Markets trade with strong gains; Nifty trades above 8,600 level

Indian equity benchmarks extended early gains to continue firm trade in early noon trade, hovering near intra-day high level, on account of buying in frontline blue chip counters. Sentiments remained up-beat 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 the tax rate will be 'optimum' even as there were indications that it may be higher than 18 percent. According to Moody’s investors Service, the GST implementation will be positive for the country’s economic growth without any significant impact on inflation. Besides, a firm trend in Asia after the Bank of England announced an interest rate cut and fresh stimulus package to counter the fallout from Britain’s vote to quit the European Union, also lifted sentiment. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 559.49 crore on August 04, 2016. Meanwhile, shares of steel producers such as Tata Steel and JSW Steel edged higher after the government extended the minimum import price (MIP) on 66 steel products for a period of two months as against 173 items earlier. On the other hand, mild selling was witnessed in selected Textiles stocks on reports that India's handloom export declined by 30% within a year after a gradual rise for several years.

On the global front, Asian markets were trading higher in early trade, supported by the Bank of England's aggressive stimulus measures, but traders keeping a wary eye on US jobs data due later in the global trading day. The Bank of England yesterday cut its benchmark interest rate to 0.25 percent from 0.5 percent. It expects to cut the rate further in the months ahead.

Back home, all BSE sectoral indices were trading in the green. Among them, banking index gained the most, up by 1.86 per cent, followed by Capital Goods up by 1.77 per cent, Metal up by 1.76 per cent and Auto up by 1.71 per cent.  In scrip specific development, Thomas Cook has rallied after the company reported 56 percent growth in consolidated net profit at Rs 62 crore for the quarter ended June 30, 2016 compared with Rs 39.8 crore for the same quarter last fiscal. Also, Arvind has jumped after the company reported 11.32% rise in its net profit at Rs 87.45 crore for the quarter ended June 30, 2016 as compared to Rs 78.56 crore for the same quarter in the previous year.

The market breadth remained optimistic as there were 1666 shares on the gaining side against 677 shares on the losing side, while 120 shares remained unchanged.

The BSE Sensex is currently trading at 28025.96, up by 311.59 points or 1.12% after trading in a range of 27795.74 and 28034.93. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.17%, while Small cap index up by 1.18%.

The top gaining sectoral indices on the BSE were Bankex up by 1.86%, Capital Goods up by 1.77%, Metal up by 1.76%, Auto up by 1.71% and PSU up by 1.53%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were SBI up by 3.33%, Hero MotoCorp up by 2.88%, Axis Bank up by 2.85%, Bajaj Auto up by 2.79% and ICICI Bank up by 2.74%. On the flip side, Sun Pharma down by 0.67%, Infosys down by 0.21% and Power Grid down by 0.03% were the top losers.

Meanwhile, for smooth implementation of the Goods and Services Tax (GST) government will have to resolve some key challenges before rolling out the key reform by FY 2017. Revenue Secretary Hasmukh Adhia has listed seven challenges which includes, calculation of revenue base of Centre and states and compensation requirements, structure of GST rates, list of exemptions, forming of consensus on Model GST Bill, threshold limits, compounding limits and cross empowerment to mitigate ill-effects of dual control, which need to be dealt to be overcome before GST can be rolled out by April 1, 2017.

He further said the GST Council will decide on to what extent the GST rate can be brought down from the present combined excise tax rate. As regards the compensation which needs to be paid by the Centre to the states, Adhia said the amount can only be quantified after the GST rate is decided. He said consultations are on with regard to the threshold limit of imposition of GST. While some states want the threshold to be Rs 10 lakh, the Centre wants it to be pegged at Rs 25 lakh.

Adhia said that as many as 60,000 revenue officials of central and state governments will be trained on GST laws and IT infrastructure framework to prepare them for rollout of the new indirect tax regime by April 2017. As per the detailed GST rollout road map prepared by him, the IT infrastructure framework will be ready by March 2017 and a massive outreach and industry sensitisation programme will also be carried out.

The Rajya Sabha cleared the long pending GST Constitutional Amendment Bill and it has to now go back to the Lok Sabha for ratification. The Council will have to work out an acceptable threshold limit for levying the GST. GST, which is expected to be implemented from April 1, 2017, will subsume excise, service tax and other local levies including VAT, octroi.

The CNX Nifty is currently trading at 8645.50, up by 94.40 points or 1.10% after trading in a range of 8590.15 and 8649.55. There were 46 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 3.39%, SBI up by 3.21%, Eicher Motors up by 3.18%, Hero MotoCorp up by 2.83% and ICICI Bank up by 2.83%. On the flip side, Sun Pharma down by 0.71%, Power Grid down by 0.34%, Infosys down by 0.26%, Bosch down by 0.09% and HCL Tech. down by 0.01% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI rose 0.2%, KOSPI Index increased 0.84%, Nikkei 225 gained 0.02%, Jakarta Composite jumped 0.8%, Taiwan Weighted added 0.75%, Hang Seng jumped 1.47% and Shanghai Composite was up by 0.12%.