Benchmarks continue firm trade; Nifty holds 8700 mark

Indian equity benchmarks continued their firm trade in the late morning session on account of buying in front line blue chip counters. The sentiments were on optimistic note as Lok Sabha will give the final parliamentary seal of approval to the enabling of the Constitution amendment bill for Goods and Services Tax (GST) that the Rajya Sabha cleared last week. Investors took note of 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 61.1 in the first quarter of 2016-17 from 47.8 in the previous quarter of 2015-16, indicating healthy improvement. The street will closely watch the policy meet as RBI is set to announce monetary policy decision scheduled for tomorrow, August 09 2016, after a policy review. Raghuram Rajan will present his last monetary policy as governor of the Reserve Bank of India (RBI). Traders were seen piling position in Oil & Gas, Realty and Consumer Durables stocks while selling was witnessed in Capital Goods and Power sector stocks.  In scrip specific development, Wockhardt slumped following the US Food and Drug Administration’s import ban on its Ankleshwar plant for non-compliance with good manufacturing norms. The Ankleshwar plant, which manufactures bulk drugs for US and Europe, is the pharma major’s third plant to receive an import ban from the US regulator. Union Bank of India was trading in red after the bank this past weekend reported a 67.90 percent year-on-year (Y-o-Y) drop in June quarter net profit at Rs 166.30 crore, on account of a spurt in provisions for non-performing assets (NPAs).

On the global front, Asian markets were trading in green, with sentiment underpinned by a stronger-than-expected US jobs report released on Friday. Traders betting on global demand will be looking closely Chinese trade figures scheduled later during the day. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,700 and 28,100 levels respectively. The market breadth on BSE was positive in the ratio of 1381:835, while 90 scrips remained unchanged.

The BSE Sensex is currently trading at 28165.15, up by 86.80 points or 0.31% after trading in a range of 28141.76 and 28226.38. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.38%, while Small cap index was up by 0.55%.

The gaining sectoral indices on the BSE were Oil & Gas up by 1.14%, Realty up by 0.71%, Consumer Durables up by 0.64%, Metal up by 0.62% and IT up by 0.41%, while Capital Goods down by 0.33% and Power down by 0.21% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.37%, Cipla up by 1.17%, Lupin up by 1.17%, Wipro up by 1.00% and Dr. Reddy’s Lab up by 0.99%.

On the flip side, Bharti Airtel down by 1.16%, NTPC down by 1.15%, Tata Steel down by 0.76%, Larsen & Toubro down by 0.67% and Sun Pharma down by 0.61% were the top losers.

Meanwhile, the Goods and Services Tax (GST) Bill, which was passed by the Rajya Sabha on 3 August, 2016 will be introduced in the Lok Sabha on 8 August 2016 for discussion and voting. The Constitution Amendment Bill is expected to sail through the Lok Sabha, where the Bharatiya Janata Party (BJP)-led National Democratic Alliance has a commanding majority. BJP has issued a whip to its Lok Sabha members to ensure its smooth passage.

Prime Minister Narendra Modi is also expected to join the MPs at the Lower House, where the NDA will navigate the Bill. The Rajya Sabha had passed the Bill with some amendments, which are needed to be again approved by the Lok Sabha.

After its passage in the Lok Sabha, the Bill will go to the state assemblies for ratification. The Bill needs ratification by half of the 29 state assemblies to become a law. After the amendments are carried out, Parliament will pass the GST and Integrated GST Bills and the assemblies will pass state GST Bill for the roll out of the tax reform in the country. The government is working overtime to ensure that at least 50% of the state Assemblies pass the Bill within 30 days of Parliament clearing it. Chief Ministers of several states too have assured that, if required, they will call a special session for the passage of the Bill.

The GST, which was first proposed a decade back, is seen as potentially transformative for India's economy, adding as much as 2 percentage points to the GDP while also improving the ease of doing business and encourage investment in manufacturing. The GST is also aimed at bringing uniform tax regime in the country by subsuming state levies. Under it, a single rate of GST will replace various taxes to ensure seamless transfer of goods and services.

The CNX Nifty is currently trading at 8702.45, up by 19.30 points or 0.22% after trading in a range of 8699.15 and 8723.50. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.35%, BPCL up by 2.98%, Bosch up by 1.76%, Tata Motors - DVR up by 1.37% and Tech Mahindra up by 1.31%.

On the flip side, Idea Cellular down by 3.01%, Bharti Infratel down by 1.49%, Bharti Airtel down by 1.43%, NTPC down by 1.27% and Tata Steel down by 0.97% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 1.76 points or 0.11% to 1,665.80, KOSPI Index increased 9.16 points or 0.45% to 2,027.10, Shanghai Composite increased 9.52 points or 0.32% to 2,986.21, Jakarta Composite increased 20.33 points or 0.38% to 5,440.58, Taiwan Weighted increased 38.96 points or 0.43% to 9,131.08, Hang Seng increased 273.39 points or 1.23% to 22,419.48 and Nikkei 225 increased 346.32 points or 2.13% to 16,600.77.