Feeble global cues drag benchmarks lower in early deals

Indian equity benchmarks have made a soft start and are trading in red in early deals on Monday, tracking feeble global cues. Sentiments also remained down-beat after the industry body Assocham in its latest report has said that prospects of interest rate cut in near future may be bleak due to factors like continuous pressure on rupee against dollar, firming of the US interest rates and hardening of crude oil prices. However, losses remained capped with Finance Minister Arun Jaitley’s statement that infrastructure investment needs a booster and his next Budget in February will focus on encouraging more public as well as private spending to boost economic growth.

On the global front, Asian markets were trading mostly in red at this point of time with the heightened geopolitical tensions. Japanese market was down, as the yen led gains among major currencies. The US markets ended modestly in red in the last session, giving up the early gains, partly due to geopolitical concerns following reports that a Chinese Navy warship seized an underwater drone belonging to a U.S. oceanographic vessel in the South China Sea.

Back home, weakness in Indian rupee too dampened sentiments. Rupee depreciated by 6 paise to 67.82 against the US dollar in early trade on Monday at the Interbank Foreign Exchange due to increased demand for the American unit from importers amid foreign fund outflows. In scrip specific development, Axis Bank declined over half a percent after the bank has reviewed and decided to reduce the marginal cost of funds based lending rates (MCLR) of the bank by 10 basis points in the overnight tenor and by 15 basis points across all other tenors.  However, shares of Laurus Labs made a splendid debut on the stock exchanges to list at Rs 490 with a premium of 14.48% against its issue price of Rs 428.

The BSE Sensex is currently trading at 26410.39, down by 79.17 points or 0.30% after trading in a range of 26369.28 and 26505.66. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.19%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.31%, Energy up by 0.81%, Utilities up by 0.40%, PSU up by 0.31% and Power up by 0.06%, while Consumer Durables down by 0.70%, Realty down by 0.61%, Auto down by 0.45%, TECK down by 0.38% and Capital Goods down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 1.81%, Mahindra & Mahindra up by 0.76%, Lupin up by 0.68%, NTPC up by 0.56% and ITC up by 0.53%. On the flip side, Sun Pharma down by 1.37%, Asian Paints down by 1.14%, Hindustan Unilever down by 1.01%, Tata Motors down by 0.99% and HDFC down by 0.89% were the top losers.

Meanwhile, amid signs of slippage of the April 1 GST rollout target, Finance Minister Arun Jaitley has said Goods and Services Tax (GST) is a transactional levy that unlike income tax can be implemented anytime during the year. He expressed confidence that GST can be implemented anytime between April 1 and September 16, 2017, in accordance with the constitutional amendment legislation that allows a national sales tax by subsuming central and state levies.

Jaitley added that it is a transactional tax and not an income tax. Transactional tax can start in any part of the financial year and therefore, the range of timing when it has to come into force because of constitutional necessity is April 1, 2017 to September 16, 2017. He hoped that the earlier it can be done, the better it is for the new taxation system. Minister also said that the GST Council has resolved 10 issues and only one pertaining to administration of tax is pending. He said that there are certain kinds of turf issues that are yet to be resolved. But the constitutional embargo is very clear.

He said that the entire amendment was notified on September 16, 2016, and it permits the old taxation regime to continue for a period of one year. So on September 16, 2017, as far as the current mode of taxation is concerned, the curtain will be down. Therefore, neither the Centre not the state can go in for collection. Jaitley suggested that there is a need that each assessee is assessed only once since central taxes like excise and service tax and state levies like VAT are being subsumed into one. He said that ideally it should be proper for the issues to be resolved at the beginning of financial year on April 1 for the new regime to kick in.

The CNX Nifty is currently trading at 8117.55, down by 21.90 points or 0.27% after trading in a range of 8105.35 and 8128.60. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.54%, GAIL India up by 1.83%, Tata Power up by 1.17%, BPCL up by 0.98% and Idea Cellular up by 0.85%. On the flip side, Sun Pharma down by 1.55%, Asian Paints down by 1.29%, Tata Motors down by 1.16%, Eicher Motors down by 1.06% and Bharti Airtel down by 1.05% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 168.87 points or 0.77% to 21,851.88, Taiwan Weighted dropped 65.36 points or 0.7% to 9,261.42, Nikkei 225 slipped 35.38 points or 0.18% to 19,365.77, FTSE Bursa Malaysia KLCI shed 2.32 points or 0.14% to 1,635.47, KOSPI Index dipped 0.65 points or 0.03% to 2,041.59 and Shanghai Composite was down by 0.41 points or 0.01% to 3,122.58. On the flip side, Jakarta Composite was up by 4.31 points or 0.08% to 5,235.96.