Benchmarks trade flat in late morning session

Indian equity benchmarks traded on lackluster note gyrating around neutral lines in late morning session in absence of any positive upside triggers. The emergence of selling by participants at record levels amid discouraging fourth quarterly earnings by some blue chip companies dampened sentiments. Investors will keep a close tab on the arrival of monsoon rains which is expected to hit the southern Kerala coast by the end of the month. The recent rally is likely to sustain if monsoon rains are normal. Investors will also be keeping an eye on Q4 GDP data that is scheduled to be announced on Wednesday. Growth had slowed to 7% in Q3 after growing 7.4% in Q2. Manufacturing PMI data for the month of May will be announced on Thursday.

Traders were taking some relief from Union Minister Bandaru Dattatreya statement that retirement fund body EPFO will invest Rs 20,000 crore in exchange traded funds this fiscal as it has decided to raise the investment limit in ETFs. The Employees Provident Fund Organization (EPFO) Central Board of Trustees meeting agreed on the proposal for raising ETF investments from 10% to 15% of investible deposits. Foreign investors have pumped in nearly $4 billion in the country’s capital market so far this month due to finalization of GST rates for bulk of the items and stable outlook for the rupee. According to latest depository data, FPIs invested a net Rs 9,007 crore in equities during May 2-26, while they poured Rs 15,769 crore in the debt markets during the period under review, translating into a net inflow of Rs 24,776 crore ($3.85 billion). A foreign brokerage report enlightened that gains from the Goods and Services Tax (GST) in its current form will be far less than initially envisioned as the structure is fairly complex with multiple tax rates. It added that this will reduce efficiency gains from having a simplified tax structure.

Traders were seen piling up position in FMCG, Consumer Durables and Telecom stocks, while selling was witnessed in Healthcare, Realty and IT stocks. Healthcare stocks have been witnessing immense weakness, following concerns on their profitability in the US on the back of pricing pressures. Results of major firms being dismal are also ailing the sector, and thereby dragging the stocks as well. In scrip specific development, Reliance Communications was trading in red after the firm on Saturday reported Rs 948 crore loss for the fourth quarter, due to intense price war unleashed by Reliance Jio. The Anil Ambani-led firm had registered net profit of Rs 79 crore in the corresponding period of the previous year. Sun Pharmaceutical Industries tumbled taking its losing streak to straight seventh session, following the company’s conservative guidance for FY18.

On the global front, Asian shares were trading on a mixed note, with Tokyo posting some early gains despite another provocative missile test by North Korea. China’s President Xi Jinping said that the country needs to shift away from over-reliance on heavy industries, large-scale and careless expansion, and the depletion of the country’s natural resources. Xi said the country’s rapid economic growth had caused many environmental problems. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,550 and 31,000 levels respectively. The market breadth on BSE was negative in the ratio of 729:1493, while 112 scrips remained unchanged.

The BSE Sensex is currently trading at 31038.79, up by 10.58 points or 0.03% after trading in a range of 30869.90 and 31155.40. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.97%, while Small cap index was down by 1.08%.

The top gaining sectoral indices on the BSE were FMCG up by 1.43%, Consumer Durables up by 0.98%, Telecom up by 0.23%, Metal up by 0.14% and Energy up by 0.10%, while Healthcare down by 3.44%, Realty down by 3.17%, IT down by 1.21%, Power down by 1.03% and TECK down by 0.97% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.59%, HDFC up by 1.96%, Hindustan Unilever up by 1.81%, Reliance Industries up by 1.18% and Power Grid up by 1.16%.

On the flip side, Sun Pharma down by 12.36%, Adani Ports & Special Economic Zone down by 3.36%, ICICI Bank down by 1.35%, ONGC down by 1.17% and Infosys down by 1.15% were the top losers.

Meanwhile, traders body Confederation of All India Traders (CAIT) has said that classification of goods under different tax slabs of the proposed pan-India indirect tax regime of the GST has created an environment of anxiety and concern among the trading community across the country. It also pointed that this has led to various verticals of retail trade demanding lower tax on the items being dealt by them since they have been categorised under higher tax slab in comparison to tax slab of current VAT tax regime.

CAIT highlighted that as per an analysis, tax rate for about 1,211 items and 36 services have been fixed under new tax regime, out of which nearly 50 percent goods have been placed under 18 percent rate, 14 percent of the 1211 items will attract a GST rate of 5 percent, another 17 percent will be taxed at 12 percent, 19 percent of the items will be taxed at 28 percent, while 7 percent will be on the exempt list.

The Delhi-based trade body further said that the broader effect of the classification of items under different tax slabs needs to be assessed very cautiously since under GST not only the taxes paid on goods but even the taxes paid on the services will be eligible for input tax credit. It also noted that taxes paid on inter-state purchases of goods or availing services will also be eligible for input tax credit. In view of mounting discontent about proposed GST rates, the CAIT has urged the government to revisit the rate schedule. However, it said that the government remains firm on the deadline for implementing GST and is expected to announce the rates for remaining goods in a meeting of the GST Council on June 3.

The CNX Nifty is currently trading at 9584.70, down by 10.40 points or 0.11% after trading in a range of 9547.70 and 9622.30. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were ITC up by 2.62%, HDFC up by 1.93%, Hindustan Unilever up by 1.81%, Power Grid up by 1.36% and Bharti Infratel up by 1.20%.

On the flip side, Sun Pharma down by 12.36%, Tech Mahindra down by 11.90%, Aurobindo Pharma down by 3.82%, Adani Ports & Special Economic Zone down by 3.46% and Yes Bank down by 2.62% were the top losers.

The Asian markets were trading on a mixed note; FTSE Bursa Malaysia KLCI increased 0.45 points or 0.03% to 1,772.75, Nikkei 225 increased 25.74 points or 0.13% to 19,712.58 and Hang Seng increased 26.55 points or 0.1% to 25,665.82.

On the other hand, Jakarta Composite decreased 11.1 points or 0.19% to 5,705.72, Taiwan Weighted decreased 6.54 points or 0.06% to 10,101.95 and KOSPI Index decreased 0.68 points or 0.03% to 2,354.62.

Shanghai Stock Exchange was closed on account of ‘Dragon Boat Festival’ holiday.