Post Session: Quick Review

After witnessing consolidation in previous three consecutive sessions, Indian equity markets resumed its record breaking run and scored a lifetime high level on Wednesday, which took both Sensex and Nifty above psychologically crucial 28,000 and 8,350 levels respectively. 50-share barometer index also hit the crucial 8,400 mark during the session, but witnessed stiff resistance around that level. Meanwhile, broader indices also tied some modest amount of gains. Sustained buying activities by both funds and retail investors amidst positive global cues mainly lead to session of record high at Dalal Street. The mood turned upbeat after government's bid to implement the goods & services tax (GST) at the earliest got a significant boost. The empowered committee of state finance ministers endorsing the so-called 'place of supply' rules that form the backbone of the new regime, will replace a plethora of levies, create a common market and likely give GDP growth a lift of up to two percentage points. Notably, these gains of bourses came ahead of the release of crucial macro-economic data, i.e. September IIP data and October CPI data, which is scheduled to be released later in the day. While, the street widely expects consumer price index (CPI) to be at 6.46%, which is another new low for the index since it started in January 2012, it expects industrial output numbers (IIP) to be in the range of 1%-2% against 0.4% In August.

On the global front, Asian stocks rose for a fourth day, as Chinese shares rallied amid optimism for next week’s exchange link with Hong Kong. Hong Kong. Rakuten Inc, the operator of Japan’s largest online mall, surged over 5% amid speculation the nation will delay another increase to its sales tax. On the flip side,  European shares snapped a two-session climb on Wednesday, with bank stocks in focus after five lenders agreed to pay a total of about $3.3 billion to U.S., British and Swiss regulators to resolve allegations they tried to manipulate the foreign-exchange market.

Closer home, much of the sectoral indices on BSE concluded into positive territory, however stocks from Power, Metal and PSU shares were the worst performers of the session. On the flip side, much of the gains were witnessed by stocks from Auto, Banking and FMCG counters. Rate sensitive stocks rallied on hopes of lower interest rates in upcoming monetary policy on expectation of yet another record low inflation figures later in the day. The market breadth on the BSE was evenly divided, where advancing and declining stocks were in a ratio of 1513:1525, while 106 scrips remained unchanged. (Provisional)

The BSE Sensex ended at 28008.90, up by 98.84 points or 0.35% after trading in a range of 27958.64 and 28126.48. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in the green; the BSE Mid cap index was up by 0.47%, while Small cap index up by 0.20%. (Provisional)

The gaining sectoral indices on the BSE were Auto up by 1.18%, Bankex up by 1.12%, FMCG up by 0.96%, Consumer Durables up by 0.55% and Infrastructure up by 0.02%, while Power down by 1.37%, Metal down by 0.90%, PSU down by 0.57%, Capital Goods down by 0.53% and Oil & Gas down by 0.53% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 3.08%, Bajaj Auto up by 1.79%, Tata Motors up by 1.78%, HDFC up by 1.64% and ITC up by 1.51%. On the flip side, Cipla down by 3.06%, Tata Steel down by 2.56%, Tata Power down by 2.47%, NTPC down by 2.37% and Larsen & Toubro down by 1.25% were the top losers. (Provisional)

Meanwhile, Finance Minister Arun Jaitley’s plan to introduce Goods and Services Tax (GST) Constitutional Amendment Bill in the winter session of Parliament, may hit a road block with persisting differences between Centre and states over some key provisions. The empowered committee of state FMs after its meeting has insisted that threshold turnover for levying GST be retained at Rs 10 lakh and petroleum be kept out of the purview of the new tax regime. However, the committee expressed hope that the GST could be rolled out by April 1, 2016, notwithstanding the hitches.

The states had in August decided that the threshold be fixed at Rs 10 lakh and had informed that to the Centre. But Abdul Rahim Rather, chairman of Empowered Committee said that the Centre had written to him suggesting that the threshold annual turnover for levying GST should be increased to Rs 25 lakh from Rs 10 lakh. Rather said that finally the Committee took a decision that they will go by the decision that is already taken that is Rs 10 lakh. The Empowered Committee also reviewed the revenue neutral rate for the GST, comprising C-GST and S-GST, as suggested by a GST sub-committee, which had suggested S-GST rate at 13.91 percent and C-GST rate at 12.77 percent.

As regards the items exempted from the purview of GST, the Empowered Committee suggested that they should be mentioned in the Constitutional Amendment Bill. States want that petroleum, alcohol and tobacco should be kept out of the purview of GST.

The GST whose rollout has missed several deadlines because of lack of consensus among states over certain crucial issues on the new tax regime, which will subsume indirect taxes like excise duty and service tax at the central level and VAT on the states front, besides local levies. The Centre is planning to provide Rs 13,000 crore on account of CST compensation to states for dues till March 2010 and is likely to seek Parliament approval for the same in the ensuing Winter session beginning November 24. The GST Constitutional Amendment Bill was introduced in the Lok Sabha in 2011, had already lapsed and the government is required to come up with a fresh bill.

India VIX, a gauge for markets short term expectation of volatility dipped 2.46% at 14.43 from its previous close of 14.80 on Tuesday. (Provisional)

The CNX Nifty ended at 8383.30, up by 20.65 points or 0.25% after trading in a range of 8370.50 and 8415.05. There were 24 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 3.10%, DLF up by 2.41%, Bajaj Auto up by 1.96%, Tata Motors up by 1.95% and Ambuja Cement up by 1.82%. On the flip side, Power Grid down by 3.18%, Cipla down by 2.94%, Tata Power down by 2.67%, Tata Steel down by 2.49% and NTPC down by 2.47% were the top losers. (Provisional)

European Markets were trading in the red; UK’s FTSE 100 was down 0.58%, France’s CAC was down by 0.83% and Germany’s DAX was down by 1.08%.

Asian markets ended mostly in green on Wednesday, with Chinese shares rallying amid optimism for next week’s exchange link with Hong Kong. Hong Kong is scrapping a daily limit on the amount of yuan residents can buy, helping reinforce its dominance as an offshore trading center for Chinese assets as Shanghai’s stock market opens to the city’s investors. Japanese stocks scaled seven-year highs on Wednesday, putting the rest of Asia in the shade, buoyed by expectations Prime Minister Shinzo Abe will postpone a planned sales tax hike to avoid damaging a fragile economic recovery. Abe stated that he will make up his mind on the tax increase after assessing the July-September GDP data due next Monday, widely expected to highlight the fragility of the rebound following a sharp contraction in the second quarter. The first increase in the two-stage sale tax hike in April knocked the Japanese economy hard, and markets view a delay in the second-phase of the tax hike as positive for growth. Japanese tertiary industry activity index rose to a seasonally adjusted 1.0%, from -0.1% in the preceding month while Japan’s M2 Money Stock rose to a seasonally adjusted 3.2%, from 3.0% in the preceding month. South Korean Unemployment Rate remained unchanged at a seasonally adjusted annual rate of 3.5% compared to the preceding month.