Benchmarks magnify gains; Nifty above 7900 mark

Extending their early gains, Indian equity markets continued to trade with vigor on continued buying activities by both funds and retail investors. Sentiments got a boost after some respite came in on long pending GST, as the state Finance Ministers resolved to lower the threshold limit for imposing Goods and Service Tax (GST) from Rs 25 lakh to Rs 10 lakh, and asked the Centre to include the provision for GST compensation in the Constitutional Amendment Bill. Besides, reports of foreign funds remaining buyers in yesterday's trade on the Indian bourses too supported the upward trend. Foreign portfolio investors (FPIs) bought shares worth a net Rs 251.36 crore on August 20, 2014. At present, Sensex and Nifty were trading above the crucial 26,400 and 7,900 levels respectively, with gains of over a percentage point. Moreover, broader indices also mirroring the same kind of enthusiasm were up with gains of over 1%.

Barring metal, all other BSE sectoral indices were trading in the green. Among them, Consumer Durables index gained the most, followed by Bankex and PSU. Banking shares mainly public sector undertakings (PSU) were trading higher on reports that the Finance ministry will take tough measures on rising scams in state-owned banks. On the other hand, Metal shares including Bhushan Steel, NMDC, SAIL and Hindalco Industries were trading lower after the government gave its approval to raise the royalty rates on minerals, including iron ore and bauxite.

In scrip specific development, Shares of Sterlite Technologies were locked in 5% upper circuit on expectations that the integrated optical fibre company would be one of the key beneficiaries of the Digital India plan. Besides, Kotak Mahindra Bank rose after its promoter sold 1.6 million shares of the bank to meet the Reserve Bank of India (RBI) guidelines to meet promoter shareholding norms.

On global front, Asian shares were trading lower after a private survey showed weaker-than-expected Chinese manufacturing data. HSBC/Markit Flash China Manufacturing Purchasing Manager's Index slipped to 50.3 in August compared with 51.7 in July, against a forecast of 51.5. Back home, India’s rupee halted a three-day advance on concern the Federal Reserve may increase interest rates, reducing the flow of funds to emerging markets. The market breadth on BSE was positive, out of 2307 stocks traded, 1563 stocks advanced, while 661 stocks declined on the BSE.  

The BSE Sensex is currently trading at 26444.07 up by 129.787 points or 0.49% after trading in a range of 26444.07 and 26302.26. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.10%, while Small cap index gained 1.03%.

The gaining sectoral indices on the BSE were Consumer Durables up by 3.32%, Bankex up by 1.46%, PSU up by 1.04%, Capital Goods up by 0.88% and Realty up by 0.86%, while Metal down by 0.34% was the only losing index on BSE.

The top gainers on the Sensex were SBI up by 2.11%, Axis Bank up by 1.76%, Bajaj-Auto up by 1.71%, Gail up by 1.42% and M&M was up by 1.33%. On the flip side, Dr. Reddys Lab down by 0.93%, Tata Steel down by 0.91%, SSLT down by 0.71%, Hero MotoCorp down by 0.63% and HDFC was down by 0.40% were the top losers.

Meanwhile, the proposed goods and services tax (GST) faced fresh challenges as State Finance Ministers pressed for lowering the threshold limit to Rs 10 lakh for imposing Goods and Service tax (GST) on entities, lower than Rs 25 lakh proposed earlier. The Empowered Committee of State Finance Ministers that met on August 20 has also asked the Central Government to specify GST compensation structure for five years in the Constitutional Amendment Bill.

Further, state FMs had also proposed to keep products such as petroleum, tobacco and alcohol out of GST ambit and demanded that the exemption list be included in the Constitutional Amendment Bill. On tax collections, the ministers have demanded that legal powers should be given to the states rather than administrative powers to collect tax from businesses with an annual turnover of up to Rs 1.5 crore. Under the dual control of traders in GST structure, taxpayers with annual turnover of over Rs 1.5 crore would be taxed by the Centre, which will later disburse to the share of the states. Those entities with turnover below Rs 1.5 crore would pay their taxes to states, which would subsequently pass on to the share of the Centre.

The government is likely to bring new GST Bill in the Winter session of Parliament. 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.

The CNX Nifty is currently trading at 7,907.15 up by 31.85 points or 0.40% after trading in a range of 7,910.00 and 7,868.15. There were 32 stocks advancing against 18 declining on the index.

The top gainers on Nifty were Bank of Baroda up by 2.24%, PNB up by 2.04%, Asian Paint up by 1.89%, SBI up by 1.87% and Gail was up by 1.78%. On the flip side, United Spirits down by 1.53%, Dr. Reddys Lab down by 0.99%, Tata Steel down by 0.93%, NMDC down by 0.88% and SSLT was down by 0.76% were the top losers.

Asian markets were trading mostly in the red; Hang Seng dropped by 0.92%, KOSPI Index slipped 1.30%, Jakarta Composite tumbled by 0.53%, Shanghai Composite declined by 1.03%, FTSE Bursa Malaysia KLCI decreased 0.33% and Taiwan Weighted was down by 0.46%. On the flip side, Nikkei 225 spurted by 0.68% and Straits Times gained 0.04% points.