Benchmarks continue firm trade in noon session

Indian equity markets are trading on an optimistic note in noon session on Wednesday, as sentiments remained buoyant after Gross domestic product (GDP) for the third quarter (Q3) of financial year 2016-17 (FY17) grew at 7%, allaying fears of any major effect of demonetisation. The Q3 numbers not only made India the fastest-growing large economy in the world but also helped the Central Statistics Office (CSO) retain its earlier projection (in first advance estimates) for full-year GDP growth at 7.1% in the second advance estimates released on Tuesday. Some support also came with the report that Indian manufacturing sector expanded marginally in February as a rebound in export demand contributed to a stronger expansion of total new orders. The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) -- an indicator of manufacturing activity -- increased to 50.7 in February, up from 50.4 in January, as output and order books rose at accelerated rates. However, in the early deals there was some cautiousness as CSO has actually forecast a greater slide in gross value added (GVA), suggesting that deceleration is sharper than what the headline GDP growth numbers suggest. The CSO data shows that growth in GVA, which is GDP minus net taxes, will slow down to 6.7% in 2016-17 or 1.1 % lower than 7.8% GVA growth in 2015-16. GVA serves as a more realistic proxy to measure changes in the aggregate value of goods and services produced in the economy. The demonetisation effect and the resultant slowdown in household spending and corporate investment may well be hiding in the steeper fall in GVA growth estimates compared to GDP.  Furthermore, the growth of eight core sectors has decelerated to 3.4% in January compared to 5.7% in the same month last year, thanks to plummeting output in three key segments - cement, fertilisers and refinery products.  Meanwhile, information technology (IT) stocks gained traction after the US President Donald Trump’s first speech to US congress was seen more restrained than the harsh rhetoric seen during his pre-election speeches. The speech did not have any comment on visa issues that may hit domestic IT firms. Instead, the US President said the US immigration should be based on a merit-based system, rather than relying on lower-skilled immigrants.

On the global front, Asian markets were trading mostly higher on Wednesday, despite the modest losses overnight on Wall Street and lower commodity prices. Investors are awaiting details on US President Donald Trump's promised tax cuts, infrastructure spending plans and repeal of Obamacare as Trump kicked off his first address to the US Congress. Further, Japan's Nikkei jumped over a percent, buoyed by a weaker yen and data showing manufacturing activity expanded in February at the fastest pace in almost three years.

Back home, stocks from Realty, Healthcare and Banking counters were supporting the markets’ uptrend, while those from Oil & Gas, Energy and Telecom counters were adding to the underlying cautious undertone. In scrip specific development, Surya Roshni surged after the company commenced commercial production at its newly set-up steel pipe plant at Hindupur District, Ananthapuramu in state of Andhra Pradesh for manufacturing of ERW Black and GI Pipes with an installed capacity of 90,000 M.T per annum from March 01, 2017. Furthermore, Maruti Suzuki India gained after the company reported a jump of 10.9% in total sales at 130,280 units in February 2017. This includes 120,735 units in domestic market and 9,545 units of exports.

The market breadth remained optimistic, as there were 1594 shares on the gaining side against 831 shares on the losing side, while 152 shares remained unchanged.
The BSE Sensex is currently trading at 28937.19, up by 193.87 points or 0.67% after trading in a range of 28824.17 and 29001.35. 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 0.17%, while Small cap index up by 0.57%.

The top gaining sectoral indices on the BSE were Realty up by 1.70%, Healthcare up by 1.02%, Bankex up by 0.85%, FMCG up by 0.80% and IT up by 0.66%, while Oil & Gas down by 0.86%, Energy down by 0.49%, Telecom down by 0.42%, Consumer Durables down by 0.32% and PSU down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.32%, Dr. Reddy’s Lab up by 2.12%, Sun Pharma up by 2.08%, HDFC up by 1.72% and Hindustan Unilever up by 1.37%. On the flip side, Tata Motors down by 0.95%, Bharti Airtel down by 0.77%, Mahindra & Mahindra down by 0.75%, NTPC down by 0.43% and GAIL India down by 0.42% were the top losers.

Meanwhile, Economic Affairs Secretary Shaktikanta Das has said that the much-awaited Goods and Services Tax (GST) is going to be rolled out on July 1, 2017 as all states have agreed on the date. He also said that the government plans to get the council’s approval on Central GST (CGST), Integrated GST (IGST) and State GST (SGST) drafts at its meeting, which will be held on March 4 and 5, days before the start of the second leg of the Budget Session. 

Das has stated that council at its 10th meeting on February 18 had approved the Draft Compensation Bill and also cleared the final draft of the anti-profiteering clause to ensure benefit of lower taxes gets shared with consumers. He also said that the draft laws passed by the council will have to be passed by Parliament. Simultaneously, State GST (SGST) will have to be passed by state legislatures. He added that the four bills form the enabling laws under the GST constitutional amendment. 

Shaktikanta further said that another step remaining is to slot all the commodities under the GST tax slabs of 5 per cent, 12 per cent, 18 per cent and 28 per cent. He also said that each item has to be fitted under a particular slab and after the March 4-5 meeting, GST officers will do the slotting. Meanwhile, GST, which will replace a plethora of central and state taxes, is a consumption based tax levied on sale, manufacture and consumption on goods and services at a national level.

The CNX Nifty is currently trading at 8931.55, up by 51.95 points or 0.59% after trading in a range of 8898.60 and 8950.25. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 2.26%, Dr. Reddy’s Lab up by 2.25%, Sun Pharma up by 2.10%, HDFC up by 1.69% and Hindustan Unilever up by 1.51%. On the flip side, BPCL down by 1.98%, Idea Cellular down by 1.42%, Ultratech Cement down by 1.18%, BHEL down by 1.14% and Tata Motors down by 1.12% were the top losers.

Asian markets were trading mostly in green, FTSE Bursa Malaysia KLCI was up by 0.21%, Shanghai Composite was higher by 0.42%, Hang Seng was up by 0.19% and Nikkei 225 surged by 1.47%.  On the other hand, Taiwan Weighted declined by 0.65% and Jakarta Composite decreased by 0.33%.