Feeble global cues drag benchmarks marginally lower in early deals

Indian equity benchmarks have made a cautious start and are trading slightly in red in early deals on feeble global cues. Persistent selling by foreign funds in the past few trading sessions too weighed on market sentiments. Foreign institutional investors were net sellers in equities worth Rs 707 crore on Thursday, as per provisional stock exchange data. However, losses remained capped with report that in a major breakthrough for rollout of the Goods and Services Tax (GST) regime from April 1 next year, the government has finalized four-tier GST tax structure of 5, 12, 18 and 28 percent that aims to lower tax incidence on most goods and keep out essential items. Meanwhile, Chief Economic Advisor Arvind Subramanian has said that the GST Council’s decision to peg the tax rate on items of mass consumption at 5 per cent will bring down prices and soften inflation.

On the global front, most of the Asian counters were trading in red at this point of time with Japanese market taking the lead despite the services sector in Japan swinging to expansion in October. The US markets continued their slide in last session on concern over the Presidential election outcome amid lackluster economic data. Back home, appreciation in Indian rupee too helped markets to restrict losses. The rupee recovered by 3 paise to 66.72 against the dollar in early trade today on mild selling of the US currency by exporters. Shares of cigarette makers such as ITC, Godfrey Phillips India and VST Industries rallied in morning trade after the GST Council’s propose to place tobacco products in the 26% tax slab and an additional cess.

The BSE Sensex is currently trading at 27414.17, down by 16.11 points or 0.06% after trading in a range of 27371.26 and 27498.91. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.45%, while Small cap index was down by 0.62%.

The top gaining sectoral indices on the BSE were FMCG up by 2.04%, Utilities up by 0.32%, Power up by 0.19%, IT up by 0.17% and TECK up by 0.06%, while Healthcare down by 2.96%, Metal down by 1.20%, Telecom down by 1.04%, Capital Goods down by 0.88% and Realty down by 0.73% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 3.66%, Hindustan Unilever up by 1.82%, NTPC up by 1.57%, Infosys up by 0.82% and GAIL India up by 0.51%. On the flip side, Dr. Reddys Lab down by 5.10%, Sun Pharma down by 4.96%, Lupin down by 3.50%, Maruti Suzuki down by 1.41% and Tata Motors down by 1.30% were the top losers.

Meanwhile, India’s Services sector activity accelerated in October backed by sharp increase in new business orders amid strong demand and improved market conditions. The recent data indicated that this placed pressure on firms’ capacity as backlogs of work rose further, but employment levels were unchanged over the month. Input costs increased again, although at a marginal rate that was softer than in September. The seasonally adjusted Nikkei India Services Business Activity Index rose to 54.5 in October from 52.0 in September. The latest readings are above the no-change mark of 50.0 for the sixteenth straight month, highlighting ongoing growth in the sector. A reading above 50 indicates economic expansion, while below the points towards contraction.

The seasonally adjusted Nikkei India Composite PMI Output Index rose to 55.4 in October from 52.4 in September. This pointed to a marked pace of expansion in private sector activity that was the quickest in nearly four years. Further, the upturn was supported by greater client requests and improved demand conditions. Manufacturing order books also rose at a quicker pace, with growth climbing to a 22-month high. Also, boosting growth of services output was a pick-up in new orders, which expanded at a solid pace that was faster than in September. The October data highlighted ongoing pressures on Indian service providers’ capacity, as unfinished business volumes rose for the fifth consecutive month. Service sector employment was unchanged over the month, while manufacturing staffing levels stagnated in October.

Further, Indian services companies remained upbeat towards the 12-month outlook for activity, but the overall level of sentiment was at a four-month low. Those firms anticipating growth indicated that improved market conditions and aggressive marketing campaigns are expected to boost activity. Higher prices paid for petrol resulted in a further increase in average input prices facing services firms.

The CNX Nifty is currently trading at 8465.10, down by 19.85 points or 0.23% after trading in a range of 8462.35 and 8504.00. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.77%, Hindustan Unilever up by 1.92%, HCL Tech up by 1.46%, NTPC up by 1.24% and Infosys up by 0.85%. On the flip side, Sun Pharma down by 4.99%, Dr. Reddys Lab down by 4.58%, Aurobindo Pharma down by 3.76%, Lupin down by 3.69% and Bharti Infratel down by 2.91% were the top losers.

Asian markets were trading mostly in the red; Nikkei 225 declined 272.29 points or 1.59% to 16,862.39, Jakarta Composite shed 19.01 points or 0.36% to 5,310.49, Hang Seng slipped 7.89 points or 0.03% to 22,675.62, KOSPI Index dipped 2.14 points or 0.11% to 1,981.66 and FTSE Bursa Malaysia KLCI was down by 0.45 points or 0.03% to 1,647.63.

On the flip side, Shanghai Composite added 0.36 points or 0.01% to 3,129.29 and Taiwan Weighted was up by 12.38 points or 0.14% to 9,079.65.