Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued their firm trade in late morning session. Traders reacting positively to the GST Council finalizing rates 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.  The rupee opened higher against dollar on Monday, on account of selling of American currency by banks and exporters. Traders took support from Revenue Secretary Hasmukh Adhia’s statement that inflation will fall by 2 percent on an implementation of the goods and services tax (GST) and will create buoyancy in the economy. The rates, he said, have been so fixed that incidence of taxation has come down in many and remained at the same level as now in most of the remaining goods and services. Adhia made the point that rates of many items have reduced while some have been put on the exemption list. According to an ASSOCHAM report, the GST will feature on the top of the government’s list of achievements in the last three years that also saw some other credible measures on taxation and financial inclusion fronts. The industry body perceives financial inclusion, digitiaation and public investment on infrastructure like railways and power distribution among the many credible steps for structural changes in the economy.

Some support also came on report that overseas investors have pumped in more than $2 billion so far in the country’s capital market this month, helped by stable outlook for the rupee. According to latest depository data, Foreign Portfolio Investors (FPIs) invested a net Rs 4,157 crore in equities during May 2-19, while they poured Rs 12,941 crore in the debt markets during the period under review, translating into a net inflow of Rs 17,099 crore ($2.66 billion). Traders were seen piling position in FMCG, Telecom and Capital Goods stocks, while selling was witnessed in HealthCare, PSU and Oil & Gas stocks. In scrip specific development, Suzlon Energy was trading in green after wind turbine manufacturer reported a consolidated net profit of Rs 578.99 crore in the fourth quarter ended March 31 mainly due to timely execution of orders. The Pune-based company had posted a net loss of Rs 333.87 crore in the corresponding quarter of last fiscal. Mahindra Holidays and Resorts India (MHRIL) was trading in green as its net profit rose 4.5 per cent to Rs 31.8 crore on 26.3 per cent rise in total income to Rs 315.7 crore in Q4 March 2017 over Q4 March 2016. The board approved 1 bonus issue of share for 2 shares held.

On the global front, Asian shares were trading mostly in green, despite a weekend missile test by North Korea that raised further concerns on its ability to deliver a nuclear warhead as far as the US states of Hawaii and Alaska. Japan’s exports rose in April to mark their fifth straight month of gains, as shipments of semiconductors and steel expanded, signaling that more robust overseas demand could underpin a steady economic recovery. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,450 and 30,600 levels respectively. The market breadth on BSE was negative in the ratio of 1123:1171 while 136 scrips remained unchanged.

The BSE Sensex is currently trading at 30611.35, up by 146.43 points or 0.48% after trading in a range of 30572.59 and 30712.15. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.31%, while Small cap index was up by 0.01%.

The top gaining sectoral indices on the BSE were FMCG up by 2.43%, Telecom up by 0.90%, Capital Goods up by 0.86%, Realty up by 0.85% and Consumer Durables up by 0.81%, while Healthcare down by 0.98%, PSU down by 0.88%, Oil & Gas down by 0.71%, Utilities down by 0.66% and Basic Materials down by 0.45% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 4.06%, Hindustan Unilever up by 1.71%, Adani Ports & Special Economic Zone up by 1.46%, Larsen & Toubro up by 1.33% and Hero MotoCorp up by 1.22%.

On the flip side, SBI down by 2.64%, Lupin down by 2.57%, Sun Pharma down by 2.06%, GAIL India down by 1.36% and Mahindra & Mahindra down by 1.25% were the top losers.

Meanwhile, Revenue Secretary Hasmukh Adhia has said that implementation of the ‘game-changing’ goods and services tax (GST) regime will cut inflation by around 2 per cent and it will also create buoyancy in the economy through better compliance and ease of doing business.

Talking on the rates have been fixed by GST council, Adhia said that incidence of taxation has come down in many and remained at the same level as now in most of the remaining goods and services. He pointed out that inflation will not at all go up because of GST as they have taken special care to ensure inflation does not go up. He noted that their internal estimate is that after the rates are decided, inflation should come down by 2 per cent.

The revenue secretary has said that while the current indirect tax regime suffers from significant cascading, which leads to higher cost of goods and services, a free flow of credits across transactions under the GST framework will bring down the tax cost for businesses. He also said that taxpayers or consumers currently have to pay both the Centre and state taxes on a single sale, which adds to increased costs for businesses and consumers. He added that such an increase in costs adds to the inflationary pressure.

The all-powerful GST Council headed by the Finance Minister has assigned tax rates to more than 500 services and 1,200 goods by setting them in five broad rates of 5, 12, 18 and 28 per cent. Council will meet again to decide on tax rates of contentious such as gold, bidi and biscuits for its rollout from July 1. GST will be a single nation-wide sales tax replacing a string of central and state levies.

The CNX Nifty is currently trading at 9454.65, up by 26.75 points or 0.28% after trading in a range of 9445.00 and 9498.65. There were 22 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.91%, Indiabulls Housing Finance up by 1.93%, Hindustan Unilever up by 1.87%, Bharti Infratel up by 1.86% and HCL Tech up by 1.56%.

On the flip side, Tata Power down by 3.09%, Lupin down by 2.96%, SBI down by 2.65%, Ambuja Cement down by 2.57% and Sun Pharma down by 2.21% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 2.44 points or 0.14% to 1,770.72, KOSPI Index increased 12.37 points or 0.54% to 2,300.85, Jakarta Composite increased 23.12 points or 0.4% to 5,815.01, Taiwan Weighted increased 35.76 points or 0.36% to 9,983.38, Nikkei 225 increased 68.69 points or 0.35% to 19,659.45 and Hang Seng increased 235.72 points or 0.94% to 25,410.59.

On the other hand, Shanghai Composite decreased 11.14 points or 0.36% to 3,079.49.