Benchmarks continue volatile trade; Sensex holds 27900 mark

Indian equity benchmarks continued their volatile trade hovering near the neutral line in the late afternoon session. The losses remained capped with NITI Aayog Vice Chairman Arvind Panagariya statement that a good monsoon can help add a percentage point to India’s GDP growth in the current fiscal, from 7.6% in 2015-16. Traders were seen piling position in Bankex, Auto and Capital Goods stocks while selling was witnessed in Consumer Durables, FMCG and Metal sector stocks. In scrip specific development, Jindal steel and Power (JSPL) was trading firm on reports that the company is likely to sell its 15% stake to Japan’s Yamato. The company is in talks with Yamato Steel to sell 15% stake by issuing preferential shares and aims to raise around Rs 1,200 crore. Bharti Infratel was trading in green after the company reported a 71% jump in consolidated net profit for the quarter ended June 2016. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. July 2016 series to next month i.e. August 2016 series. The near month July 2016 derivatives contracts will expire on Thursday i.e. July 28, 2016.

On the global front, Asian markets were trading mostly in green while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,550 and 27,900 levels respectively. The market breadth on BSE was negative in the ratio of 1192:1355 while 187 scrips remained unchanged.

The BSE Sensex is currently trading at 27959.30, down by 17.22 points or 0.06% after trading in a range of 27899.93 and 28210.88. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.28%, while Small cap index was up by 0.40%.

The gaining sectoral indices on the BSE were Bankex up by 0.81%, Auto up by 0.56%, Capital Goods up by 0.42%, TECK up by 0.21% and Oil & Gas up by 0.08% while, Consumer Durables down by 0.59%, FMCG down by 0.47%, Metal down by 0.39%, Realty down by 0.39% and Power down by 0.10% were the losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.98%, Maruti Suzuki up by 1.69%, Adani Ports & Special Economic zone up by 1.56%, Tata Motors up by 1.41% and SBI up by 0.71%.

On the flip side, Dr. Reddy’s Lab down by 9.36%, Tata Steel down by 2.31%, ITC down by 1.11%, Coal India down by 1.08% and Lupin down by 0.86% were the top losers.

Meanwhile, a meeting between Union Finance Minister Arun Jaitley and his counterparts from the states resulted in some headway on the long pending goods and service tax (GST), by reaching a broad consensus on dropping the proposed 1 per cent tax on inter-state supply of goods. There was also consensus on keeping a cap on rates outside the Constitution amendment Bill, broad principles on the tariffs and categorical wording on fully compensating states for five years, in case of loss. However, the disagreement between the Centre and states continued over administrative powers on assessment, scrutiny and adjudication of entities.

Chairman of the empowered committee of state finance minister and West Bengal Finance Minister, Amit Mitra said that an agreement was reached that the cap on the GST rates cannot be incorporated in the Constitution amendment Bill. As no tax rates are provided in the Constitution. It was discussed and the conclusion reached that the Union finance minister will communicate to other parties. However, states stood firm on their demand that there should be a threshold of Rs 1.5 crore of turnover a year for administrative powers on assessment, scrutiny and adjudication. Below this threshold, states should have complete control, while there should be a dual control of states and the Centre above this.

Mitra further stated that in the Constitution amendment Bill, the Centre had proposed 100 per cent compensation for first three years, 75 per cent and 50 per cent for the next two years. However, the Select Committee of the Rajya Sabha had recommended 100 per cent compensation for probable loss of revenue for five years. He said, the broad consensus put together is satisfactory to all political parties and all states. Besides, ‘foolproof’ wording for compensation to states has been worked out.

The Constitution amendment Bill, as passed by the Lok Sabha in May 2014, sought to impose additional levy of up to one per cent over and above the GST to help the manufacturing states such as Gujarat, Tamil Nadu and Maharashtra, since the new tax regime would be destination-based. Further, the issue of administrative powers would be dealt in the GST Bills, which would be introduced in Parliament only after the Constitution amendment Bill is passed. As such, there was a broad consensus on the provisions of the Constitution amendment Bill, which is of immediate priority. However, this sparked fears that the levy would lead to cascading, tax on tax, since it would not be a part of the GST chain. To balance the two sides, a select panel of the Rajya Sabha recommended dilution in the provision to limit it only to inter-state supply of goods for a consideration. This means that company-to-company transfers would be out of this tax.

The CNX Nifty is currently trading at 8592.50, up by 1.85 points or 0.02% after trading in a range of 8572.05 and 8665.00. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.65%, ICICI Bank up by 3.33%, Zee Entertainment up by 2.01%, Maruti Suzuki up by 1.99% and Adani Ports & Special Economic Zone up by 1.65%.

On the flip side, Dr. Reddy’s Lab down by 9.51%, Tata Steel down by 2.32%, Idea Cellular down by 1.99%, ITC down by 1.43% and Lupin down by 1.04% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.38 points or 0.02% to 1,661.80, Taiwan Weighted increased 38.6 points or 0.43% to 9,063.39, Jakarta Composite increased 49.17 points or 0.94% to 5,273.56, Hang Seng increased 89.26 points or 0.4% to 22,218.99 and Nikkei 225 increased 281.78 points or 1.72% to 16,664.82.

On the other hand, Shanghai Composite decreased 58.17 points or 1.91% to 2,992.00 and KOSPI Index decreased 2.29 points or 0.11% to 2,025.05.

The European markets were trading in green; UK’s FTSE 100 increased 14.95 points or 0.22% to 6,738.98, France’s CAC increased 65.22 points or 1.48% to 4,459.99 and Germany’s DAX increased 87.7 points or 0.86% to 10,335.46.