Benchmarks trade firm in late morning session

Indian equity benchmarks continued their firm trade in the late morning session on account of buying in front line blue chip counters as in the biggest tax reform since Independence, the national sales tax or GST Bill 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. Economic Affairs Secretary Shaktikanta Das said that GST can be implemented on April 2017 as most of the preliminary work is done.  Traders were seen piling position in Auto, Realty and Metal stocks while selling was witnessed in Consumer Durables, FMCG and Bankex sector stocks. Hectic activity was witnessed in IT stocks after 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. Telecom companies displayed 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. In scrip specific development, NBCC was trading in green after the company secured work for construction of 30 bedded ESIC Hospital at West Bengal amounting to Rs 250 crore approximately.

On the global front, Asian markets traded mostly in green, following a positive lead from Wall Street, as investors look ahead to an expected Bank of England rate cut and the release of US jobs data. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,550 and 27,700 levels respectively. The market breadth on BSE was positive in the ratio of 1331:765, while 96 scrips remained unchanged.

The BSE Sensex is currently trading at 27762.40, up by 64.89 points or 0.23% after trading in a range of 27633.11 and 27921.91. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.64%, while Small cap index was up by 0.63%.

The gaining sectoral indices on the BSE were Auto up by 1.65%, Realty up by 1.31%, Metal up by 1.16%, Power up by 0.91% and Capital Goods up by 0.64% while, Consumer Durables down by 0.85%, FMCG down by 0.12%, Bankex down by 0.10%, IT down by 0.02% and TECK down by 0.02% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.68%, Tata Steel up by 2.68%, Bajaj Auto up by 1.96%, Hero MotoCorp up by 1.83% and Sun Pharma up by 1.64%.

On the flip side, Lupin down by 1.27%, ICICI Bank down by 0.79%, ITC down by 0.63%, Reliance Industries down by 0.58% and Infosys down by 0.51% were the top losers.

Meanwhile, in the biggest tax reform since Independence and after multiple failed attempts, the Goods & Services Tax (GST) finally had its historic day in the Rajya Sabha with the passage of the Bill to amend the Constitution, which aims to do away with multiple rates of taxation at each state’s level and to replace those with a uniform rate nationwide. The legislation after a seven-hour debate was approved by the Rajya Sabha with 203 votes in favour and none against, in the 243-member House. The exact rate of the tax will only be decided in the weeks or months ahead.

The proposed GST would include various central (Excise Duty, Additional Excise Duty, service tax, Countervailing or Additional Customs Duty, Special Additional Duty of Customs, etc.), as well as state-level indirect taxes (VAT/sales tax, purchase tax, entertainment tax, luxury tax, octroi, entry tax, etc). Once the Bill is passed, there will only be a national-level central GST and a state-level GST spanning the entire value chain for all goods and services, with some exemptions.

Now, the 122 Constitution Amendment Bill, 2014, as passed by the Rajya Sabha, will first go to the Lok Sabha again, since the bill that had been passed by the lower house on May 6, 2015, underwent amendments to reach a political consensus. Later, as it is a Constitution amendment that involves the states, at least 50 percent of them also have to ratify it and finally presidential consent after which the amendment will take effect. Apart from this part, the parliament will have to pass relevant bills for a Central GST and an integrated GST, while the states will have to enact their own legislations for a State GST.

Finance Minister Arun Jaitley has said that the GST rate will be kept as low as possible, 'We will also try and keep the rate as low as possible, certainly much lower than what the present situation is. And as compliance increases, the possibility of that rate coming down further would be there.' He added that GST will make the system more efficient, increase tax compliance and tax avoidance will become more difficult as it will be detected at some stage or the other. Also, there will be no cascading effect of tax on tax; he said adding there are certain items which will either attract lower rate of tax or no tax at all.

The CNX Nifty is currently trading at 8562.65, up by 17.80 points or 0.21% after trading in a range of 8519.50 and 8601.40. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 3.80%, Tata Steel up by 2.64%, Tata Motors - DVR up by 2.55%, Hero MotoCorp up by 2.04% and Bajaj Auto up by 1.96%.

On the flip side, BPCL down by 1.68%, Lupin down by 1.24%, IndusInd Bank down by 0.88%, ICICI Bank down by 0.87% and Yes Bank down by 0.71% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 3.47 points or 0.21% to 1,651.97, KOSPI Index increased 4.42 points or 0.22% to 1,999.21, Taiwan Weighted increased 15.7 points or 0.17% to 9,017.41, Jakarta Composite increased 22.92 points or 0.43% to 5,374.80, Nikkei 225 increased 121.91 points or 0.76% to 16,205.02 and Hang Seng increased 145.59 points or 0.67% to 21,884.71.

On the other hand, Shanghai Composite decreased 3.77 points or 0.13% to 2,974.69.