Benchmark add gains; Sensex surpass 28000 mark

Indian equity benchmarks added gains and continued their firm trade hovering near the highest point of the day in the late morning session on account of buying in front line blue chip counters supported by strong performance among global peers. The sentiments got some support with the government setting a target of April 1, 2017 for rollout of the Goods and Services Tax and unveiling a detailed roadmap for its implementation. Finance Minister Arun Jaitley has said that tax rate will be ‘optimum’ even as there were indications that it may be higher than 18 percent. The government expects at least half the states to ratify the constitution amendment Bill on Goods and Services Tax within the next 30 days. Foreign portfolio investors (FPIs) bought shares worth a net Rs 559.49 crore yesterday, as per provisional data released by the stock exchanges, provided some upside support. Investors took note of the India Meteorological Department’s weekly update on rainfall which stated that during the week from 28 July to 3 August 2016, rainfall was above long period average (LPA) by 6% over the country as a whole. For the country as a whole, cumulative rainfall during this year’s monsoon for July 2016 was 7% above LPA. Traders were seen piling position in Bankex, Metal and PSU sector stocks. In scrip specific development, Suzlon Energy was trading firm on hopes to exit a process of corporate debt restructuring by March 2017, a turnaround for a company that four years ago reeled under heavy debt after an ill-advised overseas expansion.

On the global front, Asian markets traded mostly in green, driven by the Bank of England’s aggressive stimulus measures and an overnight rally in crude oil prices but traders keeping a wary eye on US jobs data due later in the global trading day. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,600 and 28,000 levels respectively. The market breadth on BSE was positive in the ratio of 1603:550, while 103 scrips remained unchanged.

The BSE Sensex is currently trading at 28010.74, up by 296.37 points or 1.07% after trading in a range of 27795.74 and 28034.93. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.96%, while Small cap index was up by 1.08%.

The gaining sectoral indices on the BSE were Bankex up by 1.72%, Metal up by 1.70%, PSU up by 1.44%, Oil & Gas up by 1.40% and Capital Goods up by 1.40%.

The top gainers on the Sensex were ICICI Bank up by 3.01%, SBI up by 2.79%, Axis Bank up by 2.25%, Hero MotoCorp up by 2.11% and Bajaj Auto up by 2.04%.

On the flip side, Sun Pharma down by 0.38% and Infosys down by 0.11% were the top losers.

Meanwhile, as the tax on services will increase by around 20 percent from the current tax rate after implementation of GST, the government could consider an anti-profiteering clause to ensure the benefit of the goods and services tax (GST) are passed on to consumers and prices don't spike once the levy is rolled out.

Finance Minister Arun Jaitley has though said that we are still far from that kind of thinking and this matter will have to be discussed in the GST Council if it comes up as a subject for debate. He also said that the council will include representatives of the Centre and states and they will decide on all critical aspects of GST which includes the rate structure and relevant legislation.

GST will have a three-slab structure with most goods and services at the standard rate in the middle. A lower rate will be imposed on essential items to  protect the poor and a higher rate on luxury items. Arun Jaitley has said that companies should be able to save on logistics, protect themselves better from imports and optimise operations, all of which should lead to reduced prices. In the long run, the tax rate will come down and with that, the price of many goods.

There have been cases of some countries witnessing a rise in inflation after switching over to GST. In Malaysia the Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC), to ensure that profiteering does not take away the advantage of GST from consumers, urged the business owners to adjust their pricing of goods and services and pass on the benefits to consumers. The ministry announced to carryout investigations for anti-profiteering checks as per their law to ensure the fairness. Similarly when GST was introduced in Australia, the government also setup a commission to monitor the prices and protecting the interest of consumers.

The CNX Nifty is currently trading at 8642.35, up by 91.25 points or 1.07% after trading in a range of 8590.15 and 8646.65. There were 46 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 3.10%, SBI up by 2.75%, Hindalco up by 2.70%, BHEL up by 2.69% and Eicher Motors up by 2.45%.

On the flip side, Sun Pharma down by 0.36%, Power Grid down by 0.17%, Infosys down by 0.07%, Bosch down by 0.04% and Bharti Infratel down by 0.01% were the top losers.

The Asian markets traded mostly in green; FTSE Bursa Malaysia KLCI increased 3.24 points or 0.2% to 1,658.53, KOSPI Index increased 15.74 points or 0.79% to 2,015.77, Jakarta Composite increased 42.93 points or 0.8% to 5,416.79, Taiwan Weighted increased 56.96 points or 0.63% to 9,081.67 and Hang Seng increased 305.92 points or 1.4% to 22,138.15.

On the other hand, Nikkei 225 decreased 9.21 points or 0.06% to 16,245.68 and Shanghai Composite decreased 5.05 points or 0.17% to 2,977.38.