Benchmarks trade on flat note in late morning session

Indian equity benchmarks traded on a flat note in late morning session in absence of buying in front line blue chip counters. The rupee opened higher against dollar on Wednesday on account of selling of American currency by banks and exporters. Foreign portfolio investors stood net sellers in domestic equity markets on Tuesday and sold shares worth Rs 807.60 crore with gross purchases and gross sales of Rs 3,952.28 crore and Rs 4,758.88 crore, respectively. The Central Statistics Office (CSO) will release Gross Domestic Product (GDP) growth estimates for 2016-17 that will factor in rebased factory output and Wholesale Price Index (WPI) data. Meanwhile, India’s former chief statistician Pronab Sen has said that with the recent revision of the base year of the Wholesale Price Index (WPI) and the Index of Industrial Production (IIP) to 2011-12 from 2004-05, the country’s gross domestic product (GDP) for fiscal year 2016-17 will get a 40-50 basis points (bps) push to 7.6 percent against the Central Statistics Office (CSO) prediction of 7.1 percent. A foreign brokerage firm reported that states can look at a higher revenue of Rs 350-450 billion after GST implementation in mid-2017. The study that assessed underlying dynamics of various states' finances over a decade said if they can keep their fiscal deficits within the budgeted target, and the Central government adheres to its target of 3.2 percent of GDP, the combined 2017-18 deficit could be 6 percent (or lower). There was some buzz in the Banking stocks after global rating agency enlightened that Indian banks’ stressed assets are likely to increase to 15 percent of total loans by March 2018, with PSU banks accounting for most of the loans even as their regulatory capital requirements will continue to rise till 2019. The agency added that Indian banks’ credit profiles are unlikely to improve over the next 12 months.

Traders were seen piling up position in Realty, Auto and Consumer Discretionary stocks, while selling was witnessed in Metal, FMCG and IT stocks. In scrip specific development, Reliance Communications was trading under pressure after Moody’s Investors Service downgraded its corporate family rating and senior secured bond rating to Caa1 from B2 on account of weak performance and fragile liquidity position. SAIL was trading in red on reporting a loss of Rs 771.3 crore in the three months ended March, 2017. NHPC was trading in red on reporting a 31 per cent decline in standalone net profit at Rs 168.42 crore in the fourth quarter ended March, due to lower income. The company’s standalone net profit was Rs 245.48 crore in the corresponding quarter of 2015-16.

On the global front, Asian shares were trading mostly in red, even as China re-opened after a two-day break and brought along some upbeat news. China’s manufacturing sector expended faster than expected in May, highlighting continued steady growth.  The National Bureau of Statistic’s official Purchasing Managers’ Index (PMI) came in at 51.2 higher than the 51.0 expected and even with 51.2 in April. 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 positive in the ratio of 1325:902, while 100 scrips remained unchanged.

The BSE Sensex is currently trading at 31162.70, up by 3.30 points or 0.01% after trading in a range of 31107.48 and 31233.68. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.64%, while Small cap index was up by 0.83%.

The top gaining sectoral indices on the BSE were Realty up by 1.46%, Auto up by 1.15%, Consumer Disc up by 1.05%, Utilities up by 1.02% and Power up by 0.69%, while Metal down by 0.85%, FMCG down by 0.23%, IT down by 0.21%, TECK down by 0.20% and Telecom down by 0.13% were the losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 5.98%, Power Grid up by 2.33%, Lupin up by 1.89%, GAIL India up by 1.65% and Maruti Suzuki up by 1.06%.

On the flip side, ONGC down by 1.21%, Cipla down by 0.82%, ITC down by 0.76%, Infosys down by 0.75% and Sun Pharma down by 0.59% were the top losers.

Meanwhile, Union Revenue Secretary Hasmukh Adhia has said that there is scope for rationalisation of tax rates fixed on various goods and services (GST) under the new tax regime to be implemented from July 1. He also said that the government's intention is not to increase the tax rates but to increase the revenue by implementing GST as it would bring transparency, simplification and efficiency in tax administration and help in curbing tax evasion and thereby leading to tax buoyancy. 

On the concerns of the food processing sector, Adhia has said that decision on fixing rates of foodgrains, especially wheat and rice would be taken in the next GST Council meeting to be held on June 3. He also said that the Council would also take a view on the definition of brands and branding of food items. He pointed that the food processing industry needs to be encouraged and argued that if these items were kept in the exempted category, the food processing industry will be losing.

Revenue Secretary further said that there have been some concerns raised in the financial service sector that deposits or loans will become costlier on implementation of GST. He said “all people in financial services will know, we are not charging service taxes in deposits as well as loans, but taxes on other services. Loans are not going to become costlier”. He added that this is a misplaced fear, because of lack of understanding. 

Noting that the new tax system would be a game changer, he said that it will help in creating lot of jobs for young generation. He also explained that the GST may push India's GDP up by more than 4% because of the simplicity and predictability of the new indirect tax regime, which will encourage people to be tax compliant. He added that the new indirect tax regime will create problems but one should find solutions, instead of not allowing it to happen.

The CNX Nifty is currently trading at 9619.15, down by 5.40 points or 0.06% after trading in a range of 9610.80 and 9638.70.

There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 5.93%, Ultratech Cement up by 2.89%, Power Grid up by 2.01%, Lupin up by 1.84% and Indian Oil Corporation up by 1.64%.

On the flip side, Vedanta down by 2.27%, Bharti Infratel down by 2.24%, Aurobindo Pharma down by 1.60%, ONGC down by 1.48% and Yes Bank down by 1.34% were the top losers.

The Asian markets were trading mostly in red; Taiwan Weighted decreased 58.99 points or 0.58% to 10,042.96, Nikkei 225 decreased 50.46 points or 0.26% to 19,627.39, Hang Seng decreased 35.6 points or 0.14% to 25,666.03 and FTSE Bursa Malaysia KLCI decreased 0.37 points or 0.02% to 1,764.97.

On the other hand, KOSPI Index increased 1.09 points or 0.05% to 2,344.77, Shanghai Composite increased 5.51 points or 0.18% to 3,115.57 and Jakarta Composite increased 10.92 points or 0.19% to 5,704.31.