Markets trade flat with positive bias

Indian equity benchmarks are trading flat in early deals on Thursday as feeble global cues coupled with weakness in IT heavyweights weighed on the indices in opening deals. The frontline gauges managed to trade above water as rupee appreciated against dollar in morning trade. The rupee is trading stronger at 61.35/36 versus its Wednesday’s close of 61.51, tracking the dollar's losses versus major currencies.

Global cues remained mixed with the US markets ending flat with a positive bias, recovering from their last session’s fall. There were concerns about the ongoing conflict in Ukraine that weighed on the sentiments, while the Commerce Department reported that the US trade deficit narrowed to $41.5 billion in June and raised concerns about the outlook for monetary policy. The Asian markets were trading mostly in the red at this point of time, leading to their third straight decline. Japanese market too was trading lower after the yen gained 0.5 percent against the dollar.

Back home, stocks of companies associated with the railways rallied by up to 11% after the Union Cabinet on Wednesday cleared the proposal to allow 100% foreign direct investment (FDI) in railway infrastructure. On the flip side, Software and technology counters remained under pressure, as the global technology major Cognizant Technology Solutions, despite posting June quarter earnings in line with expectations, scaled down its annual revenue growth estimate to be at least 14 per cent, against the earlier estimate of 16.5 per cent.

On the sectoral front, oil and gas, metal and public sector undertaking witnessed the maximum gains in trade, while software and technology remained the only losers on the BSE sectoral space. The broader indices too were trading in the green, while the market breadth on the BSE was negative; there were 1163 shares on the gaining side against 633 shares on the losing side while 58 shares remain unchanged.

The BSE Sensex opened at 25668.71; around 3 point higher compared to its previous closing of 25665.27, and has touched a high and a low of 25674.79 and 25594.25 respectively. The index is currently trading at 25674.68, up by 9.41 points or 0.04%. There were 21 stocks advancing against 9 declines on the index.

The overall market breadth has made a positive start with 62.73% stocks advancing against 34.14% declines. The broader indices were trading in the green; the BSE Mid cap index was up 0.31%, while Small cap index was up by 0.39%. 

The top gaining sectoral indices on the BSE were Oil and Gas up by 0.77%, Metal up by 0.74%, PSU up by 0.65%, Power up by 0.64% and Realty up by 0.63%, while IT down by 1.47% and TECk down by 1.19% were only losers on the sectoral index.

The top gainers on the Sensex were Coal India up by 1.33%, BHEL up by 1.18%, Tata Steel up by 1.10%, RIL up by 0.73% and ICICI Bank up by 0.70%. On the flip side, TCS was down by 1.73%, Infosys was down by 1.53%, Wipro was down by 1.36%, Sun Pharma was down by 1.00% and HUL was down by 0.62% were the top losers on the Sensex.

Meanwhile, the government has stated that the proposed new indirect tax regime, Goods and Services Tax (GST) is likely to be introduced shortly. The central government in consultation with states had decided to phase out Central Sales Tax (CST) in order to facilitate introduction of GST and to give compensation to the states for revenue loss on this account.

GST, the proposed new indirect tax regime and one of the biggest taxation reforms in India will replace existing state and federal levies such as excise duty, service tax and value-added tax (VAT) and will integrate State economies and boost overall growth. Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions. The industry is awaiting its introduction, as GST would remove the cascading effect, boost revenues and aid economic growth.

In a leg up to the early implementation of the goods and services tax (GST) reform, the government is presently engaged to address states’ concerns over its design and compensation for revenue loss to ensure early implementation of this singular tax reform. States are insisting that petroleum be kept out of the purview of the GST are also opposed to subsuming of entry tax within GST, especially that entry tax which is in lieu of octroi. States are also upset with the centre for non-payment of Central Sales Tax (CST) compensation from the year 2011-12.

The previous UPA Government had brought a Constitutional Amendment Bill to introduce the GST, but failed to get it through, owing to the lack of consensus. Since the basic framework is ready, new Government does not require much effort to re-introduce the Bill. Further, it would not have a problem passing the Bill, given its strength in the Lok Sabha.

The CNX Nifty opened at 7,651.15; about 21 point lower as compared to its previous closing of 7,672.05, and has touched a high and a low of 7,678.00 and 7,649.50 respectively. The index is currently trading at 7,677.10, up by 5.05 points or 0.07%. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were Jindal Steel up by 3.99%, BPCL up by 1.58%, Tata Steel up by 1.36%, BHEL up by 1.33% and Coal India up by 1.24%. On the flip side, Infosys down by 1.72%, TCS down by 1.66%, HCL Tech down by 1.65%, Wipro down by 1.16% and Asian Paints down by 1.04% were the major losers on the index.

Asian markets were trading in the red; Nikkei 225 contracted by 62.05 points or 0.41% to 15,097.74, Hang Seng dipped 126.07 points or 0.51% to 24,458.06, KOSPI Index crumbled by 9.53 points or 0.46% to 2,051.20, Jakarta Composite decreased by 2.29 points or 0.05% to 5,055.94, Shanghai Composite slipped 13.13 points or 0.59% to 2,204.33, FTSE Bursa Malaysia KLCI dropped by 1.24 points or 0.07% to 1,868.6, Straits Times shed by 14.19 points or 0.43% to 3,306.04. and Taiwan Weighted was down by 6.52 points or 0.07% to 9,137.45.