Markets erase losses to enter in positive territory

Indian equity benchmarks erased all of their losses in late afternoon session and entered into positive territory on the account of heavy buying in Energy, Oil & Gas and Metal stocks. Investors took some encouragement with Economic Affairs Secretary Shaktikanta Das’ statement that the GST will definitely give a boost to the real economy at the expense of the parallel shadow economy and added that the indirect tax regime would also raise gross domestic product (GDP) growth by 1.5-2 percentage points. Das also said that the tax net will be widened under the new regime and this may result in reduction of general tax rate. Sentiments turned optimistic with S&P Global Ratings’ report that the effect of demonetisation is fading and growth is likely to return to the pre-note ban stage, but a clearer picture of the economy will be available by June-end. Some support also came with the report that new GST draft rules will be finalised by the Council later today.

On sectoral front, stocks of some metal companies were trading higher with the report that the government is considering all options, including the possibility of imposing minimum import price (MIP) on certain categories of aluminium products to protect the domestic industry and stocks of some fertilizer companies were trading in green ahead of likely changes in National Uria Policy by Cabinet.

On the global front, European markets were trading in red as investors digested the new EU guidelines to a potential Brexit deal and reacted to a cabinet reshuffle in South Africa. Asian markets were also trading in red. Back home, in scrip specific development, Zensar Technologies edged higher after the company entered into a definitive agreement to acquire the business of Keystone Logic Solutions.

The BSE Sensex is currently trading at 29655.80, up by 8.38 points or 0.03% after trading in a range of 29552.61 and 29665.24. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.83%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Energy up by 2.87%, Oil & Gas up by 2.20%, Metal up by 1.47%, PSU up by 1.28% and Capital Goods up by 1.20%, while Telecom down by 1.20%, FMCG down by 0.57%, IT down by 0.52%, TECK down by 0.51% and Bankex down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 4.28%, Larsen & Toubro up by 1.68%, NTPC up by 1.50%, SBI up by 1.34% and Coal India up by 1.33%. On the flip side, HDFC Bank down by 1.49%, HDFC down by 1.23%, ITC down by 1.10%, TCS down by 1.05% and Cipla down by 0.98% were the top losers.

Meanwhile, after the Loksabha approval, the GST rollout looks imminent from July 1 and there are hopes that it will give a huge boost to economic activity in almost all sectors of Indian economy. Economic Affairs Secretary Shaktikanta Das has said that GST is an outcome of hard work done over last many years and it would remove the shadow economy. Das has also said that the tax net will be widened under the new regime and this may result in reduction of general tax rate.

Noting that GST is a very transformative piece of legislation, Das has said that it will definitely give a boost to the real economy at the expense of the parallel shadow economy and added that the indirect tax regime would also raise gross domestic product (GDP) growth by 1.5-2 percentage points.

Regarding revenue losses once the GST comes into place, Shaktikanta Das said that states might lose revenue in initial years, but the revenue inflows will stabilise even in the medium term and noted that he would not expect the revenue losses to continue beyond the first three years. He said that in any case if it happens, then there is a compensation mechanism for the first five years to compensate the states.

The CNX Nifty is currently trading at 9183.85, up by 10.10 points or 0.11% after trading in a range of 9152.10 and 9184.35. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 4.25%, Indian Oil Corp up by 2.91%, Hindalco up by 2.68%, BPCL up by 2.21% and ACC up by 2.14%. On the flip side, Bharti Infratel down by 3.53%, HDFC Bank down by 1.65%, Bharti Airtel down by 1.20%, ITC down by 1.15% and Eicher Motors down by 1.11% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 189.5 points or 0.78% to 24,111.59, Nikkei 225 decreased 153.96 points or 0.81% to 18,909.26, Taiwan Weighted decreased 36.63 points or 0.37% to 9,811.52, Jakarta Composite decreased 6.21 points or 0.11% to 5,586.74, KOSPI Index decreased 4.41 points or 0.2% to 2,160.23 and FTSE Bursa Malaysia KLCI decreased 4.06 points or 0.23% to 1,745.19. On the flip side, Shanghai Composite increased 12.28 points or 0.38% to 3,222.51.

All European markets were trading in red; UK’s FTSE 100 decreased 39.53 points or 0.54% to 7,329.99, France’s CAC decreased 17.6 points or 0.35% to 5,072.04 and Germany’s DAX decreased 13.82 points or 0.11% to 12,242.61.