Market continue to trade in fine fettle in early noon session

Indian equity bourses continue to trade in fine fettle in early noon session on the back of positive global cues as Brexit fears slowly starting to subside. Sentiment was bolstered on hopes that the long-awaited GST Bill may be passed in the upcoming monsoon session of Parliament, which is scheduled from July 18 to August 12. Further, government asserted that it has 'enough' numbers on its side for passage of the GST Bill in the monsoon session. Also, sentiment improved after the cabinet cleared a big pay hike for over a crore government employees and pensioners. The Seventh Pay Commission had recommended 23.55% overall hike in salaries, allowances and pension for government employees. Some support also came with India Meteorological Department’s (IMD) report that the Southwest monsoon is likely to hit the national capital in next 2-3 days as it picks up pace. Global cues too remained supportive with Asian markets trading mostly higher, tracking overnight gains on Wall Street.

The BSE Sensex is currently trading at 26880.36, up by 139.97 points or 0.52% after trading in a range of 26879.96 and 26994.34. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.66%, while Small cap index up by 0.83%.

The top gaining sectoral indices on the BSE were Realty up by 1.29%, Consumer Durables up by 1.08%, Auto up by 0.98%, Bankex up by 0.96% and Power up by 0.84%, while their were no losers on the BSE sectoral front.

The top gainers on the Sensex were Tata Motors up by 2.74%, Axis Bank up by 2.31%, Dr. Reddys Lab up by 1.83%, ICICI Bank up by 1.69% and NTPC up by 1.45%. On the flip side, Sun Pharma down by 0.85%, HDFC Bank down by 0.33% and Infosys down by 0.31% were the top losers.

Meanwhile, India Ratings and Research, following the Cabinet’s decision to clear all recommendations made by the Seventh Pay Commission report, resulting in about 23.55 percent overall increase in salaries, allowances and pension for more than 1 crore government staff and pensioners, has said that implementation of the much- awaited pay hike for one crore central government employees and pensioners will boost domestic consumption by Rs 45,110 crore as also push up household savings. Overall it is positive for growth with modest risk on inflation.

According to India rating the gross impact of the increased pay out on the government exchequer is likely to be Rs 94,775 crore or 0.63 per cent of GDP. It added that the central government will receive income tax on this pay out and collect excise duty on consumption, after sharing the increase in income tax and excise duty with states. Thus the net impact on the central government finances is estimated to be Rs 80,641 crore or 0.54 per cent of GDP.

However, the rating agency also said that consumer price index inflation may inch up somewhat due to higher prices of services, but the impact on wholesale price index is likely to be muted due to the counter balance provided by the deflation in commodity prices and the availability of excess capacity in several manufacturing sectors.

As per India rating agency consumption in the economy will get a boost of Rs 45,110 crore or 0.30 per cent of GDP and increase savings will increase by Rs 30,710 crore  or 0.20 per cent of GDP as consumption demand in urban areas is likely rise owing to the rising income levels.  While the employees will get salary arrears from January 1, 2016, allowances will be paid only from July 1, 2016. The impact of the pay hike is expected to be less severe on state finances than expected earlier due to a lower arrear pay out.

The CNX Nifty is currently trading at 8248.05, up by 44.05 points or 0.54% after trading in a range of 8246.85 and 8277.20. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were BHEL up by 3.28%, Grasim Industries up by 2.83%, Tata Motors up by 2.72%, Tata Motors - DVR up by 2.28% and Axis Bank up by 2.16%. On the flip side, Ambuja Cement down by 0.82%, Bosch down by 0.51%, Sun Pharma down by 0.36%, HDFC Bank down by 0.20% and Infosys down by 0.18% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 increased 9.09 points or 0.06% to 15,575.92, FTSE Bursa Malaysia KLCI increased 9.95 points or 0.61% to 1,652.16, KOSPI Index increased 13.99 points or 0.72% to 1,970.35, Jakarta Composite increased 48.27 points or 0.97% to 5,028.38, Taiwan Weighted increased 80.02 points or 0.93% to 8,666.58 and Hang Seng increased 307.82 points or 1.51% to 20,743.94, while Shanghai Composite decreased 4.08 points or 0.14% to 2,927.51.