Indian benchmarks continue firm trade in noon session

Indian stock markets continue to remain in fine fettle in noon session on sustained buying by funds and retail investors amid a positive trend in other Asian markets. Sentiments got some support with the BRICS nation’s National Development Bank chief K V Kamath’s statement that India will continue to grow on the back of its consumption-driven economy. He also said that the demonetisation move in India would have only a short-term blip after which India should be back on a clear growth path. Furthermore, in a written response to the Parliament's Public Accounts Committee (PAC), the Revenue Department said that due to the withdrawal of old high-value notes, the idle or hidden cash has come into the formal system which will be utilised for productive purposes. Regarding other implications, it said that increasing use of non-cash modes of transactions will promote transparency and have a lasting positive impact on tax collections, both direct and indirect.  However, gains remained capped on the report that foreign investors have pulled out over Rs 5,100 crore from the Indian capital market so far this month over concerns regarding 'lower prospects' of economic growth as compared to other emerging markets. The latest FPI outflow followed withdrawal of close to Rs 77,000 crore on net basis from equity and debts together in last three months (October-December). Meanwhile, describing the official data on the index of industrial production (IIP) for November 2016, during which demonetisation was announced, as a ‘false positive’, Crisil Research has said that the latest IIP figures do not reflect the true condition of the Indian manufacturing sector. Belying popular expectations, India's factory output, as measured by the IIP released earlier this month, has rose 5.7% in November, the first month of the government's demonetisation drive.

On the global front, Asian markets were trading mostly higher on Monday, following the modest gains on Wall Street Friday after Donald Trump's inauguration as the 45th US President. However, Japan's Nikkei share average dropped as shares of exporters fell on a stronger yen, while sentiments were subdued on concerns over newly sworn-in US President Donald Trump's protectionist trade view. Demand for safe haven assets rose while the U.S. dollar slumped after Bank of Japan Governor Haruhiko Kuroda said that the greenback could strengthen in the Trump presidency. Oil prices traded above the $53 per barrel mark along with gold, which continued its gaining streak.

Back home, all BSE sectoral indices were trading in the green. Among them, Metal index gained the most by 1.64 per cent, followed by Oil & Gas 1.32 per cent, PSU 1.29 per cent and Realty 1.13 per cent. In scrip specific development, Lupin gained after the company received final approval for its Paroxetin Extended Release Tablets USP, 12.5 mg, 25 mg and 37.5 mg from the United States Food and Drug Administration (USFDA) to market a generic version of Apotex Technologies, Inc’s Paxil CR Tablets, 12.5 mg, 25 mg and 37.5 mg. On the other hand, Amara Raja Batteries declined after the company posted a 17.90% fall in net profit at Rs 112.32 crore for the quarter ended December 31, due to higher expenses.

The market breadth remained optimistic, as there were 1519 shares on the gaining side against 785 shares on the losing side, while 151 shares remained unchanged.

The BSE Sensex is currently trading at 27129.91, up by 95.41 points or 0.35% after trading in a range of 26963.58 and 27167.79. 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 0.37%, while Small cap index up by 0.59%.

The top gaining sectoral indices on the BSE were Metal up by 1.64%, Oil & Gas up by 1.32%, PSU up by 1.29%, Realty up by 1.13% and FMCG up by 0.66%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Lupin up by 1.91%, GAIL India up by 1.83%, ONGC up by 1.60%, SBI up by 1.43% and Tata Steel up by 1.41%. On the flip side, ICICI Bank down by 2.43%, Axis Bank down by 1.09%, Bharti Airtel down by 0.62%, Hindustan Unilever down by 0.48% and Larsen & Toubro down by 0.40% were the top losers.

Meanwhile, asserting that demonitisation move has affected country's economic growth, a major central revenue body has asked finance minister Arun Jaitley not to roll-out Goods and Services Tax (GST) in a hurry and threatened to take legal recourse if their worries were not addressed. Tax officials named as ‘illegal’ certain decisions which are taken by finance minister and demanded that they be corrected. It also sought that the officer's body be consulted before any final decision is taken.

The GST council meeting on January 16, had agreed to the demand of coastal states, allowing them to tax economic activity in 12 nautical miles even though constitutionally the Centre has jurisdiction over territorial waters. It was also decided that under the proposed tax regime, 90% of all assessees with a turnover of Rs 1.5 crore or less will be assessed for scrutiny and audit by state authorities, the remaining 10% by the Centre. The All India Association of Group B Central Excise Gazetted Executive Officers has said that the decision to transfer 90% of service tax assessees to states is not supported by any lawful and logical base and therefore, the decisions taken by GST Council should be withdrawn immediately. 

Tax officials also added that due to demonitisation of high value currency notes, the India's GDP growth is likely to fall at least 1% that is to 6.6% from 7.6% estimated, as reviewed. It also stressed that in case if GST implementation is delayed further because of judicial scrutiny of the illegal decisions taken by the GST council, the country may suffer economically as the GDP may further slowdown.  

It further said the council had not been conferred upon any power by the Constitution to recommend the transfer of rights or allowing levy and collection of IGST (which deals in levy on inter-state supply, including stock transfers of goods or services) to the states. It also said that the area in sea up to 12 nautical miles from the coastline falls within the territory of India. Therefore, the powers to tax transactions in such areas were vested in the Union government. The GST is expected to be implemented from July 1, as against April 1 decided earlier by the government.

The CNX Nifty is currently trading at 8391.75, up by 42.40 points or 0.51% after trading in a range of 8327.20 and 8404.15. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.97%, Ultratech Cement up by 2.14%, Grasim Industries up by 2.09%, BPCL up by 2.04% and ONGC up by 1.80%. On the flip side, ICICI Bank down by 2.47%, Bharti Infratel down by 1.42%, Axis Bank down by 1.06%, Bharti Airtel down by 0.84% and Aurobindo Pharma down by 0.66% were the top losers.

Asian markets were trading mostly in green; KOSPI Index rose 0.12%, FTSE Bursa Malaysia KLCI increased 0.5%, Shanghai Composite gained 0.39%, Hang Seng added 0.02% and Taiwan Weighted was up by 0.99%. On the flip side, Nikkei 225 decreased 0.73% and Jakarta Composite was down by 0.12%.