Indian equity indices hit all-time highs; Nifty holds above 9,300 mark

Indian benchmark indices, which have hit fresh intraday highs on continued buying by both funds and retail investors, supported by a firming trend in global markets, is trading jubilantly in noon session. Sentiments got a boost after Finance Minister Arun Jaitley asserted that the government was giving top priority to addressing the issue of bad loans, while acknowledging that the problem of non-performing assets was “adversely impacting” the Indian banking system. Besides, Indian rupee appreciating against the dollar to trade at a near 21-month high of 64.07 fuelled the bull run of the bourses. Investors got some confidence with the report that India continues to remain an economic bright spot despite some bold but disruptive reforms. The FICCI-PwC India Manufacturing Barometer (IMB) survey stated that about 63% of respondents were 'somewhat optimistic' about the prospects of the Indian economy for the coming year, representing a significant jump over last year's 58%. Some support also came with Revenue Secretary Hasmukh Adhia assuring that prices will not increase due to higher incidence of tax and instead, are likely to come down under the Goods and Services Tax (GST) regime. He said that though most services will be taxed at 18% under the GST regime, as against the current 15% service tax, a majority of these will get input tax credit on purchases and the overall tax incidence will remain the same. Investors even overlooked the report that upside risks to inflation persists despite prediction of a good monsoon and might deter the Reserve Bank from going in for a rate cut in the near future. According to the report, rise in global commodity prices, possibility of El Nino, increase in house rent allowance under 7th Pay Commission and the initial impact on prices due to GST will add to the upside risks to inflation.

On the global front,  Asian markets were trading mostly higher on Wednesday, following the overnight gains on Wall Street amid upbeat corporate earnings results and on optimism that US President Donald Trump is expected to unveil a tax plan later in the day. Further Japanese markets rose to near one-month highs, buoyed by a weaker yen and record high for the Nasdaq Composite. Meanwhile, growing appetite for risk meant safe-haven assets fell out of favour, with US 10-year Treasury yields firming to 2.34 per cent from 2.23 per cent on Friday.

Back home, stocks from FMCG, Metal and Auto counters were supporting the markets’ uptrend, while those from IT, TECK and Energy counters were adding to the underlying cautious undertone. In scrip specific development, Swaraj Engines rallied after the company reported a rise of 29.82% in its net profit at Rs 15.28 crore for the quarter ended March 31, 2017 as compared to Rs 11.77 crore for the same quarter in the previous year. Moreover, Persistent Systems surged after the company entered into a strategic collaboration with Partners HealthCare, founded by Brigham and Women’s Hospital and Massachusetts General Hospital, to develop a new industry-wide open-source platform with the goal of bringing digital transformation to clinical care.

The market breadth remained pessimistic, as there were 690 shares on the gaining side against 1699 shares on the losing side, while 119 shares remained unchanged.

The BSE Sensex is currently trading at 30134.20, up by 190.96 points or 0.64% after trading in a range of 30004.28 and 30137.53. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.42%, while Small cap index up by 0.40%.

The top gaining sectoral indices on the BSE were FMCG up by 1.55%, Metal up by 1.05%, Auto up by 0.99%, Basic Materials up by 0.86% and Bankex up by 0.83%, while IT down by 0.64%, TECK down by 0.38%, Energy down by 0.30%, Healthcare down by 0.20% and Realty down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.38%, Asian Paints up by 2.09%, HDFC up by 1.78%, GAIL India up by 1.76% and Mahindra & Mahindra up by 1.64%. On the flip side, Infosys down by 1.13%, Cipla down by 1.08%, Power Grid down by 0.87%, Reliance Industries down by 0.45% and NTPC down by 0.45% were the top losers.

Meanwhile, allaying fears that GST implementation will lead to a spurt in prices, the Revenue Secretary Hasmukh Adhia has said that prices of goods and services will not see any increase due to higher incidence of tax, instead of that prices are likely to come down under the Goods and Services Tax (GST) regime. He added that almost 60 percent of the income of the Centre and states comes from items that attract 14 percent value added tax and 12.5 percent excise duty and there will be a likely decrease in the tax on each of these items under GST.

Adhia further said that though most services will be taxed at 18 percent under the GST regime, as against the current 15 percent service tax, a majority of these will get input tax credit on purchases and the overall tax incidence will remain the same. He also said that there is a possibility that there will be more than one rate for service tax. It is not necessary all services will attract 18 percent tax but abatement will be kept in mind. He added that for a few services, the rate will be decided keeping in mind abatement (relief) that it attracts. For such services, rate will be less that 18 percent.

The Revenue Secretary has said that the government will try to finalize the rates of tax for each item at the earliest to roll out GST from July 1. He also said that the government will soon issue the rules concerning the provision of GST Compliance Rating for an assessee under the law. Meanwhile, the GST Network (GSTN) system will furnish the taxpayer track record regarding the compliance level, especially about the track record related to timely uploading of supply invoices giving details about the auto reversals that have happened for invoices issued by a supplier. The Secretary added if a taxpayer tries to evade tax, the GSTN software will be able to detect that and downgrade the compliance rating.

The CNX Nifty is currently trading at 9360.45, up by 53.85 points or 0.58% after trading in a range of 9301.35 and 9363.75. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.48%, ITC up by 2.36%, Asian Paints up by 2.02%, HDFC up by 1.95% and GAIL India up by 1.88%. On the flip side, Bharti Infratel down by 1.85%, Tech Mahindra down by 1.38%, Power Grid down by 1.20%, Infosys down by 1.16% and Cipla down by 1.07% were the top losers.

Asian markets were mostly trading in green; Taiwan Weighted rose 0.15%, FTSE Bursa Malaysia KLCI gained 0.17%, KOSPI Index increased 0.53%, Shanghai Composite added 0.43%, Nikkei 225 surged 1.02% and Hang Seng was up by 0.61%. On the other hand, Jakarta Composite was tad down by 0.01%.