Indian benchmarks continue to trade in green in noon session

Indian benchmark indices paired some early gains and were trading in a narrow range with a positive bias in noon session, on continued buying activities by both funds and retail investors in frontline blue-chip stocks. Sentiments got some support with the report that GST Council reached consensus on most provisions of integrated-GST, the law for interstate sales, and other issues related to the central GST and state GST previously left undecided. But states raised a few more issues, even as the contentious one on tax administration remained unresolved. A number of states said the April 1 deadline to roll out GST looked difficult to meet and that a realistic target could be June or July. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. India rupee was trading strong at 68.23 in the late morning deals on increased dollar by banks and exporters. However, investors turned jittery after the report that India's services industry contracted 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 reading below 50 indicates contraction).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. Market participants also remained cautious over the report that indicate Fiscal impact of the recent measures announced by prime minister Narendra Modi aimed at helping economically weaker sections could be around Rs 3500 crore. Prime Minister had announced three broad schemes including interest rate sops for housing for the poor and farm loans besides financial incentives for pregnant women. While the fiscal burden on account of financial incentives for pregnant women is estimated at Rs 1200 crore, sops on farm loans is estimated to cost the exchequer Rs 1300 crore and Fiscal costs of offering sops on housing for the poor at Rs 1000 crore.

On the global front, Asian markets were trading mostly higher on Wednesday, following the overnight gains on Wall Street and as upbeat economic data from the US, China and Europe boosted optimism for global economic growth. Japan's equity market is trading on a positive note as investors took heart from upbeat global economic data which came out during Japan's holidays. A weaker yen boosted exporters. The final Nikkei Japan manufacturing Purchasing Managers Index (PMI) rose to 52.4 in December, beating a preliminary reading of 51.9 and November's 51.3. Meanwhile, oil prices edged up on Wednesday, recovering some losses from the previous day when the US-dollar hit a 14-year peak and weighed on crude markets.

Back home, stocks from Metal, Capital Goods and Consumer Durables counters were supporting the markets’ uptrend, while those from FMCG and Banking counters were adding to the underlying cautious undertone. In scrip specific development, Nandan Denim surged after Reserve Bank of India (RBI) has increased foreign investment limit in the company from 24% to 49% of paid-up capital. Moreover, Suven Life Sciences gained after the company received two product patents, one from Eurasia and one from Norway corresponding to the New Chemical Entities for the treatment of disorders associated with Neurodegenerative diseases and these Patents are valid through 2032 and 2025 respectively.

The market breadth remained optimistic as there were 1629 shares on the gaining side against 719 shares on the losing side, while 116 shares remained unchanged.
The BSE Sensex is currently trading at 26670.48, up by 27.24 points or 0.10% after trading in a range of 26632.95 and 26723.37. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.57%, while Small cap index up by 0.79%.

The gaining sectoral indices on the BSE were Metal up by 0.89%, Capital Goods up by 0.83%, Consumer Durables up by 0.81%, Realty up by 0.79% and IT up by 0.71%, while FMCG down by 0.23% and Bankex down by 0.18% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.72%, ONGC up by 1.35%, Wipro up by 1.28%, Coal India up by 1.20% and Bajaj Auto up by 0.94%. On the flip side, Reliance Industries down by 1.52%, Cipla down by 0.72%, Bharti Airtel down by 0.54%, Lupin down by 0.50% and Hindustan Unilever down by 0.46% were the top losers.

Meanwhile, on the first day of its eighth meeting of Goods and Services Tax (GST) Council, the States have demanded taxation rights for high sea sales and also increasing the number of items on which cess is to be levied to compensate for revenue loss. The revenue loss is estimated at Rs 90,000 crore post demonetisation as most states have seen revenue decline of up to 40 per cent, which is much above the initial estimate of Rs 55,000 crore GST compensation fund that was proposed to be created by levying cess on demerit or sin goods and luxury items. This constitutes a new challenge to the rollout and timeline for the biggest indirect tax reform and the council also suggested that April 1 target to roll out the new tax regime is a distant possibility.

At the meeting, coastal states insisted for rights to levy GST on trade of goods within 12 nautical miles offshore, holding up finalising of the draft law for levy of Integrated-GST (IGST) on inter-state trade. The coastal states want the number of items that would attract cess to be increased as states would need higher compensation due to adverse effect of demonetisation on their tax collections.

At the first day of meeting, the council did not even discuss the most vexed issue of dual-control which had been till now holding up roll out of Goods and Services Tax (GST) regime. Therefore, GST council headed by the finance minister Arun Jaitley will continue discussion at the second day of the meeting to hammer out an agreement on issues of dual control to divide assessing powers between the Centre and the states. Finance Minister Arun Jaitley has pointed out that September 16 is the last deadline as the current indirect tax structure will cease to exist and it is a constitutional compulsion to roll out the GST before that. 

The CNX Nifty is currently trading at 8208.60, up by 16.35 points or 0.20% after trading in a range of 8190.85 and 8218.50. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.90%, Tata Motors up by 1.96%, ONGC up by 1.61%, HCL Tech up by 1.51% and Tech Mahindra up by 1.50%. On the flip side, Kotak Mahindra Bank down by 1.65%, Reliance Industries down by 1.44%, ACC down by 1.38%, Bharti Airtel down by 0.89% and Cipla down by 0.79% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.48%, Shanghai Composite gained 0.55%, Taiwan Weighted increased 0.15% and Nikkei 225 was up by 2.45%. On the flip side, Hang Seng decreased 0.07%, Jakarta Composite slipped 0.2% and KOSPI Index was down by 0.04%.