Benchmarks trades in fine fettle in early deals

Indian equity benchmarks have made a gap-up opening and are trading in fine fettle in early deals on Monday, with frontline gauges surpassing their crucial 30,500 (Sensex) and 9,450 (Nifty) levels. Traders reacted positively to the GST Council finalizing for services and sector specific actions can be seen based on the rates allocated. There will be four rates for services at 5, 12, 18 and 28 percent, similar to tax slabs for goods. Traders also took some encouragement with report that Foreign Direct Investment (FDI) inflows into the country touched a new high of $60.08 billion in 2016-17. Inflows grew by 8 per cent over the previous high of $55.6 billion posted in 2015-16.

Global cues too remained supportive with Asian markets trading mostly in green, following the continued recovery on Wall Street last week and as investors digest yet another missile test out of North Korea at the weekend. The US markets extended their gains in last session, as traders continued to pick up stocks at relatively low levels following the substantial weakness seen on Wednesday.

Back home, rating agency ICRA reacting to the rate finalization has said that structure is unlikely to fan inflation, and the Reserve Bank will be “less hawkish” in its stance at June 7 review. In scrip specific developments, Kotak Mahindra Bank and Tata Motors DVR edged higher after announcement that these will be included in the BSE’s benchmark Sensex from June 19. Motherson Sumi gained 2% as it has lined up capital expenditure of Rs 2,000 crore for the current fiscal, mainly on the upcoming nine plants in five countries including India. The market breadth indicating the overall health of the market was strong, with 1,125 shares gaining and 848 shares declining, while a total of 105 shares were unchanged.

The BSE Sensex is currently trading at 30589.97, up by 125.05 points or 0.41% after trading in a range of 30582.82 and 30712.15. There were 15 stocks advancing against 14 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading mixed; the BSE Mid cap index declined 0.21%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were FMCG up by 1.94%, Telecom up by 0.87%, Capital Goods up by 0.73%, IT up by 0.73% and Realty up by 0.72%, while PSU down by 0.84%, Oil & Gas down by 0.66%, Healthcare down by 0.60%, Utilities down by 0.56% and Energy down by 0.26% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 3.67%, Tata Motors up by 1.48%, Adani Ports up by 1.37%, TCS up by 1.32% and Larsen & Toubro up by 1.25%. On the flip side, Sun Pharma down by 2.06%, SBI down by 1.98%, GAIL India down by 1.61%, Lupin down by 1.44% and Asian Paints down by 1.13% were the top losers.

Meanwhile, modifying the rule of direct borrowings by the state government entities from external agencies, in view of huge funding requirements for major infrastructure projects, the government has allowed financially sound state government entities to seek loans directly from bilateral Official development Assistance (ODA) partners. The concerned State Government will furnish guarantee and the Government of India will provide counter guarantee to obtain the loan. State government entities will include any authority, public sector undertaking or organisation of the state.

As per new guidelines, state government entities having annual revenue of more than Rs 1,000 crore in the three previous years for infrastructure projects of over Rs 5,000 crore can obtain loan. Besides, the project should have regular revenue stream and the revenues to be generated from the project should be enough for repayment of principal amount and interest. The revenues from the project would be escrowed to the extent of payment of principal and interest from time to time.

Besides, the state entities can directly approach bilateral agencies and the funding would not fall under state FRBM target. The proposed move will help state government entities in implementing projects having huge financial requirements which otherwise would have been faced fund crunch despite being viable.

The CNX Nifty is currently trading at 9462.25, up by 34.35 points or 0.36% after trading in a range of 9457.10 and 9498.65. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.93%, Bharti Infratel up by 2.07%, Kotak Mahindra Bank up by 1.69%, Indiabulls Housing up by 1.46% and Adani Ports up by 1.45%. On the flip side, Tata Power down by 3.27%, Sun Pharma down by 2.17%, GAIL India down by 1.73%, SBI down by 1.59% and Lupin down by 1.58% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI gained 2.92 points or 0.17% to 1,771.20, KOSPI Index increased 11.41 points or 0.5% to 2,299.89, Taiwan Weighted rose 30.47 points or 0.31% to 9,978.09, Jakarta Composite jumped 32.87 points or 0.57% to 5,824.75, Nikkei 225 added 89.02 points or 0.45% to 19,679.78 and Hang Seng was up by 237.39 points or 0.94% to 25,412.26.

On the flip side, Shanghai Composite was down by 7.52 points or 0.24% to 3,083.11.