Benchmarks shift gears; trade into positive territory with slender gains

Shifting gears, Indian equity markets bouncing off from day’s low were trading with flat gains, albeit slender of around one tenth of a percent, which lifted both Sensex and Nifty above psychologically crucial 27,000 and 8,050 levels respectively. Nevertheless, broader indices outperforming larger peers were trading with gains in the range of 0.25%-0.60%. Prevailing caution ahead of the release of crucial macro-economic data such as July industrial output and August Retail inflation data, was weighing on the sentiment of local equity markets right from the start of the trade.

The street expects Industrial production to grow 1.8% from a year earlier in July, slower than June's 3.4% increase, while India's consumer price inflation, closely tracked by the Reserve Bank of India, is expected to edge lower to 7.80% in August from July's 7.96%. However, positive global cues were supporting the up-move of markets, which from the past three trading session were reeling under pressure.

On the global front, Asian stocks managed to hold mostly into positive territory even as investors awaited the release of Chinese economic statistics and global sentiment was dampened by the upcoming Scottish independence vote and weak inflation data. China will on Saturday announce figures including retail sales and fixed asset investment for August, while data released on Thursday showed inflation easing to a four-month low, fuelling the case for a further easing in monetary policy. European shares got off to a positive start, with investors trying to gauge the mood of the Federal Reserve before policymakers meet next week.

Closer home, despite the reversal of trend, most of the sectoral indices on BSE were reeling under pressure, however stocks from Consumer Durables, Fast Moving Consumer Goods and Auto counters were the top gainers of the session.  On the flip side, much of the drubbing was witnessed by Power stocks, closely followed by Metal and Information Technology counters. Auto stocks were in top gear after the government reportedly underscored that it was mulling at the proposal for extending excise duty concessions to the automobile sector beyond December. Further, towards this development, the Heavy Industry Ministry is likely to send a proposal to Finance Ministry regarding extension of excise duty concession till March 31, 2015. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1544:1223; while 80 shares remained unchanged.

The BSE Sensex is currently trading at 27018.13, up by 22.26 points or 0.08% after trading in a range of 26966.96 and 27065.02. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.24%, while Small cap index up by 0.60%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.39%, FMCG up by 0.69%, Auto up by 0.53%, Realty up by 0.25% and INFRA up by 0.16% while, Power down by 0.93%, Metal down by 0.51%, IT down by 0.32%, PSU down by 0.23% and Capital Goods down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 2.28%, ITC up by 1.31%, Maruti Suzuki up by 1.22%, Bharti Airtel up by 1.22% and Tata Motors up by 0.68%. On the flip side, Hindalco down by 2.84%, NTPC down by 1.32%, Coal India down by 1.01%, Sun Pharma Inds. down by 0.87% and Infosys down by 0.78% were the top losers.

Meanwhile, the government is likely to implement proposed new indirect tax regime Goods and Services taxes (GST) by mid-2015. With an aim to provide impetus to Indian industry by implementing GST, Finance Ministry has started a comprehensive study of tax exemptions granted to various goods and services under indirect tax regime in order to streamline the tax structure under GST.

The government may implement two types of GSTs including central GST and state GST. However, states are opposing the two tier structure and above constitutional amendment to transfer of taxation rights from state to centre under a uniform structure. States have also proposed to keep products such as petroleum, tobacco and alcohol out of GST ambit.

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. GST will help create a pan-Indian market for movement of goods and delivery of services and add about 1-2 percent to country's GDP. 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 8088.75, up by 3.05 points or 0.04% after trading in a range of 8072.75 and 8102.95. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.48%, Lupin up by 2.30%, Asian Paints up by 1.86%, ITC up by 1.30% and Maruti Suzuki up by 1.23%. On the flip side, Hindalco down by 3.15%, Power Grid Corporation down by 1.92%, NTPC down by 1.43%, Ultratech Cement down by 1.17% and Cairn India down by 1.07% were the top losers.

Asian markets were trading mostly higher; Straits Times increased 2.17 points or 0.06% to 3,349.45; KOSPI Index increased 7.7 points or 0.38% to 2,041.86; Jakarta Composite increased 9.42 points or 0.18% to 5,142.46;  Shanghai Composite increased 16.95 points or 0.73% to 2,328.63 and  Nikkei 225 increased 39.09 points or 0.25% to 15,948.29. On the flip side, Taiwan Weighted declined by 99.77 points or 1.07% to 9,223.18; FTSE Bursa Malaysia KLCI slid by 2.42 points or 0.13% to 1,863.69 and Hang Seng shed 2.23 points or 0.01% to 24,660.41.

European shares got off to a positive start; with France’s CAC rising by 8.33 points or 0.19% to 4,449.23; UK’s FTSE 100 gaining by 15.9 points or 0.23% to 6,815.5 and Germany’s DAX adding by 3.38 points or 0.07% at 5013.12.