Benchmarks make somber start on F&O expiry day

Indian equity indices have made a gap-down start and are trading lower by around half a percent in early deals on F&O expiry day with frontline gauges breaching their crucial 26,000 (Sensex) and 8,000 (Nifty) levels. Traders remained concerned with the minutes of the US Fed’s November meeting showing that the US central bank is poised to raise rates in December. Sentiments also weighed on with Commerce and Industry Minister Nirmala Sitharaman’s statement that economic output in the current quarter may get affected, with the government’s demonetisation drive temporarily hitting commercial activities in some sectors.

Global cues too remained somber with most of the Asian counters were trading in red at this point of time with some indices in the region suffering cuts of over half a percent. Though, the Japanese market after a day of break was moving higher as the dollar rose to near a more than seven-month high against the yen. The US markets made a mixed closing in last session, while the Dow and the S&P 500 reached new record closing highs, the tech-heavy Nasdaq ended the day in the red, as traders seemed taking a breather following the upward move seen over the past couple weeks.

Back home, depreciation in Indian rupee too dampened sentiments. Rupee’s unabated free-fall continued for the fifth straight day on Thursday as it weakened by another 27 paise to hit a fresh 9-month low of 68.83 against the dollar in early trade amid foreign fund outflows and the greenback's surge in overseas markets. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 851 shares on the gaining side against 907 shares on the losing side while 81 shares remain unchanged.

The BSE Sensex is currently trading at 25960.94, down by 90.87 points or 0.35% after trading in a range of 25880.78 and 26049.14. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index shed 0.15%, while Small cap index was down by 0.09%.

The few gaining sectoral indices on the BSE were Metal up by 0.76%, IT up by 0.36%, Basic Materials up by 0.26% and TECK was up by 0.13%, while Power down by 0.93%, Utilities down by 0.80%, Auto down by 0.75%, Bankex down by 0.70% and Healthcare was down by 0.60% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.12%, Hero MotoCorp up by 0.69%, Infosys up by 0.64%, Wipro up by 0.48% and Dr. Reddys Lab up by 0.46%. On the flip side, Tata Motors down by 1.97%, NTPC down by 1.97%, ICICI Bank down by 1.23%, Adani Ports & Special down by 0.99% and Lupin down by 0.96% were the top losers.

Meanwhile, the all-powerful Goods and Services Tax (GST) Council meeting which was scheduled for November 25 has now been postponed to December 2-3. This is the second time in the month of November that the GST council meeting had to be cancelled. The meeting was initially scheduled for November9-10, and was later postponed to November 24-25, as several states suggested changes in the model GST law and compensation formula

The meeting was to discuss the draft laws and also the contentious issue of administration of the regime. Though, the officers’ committee of both the Centre and states will meet on November 25 to finalise the three draft legislations that is CGST, IGST and compensation law, and these will be placed in public domain for stakeholders’ comments. However, the officers committee would not discuss the issue of cross empowerment to avoid dual control as it would be decided at the ministerial level.

The Central GST (CGST) will be framed based on the model GST law. The Integrated GST (IGST) law would deal with inter-state movement of goods and services. Also, the states will draft their own State GST (SGST) based on the draft model law with minor variations incorporating state-based exemption. These laws deal with returns, registration and refund process as well as where GST will be levied. The compensation law will list out how states will be compensated in the initial five years for revenue loss on account of GST rollout.

The Centre is planning to create Rs 50,000 crore fund for GST compensation by levying cess on demerit and luxury goods. At its last meeting, the GST Council agreed on a four-slab structure of 5, 12, 18 and 28 percent along with a cess on luxury and ‘sin’ goods such as tobacco. Also, the Centre is on track to introduce the legislations in the ongoing winter session of Parliament, which ends on December 16.

The CNX Nifty is currently trading at 7994.60, down by 38.70 points or 0.48% after trading in a range of 7973.95 and 8013.65. There were 14 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 2.14%, Hindalco up by 1.76%, ACC up by 0.94%, Bank of Baroda up by 0.89% and Grasim Industries up by 0.76%. On the flip side, Eicher Motors down by 2.20%, Tata Motors down by 2.08%, NTPC down by 1.91%, Tata Motors - DVR down by 1.84% and Kotak Mahindra Bank down by 1.78% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 78.81 points or 0.35% to 22,597.88, Jakarta Composite declined 52.66 points or 1.01% to 5,159.34, KOSPI Index shed 15.15 points or 0.76% to 1,972.80, Taiwan Weighted slipped 8.18 points or 0.09% to 9,170.05 and FTSE Bursa Malaysia KLCI was down by 5.94 points or 0.36% to 1,624.44.

On the flip side, Shanghai Composite increased 3.08 points or 0.09% to 3,244.21 and Nikkei 225 was up by 187.43 points or 1.03% to 18,350.37.