Benchmarks extends downward journey in late morning session

Indian equity benchmarks extended its downward journey in the late morning session on account of selling in frontline blue chip counters tracking weakness across global markets. The sentiments were under pressure after Indian rupee opened down against US dollar at the Interbank Foreign Exchange (Forex) market following increased demand of American currency among importers and banks. Markets failed to draw some support with the President Pranab Mukherjee giving his assent to the landmark Goods and Services Tax (GST) Bill. Now the Centre will have to pass the Central GST and Integrated GST Bills, while the states will need to approve their respective GST legislations. The government targets to implement the GST system from 1 April, 2017. Investors will be eyeing the Index of industrial production data for the month of July to be released after the market hours. Industrial output growth halved to 2.1 per cent in June, as compared to 4.2 per cent in June 2015. Traders were seen piling position in Oil & Gas, IT and TECK stocks, while selling was witnessed in Bankex, Realty and Auto sector stocks. In scrip specific development, Jindal Steel and Power (JSPL) was trading under pressure after the company reported nearly 100% rise in net loss at Rs 1,082.15 crore for the quarter ended June 30, 2016.

On the global front, Asian shares traded mostly in red; Asian shares slipped and global bonds came under pressure on Friday after the European Central Bank left markets in the dark on what future easing steps it may take, while oil prices jumped on an unexpected drawdown in US stockpile. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,900 and 28,900 levels respectively. The market breadth on BSE was negative in the ratio of 770:1348, while 133 scrips remained unchanged.

The BSE Sensex is currently trading at 28841.76, down by 203.52 points or 0.70% after trading in a range of 28785.29 and 29062.90. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.61%, while Small cap index was down by 0.43%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.67%, IT up by 0.38% and TECK up by 0.22%, while Bankex down by 1.17%, Realty down by 1.07%, Auto down by 1.07%, Consumer Durables down by 1.07% and FMCG down by 1.06% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.52%, TCS up by 1.03%, GAIL India up by 0.99%, Wipro up by 0.89% and Dr. Reddy’s Lab up by 0.55%.

On the flip side, Hero MotoCorp down by 2.19%, HDFC down by 2.07%, ICICI Bank down by 1.79%, Bajaj Auto down by 1.71% and Axis Bank down by 1.61% were the top losers.

Meanwhile, President Pranab Mukherjee has given final approval to the GST Constitution Amendment Bill which has been already been approved by the Parliament as well as 16 states, making the GST bill a law. This is a significant milestone achieved in the implementation of GST that sets the stage for GST Council, which will work out the details of the tax, including the rate at which it will be levied.  With this, the road is now clear for the Centre and states to constitute the GST Council, headed by Union finance minister Arun Jaitley and comprising state finance ministers. Jaitley has recently said that the government will attempt to press ahead with the implementation of the GST from April 1, 2017. Once the date of the new tax is notified all state and central taxes that it subsumes will cease to exist.

The GST rate has to be decided by the proposed GST Council, which will be chaired by the Union Finance Minister. The states will have two-thirds of the voting rights in the GST council, while the Centre will have a one-third right. Decisions will have to passed by three-fourth vote, implying the need for consensus. The council will take crucial decisions including the rate, laws, rules and procedures and administrative framework that will form the core of the CGST law and the IGST law, which will have to be passed apart from the state GST laws before the tax can be rolled out.

A committee headed by chief economic adviser Arvind Subramanian has suggested a revenue neutral rate of 15-15.5 per cent and standard rate of around 18 per cent. The Goods and Services Tax is a single indirect tax that proposes to subsume most central and state taxes like Value Added Tax, service tax, central sales tax, excise duty, additional customs duty and special additional customs duty and creating one national market that is expected to bump up GDP by as high as 2 per cent.

The CNX Nifty is currently trading at 8883.25, down by 69.25 points or 0.77% after trading in a range of 8865.95 and 8939.15. There were 11 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.48%, HCL Tech up by 1.43%, GAIL India up by 1.04%, TCS up by 0.98% and Wipro up by 0.87%.

On the flip side, Yes Bank down by 3.87%, Hero MotoCorp down by 2.43%, HDFC down by 2.16%, Ultratech Cement down by 2.11% and ACC down by 1.88% were the top losers.

The Asian markets were trading mostly in red; Taiwan Weighted decreased 102.97 points or 1.11% to 9,159.92, Jakarta Composite decreased 57.5 points or 1.07% to 5,313.57, KOSPI Index decreased 30.17 points or 1.46% to 2,033.56, FTSE Bursa Malaysia KLCI decreased 6.47 points or 0.38% to 1,684.91 and Shanghai Composite decreased 1.35 points or 0.04% to 3,094.60.

On the other hand, Nikkei 225 increased 22.69 points or 0.13% to 16,981.46 and Hang Seng increased 288.29 points or 1.21% to 24,207.63.