Benchmarks trim gains; Nifty holds 8200 mark

Indian equity benchmarks trimmed gains and continued trading in green in late morning session as investors awaited results from the second day of GST Council Meet. The sentiments got some support after the industry body, Associated Chambers of Commerce and Industry of India (ASSOCHAM) said that to drive economic growth, the focus should now be on effective implementation of the steps announced by Prime Minister Narendra Modi in his address to the nation on New Year’s Eve, as they are extremely positive for the Indian economy. Prime Minister had announced major tax rebates for the poor, farmers, small traders, senior citizens and women. However, some pressure built in after India’s services industry ended 2016 on a sour note, contracting for a second month in a row in December as orders shrank amid a severe cash shortage. The Nikkei/Markit Services Purchasing Managers’ Index was little changed at 46.8 in December from November’s 46.7. A new business sub-index, an indicator of domestic and foreign demand, fell to a 39-month low of 46.0 in December from 46.7, even though firms cut prices of their goods despite input costs rising at a faster pace. Investors also took cautious approach as the Goods and Services Tax (GST) Council will take up the tricky issue of division of administrative turf between the Centre and states in the proposed indirect taxation system on Wednesday, even as many states signaled sticking to their stance of having a control over small dealers. The states are also digging in their heels to ask for more compensation, as they are hit by demonetization, clearly giving signals that the April 1 deadline is likely to be missed. Traders were seen piling position in Metal, Auto and Capital Goods stocks, while selling was witnessed in Bankex and FMCG sector stocks. In scrip specific development, Glenmark Pharmaceuticals was trading in green after the pharma major received final approval from the US health regulator (USFDA) for sale of Tretinoin Capsules, used in treatment of leukemia. Nandan Denim was trading firm after the Reserve Bank of India notified that foreign portfolio investors can now invest up to 49% in the company against 24% earlier.

On the global front, Asian shares were trading mostly in green. Japanese equities kicked off the new year sharply higher on Wednesday, leading the region’s gains amid a robust outlook for the US economy, coupled with expectations of continued yen weakness. The Nikkei Japan Manufacturing Purchasing Managers’ Index, a key measure of manufacturing activity, rose to 52.4 in December from 51.3 in November, the highest reading since December 2015. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,200 and 26,600 levels respectively. The market breadth on BSE was positive in the ratio of 1851:897, while 138 scrips remained unchanged.

The BSE Sensex is currently trading at 26657.33, up by 14.09 points or 0.05% after trading in a range of 26632.95 and 26723.37. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.49%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were Metal up by 0.83%, Auto up by 0.77%, Capital Goods up by 0.67%, Consumer Durables up by 0.54% and PSU up by 0.53%, while Bankex down by 0.31% and FMCG down by 0.13% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.20%, ONGC up by 1.66%, Bajaj Auto up by 0.95%, Coal India up by 0.87% and Tata Steel up by 0.76%.

On the flip side, Reliance Industries down by 1.62%, Cipla down by 0.96%, Bharti Airtel down by 0.74%, Lupin down by 0.58% and HDFC Bank down by 0.40% were the top losers.

Meanwhile, the industry body, Associated Chambers of Commerce and Industry of India (Assocham) has said that to drive economic growth, the focus should now be on effective implementation of the steps announced by Prime Minister Narendra Modi in his address to the nation on New Year's Eve, as they are extremely positive for the Indian economy. Prime Minister had announced major tax rebates for the poor, farmers, small traders, senior citizens and women. He also urged the nation's banking system to work for the poor and the marginalised and complimented the people for joining and supporting the government's cleansing drive against corruption and black money.

Assocham President, Sunil Kanoria said that the initiatives like 60-day interest waiver for farmers who have taken loans from district co-operative banks and primary societies together with additional fund of Rs 20,000 crore given to NABARD to give loans to farmers would help in alleviating pains of farmers and rural class. He also said that schemes like interest subsidy on loans for low cost housing together with impetus to affordable housing will provide much needed help to vulnerable sections of society and revive consumer confidence amid largest, but poorest socio-economic group. He further said that the push towards low cost housing is also good news for retail portfolio of banks and non-banking financial companies (NBFCs) that have been struggling to boost their business amid economic slowdown. He also said that the credit guarantee for SME and MSME has been increased to Rs 2 crore and this will provide support to these sectors.

Kanoria added that the government should also complement these actions with substantial reduction in both individual and corporate tax rates, more so as private sector investments are yet to kick-start and lower tax rates will certainly push private investments and drive economic growth. On the banking sector, he said that banks have started reducing interest rates, considering that post-demonetisation there has been a substantial surge in deposits, and further rate cuts will only revive consumption demand and reinvigorate the investment cycle.

The CNX Nifty is currently trading at 8200.85, up by 8.60 points or 0.10% after trading in a range of 8190.85 and 8218.50. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.40%, Tata Motors up by 2.29%, ONGC up by 1.82%, Tata Motors - DVR up by 1.62% and Hindalco up by 1.26%.

On the flip side, Kotak Mahindra Bank down by 1.69%, Reliance Industries down by 1.60%, ACC down by 1.08%, Cipla down by 0.98% and Bharti Airtel down by 0.85% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 1.04 points or 0.05% to 2,045.01, FTSE Bursa Malaysia KLCI increased 7.93 points or 0.48% to 1,643.46, Shanghai Composite increased 15.18 points or 0.48% to 3,151.10, Taiwan Weighted increased 16.36 points or 0.18% to 9,289.24 and Nikkei 225 increased 464.09 points or 2.43% to 19,578.46.

On the other hand, Hang Seng decreased 12.42 points or 0.06% to 22,137.98 and Jakarta Composite decreased 10.49 points or 0.2% to 5,265.48.