Indian benchmarks continue firm trade in noon session

Indian benchmarks continued to trade firm in noon session on fresh buying by investors amid better-than-expected earnings by some blue chip companies. Besides, speculators covering up their short positions ahead of the May derivatives contract expiry tomorrow added to the upward move. Some support also came with Prime Minister Narendra Modi’s statement that our aim is that India must be an engine of growth as well as an example in climate friendly development in the years to come. However, fresh tensions at Indo-Pak border capped the gains after India stroked Pakistan military posts near LoC. Indian Army spokesperson Major General Ashok Narula said Pakistan Army has been supporting armed infiltration in Kashmir and targeted attacks have been carried out to put an end to such activities. Investors are waiting for the release of U.S. Federal Reserve’s May meeting minutes later today for clues about its next interest rate hike. Meanwhile, several financial sector stocks gained traction on buzz that the government is likely to introduce in the monsoon session of Parliament a separate bankruptcy law to deal with insolvency in financial sector companies that include banks and NBFCs.

On the global front, Asian markets were trading mostly higher on Wednesday following the positive lead overnight from Wall Street after the Trump administration unveiled its first budget proposal. Japan's Nikkei stock index pared its earlier gains but was still 0.5% higher, as weak yen against dollar lifts mood. The dollar held firm, having rebounded from 6-1/2-month lows against its major peers thanks to a rise in U.S. Treasury yields, with investor focus now turning towards the Federal Reserve's monetary policy stance. Oil prices rose, supported by increasing confidence that an OPEC-led production cut aimed at tightening the market would be extended through the rest of 2017 and the first quarter of next year. However, China's main stock index fell after Moody's Investors Services downgraded China's long-term local and foreign currency issuer ratings on Wednesday citing expectations that the financial strength of the world's second biggest economy would erode in the coming years. Meanwhile, US President Donald Trump asked lawmakers to cut $3.6 trillion in government spending over the next decade, taking aim at healthcare and food assistance programs for the poor in an austere budget that also boosts the military.

Back home, stocks from Industrials, Oil & Gas and Utilities counters were supporting the markets’ uptrend, while those from Telecom, Metal and Healthcare counters were adding to the underlying cautious undertone. In scrip specific development, Voltas surged after the company reported a better than expected 22% year-on-year (y-o-y) jumped in its consolidated net profit at Rs 200 crore in the March quarter (Q4FY17). 

The market breadth remained optimistic, as there were 1194 shares on the gaining side against 1159 shares on the losing side, while 123 shares remained unchanged.

The BSE Sensex is currently trading at 30488.66, up by 123.41 points or 0.41% after trading in a range of 30395.69 and 30534.15. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.02%, while Small cap index up by 0.47%.

The top gaining sectoral indices on the BSE were Industrials up by 1.13%, Oil & Gas up by 1.02%, Utilities up by 0.77%, Auto up by 0.65% and Energy up by 0.60%, while Telecom down by 1.03%, Metal down by 0.35%, Healthcare down by 0.34% and Basic Materials down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.64%, GAIL India up by 2.79%, HDFC up by 1.57%, Adani Ports & Special Economic Zone up by 1.55% and NTPC up by 1.31%. On the flip side, Dr. Reddy’s Lab down by 1.31%, Cipla down by 0.88%, SBI down by 0.66%, Axis Bank down by 0.59% and Asian Paints down by 0.59% were the top losers.

Meanwhile, easing fears of increase in prices of some services, the government has said that taxation on entertainment, including cinema, cable and DTH services will come down under the goods and services tax (GST) regime, as the ‘entertainment tax’ levied by States has been subsumed in the GST.

The rate of GST approved by GST Council on services by way of admission to entertainment events or cinematography films in cinema theatres is 28 percent. At present, States impose entertainment tax of up to 100 percent in respect of exhibition of cinematography films in theatres/cinema halls. Under new tax regime, the entertainment tax has been subsumed, and hence only the taxes levied by a panchayat or municipality on entertainments and amusements will continue.

In case of cable TV and Direct-To-Home (DTH), the GST rate has been pegged at 18% as against the entertainment tax ranging between 10% and 30% levied by states plus the 15% service tax charged by the Centre. With regard to circus, theatre, Indian classical dance including folk dance and drama, the GST rate is 18 per cent ad valorem. Further, the GST Council has approved an exemption up-to a consideration for admission of Rs 250 per person. These services currently attract entertainment tax levied by the States.

Therefore, entertainment services shall suffer a lower tax incidence under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services. 

The CNX Nifty is currently trading at 9416.25, up by 30.10 points or 0.32% after trading in a range of 9386.35 and 9431.90. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Tata Motors - DVR up by 3.94%, Tata Motors up by 3.62%, Indian Oil Corporation up by 3.08%, GAIL India up by 2.80% and Yes Bank up by 2.38%. On the flip side, Bharti Infratel down by 2.49%, HCL Tech down by 1.96%, Aurobindo Pharma down by 1.75%, Dr. Reddy’s Lab down by 1.45% and ACC down by 1.11% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased by 3.24 points or 0.18% to 1,770.41, KOSPI Index rose 4.26 points or 0.18% to 2,316.00, Taiwan Weighted added 36.58 points or 0.37% to 10,044.42 and Nikkei 225 was up by 103.73 points or 0.53% to 19,717.01.

On the other hand, Jakarta Composite declined by 53.66 points or 0.94% to 5,676.95, Hang Seng decreased by 33.65 points or 0.13% to 25,369.50 and Shanghai Composite was down by 24.17 points or 0.79% to 3,037.77.