Benchmarks regain momentum; trade close to day’s highs

After paring some early gains in the late morning session, Indian equity markets have regained the optimistic momentum and are clawing back towards the session’s highs. The frontline indices got firm support around the psychological 25,050 (Sensex) 7,600 (Nifty) levels as they rebounded from thereon, as investors opted to buy beaten down but fundamentally strong stocks after six days of continued drubbing. Sentiments in the session remained sanguine with report that indirect tax collection jumped 34.3 percent to Rs 4,38,291 crore during the first eight months of current financial year.  Appreciation in Indian rupee too aided sentiments. The Indian currency was trading higher by 6 paise at 66.77 per dollar at this point of time as compared to its previous close of 66.83.

On the global front, Asian markets were trading mostly in red at this point of time with Japanese Nikkei share average declining to a five-week closing low as a sudden surge in the yen hit shares of exporters such as Fanuc and Honda Motor, though the trading volume was low. Back home, shares of real estate companies edged higher after the Union Cabinet approved the Real Estate (Regulation and Development) Bill, 2015. The Real Estate (Regulation and Development) Bill provides uniform regulatory environment to ensure speedy adjudication of disputes and orderly growth of the real estate sector. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1,445 shares on the gaining side against 899 shares on the losing side while 159 shares remain unchanged.

The BSE Sensex is currently trading at 25139.94, up by 103.89 points or 0.41% after trading in a range of 25034.14 and 25175.82. 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 0.17%, while Small cap index up by 0.48%.

The top gaining sectoral indices on the BSE were Realty up by 1.24%, Oil & Gas up by 1.23%, Metal up by 0.84%, Capital Goods up by 0.71% and Power up by 0.36% while, Healthcare down by 0.63%, Auto down by 0.30% and Bankex down by 0.24% were the few losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.58%, Hindalco up by 2.58%, Reliance Industries up by 2.36%, HDFC up by 1.84% and NTPC up by 1.38%. On the flip side, Sun Pharma down by 2.15%, Lupin down by 1.54%, Tata Motors down by 1.52%, Mahindra & Mahindra down by 1.33% and BHEL down by 1.09% were the top losers.

Meanwhile, the committee headed by Chief Economic Advisor (CEA) Arvind Subramanian has listed various risk factors in the implementation of Goods and Service Tax (GST) bill. These factors include revenue shortfall and re-emergence of trust deficit between the Centre and the states.

The report stated that one risk of setting a revenue neutral rate (RNR) that is low is the re-emergence of a trust deficit between the Centre and the States as happened in relation to compensation for lost CST revenues after the global financial crisis. The committee has suggested a low RNR of 15 per cent which could translate into bulk of the goods being taxed at 17-18 per cent, with a low rate of 12 per cent on merit goods and high rate of 40 per cent on demerit or sin goods.

Besides, it has observed that revenue shortfall could result in a 'double whammy' for Centre as it would also affect the fiscal deficit and might delay compensation to the states, resulting in trust deficit.  The report said that the revenue shortfall could be overcome by raising taxes on non-GST products like petroleum, alcohol and tobacco. Further, the Centre may also relax the deficit targets, adding that a moderately higher fiscal deficit due to a low GST will benefit consumers, especially poorer ones.

The CNX Nifty is currently trading at 7640.55, up by 28.05 points or 0.37% after trading in a range of 7610.00 and 7651.50. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.58%, GAIL India up by 2.49%, Reliance Industries up by 2.21%, HDFC up by 1.93% and Adani Ports &Special up by 1.91%. On the flip side, Sun Pharma down by 2.45%, Tata Motors down by 1.75%, Lupin down by 1.48%, Mahindra & Mahindra down by 1.44% and Yes Bank down by 1.43% were the top losers.

Asian markets were trading mostly in red terrain; Nikkei 225 declined 254.52 points or 1.32% to 19,046.55, Hang Seng slipped 28.62 points or 0.13% to 21,775.14, Taiwan Weighted dipped 13.45 points or 0.16% to 8,216.17, FTSE Bursa Malaysia KLCI decreased 6.77 points or 0.41% to 1,652.59, Shanghai Composite shed 5.33 points or 0.15% to 3,467.11 and Jakarta Composite was down by 4.95 points or 0.11% to 4,459.23. On the flip side, KOSPI Index was up by 3.83 points or 0.2% to 1,952.07.