Post Session: Quick Review

Indian equity markets that gained traction despite making cautious start in early deals remained flat for most part of the day and suffered selling pressure in the latter part, however they managed to end the session marginally in green. The markets traded on firm note taking cues from the biggest tax reform since Independence, the national sales tax or GST Bill which has been approved by the Rajya Sabha to replace a raft of different state and local taxes with a single unified value added tax system. The bill will benefit sectors like FMCG (excluding cigarettes and jewellery), auto, cement, light electrical, multiplexes, retail and logistics. The US India Business Council (USIBC) has termed the passage of GST bill by the Indian Parliament as a game-changer, saying it is a significant milestone in efforts to improve the country's ranking in World Bank's ease of doing business index. USIBC believes that the GST will boost economic growth by streamlining domestic supply chains and removing the compliance burden of contradictory state tax regimes. Assocham president Sunil Kanoria stated that the goods and services tax (GST) regime will boost positive sentiment in the country but is likely to miss its rollout target of April 1 next year. Meanwhile, Economic Affairs Secretary Shaktikanta Das said that GST can be implemented on April 2017 as most of the preliminary work is done. The secretary allayed fears that the bill will have an impact on inflation even if the rate is kept at 20%. Some selling crept in IT stocks as industry body Nasscom enlightened that margins of Indian IT companies are under pressure due to reasons like global economic turbulence, while there may be a marginal decline in hiring because of increased automation and efficiency. 

On the global front, shares rose in Europe and Asia, lifted by gains in financial stocks, while sterling dipped against the dollar before Bank of England policy meeting expected to deliver a first cut in interest rates since 2009. The central bank hasn’t cut interest rates since March 2009, but is expected to cut them in an effort to support the UK economy, which data show has been hurt since the June 23 'UK referendum' on EU membership.

Back home, benchmarks which slipped in red, later gained some strength tracking European markets and moved in positive zone. Telecom companies showed mixed response with telecom minister Manoj Sinha informing that government has imposed a penalty of Rs 2,313 crore on telecom operators for violating subscriber verification norms till May 31. As per the data, state-run telecom firm BSNL tops the chart with a penalty of Rs 583.09 crore followed by Rs 377.51 crore on Reliance Communications, Rs 328.15 crore on Tata Teleservices, Rs 300.34 crore on Bharti Airtel, Rs 285.62 crore on Vodafone, Rs 218.04 crore on Idea Cellular, Rs 108.82 crore on Aircel and Rs 53.14 crore on MTS. Sugar stocks were in limelight after the Union Cabinet approved provision of production subsidy to sugar mills on the basis of actual exports and supply of ethanol. The sugar subsidy was earlier meant to be disbursed on the basis of estimated exports and ethanol output. The move is seen to be helping the mills offset cost of cane and facilitate timely payment of cane price dues of farmers.

The BSE Sensex ended at 27754.75, up by 57.24 points or 0.21% after trading in a range of 27627.97 and 27921.91. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices were trading in green; the BSE Mid cap index was up by 0.47%, while Small cap index was up by 0.49%. (Provisional)

The gaining sectoral indices on the BSE were Realty up by 2.73%, Metal up by 1.63%, Auto up by 1.45%, Power up by 0.87% and PSU up by 0.43% while, Consumer Durables down by 0.75%, IT down by 0.49%, TECK down by 0.32% and FMCG down by 0.09% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 4.60%, Tata Motors up by 4.07%, Adani Ports & Special Economic Zone up by 2.22%, Bharti Airtel up by 1.94% and Sun Pharma up by 1.26%. (Provisional)

On the flip side, Asian Paints down by 1.61%, Lupin down by 1.21%, Infosys down by 1.20%, Coal India down by 0.83% and Mahindra & Mahindra down by 0.72% were the top losers. (Provisional)

Meanwhile, setting the stage for India’s biggest ever spectrum sale, the Union Cabinet has approved a spectrum usage charge (SUC) of 3 percent of adjusted gross revenue (AGR), excluding revenues from wire-line services. Now Department of Telecommunications (DoT) can issue the Notice Inviting Applications marking the beginning of the auction process. Traditionally, the auctions begin within 45-50 days of the notice being issued.

The Cabinet has also cleared the proposal on using the weighted average method to compute the charge in addition to introducing proposal for a 3 per cent floor rate for the weighted average calculation, which was approved by the inter-ministerial Telecom Commission on July 25. The weighted average of SUC rates across all spectrum assigned to an operator in all access spectrum bands, including broadband wireless access (BWA) spectrum obtained in the 2010 auction, shall be applied for charging SUC, subject to minimum 3 per cent of AGR, and excluding revenues from wire-line services. However, the uniform SUC rate has been a highly contentious issue with the industry due to differences in the fee for the 2300 MHz band (1 per cent) and other bands.

The Cabinet, on June 22, had cleared the proposal for auction in various bands, but wanted more clarifications on the issue of SUC therefore it has asked Telecom Regulatory Authority of India (TRAI) and the Department of Telecom (DoT) to have a fresh look. And finally the Telecom Commission on July 25 recommended 3 percent annual usage charge for the spectrum to be sold in the upcoming auction while fixing the same as the minimum rate even for existing airwaves with all operators.

The auctions, scheduled for September, will see spectrum auctioned in all the major bands, including 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz. This time there will be a total of 2,142 MHz put up for auction in these bands. Besides, the auction is expected to generate over Rs 5.60 lakh crore for the Centre and allow operators to accumulate more spectrums.

The CNX Nifty ended at 8561.75, up by 16.90 points or 0.20% after trading in a range of 8518.15 and 8601.40. There were 31 stocks advancing against 20 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bank of Baroda up by 5.48%, Tata Motors up by 4.63%, Tata Steel up by 4.54%, Tata Motors - DVR up by 2.55% and Adani Ports & Special Economic Zone up by 2.47%. (Provisional)

On the flip side, Asian Paints down by 1.52%, Infosys down by 1.24%, Zee Entertainment down by 1.24%, Lupin down by 1.12% and Bharti Infratel down by 0.81% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 8.07 points or 0.12% to 6,642.47, France’s CAC increased 16.56 points or 0.38% to 4,337.64, while Germany’s DAX increased 81.3 points or 0.8% to 10,251.51.

Asian equity markets ended higher on Thursday as oil prices rebounded from four-month lows and US private-sector hiring data showed the labor market was holding up despite slowing in small business hiring. Traders eyed a Bank of England meeting later in the day amid expectations the central bank will cut interest rates for the first time since 2009 in a bid to ward off a recession. Chinese shares closed marginally higher after the People's Bank of China reiterated it would continue its prudent monetary policy in the second half of the year and fine-tune it as necessary. Further, Japanese shares ended a volatile session sharply higher as the yen failed to maintain earlier gains on comments by Bank of Japan Deputy Governor Kikuo Iwata that the central bank hasn't set a future direction for policy.