Benchmarks continue weak trade; Sensex below 28000 mark

Indian equity benchmarks continued their weak trade in the late morning session on back of profit-booking in select counters after yesterday’s sharp run up. The sentiments were under pressure with minutes of the Reserve Bank of India’s maiden monetary policy committee (MPC) meeting, released on Tuesday, whereby the rate panel eyed growth concerns. The minutes showed that broad concerns over economic growth and relief from the pullback in inflation, spurred the bank’s recent rate cut decision. The downside was capped as the first day of its meeting concluded on Tuesday; the GST Council managed to arrive at a consensus on how to compensate the states for the losses they incur on account of the tax reform that subsumes various state and central levies. However, the council has not yet arrived at a conclusion on the crucial GST rate structure. The Congress party has been arguing for capping the GST standard rate at 18%, which it says is the appropriate rate. With the new structure proposal capping the rate at 26% and also adding a cess on top of it, this is unlikely to pass the muster. The cess is already attracting opposition. Traders were seen piling up positions in Oil & Gas, PSU and Power stocks, while selling was witnessed in Auto, FMCG and Realty sector stocks. In scrip specific development, automotive parts maker, Endurance Technologies was trading firm after debuting on the stock exchange. Endurance Technologies had raised Rs 1,162 crore through initial public offering (IPO), which was oversubscribed 43.84 times. The company fixed the issue price at Rs 472 per share, at the upper end of the Rs 467-472 per share price band.

On the global front, Asian markets were trading mostly higher as a barrage of Chinese data confirmed the economy had stabilized on the back of government spending and a hot housing market, even if worries about debt continue to mount. China’s economy grew 6.7% in the third quarter from a year earlier, steady from the previous quarter and in line with expectations. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,700 and 28,000 levels respectively. The market breadth on BSE was positive in the ratio of 1384:857, while 137 scrips remained unchanged.

The BSE Sensex is currently trading at 27992.46, down by 58.42 points or 0.21% after trading in a range of 27976.73 and 28131.07. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.04%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.11%, PSU up by 0.70%, Power up by 0.61%, Consumer Durables up by 0.44% and Capital Goods up by 0.36%, while Auto down by 0.64%, FMCG down by 0.62%, Realty down by 0.47%, Bankex down by 0.21% and IT down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.95%, Wipro up by 1.85%, Sun Pharma up by 1.55%, Lupin up by 1.42% and Axis Bank up by 1.39%.

On the flip side, ITC down by 1.61%, ICICI Bank down by 1.33%, Mahindra & Mahindra down by 1.08%, Hero MotoCorp down by 1.06% and Tata Motors down by 1.04% were the top losers.

Meanwhile, moving swiftly on the road to formalizing the biggest reform of the indirect tax regime, Finance Minister Arun Jaitley in a first day of three-day GST council meeting discussed four slab tax rate structure of 6 per cent, 12 per cent, 18 per cent and 26 per cent with lower rates for essential items and the highest for luxury goods that will also be levied with an additional cess.

During the meeting, the lowest tax rate proposed was to be imposed on essential items and 18 per cent on most of the items. The highest tax rate of 26 per cent was reserved for luxury and sin products like tobacco. FMCG and consumer durable products too were proposed to attract 26 percent GST rate, against the current incidence of around 31 percent. With a view to keep inflation under check, the proposal sponsored by the Centre proposed to continue exempting food items from tax as well as keep 50 percent of the common use goods in either exempt category or lower band. 

The Finance Minister said that the GST Council discussed five alternatives of GST rate structure, though no decision was taken. It was said that the total impact of the proposed rate structure on Consumer Price Index (CPI)-based inflation rate will be (-) 0.06 per cent. Under the proposed GST rate structure, the inflation impact on constituents of CPI such as health services, fuel and lighting and clothing is estimated to be 0.56 per cent, 0.05 per cent and 0.23 per cent, respectively, while for transport it is estimated at (-) 0.65 per cent, education at (-) 0.08 per cent and housing at (-) 0.09 per cent. Total revenue collection under the proposed GST structure is estimated at Rs 8.72 lakh crore (based on 2015-16 estimates).

The council also reached an agreement on the formula for payment of compensation to states from any loss of revenue from implementation of Goods and Service Tax (GST) in the first five years beginning April 1, 2017. The panel agreed on keeping base year for calculating the revenue of a state at 2015-16 and considering a secular growth rate of 14 percent for calculating the likely revenue of each state in the first five years of implementation of GST

The CNX Nifty is currently trading at 8667.90, down by 10.00 points or 0.12% after trading in a range of 8656.80 and 8698.75. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were BHEL up by 4.66%, GAIL India up by 3.17%, Idea Cellular up by 1.85%, Sun Pharma up by 1.70% and Wipro up by 1.65%.

On the flip side, ITC down by 1.79%, Mahindra & Mahindra down by 1.28%, Tata Motors - DVR down by 1.25%, ICICI Bank down by 1.22% and Hindustan Unilever down by 0.98% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.6 points or 0.04% to 1,668.17, Shanghai Composite increased 3.83 points or 0.12% to 3,087.70, Nikkei 225 increased 24.93 points or 0.15% to 16,988.54 and Taiwan Weighted increased 56.4 points or 0.61% to 9,278.98.

On the other hand, Hang Seng decreased 58.7 points or 0.25% to 23,335.69, Jakarta Composite decreased 12.53 points or 0.23% to 5,417.52 and KOSPI Index decreased 0.19 points or 0.01% to 2,040.24.