Benchmarks trade jubilantly in early deals; Nifty surpasses 9,500 mark

Buoyed by firm global cues, Indian equity benchmarks have made a gap-up opening and are trading jubilantly in early deals, with frontline gauges surpassing their crucial 9,500 (Nifty) and 30,700 (Sensex) levels. Traders reacted positively to the Goods and Services Tax (GST) Council finalising tax rates of goods and services under the four-slab structure with essential items of daily use being kept in the lowest bracket of 5 percent. The Council fixed the rates for over 1200 items under the Goods and Services tax. Lots of daily consumption items such as milk, fruit and vegetables, jaggery or gur, foodgrain and cereals have been exempted from tax, while others such as sugar, tea, coffee, edible oil, mithai, and newsprint have been placed in the lowest slab of 5 per cent.

Global cues too remained supportive with Asian markets trading mostly in green at this point of time, as traders overlooked uncertainties surrounding President Donald Trump after reports he tried to influence a federal investigation. The US markets bounced back in last session and the major averages partly offset the steep losses posted in the previous session.

Back home, banking stocks remained on buyers’ radar, as the RBI has eased the norms of setting up bank branches and said branches manned by either bank’s staff or its business correspondents where services are provided for a minimum of four hours per day for at least five days a week will be called a banking outlet. FMCG index too edged higher and hit record high after the GST Council approved lower rates. Meanwhile, HUDCO made stellar debut on the bourses, as the scrip got listed at Rs 73.45 on BSE, a premium of 22.42 per cent over its issue price of Rs 60 per share.

The BSE Sensex is currently trading at 30,700.56, up by 265.77 points or 0.87% after trading in a range of 30539.65 and 30712.35. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 0.84%, while Small cap index was up by 1.22%.

The top gaining sectoral indices on the BSE were FMCG up by 4.00%, Realty up by 1.89%, Power up by 1.57%, PSU up by 1.32% and Metal up by 1.28%, while IT down by 0.46% and TECK down by 0.31% were the only losing indices on BSE.

The top gainers on the Sensex were ITC up by 5.83%, Hindustan Unilever up by 2.47%, SBI up by 2.05%, Coal India up by 1.99% and Axis Bank up by 1.83%. On the flip side, Asian Paints down by 0.95%, GAIL India down by 0.86%, Infosys down by 0.81%, Sun Pharma down by 0.79% and TCS down by 0.63% were the top losers.

Meanwhile, on the day one of its crucial fourteenth meeting, the Goods and Services Tax (GST) Council, headed by Union Finance Minister Arun Jaitley, finalized tax rates on 1211 items, under the four-slab structure with essential items of daily use being kept in the lowest bracket of 5 percent. The most of the items will likely become cheaper as the new rates will be lower than the current effective levies. The Council in the opening session of the two-day meeting also approved rules for the rollout of the new indirect tax regime from July 1, 2017.

Out of 1211 items, GST rates on all except six categories have been decided. Under the new tax regime, rates will range from 5 to 28 percent, with 12 percent and 18 percent being the standard rates. Only 19 percent of goods will be taxed above 18 percent, while 81 percent of items will fall under below 18 percent GST rate slabs. Cereals and milk will be exempted from tax, while sugar, edible oil, normal tea and coffee (not instant tea or coffee) will attract a GST rate of 5 percent, down from the current effective rate of 4-6 percent. Coal will be taxed at 5 percent under GST, compared to a current effective rate of 11.7 percent, along with a levy of Rs 400 per tonne.

Common use products like hair oil, soaps and toothpaste will be charged with a single national sales tax or GST of 18 percent instead of present 22-24 percent tax incidence through a combination of central and state government levies. Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from GST. Currently, some states levy Value Added Tax (VAT) on them. Aerated drinks and cars will be in 28 percent bracket. On top of the peak rate, small cars will attract a 1 percent cess, mid-sized cars will attract 3 percent and luxury cars 15 percent. ACs and refrigerators will fall in the 28 percent tax slab, while life saving drugs have been kept at 5 percent rate.

The panel will discuss tax rates for gold and some other items on May 19, 2017, and could meet one more time if necessary to decide rates on remaining items. The GST will be a national sales tax that will be levied on consumption of goods or use of services. It will replace 16 current levies - seven central taxes like excise duty and service tax and nine state taxes like VAT and entertainment tax - thereby creating India as one market with one tax rate. With the GST, India will join select league of nations with a goods and service tax.

The CNX Nifty is currently trading at 9500.90, up by 71.45 points or 0.76% after trading in a range of 9465.15 and 9505.75. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were ITC up by 5.90%, Yes Bank up by 3.53%, Bank of Baroda up by 3.47%, Hindustan Unilever up by 2.10% and Coal India up by 2.08%. On the flip side, Asian Paints down by 1.18%, Sun Pharma down by 0.89%, Infosys down by 0.81%, TCS down by 0.70% and GAIL India down by 0.68% were the top losers.

Asian markets were trading mostly in green; KOSPI Index rose 3.6 points or 0.16% to 2,290.42, FTSE Bursa Malaysia KLCI gained 3.66 points or 0.21% to 1,770.83, Jakarta Composite increased 21.13 points or 0.37% to 5,666.58, Nikkei 225 added 41.35 points or 0.21% to 19,595.21 and Hang Seng was up by 78.93 points or 0.31% to 25,215.45.

On the flip side, Taiwan Weighted decreased 11.13 points or 0.11% to 9,958.32 and Shanghai Composite was down by 1.68 points or 0.05% to 3,088.46.