Indian bourses continue to trade flat with negative bias

Indian bourses continued to trade flat with negative bias in the noon session with frontline gauges trading below their crucial 27,750 (Sensex) and 8,600 (Nifty) levels. Weak trade in the Asian market as concerns over a possible Trump victory in a presidential race and the prospects for higher U.S. interest rates dented risk sentiment. The losses in Oil & Gas, Realty, PSU, Capital Goods and banking stocks also aided to pessimistic milieu.  Also, the rupee depreciated against the US dollar at the Interbank Foreign Exchange in noon deals due to fresh dollar demand from importers. Traders failed to get any sense of relief with ASSOCHAM’s report that Indian economy is expected to fare better in the second half of the current fiscal backed by uptick in sales and improved capacity utilization, though fresh investments and new jobs creation may be a concern going forward. In scrip specific development, Lupin was down by 1 percent despite receiving the USFDA approval for Norgestimate and Ethinyl Estradiol tablets.

On the global front, Asian markets were trading in red after Wall Street's 'fear index' spiked on jitters over the U.S. presidential elections. Back home, the BSE Sensex is currently trading at 27583.41, down by 293.20 points or 1.05% after trading in a range of 27535.02 and 27679.32. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.61%, while Small cap index was down by 1.63%.

The top losing sectoral indices on the BSE were Oil & Gas down by 2.61%, Realty down by 2.01%, PSU down by 1.91%, Capital Goods down by 1.33% and Bankex down by 1.13%, while there were no gaining indices on BSE sectoral front.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.68%, NTPC up by 1.00% and Hindustan Unilever up by 0.71%. On the flip side, ONGC down by 3.89%, SBI down by 2.63%, Tata Motors down by 2.55%, GAIL India down by 2.45% and Sun Pharma Inds. down by 1.89% were the top losers.

Meanwhile, arguing against the levy of cess, the Associated Chambers of Commerce & Industry of India (Assocham) has urged Finance Minister Arun Jaitley to hike the proposed Goods and Services Tax (GST) by 1-2 percent instead of levying cess to compensate states for revenue loss under the GST regime. Assocham Secretary General D S Rawat has said that even if multiple rates are accepted by the GST Council, additional cess should not be made applicable as this would lead to distortion and cascading of taxes. He further said that the idea behind the levying cess is to make a corpus for compensation to states does not seem to be feasible.

The additional revenue required for such compensation can be collected by increasing the proposed tax rates by 1-2 per cent instead of levying a cess. 
However, the suggestion is at variance with Jaitley's contention, who had favoured levy of cess on tobacco and luxury products to compensate states, saying the cost of funding that through an additional tax would be exorbitantly high and almost unbearable. Assocham has also suggested that essential commodities of mass consumption like fruits, vegetables, grains etc should be taxed at zero rate. Processed food products for mass consumption like dairy products, rice, edible oil, biscuits should attract 6 per cent duty. It further suggested that mobile phones, computers, fruit juices, pet foods be taxed at 12 per cent and other items at 18 per cent. Luxury cars, tobacco and pan masala should be taxed at 26 per cent.

Earlier, GST council meeting had discussed four slab tax rate structure of 6 per cent, 12 per cent, 18 per cent and a peak rate of 26 per cent, which will mostly apply to FMCG and consumer durables. Also, a cess is likely to be levied on demerit or sin goods and polluting items. Under this structure, the items which are currently taxed between 3-9 per cent will fall in the 6 per cent bracket and those in 9-15 per cent range will come under 12 per cent rate. Moreover, the products which are currently taxed between 15-21 per cent will attract 18 per cent levy, while above 21 per cent will be taxed at the peak rate of 26 per cent. The next meeting of the GST Council, chaired by Finance Minister Arun Jaitley, is scheduled on November 3-4. 

The CNX Nifty is currently trading at 8522.35, down by 103.90 points or 1.20% after trading in a range of 8515.65 and 8549.50. There were 6 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.63%, Mahindra & Mahindra up by 2.31%, NTPC up by 0.90%, Hindustan Unilever up by 0.81% and Indusind Bank up by 0.64%. On the flip side, ONGC down by 3.91%, Yes Bank down by 3.56%, Tata Motors - DVR down by 3.47%, Bank of Baroda down by 3.19% and SBI down by 2.92% were the top losers.

The Asian markets were trading in red; Hang Seng decreased 329.41 points or 1.42% to 22,817.66, Nikkei 225 decreased 307.72 points or 1.76% to 17,134.68, Taiwan Weighted decreased 133.66 points or 1.44% to 9,139.04, KOSPI Index decreased 28.45 points or 1.42% to 1,978.94, Shanghai Composite decreased 15.39 points or 0.49% to 3,107.04, FTSE Bursa Malaysia KLCI decreased 7.98 points or 0.48% to 1,662.95 and Jakarta Composite decreased 5.17 points or 0.1% to 5,410.84.