Benchmarks trade on flat note with positive bias

Indian equity benchmarks traded on flat note with positive bias in late morning session. The rupee opened lower against dollar on Tuesday on account of selling of American currency by banks and exporters. Foreign portfolio investors sold shares worth Rs 316.10 crore on Monday with gross purchases and gross sales of Rs 4493.86 crore and Rs 4809.96 crore, respectively. Traders got some support after World Bank in its ‘India Development Report’ increased its hopes that India, the fastest growing major economy in the world, will grow at 7.2 per cent in the current fiscal and further up to 7.7 per cent by 2019-20 on strong fundamentals, reform momentum and improving investment scenario. The World Bank had in January scaled down India’s growth forecast to 7 per cent for 2016-17 and had estimated growth to rebound in 2017-18 to 7.6 per cent. In its latest report it said that Economic activity ought to accelerate in 2017-18 and GDP is projected to grow at 7.2 per cent from 6.8 per cent in 2016-17. According to domestic brokerage report India’s GDP numbers for the fiscal 2015-16 and 2016-17 are expected to be revised to 8.3 per cent and 7.6 per cent, respectively, because of new IIP and GDP series. The GDP numbers scheduled to be released on May 31, is expected to be pleasant affair and the new IIP and WPI series will impact all GDP numbers from 2013-14. The upside was capped as the Securities and Exchange Board of India (SEBI) proposed tighter regulations for participatory notes (P-Notes), an instrument used by foreign investors to take exposure to the domestic market without registering in India. The market regulator proposed to bar P-Notes, or offshore derivative instruments (ODIs), from taking speculative positions in the futures and options segment. It said note-holders would be allowed exposure to the derivatives market only for hedging and not for naked speculation.

Traders were seen piling up position in Healthcare, Bankex and IT stocks, while selling was witnessed in Realty, Capital Goods and Power stocks. In scrip specific development, state owned oil marketing company Bharat Petroleum Corporation (BPCL) was trading in red after reporting a decline of 12.96 per cent in its net profit for the fourth quarter (Q4) of 2016-17. According to the OMC, its net profit during the quarter under review declined to Rs 1,841.68 crore from Rs 2,116.03 crore reported in the corresponding period of 2015-16. Coal India was trading in red on posting a 38 per cent fall in net profit for the fourth quarter ended March at Rs 2,716 crore caused by lackluster power demand, falling realizations from e-auctions and efforts to keep prices below international levels. It had posted a profit of Rs 4,398 crore in the same period of last year.

On the global front, Asian shares were trading mostly in red. Stocks in Japan retreated as the yen strengthened. In economic news, Japan household spending dipped 1.4% for the month of April, weaker than the 0.7% forecast. Meanwhile, April retail sales rose 3.2% on year, compared to a forecast of a 2.3% rise. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,600 and 31,100 levels respectively. The market breadth on BSE was negative in the ratio of 795:1413, while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 31132.28, up by 23.00 points or 0.07% after trading in a range of 31064.04 and 31220.38. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.02%, while Small cap index was down by 0.32%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.63%, Bankex up by 0.32%, IT up by 0.22%, Auto up by 0.17% and Utilities up by 0.10%, while Realty down by 1.37%, Capital Goods down by 1.15%, Power down by 0.92%, FMCG down by 0.83% and Consumer Durables down by 0.80% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 2.70%, NTPC up by 2.65%, Lupin up by 2.22%, ICICI Bank up by 2.13% and Adani Ports & Special Economic Zone up by 1.93%.

On the flip side, Power Grid down by 2.49%, Coal India down by 1.79%, Hindustan Unilever down by 1.18%, Larsen & Toubro down by 1.14% and TCS down by 1.09% were the top losers.

Meanwhile, in the remaining 9-month period of the current fiscal, following the Goods and Services Tax (GST) roll out from July 1, 2017, the Centre is expecting to mop up as much as Rs 55,000 crore by levy of cess, including a big chunk from demerit and luxury goods. The amount to be raised through cess on coal as well as luxury items and sin goods will be used for compensating states for revenue shortfall following the implementation of the new tax regime.

According to the revenue department's estimates, Rs 22,000 crore is expected to come from cess on coal, lignite and peat in the July-March period of current fiscal. Cess on tobacco is likely to yield around Rs 16,000 crore. The remaining amount in the ‘Goods and Services Tax Compensation Fund’ will come from cess on pan masala, aerated drinks and motor vehicles. The revenue department is hopeful that funds raised through different kinds of cess would be sufficient to take care any revenue shortfall that the states might face on account of GST roll-out.

Revenue Secretary Hasmukh Adhia had said that roughly, they would think that whatever compensation is required for current year it would be made good from the cess income which they will get this year and cess tables have been arranged accordingly. That is why they have levied cess even on small cars. The small cars have been kept within cess because there is an existing incidence on small cars and they didn't want to lose some revenues there. Besides, the GST Council had agreed on keeping base year for calculating the revenue of a state at 2015-16 and considering a secular growth rate of 14% for calculating the likely revenue of each state in the first five years of implementation of GST.

The CNX Nifty is currently trading at 9606.25, up by 1.35 points or 0.01% after trading in a range of 9581.20 and 9631.60. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 8.72%, Dr. Reddy’s Lab up by 2.72%, NTPC up by 2.65%, Lupin up by 2.23% and ICICI Bank up by 2.18%.

On the flip side, BPCL down by 2.64%, Power Grid down by 2.58%, Bharti Infratel down by 2.10%, Zee Entertainment down by 1.74% and Coal India down by 1.70% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 19.63 points or 0.1% to 19,662.94, KOSPI Index decreased 10.83 points or 0.46% to 2,342.14 and FTSE Bursa Malaysia KLCI decreased 0.67 points or 0.04% to 1,764.22.

On the other hand, Jakarta Composite increased 11.48 points or 0.2% to 5,723.82.

Shanghai Stock Exchange, Hong Kong Stock Exchange and Taiwan Stock Exchange were closed on account of national holiday.