered at par with permanent workman in terms of working hours, wages, allowances and other statutory dues.
The package breaks new ground in moving from input to outcome based incentives by increasing subsidy under Amended-TUFS from 15% to 25% for the garment sector as a boost to employment generation. A unique feature of the scheme will be to disburse the subsidy only after the expected jobs are created.
In a first of its kind move, a new scheme will be introduced to refund the state levies which were not refunded so far. This move is expected to cost the exchequer Rs 5500 crores and will greatly boost the competitiveness of Indian exports in foreign markets. Drawback at All Industries Rate will be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme. Looking at the seasonal nature of garment industry, the provision of 240 days under Section 80JJAA of Income Tax Act would be relaxed to 150 days for garment industry.
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