Benchmarks trade firm; Metal, Realty lead

Indian equity markets added gains and continued their firm trade in the late afternoon session on account of buying in frontline blue chip counters. Investors however took cautious approach after the International Monetary Fund (IMF) cut its global growth forecasts for a second time this year, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed. Traders were seen piling position in Metal, Realty and Auto stocks while selling was witnessed in IT, TECK and Bankex sector stocks. In the scrip specific development, Sobha was trading in red on reporting lower Q2FY16 sales. The company logged sales worth Rs 533.2 crore, a 9.7% fall from Rs 590.5 crore sales a year ago. HMT was trading firm after the company signed a pact with a German firm Fraunhofer for technology up-gradation.

On the global front, the Asian markets were trading in green, while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,150 and 27,000 levels respectively. The market breadth on BSE was positive in the ratio of 1609:986 while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 27024.72, up by 91.84 points or 0.34% after trading in a range of 26877.51 and 27069.33. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.14%, while Small cap index up by 0.47%.

The gaining sectoral indices on the BSE were Metal up by 3.13%, Realty up by 2.52%, Auto up by 1.50%, Power up by 1.14% and PSU up by 1.01%, while IT down by 0.96%, TECK down by 0.90% and Bankex down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were Hindalco up by 10.37%, Vedanta up by 6.71%, Tata Steel up by 3.63%, Tata Motors up by 3.15% and ONGC up by 3.12%.

On the flip side, Wipro down by 2.08%, Bharti Airtel down by 1.89%, Dr. Reddys Lab down by 1.09%, Infosys down by 1.03% and Axis Bank down by 0.87% were the top losers.

Meanwhile, Commerce department has come up with the proposal that tariffs and minimum alternate tax (MAT) levied on Special economic zones (SEZ) should be brought down. SEZs may soon get a boost with the government considering two proposals to revive these once much sought after enclaves that are struggling without fiscal benefits. SEZs contribute about a quarter of the country's exports but several licences were surrendered after the two taxes were levied .The proposals are expected to be discussed on October 7, when officials of the commerce ministry and trade councils will discuss the ways to boost exports.

Units in SEZs, which were set up with the objective of attracting foreign investment and boosting exports, are also allowed to sell products manufactured in such zones in the domestic market. India can import almost 200 kinds of electronic hardware without paying the custom duty under the Information Technology Agreement. Though, manufacturers of these goods in SEZ selling them in the local market have to pay almost 28 per cent in duties.

Currently, goods from SEZs which are sold in the domestic market are levied an import duty which puts them at disadvantage compared with the goods which are imported through free trade agreements. SEZ units face competition from goods being sold in DTA (domestic tariff area) through the free trade agreement route due to the difference in the duty. Besides customs duty, SEZs have also been hit by MAT and dividend distribution tax, which were imposed in 2011.

The commerce department wants MAT of 7.5 per cent to be levied on manufacturing SEZs from the existing of 18.5 per cent. Reduction in MAT in manufacturing SEZs will benefit those in the auto components, garment manufacturing, ceramics and computer parts sectors located in Chennai, Noida and Kerala.

Exports from SEZs declined to Rs 4.63 lakh crore in 2014-15 from Rs 4.94 lakh crore in 2013-14.

The CNX Nifty is currently trading at 8171.25, up by 18.35 points or 0.23% after trading in a range of 8132.90 and 8186.85. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 10.13%, Vedanta up by 6.94%, Cairn India up by 3.84%, Tata Steel up by 3.56% and ONGC up by 3.21%.

On the flip side, HCL Tech down by 4.04%, Wipro down by 2.11%, Bharti Airtel down by 1.88%, Zee Entertainment down by 1.28% and BPCL down by 1.22% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 15.19 points or 0.76% to 2,005.84, FTSE Bursa Malaysia KLCI increased 27.09 points or 1.63% to 1,689.60, Jakarta Composite increased 27.43 points or 0.62% to 4,473.21, Straits Times increased 59.74 points or 2.06% to 2,957.15, Taiwan Weighted increased 101.13 points or 1.2% to 8,495.23, Nikkei 225 increased 136.88 points or 0.75% to 18,322.98 and Hang Seng increased 684.14 points or 3.13% to 22,515.76.

China Stock exchange was closed on account of ‘National Day’ holiday.

The European markets were trading in green; UK’s FTSE 100 increased 56.7 points or 0.9% to 6,382.86, France’s CAC increased 45.98 points or 0.99% to 4,706.62 and Germany’s DAX increased 137.67 points or 1.39% to 10,040.50.