Benchmarks extend gains; trade near intra-day high level

Indian equity benchmarks extended early gains and continued firm trade in the afternoon session, hovering near intra-day high level on increased buying by funds and retail investors. Sentiments got support from NITI Aayog Vice Chairman Arvind Panagariya’s statement, who expressing his support for the demonetisation of high-value currency said that demonetisation was a move towards formal economy. He said it is the government's drive to promote digital transactions and a less cash economy so as to move from the informal to greater formalisation of the economic system. There was also a rush to cover short positions ahead of the December expiry of derivatives which supported the upside. Besides, a firm trend at Asian markets following upbeat U.S. consumer confidence and housing data released overnight, too aided to optimistic milieu. In scrip specific development, Sunil Hitech Engineers was up by 5 percent after the company was awarded an order worth Rs 434 crore in the state of Arunachal Pradesh for National Highways & Infrastructure Development Corporation on Engineering, Procurement & Construction (EPC) mode.

On the global front, Asian markets were trading mostly in green, tracking the positive cues overnight from Wall Street and higher commodity prices. The US dollar strengthened, while crude oil prices edged lower in Asian trades.

The BSE Sensex is currently trading at 26373.85, up by 160.41 points or 0.61% after trading in a range of 26216.54 and 26377.14. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.28%, while Small cap index added 1.41%.

The top gaining sectoral indices on the BSE were Power up by 1.20%, Realty up by 1.17%, TECK up by 0.96%, IT up by 0.91% and Bankex up by 0.91%, while there were no losing indices on BSE sectoral front.

The top gainers on the Sensex were Axis Bank up by 2.17%, Wipro up by 2.00%, Coal India up by 1.94%, Dr. Reddys Lab up by 1.63% and Asian Paints up by 1.27%. On the flip side, Tata Steel down by 0.79%, Tata Motors down by 0.28%, Reliance Industries down by 0.25%, Bharti Airtel down by 0.10% and Larsen & Toubro down by 0.03% were the top losers.

Meanwhile, in a bid to boost economic activities top economists at a meeting headed by Prime Minister Narendra Modi at Niti Aayog, have suggested a simplification and reduction in corporate and personal income tax rates, harmonisation of customs duties to global levels and more steps to create a bigger formal economy by building on demonetisation. 

During the meeting, economists also recommended simplification of taxes and better coordination between the data bases of the tax department's two arms— CBDT and CBEC. On indirect taxes, the suggestion was to unify customs duties across the manufacturing sector to about 7 per cent to prevent inverted duty structures. Besides, experts have suggested that there is a need to invest in the tourism sector which has potential to generate high paying job and making Indian universities world class.

Niti Aayog Vice Chairman Arvind Panagariya said “Tax simplification figured quite a lot on the direct taxation, both corporate and personal income tax on simplifying, reducing exemptions, bringing down tax rate and aligning tax system to make India competitive with international destination.” He also added that one of the issues that came up for discussion was tariff inversion whereby tariff on component and inputs are higher than the final products so that undercuts the incentive to produce the final product. Therefore, he suggested to harmonise the tariff to single rate to 7 per cent or so.

The high-level meeting, which comes ahead of the Budget, did not go into the demonitisation impact on the economy, while the aspect of digitisation to make it a less cash economy figured. Apart from Panagariya, the meeting was attended by finance minister Arun Jaitley, senior government officers and senior officials from Niti Aayog. The economists and experts who were present include Pravin Krishna, Sukhpal Singh, Vijay Paul Sharma, Neelkanth Mishra, Surjit Bhalla, Govinda Rao, Madhav Chavan, N K Singh, Vivek Dehejia, Pramath Sinha, Sumit Bose and T N Ninan. The government is planning to present the budget for 2017-18 on February 1 instead of the regular date of February 28.

The CNX Nifty is currently trading at 8087.00, up by 54.15 points or 0.67% after trading in a range of 8033.25 and 8087.15. There were 44 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.34%, Zee Entertainment up by 2.42%, Grasim Industries up by 2.29%, Bosch up by 2.27% and Indusind Bank up by 2.21%. On the flip side, Tata Motors - DVR down by 0.83%, Tata Steel down by 0.64%, Tata Motors down by 0.40%, Reliance Industries down by 0.37% and Hindalco down by 0.35% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 6.89 points or 0.43% to 1,626.57, Taiwan Weighted increased 92.13 points or 1.01% to 9,201.40, Jakarta Composite increased 100.15 points or 1.96% to 5,204.23 and Hang Seng increased 101.43 points or 0.47% to 21,676.19.

On the flip side, KOSPI Index decreased 17.68 points or 0.87% to 2,024.49, Shanghai Composite decreased 14.03 points or 0.45% to 3,100.64 and Nikkei 225 decreased 1.34 points or 0.01% to 19,401.72.