Benchmarks trade higher amid firm global cues

Extending their previous session’s rally, Indian equity markets made a gap-up opening and are trading in green on the back of firm global cues amid easing of Greek debt crises. Sentiment also got support with the release of the latest Global Economic Prospects (GEP) report of World Bank which has said that leading the World Bank's growth chart of major economies, India with an expected growth rate of 7.5 percent this year is set to surpass China. Further, some support also came on report that the government has approved the signing of a motor vehicles agreement between India and three other nations of the SAARC grouping - Bhutan, Bangladesh and Nepal on June 15, which will enable seamless transit of passenger and cargo vehicles among these nations. Appreciation in Indian rupee against dollar too supported the sentiments. The rupee opened higher by 8 paise to 63.76 against the dollar in early trade at the Interbank Foreign Exchange on sustained selling of the US currency by exporters and banks as the current account deficit shrank in the fourth quarter. India’s current account deficit narrowed to $1.3 billion, or 0.2 per cent of gross domestic product, in the January-March quarter from $8.3 billion, or 1.6 per cent of GDP in the previous quarter.

In scrip specific development, Chennai Petroleum Corporation (CPCL) was trading higher after the company sought shareholders nod for borrowing limit up to Rs 8,000 crore and bonds issue of up to Rs 3,000 crore, while Surana Solar was trading lower after media reports clarified that the bulk deal in the stock was not done by ace investor Rakesh Jhunjhunwala but by his namesake.

On the global front, the US markets ended higher on Wednesday helped by optimism that Greece may be closer to reaching a deal with creditors. Asian markets were mostly trading in green as investors indulged in some bargain hunting after recent weakness.

Back home traders were seen piling position in Realty, Healthcare, Consumer Durables, FMCG and Metal, while selling was witnessed only in Auto. The market breadth on BSE was positive in the ratio of 1025: 553 while 62 scrips remained unchanged.

The BSE Sensex is currently trading at 26909.96, up by 69.46 points or 0.26% after trading in a range of 26896.42 and 27000.14. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.59%, while Small cap index was higher by 0.71%.

The top gaining sectoral indices on the BSE were Realty up by 1.44%, Healthcare, up by 0.80%, Consumer Durables up by 0.72%, FMCG up by 0.59% and Metal up by 0.57% while, Auto down by 0.11% was the lone losing index on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.91%, Vedanta up by 1.70%, Sun Pharma up by 1.49%, ICICI Bank up by 1.16% and Maruti Suzuki up by 0.68%. On the flip side, Tata Motors down by 1.11%, Tata Steel down by 0.70%, BHEL down by 0.62%, HDFC Bank down by 0.56% and NTPC down by 0.54% were the top losers.

Meanwhile, rating agency Crisil in its latest report has stated that the implementation of Goods & services tax (GST) will help reduce logistics costs for companies by up to 30 percent over 3-4 years due to savings in warehousing cost and elimination of check-posts.

Crisil has stated that once the CST (Central sales tax) is phased out, optimisation of warehouses and inventories will accrue in savings on logistics, while the elimination of check posts will also help deliver savings as goods move faster. It added that manufacturers of non-bulk goods spend about 5-8 per cent of sales on logistics. GST will save warehousing costs of 1-1.5 per cent of sales over the next three-four years. On the same time elimination of check-post delays will yield additional savings of 0.4-0.8 per cent, thus taking overall savings to 1.5-2 per cent of sales.

The assessment of the agency showed the consumer durables sector to be the biggest beneficiary of GST, potentially saving 30% of logistics costs from current levels of 7-8% of sales. The sector has the most number of warehouses set up solely to avoid paying CST and hence offers maximum scope for consolidation.

The rating agency though raised concern over the government’s proposal of allowing states to levy an additional tax of 1 per cent on supply of goods in lieu of CST for two years, saying that this is against the core principle of GST, and will defer full benefits of the rollout.

The CNX Nifty is currently trading at 8141.45, up by 17.00 points or 0.21% after trading in a range of 8137.25 and 8163.05. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 1.83%, Vedanta up by 1.54%, Sun Pharma up by 1.54%, BPCL up by 1.48% and Zee Entertainment up by 1.08%. On the flip side, Tata Motors down by 1.11%, Cairn India down by 1.03%, Bosch down by 0.95%, Tata Steel down by 0.75% and HCL Tech. down by 0.75% were the top losers.

Asian markets were mostly trading in green; KOSPI Index increased 3.59 points or 0.18% to 2,054.91, Taiwan Weighted increased 7.62 points or 0.08% to 9,306.12, Straits Times increased 22.29 points or 0.67% to 3,348.06, Hang Seng increased 224.44 points or 0.84% to 26,912.08 and Nikkei 225 increased 253.79 points or 1.27% to 20,300.15. On the flip side, Shanghai Composite decreased 9.66 points or 0.19% to 5,096.37, Jakarta Composite decreased 7.45 points or 0.15% to 4,926.10 and FTSE Bursa Malaysia KLCI decreased 0.19 points or 0.01% to 1,735.44.