Benchmarks trim gains; mood still upbeat

After a smart up move in morning trades, Indian equity markets pared some gains and are currently moving in a narrow range. The BSE benchmark moved up over 200 points, while NSE benchmark was up by over 60 points as market participants indulged in enlarging positions in frontline blue-chip counters on positive global cues.  Overnight, the Federal Reserve opted to hold its key short-term interest rate steady. Investors across the Asian region welcomed the news as a rate rise would have pulled money out of emerging markets. On the domestic front, sentiments got some support 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. Also, 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. Some support also came with a private report stating that rural demand is likely to turn up in the coming months largely driven by better rains, and Kharif farm income is expected to jump 12.3 percent this year. Meanwhile, Railway stocks remained on buyers’ radar, after the Cabinet approved merging Railway Budget with the general Budget and doing away with distinction of plan and non-plan expenditure. Logistics stocks gained traction on reports that Commerce Ministry is working on a proposal to enhance the logistics competitiveness of exporters and is discussing it with the railways as well as port authorities. On the other hand, Information Technology (IT) stocks came under pressure as Fed officials cut their 2016 growth forecast for the US economy to 1.8 percent, from a 2.0 percent projection in June, and lowered their long-term view on the growth rate to 1.8 percent from 2 percent.

On the global front, Asian stocks edged higher on Thursday, buoyed by the U.S. Federal Reserve’s decision to stick to the status quo, as well as rising commodity prices. Federal Reserve kept its benchmark interest rate unchanged for the sixth straight meeting, saying it needs to see more signs of strength in the US economy. Loose monetary policies in the US, Europe and Asia have helped power gains in stocks across the globe. Meanwhile, Energy companies jumped with the price of oil.

Back home, stocks from Oil & Gas, PSU and Banking counters were supporting the markets’ uptrend, while those from IT and TECK counters were adding to the underlying cautious undertone. In scrip specific development, Syngene International has rallied after the company closed the deal with Strand Life Sciences to purchase systems biology and pharma services practice for an undisclosed amount. Furthermore, NTPC has surged after the company received shareholders’ approval to raise up to Rs 15,000 crore through issuance of debentures/bonds on private placement basis.

The market breadth remained optimistic as there were 1585 shares on the gaining side against 826 shares on the losing side, while 169shares remained unchanged.

The BSE Sensex is currently trading at 28719.49, up by 212.07 points or 0.74% after trading in a range of 28708.79 and 28871.92. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.80%, while Small cap index up by 0.77%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.20%, PSU up by 1.13%, Bankex up by 1.13%, Auto up by 1.10% and Power up by 1.04%, while IT down by 0.28% and TECK down by 0.14% were the few losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.46%, Power Grid Corpn. up by 1.94%, Adani Ports &Special up by 1.84%, SBI up by 1.83% and Reliance Industries up by 1.78%. On the flip side, Axis Bank down by 0.79%, Lupin down by 0.78%, TCS down by 0.51%, Hindustan Unilever down by 0.49% and Wipro down by 0.41% were the top losers.

Meanwhile, the Goods and Service Tax (GST) council which has to decide the tax rate, exempted goods and the threshold under the new taxation regime, is all set to meet for the first time on September 22. The two-day meet of the GST Council will be chaired by the Union Finance Minister Arun Jaitley and will have Minister of State in charge of revenue and state finance ministers as members.

The GST Council is likely to iron out issues between the Centre and states for moving on fast track to roll out GST from April 1, 2017. It will also take up the discussion on issues of dual control and threshold with states demanding that they be given the legal and administrative power for imposing tax on entities with turnover of up to Rs 1.5 crore. The Centre has proposed that small traders having annual turnover of up to 20 to 25 lakh rupees, could be exempted from the GST, but states have demanded that the limit be kept at Rs.10 lakh and they have made it clear that small businesses with turnover of Rs 1.5 crore and below should be taxed only in the hands of state. The meeting is also likely to select a Vice Chairman for the Council who would be one of the state finance ministers.

The GST Council is likely to work out a consensus on all the key issues, including GST rate, within two months so that those can be incorporated in the CGST and IGST laws. Recently, Prime Minister Narendra Modi had directed that all steps including preparation of Model GST laws and rules, establishment of IT infrastructure for both Centre and states, training of officers of central and state governments must be completed before the government’s deadline of April 1.

GST, which is considered as the biggest tax reform since Independence, will subsume excise and service tax, and various other local levies including VAT and octroi. The bill was unanimously passed by the Parliament last month and over 18 states have ratified the bill.

The CNX Nifty is currently trading at 8845.65, up by 68.50 points or 0.78% after trading in a range of 8840.70 and 8893.35. There were 40 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 3.16%, Aurobindo Pharma up by 3.05%, Hero MotoCorp up by 2.48%, Hindalco up by 2.31% and Power Grid up by 2.05%. On the flip side, Idea Cellular down by 1.01%, Axis Bank down by 0.95%, Lupin down by 0.84%, Tech Mahindra down by 0.75% and TCS down by 0.68% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI gained 0.33%, KOSPI Index surged 1.02%, Shanghai Composite increased 0.7%, Taiwan Weighted rose 0.07%, Jakarta Composite jumped 0.87% and Hang Seng strengthened 0.18%. Japanese stock exchange was closed on account of ‘Autumn Equinox’ holiday.