Benchmarks trade jubilantly; Nifty reclaims 8,700 mark

Buoyed by firm global cues, Indian equity benchmarks are trading jubilantly in early deals with frontline gauges surpassing their crucial 28,200 (Sensex) and 8,700 (Nifty) levels. Sentiments remained up-beat after Finance Minister Arun Jaitley said that Indian economy has defied global slowdown and geo-political tensions and is now poised to seize the opportunity to grow faster. Traders also took some encouragement with a joint study by Confederation of Indian Industry (CII) and the Indian Banks' Association (IBA) stating that the overall financial conditions index in India rose 28 per cent sequentially to 61.1per cent in the first quarter of 2016-17 from 47.8 per cent in the previous quarter of 2015-16, indicating healthy improvement.

Firm cues from global markets too provided strong support to the local bourses, with Asian markets rallying at this point of time amid encouraging US jobs data with shares in Japan surging the most, while Chinese shares were trading marginally higher despite drop in forex reserves in July.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Buying in bank shares too aided sentiments ahead of the Reserve Bank of India (RBI) policy review on August 9. Too Auto shares extended gains as the sector is likely to benefit the most, post the implementation of the GST Bill on the back of a lower effective tax rate. The market breadth remained in favor of advances, as there were 1,206 shares on the gaining side against 669 shares on the losing side while 70 shares remain unchanged.

The BSE Sensex is currently trading at 28203.76, up by 125.41 points or 0.45% after trading in a range of 28154.49 and 28226.38. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.32%, while Small cap index was up by 0.51%.

The gaining sectoral indices on the BSE were Metal up by 1.35%, Oil & Gas up by 0.94%, Consumer Durables up by 0.88%, Realty up by 0.64% and Auto up by 0.63%, while Capital Goods down by 0.26% and Power down by 0.11% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.32%, Reliance Industries up by 1.16%, Wipro up by 1.06%, HDFC up by 1.03% and Hindustan Unilever up by 0.97%. On the flip side, NTPC down by 0.99%, Bharti Airtel down by 0.61%, Sun Pharma down by 0.50%, Larsen & Toubro down by 0.44% and ONGC down by 0.42% were the top losers.

Meanwhile, international rating agency Moody’s Investor Service in its latest report titled, ‘Upper House Passage Paves Way for GST Bill Implementation, a Credit Positive’, said that the passage of Goods and Services Tax (GST) Bill in the Rajya Sabha is credit positive for India's sovereign rating as the rollout of GST regime will have a favorable impact on growth and tax revenues, although the overall impact will vary across sectors.

Moody’s said the short-term sovereign credit implications of the GST bill will be limited, given that effective implementation will take some time and as the GST rates are likely to be chosen as revenue neutral. It added that the GST will support economic activity and government revenues over the medium term by removing a key hurdle to the smooth movement of goods and services and GST will lead to much simpler administrative framework, reducing tax governing costs for corporate and over time, improving the overall cost competitiveness of corporate India.

Report further said that the overall impact is likely to vary across sectors, with some of the highest tax payers under the current regime, such as automotives standing to gain the most. It added the new GST structure follows a dual taxation model with powers granted to the central and state governments to tax both goods and services under a common structure. GST will replace the existing system of multiple taxes, imposed at different stages of the value chain, with a single unified tax.
Rajya Sabha on August 3 passed a constitutional amendment to allow implementation of the long-delayed GST further the Bill will now go to Lok Sabha. The Bill will then have to be ratified by 50 percent of the state legislative assemblies, and the actual GST bill will need to be enacted into law by the Lok Sabha and by state governments.

The CNX Nifty is currently trading at 8712.35, up by 29.20 points or 0.34% after trading in a range of 8700.10 and 8723.50. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 5.11% and BPCL up by 2.77% and Tata Motors - DVR up by 1.89% and HDFC up by 1.10% and Maruti Suzuki up by 1.08%. On the flip side, Idea Cellular down by 2.26%, Bharti Infratel down by 1.55%, Bharti Airtel down by 1.11%, Bank of Baroda down by 1.05% and NTPC down by 0.87% were the top losers.

Asian markets were rallying; FTSE Bursa Malaysia KLCI rose 2.87 points or 0.17% to 1,666.91, KOSPI Index gained 7.08 points or 0.35% to 2,025.02, Shanghai Composite increased 7.75 points or 0.26% to 2,984.44, Taiwan Weighted added 22.15 points or 0.24% to 9,114.27, Jakarta Composite jumped 32.19 points or 0.59% to 5,452.43, Hang Seng surged 275.16 points or 1.24% to 22,421.25 and Nikkei 225 was up by 331.1 points or 2.04% to 16,585.55.