Benchmarks continue weak trade; Nifty below 8800 mark

Indian equity benchmarks continued their weak trade in the late morning session on account of selling in frontline blue chip counters tracking regional counterparts. After a big gap-up opening last week on comments from the US Fed, the benchmarks seemed to have lost momentum and traders have turned cautious on the market. Some weakness crept in after Indian rupee weakened against the US dollar at the Interbank Foreign on account of increased demand for the American currency by bankers and importers amid lower opening at domestic markets. Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 299.98 crore on Friday as per provisional data released by the stock exchanges. The street failed to draw some comfort with Reserve Bank of India’s Governor, Urjit Patel downplaying the risk of inflation and harping on the focus on growth. Patel reportedly said that the GST regime would not harden inflation and the growth objective will remain part of the newly constituted MPC’s mandate. Investors’ attention has now turned from central banks to American politics ahead of the first US presidential debate. Investors will also continue to track the progress of monsoon rains. The India Meteorological Department (IMD) in its weekly monsoon update issued on September 22, 2016 stated that for the country as a whole, cumulative rainfall during this year’s monsoon has so far up to September 21, 2016 been 5% below long period average (LPA). Traders were seen piling up positions in Oil & Gas, Metal and PSU stocks, while selling was witnessed in Bankex, Auto and FMCG sector stocks. In scrip specific development, GNA Axles was trading firm after making strong debut over its issue price of Rs 207. The auto component maker’s Initial Public Offering (IPO) which was open for subscription between 14 and 16 September raised Rs 130 crore with price band at Rs205–207 per share. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. September 2016 series to next month i.e. October 2016 series. The near month September 2016 derivatives contracts will expire on Thursday i.e. September 29, 2016.

On the global front, Asian markets were lower, as investors’ awaited Monday evening’s US presidential debate between Donald Trump and Hillary Clinton, which will take place early on Tuesday in Asian time zones. The first of three debates ahead of the November election could set US television audience records. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,800 and 28,600 levels respectively. The market breadth on BSE was positive in the ratio of 1171:984, while 134 scrips remained unchanged.

The BSE Sensex is currently trading at 28537.95, down by 130.27 points or 0.45% after trading in a range of 28505.98 and 28630.92. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.14%, while Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.86%, Metal up by 0.58%, PSU up by 0.31%, Power up by 0.17% and Capital Goods up by 0.16%, while Bankex down by 0.82%, Auto down by 0.54%, FMCG down by 0.41%, TECK down by 0.38% and IT down by 0.21% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.09%, Power Grid Corporation up by 1.25%, Coal India up by 0.88%, Tata Steel up by 0.83% and Dr. Reddy’s Lab up by 0.63%.

On the flip side, Bharti Airtel down by 2.40%, ICICI Bank down by 2.12%, Mahindra & Mahindra down by 1.44%, GAIL India down by 1.29% and ITC down by 1.20% were the top losers.

Meanwhile, moving on fast track to meet the April 1, 2017 target to roll out the landmark Goods and Services Tax (GST), the Centre and the States in the first meeting of GST Council, resolved three crucial issues which includes threshold for exemption, the draft compensation formula and the issue of dual control.

The newly constituted council decided to keep revenue exemption limit at Rs 20 lakh for all states with the exception of north eastern and the hill states where the limit will be Rs. 10 lakh. While the exact compensation formula based on the revenue projection will be worked out, all cesses will be considered under the compensation from the Centre. States have indicated that the compensation for any loss from the GST rollout should be paid at regular quarterly or bi-monthly intervals. 

Resolving issues over dual control over small traders, GST council has also decided that businesses with an annual turnover of up to Rs. 1.5 crore will be assessed by the States. For those above the threshold, there will be an element of dual control and they will be assessed either by the Centre or States based on a formula for risk assessment. A mechanism would be worked out for traders above Rs 1.5 crore to ensure that a dealer is regulated either by the Central government or the state government and not both. It was also decided that the 11 lakh existing service tax assesses will be assessed by the Centre and State officials after training will begin to help assess future assesses.

The two day GST Council meeting was chaired by Union Finance Minister Arun Jaitley and including representatives of all the 29 states and 2 union territories also decided that 2015-16 will be the base year for calculating revenue compensating to states for any loss of revenue arising from rollout of GST, the final methodology will be worked out in next meetings,. The GST Council will have next meeting on September 30 to discuss the categories of goods and services that would be exempt from the GST. After that, it would also meet on October 17, 18 and 19 to finalise the tax slabs for GST as well as the crucial rates at which the GST would be paid by consumers.

The CNX Nifty is currently trading at 8794.70, down by 36.85 points or 0.42% after trading in a range of 8780.70 and 8809.55. There were 15 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 2.09%, Power Grid Corporation up by 1.17%, Coal India up by 1.13%, Tata Power up by 1.12% and BPCL up by 0.88%.

On the flip side, Bharti Airtel down by 2.08%, ICICI Bank down by 2.01%, Mahindra & Mahindra down by 1.52%, Bharti Infratel down by 1.50% and GAIL India down by 1.27% were the top losers.

The Asian markets were trading in red; Hang Seng decreased 153.69 points or 0.65% to 23,532.79, Nikkei 225 decreased 139.61 points or 0.83% to 16,614.41, Taiwan Weighted decreased 84.58 points or 0.91% to 9,200.04, Jakarta Composite decreased 33.01 points or 0.61% to 5,355.90, Shanghai Composite decreased 20.64 points or 0.68% to 3,013.25, KOSPI Index decreased 8.49 points or 0.41% to 2,045.58 and FTSE Bursa Malaysia KLCI decreased 2.48 points or 0.15% to 1,668.51.