Benchmarks make optimistic start on the F&O expiry day

Indian equity benchmarks have made a positive start and are trading in fine fettle in early deals on Thursday, as traders opted to buy beaten down but fundamentally strong stocks after two days of continuous drubbing. Traders took some support with report that government in its bid to support the initiative ‘Make in India’ and easing the flow of foreign capital into the country, dismantling the Foreign Investment Promotion Board (FIPB), which currently vets FDI proposals requiring the government approval. FIPB will be replaced by a new mechanism under which the proposals will be approved by the ministries concerned as per the standard operating procedure approved by the Cabinet.

Global cues too remained supportive with Asian markets rallying at this point of time, supported by the gains in oil prices which reached a one month high ahead of the key meeting from crude producing countries. The Japanese market was up by over half a percent as yen declined. The US markets extended their gains in last session and the S&P 500 reached a new record closing high.

Back home, sugar stocks remained on buyers’ radar, as the Cabinet Committee on Economic Affairs (CCEA) has decided to increase fair and remunerative price (FRP) of sugarcane by Rs 25 per quintal to Rs 255 for 2017-18 season beginning October, though the FRP for the ongoing 2016-17 season has been kept unchanged at Rs 230 per quintal. There was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. The market breadth remained in favor of advances, as there were 1,247 shares on the gaining side against 670 shares on the losing side while 80 shares remain unchanged.

The BSE Sensex is currently trading at 30434.55, up by 132.91 points or 0.44% after trading in a range of 30352.26 and 30459.74. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.41%, while Small cap index was up by 0.65%.

The top gaining sectoral indices on the BSE were IT up by 1.06%, Realty up by 0.90%, Capital Goods up by 0.79%, TECK up by 0.76% and Energy up by 0.72%, while Healthcare down by 1.53% and Auto down by 0.01% were the only losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 1.42%, Infosys up by 1.31%, TCS up by 1.26%, Reliance Industries up by 1.06% and HDFC up by 0.95%. On the flip side, Lupin down by 6.77%, Sun Pharma down by 2.33%, Dr. Reddy’s Lab down by 1.65%, Adani Ports down by 1.06% and Power Grid down by 0.93% were the top losers.

Meanwhile, almost a month ahead of the roll out of the goods and services tax (GST), the industry body Associated Chambers of Commerce and Industry of India (Assocham) has said that execution of GST from July 1, 2017, will be a challenge for the industry and the government should consider relaxing penal provisions for a couple of quarters to help it comply with the new tax regime. The government is working overtime to roll out the GST regime from July 1 and has held several workshops and seminars to familiarise traders and the industry about the new indirect taxation structure.

Assocham President Sandeep Jajodia said ‘Implementing GST from July 1 will definitely be a challenge for the industry... there could be people making genuine mistakes. I would say the department should be softer in the first quarter or two because it is going to be a learning process.’ He sought relaxation on imposition of penal provisions for at least a quarter or two, if not the whole year. However, he also said that GST will provide a huge fillip to the industry in the medium to long term as tax compliance at present is ‘quite tedious’.

The GST law provides for as many as 21 kinds of penalties for various offences. Short payment will attract a penalty of 10 percent of the tax due subject to a minimum of Rs 10,000. For various other errors, the penalty would be 10 percent of the tax due.

The CNX Nifty is currently trading at 9402.10, up by 41.55 points or 0.44% after trading in a range of 9379.20 and 9410.30. There were 34 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing up by 1.55%, GAIL India up by 1.36%, Infosys up by 1.28%, TCS up by 1.25% and Indusind Bank up by 1.23%. On the flip side, Lupin down by 6.88%, Sun Pharma down by 2.44%, Dr. Reddy’s Lab down by 1.57%, Adani Ports down by 1.02% and Power Grid down by 1.00% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 10.75 points or 0.61% to 1,781.76, Shanghai Composite gained 11.9 points or 0.39% to 3,075.98, KOSPI Index surged 20.78 points or 0.9% to 2,338.12, Taiwan Weighted jumped 51.44 points or 0.51% to 10,095.86, Nikkei 225 added 79.03 points or 0.4% to 19,822.01 and Hang Seng was up by 148.1 points or 0.58% to 25,576.60.