Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued their firm trade in the late morning session on account of buying in frontline blue chip counters. The sentiments were on optimistic note after the US Federal Reserve on expected lines left interest rate unchanged, and signaled gradual hike in near future. The rupee strengthened against the dollar in early trade at the Interbank Foreign Exchange on selling of the US currency by exporters and banks amid foreign fund inflows. Some additional support came with the report that country’s Current Account Deficit (CAD) narrowed to $0.3 billion, or 0.1 percent of GDP, in the first quarter of 2016-17, significantly lower than $6.1 billion or 1.2 percent of GDP in Q1 of 2015-16.on account of lower trade gap. Meanwhile, the GST Council, which will decide on tax rates, exempted goods and threshold, will meet for the first time today as it races against time to iron out issues between Centre and states for rolling out the new indirect tax regime from April 1, 2017. Traders were seen piling up positions in Bankex, Auto and PSU stocks, while selling was witnessed in IT and TECK sector stocks. In scrip specific development, Syngene International was trading firm on completing a deal through which it has purchased assets of Strand Life Sciences related to systems biology, Heptox and pharma bioinformatics services. Bosch was trading in green on expecting its mobility business to grow by 5 percent this year riding on the technology products in the commercial vehicle segment while it gears up to meet new emission standards in India and China.

On the global front, Asian shares rallied as the Federal Reserve kept interest rates steady as expected and the Bank of Japan moved to an apparent easier policy stance. According to the OECD’s latest Interim Economic Outlook, weak trade growth and financial distortions are exacerbating slow global economic growth. China is expected to continue facing challenges as it rebalances its economy from manufacturing-led demand toward consumption and services. Chinese growth is forecast at 6.5 percent in 2016 and 6.2 percent in 2017. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,850 and 28,700 levels respectively. The market breadth on BSE was positive in the ratio of 1643:614, while 147 scrips remained unchanged.

The BSE Sensex is currently trading at 28771.73, up by 264.31 points or 0.93% after trading in a range of 28766.94 and 28871.92. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.77%, while Small cap index was up by 0.88%.

The top gaining sectoral indices on the BSE were Bankex up by 1.44%, Auto up by 1.29%, PSU up by 1.27%, Power up by 1.18% and Oil & Gas up by 1.18%, while IT down by 0.27% and TECK down by 0.09% were the losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.60%, SBI up by 2.33%, Power Grid Corporation up by 2.17%, Adani Ports & Special Economic Zone up by 2.13% and Reliance Industries up by 1.95%.

On the flip side, TCS down by 0.60%, Hindustan Unilever down by 0.51%, Infosys down by 0.34%, Lupin down by 0.31% and Wipro down by 0.31% were the top losers.

Meanwhile, the Union Cabinet has approved the merger of railway and general budget but said that distinct identity and the functional autonomy of the railways will be maintained. The cabinet has also decided to advance the date of presentation of the annual accounts and decided to do away with the Plan/ Non-Plan expenditure classification in Budget 2017-18, replacing it with 'capital and receipt'. Advancement of budget will help complete related legislative business before March 31 and will enable better planning and execution of schemes from the beginning of a fiscal year, while doing away with the Plan and Non-Plan expenditure classification will provide corporate-style budgetary framework having a focus on revenues and capital expenditure.

The committee headed by NITI Aayog member Bibek Debroy, set up to finalise the modalities for the merger of rail budget with the general Budget had observed that presenting a separate railway budget is only a ritual as its size has become very small compared to the general budget. It had suggested that rail budget should be a part of government's overall fiscal discipline and the developmental approach of the Budget. Railway Minister Suresh Prabhu said that it was decided for merger of the rail budget with general budget but distinct identity of the railways will be maintained. Following the merger of Budget, the Railways would not have to pay dividend to the central government though it would still get gross budgetary support from the exchequer. In the financial year 2016-17, the railways had to pay dividend of Rs 9,731 crore, of which subsidy was Rs 4,301 crore, as a result the national transporter had to pay Rs 5,430 crore to the exchequer.

As far as the salary and pension bill of railway employees is concerned, it will remain the responsibility of the national transporter as there will be no change in the existing practice. At present, the railways has to bear an additional burden of about Rs 40,000 crore on account of implementation of the 7th Pay Commission awards, besides, an annual outgo of Rs 33,000 crore on subsidies for passenger service.

The merger is also expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance. Consequent to the merger, the appropriations for railways will form part of the main Appropriation Bill. This will mark an end to the 92-year old practice of presenting a separate railway budget as was recommended by the Acworth Committee in 1921. Based upon the recommendations, the finances of railways were separated in 1924.

The CNX Nifty is currently trading at 8861.40, up by 84.25 points or 0.96% after trading in a range of 8861.00 and 8893.35. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.08%, Hero MotoCorp up by 2.62%, Indusind Bank up by 2.47%, SBI up by 2.37% and Aurobindo Pharma up by 2.36%.

On the flip side, Idea Cellular down by 0.95%, TCS down by 0.64%, Hindustan Unilever down by 0.55%, Wipro down by 0.44% and HCL Tech down by 0.38% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 5.52 points or 0.33% to 1,664.25, Shanghai Composite increased 21.03 points or 0.69% to 3,046.90, KOSPI Index increased 23.02 points or 1.13% to 2,059.01, Jakarta Composite increased 46.51 points or 0.87% to 5,389.11 and Hang Seng increased 207.1 points or 0.87% to 23,877.00.

On the other hand, Taiwan Weighted decreased 4.44 points or 0.05% to 9,224.06. Japanese stock exchange was closed on account of ‘Autumn Equinox’ holiday.