Benchmarks continue weak trade; Sensex holds 27800 mark

Indian equity benchmarks continued their weak trade in the late morning session on account of selling in front line blue chip counters taking cues from global counterparts and ahead of the debate on Goods and Services Tax Bill in the Rajya Sabha scheduled later today. The report from market insight firm Nielsen that consumer confidence in India declined in the second quarter this year with concerns over fuel prices and rising inflation, making the country lose the top position it occupied for the last two years as the most confident globally added some pessimism on the street. However, the downside was arrested after a survey showed that the Nikkei India Services Purchasing Managers’ Index, or PMI, rose to 51.9 in July from 50.3 in June. The reading for July was the highest in three months. The Indian rupee was trading marginally higher against the US dollar from its previous close of 66.74. Traders were seen piling position in Metal, PSU and Bankex stocks while selling was witnessed in FMCG, Power and Realty sector stocks. In scrip specific development, Lupin was trading in red after the Competition Commission imposed a penalty of Rs 73 crore on the company and its two officials for indulging in unfair business practices with regard to supply of medicines in Karnataka. On the other hand, HCL Technologies was trading firm after India’s fourth largest IT exporter reported 14.8% year-on-year (YoY) growth and 6.3% quarter-on-quarter (QoQ) growth in the net profit to Rs 2,047 crore.

On the global front, Asian markets traded mostly in red, extending a global retreat, with Tokyo taking a hit from a strong yen after Japan's economy-boosting stimulus programme fell flat with investors. Stocks rallied last month on promises of support from central banks, but disappointing stimulus, weak US data, plunging oil prices and worries about European banks have sent dealers scurrying for cover. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,600 and 27,900 levels respectively. The market breadth on BSE was negative in the ratio of 790:1352, while 80 scrips remained unchanged.

The BSE Sensex is currently trading at 27800.66, down by 181.05 points or 0.65% after trading in a range of 27760.28 and 28015.43. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.77%, while Small cap index was down by 0.46%.

The gaining sectoral indices on the BSE were Metal up by 0.61%, PSU up by 0.13% and Bankex up by 0.06% while, FMCG down by 1.43%, Power down by 1.02%, Realty down by 0.90%, Capital Goods down by 0.57% and Auto down by 0.51% were the losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.06%, Coal India up by 0.90%, Adani Ports & Special Economic Zone up by 0.82%, Hero MotoCorp up by 0.69% and Cipla up by 0.65%.

On the flip side, ITC down by 2.27%, Power Grid Corporation down by 1.90%, Hindustan Unilever down by 1.84%, HDFC down by 1.19% and Bharti Airtel down by 1.15% were the top losers.

Meanwhile, the much-awaited GST Bill is all set to be tabled in Rajya Sabha on 3 August 2016. The government has secured all-round support for the constitution amendment bill that will be taken up by the Upper House for passage and potentially pave the way for rolling out a single tax to replace a string of local levies.

Finance Minister Arun Jaitley has been meeting the leaders of Congress and other parties, including SP, BJD, TMC and RJD, to build a consensus on the passage of the long pending indirect tax reform Bill in the Rajya Sabha. BJP and Congress issue whip to their MPs to remain present in the house for passage of the Bill.

The GST bill was introduced in the Lok Sabha on December 19, 2014, and was passed by the Lok Sabha around five months later on May 6. It was then referred to a Select Committee of the Rajya Sabha which submitted its report on July 22. These amendments will need to get the nod of the Lok Sabha again, following which at least 50 percent of the states need to ratify the bill for it to become a statute. This again could be a long-drawn process, since states will have their own issues and queries. 

The Bill, which was approved by the Lok Sabha in May, provided for 1 per cent additional tax on inter-state trade and commerce for two years or more as may be decided by the GST Council. Even the Rajya Sabha Select Committee had suggested removal of this provision as it would lead to cascading of taxes.

The Constitution (122nd Amendment) Bill, 2014, which lays the ground for roll out of Goods and Services Tax regime that will include various central indirect taxes including the Central Excise Duty, Countervailing Duty, Service Tax, etc. It also subsumes state value added tax, octroi and entry tax, luxury tax among others. The expected passage of a key constitutional amendment would resolve crucial issues needed to transform India`s $ 2 trillion economy and 1.3 billion consumers into a single market for the first time.

The CNX Nifty is currently trading at 8577.85, down by 45.05 points or 0.52% after trading in a range of 8564.30 and 8635.45. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.62%, HCL Tech up by 2.50%, Idea Cellular up by 1.64%, Adani Ports & Special Economic Zone up by 1.09% and Bank of Baroda up by 1.06%.

On the flip side, ITC down by 2.51%, Power Grid Corporation down by 2.15%, Hindustan Unilever down by 1.78%, BHEL down by 1.51% and TCS down by 1.36% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 339.02 points or 1.53% to 21,790.12, Nikkei 225 decreased 266 points or 1.62% to 16,125.45, Taiwan Weighted decreased 64.87 points or 0.72% to 9,003.89, KOSPI Index decreased 18.93 points or 0.94% to 2,000.10, FTSE Bursa Malaysia KLCI decreased 8.75 points or 0.53% to 1,651.48 and Jakarta Composite decreased 6.89 points or 0.13% to 5,366.43.

On the other hand, Shanghai Composite increased 6.27 points or 0.21% to 2,977.55.