Benchmarks extend losses in late morning session

Indian equity benchmarks extended losses in the late morning session on account of selling in front line blue chip counters ahead of Reserve Bank of India’s monetary policy review which is due later in the day. There is an expectation that Reserve Bank Governor Raghuram Rajan is likely to hold the key repo rate steady at 6.5 percent in his final monetary policy but the street will eye governor’s views on economy. The downside was however capped as the Lok Sabha late last night unanimously passed the amendments to the GST Bill recommended by the Rajya Sabha, all 443 member present in the house voted in favour of the bill. Finance Minister Arun Jaitley said that the tax rate under the GST regime will be kept at minimum workable rate as no state government can annoy its people by having a higher rate. Traders were seen piling position in Power, PSU and Bankex stocks while selling was witnessed in FMCG, Realty and Oil & Gas sector stocks. In scrip specific development, Idea Cellular was trading under pressure after the mobile carrier posted a 74 percent drop in its June quarter net profit. The country’s third largest telecom company posted a net profit of Rs 220 crore in Q1, missing a consensus forecast of Rs 435 crore.

On the global front, Asian markets were trading mostly in green but on cautious tone, after Wall Street pulled back from a record high and with oil prices unable to consolidate their overnight gains as markets speculated about possible production cuts. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,700 and 28,200 levels respectively. The market breadth on BSE was negative in the ratio of 967:1185 while 92 scrips remained unchanged.

The BSE Sensex is currently trading at 28135.56, down by 47.01 points or 0.17% after trading in a range of 28116.03 and 28289.96. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.23%, while Small cap index was down by 0.25%.

The gaining sectoral indices on the BSE were Power up by 0.60%, PSU up by 0.29% and Bankex up by 0.17%, while FMCG down by 0.77%, Realty down by 0.51%, Oil & Gas down by 0.45%, Consumer Durables down by 0.34% and Metal down by 0.29% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.25%, Lupin up by 1.22%, ONGC up by 0.88%, Coal India up by 0.77% and SBI up by 0.67%.

On the flip side, Adani Ports & Special Economic zone down by 1.21%, HDFC down by 0.93%, ITC down by 0.92%, Asian Paints down by 0.67% and Larsen & Toubro down by 0.62% were the top losers.

Meanwhile, after getting passed in the Rajya Sabha, the long-delayed GST Constitution amendment bill to roll out Goods & Services Tax has cleared the hurdle of Lok Sabha too, shifting this historical reform to states that need to pass it quickly for the Centre to take the next steps.  Lok Sabha unanimously passed the 122nd Constitutional Amendment Bill recommended by the Rajya Sabha last week. The bill tabled in the Lower House for debate after the GST Constitutional Bill was passed by the Upper House, all 443 members present in the house voted in favour of the bill. The Lok Sabha had passed the Bill last year in May, but that underwent some amend.

The action will now shift to the states as the government seeks to get the bill ratified by a majority of the Indian states within the next one month to stay on course for its 1 April 2017 deadline on implementing the seminal tax reform. It also needs to get two more laws to be passed by Parliament in the winter session. At least 16 out of 31 provinces with Assemblies (29 states and two of the seven union territories), or more than half the total, need to pass this Bill before it can be sent for President's assent. The government is in touch with several state governments to get the Bill passed that will create a national market for delivery of goods and services currently fragmented along state boundaries.

Prime Minister Narendra Modi asserted that the GST will benefit mainly those states which are considered backward and address the problem of imbalanced development. He acknowledged that manufacturing states will suffer losses but said they will be compensated. He described GST as a 'crucial step' towards ending tax terrorism besides reducing corruption and black money and said the new regime of indirect taxation will make consumer the 'king'.

GST, a destination-based tax, will subsume various indirect taxes at the central and the state levels including excise duty, service tax, value-added tax, entertainment tax and luxury tax. It will remove all barriers across states and integrate the country into a common market. The new tax system is expected to make manufacturing more competitive and speed up logistics among host of other benefits.

The CNX Nifty is currently trading at 8691.90, down by 19.45 points or 0.22% after trading in a range of 8686.75 and 8728.35. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 4.19%, Lupin up by 1.26%, Bharti Infratel up by 1.26%, NTPC up by 1.22% and BHEL up by 1.14%.

On the flip side, Idea Cellular down by 4.95%, Ambuja Cement down by 1.84%, Tech Mahindra down by 1.19%, Eicher Motors down by 1.14% and Grasim Industries down by 1.12% were the top losers.

The Asian markets were trading mostly in green; Taiwan Weighted increased 0.28 points to 9,150.54, Shanghai Composite increased 8.61 points or 0.29% to 3,012.89, KOSPI Index increased 12.16 points or 0.6% to 2,043.28 and Nikkei 225 increased 102.78 points or 0.62% to 16,753.35.

On the other hand, Hang Seng decreased 18.37 points or 0.08% to 22,476.39, Jakarta Composite decreased 17.71 points or 0.32% to 5,441.27 and FTSE Bursa Malaysia KLCI decreased 3.19 points or 0.19% to 1,669.49.