Indian bourses continue to trade in positive territory

Key benchmark indices continued to trade in positive territory in the afternoon session, led by gains in frontline blue chip stocks such as Bajaj Auto, ONGC and Axis Bank among others. Sentiments remained positive with private report that the country's services sector activity increased at its fastest pace in four months in May led by a faster rise in new business inflows. The Nikkei/IHS Markit Services Purchasing Managers' Index rose to a seven-month high of 52.2 in May, from April's 50.2. Some support also came with a World Bank report stating that successful demonetisation will help in raising revenues on sustained basis as more and more people will come under the tax net. However, further gains were capped as investors remained cautious ahead of the Reserve Bank of India (RBI)'s policy meeting, which begins tomorrow. On the sectoral front, jewellery stocks such as PC Jeweller, Gitanjali Gems and Titan Company gained after the Union Government said it will tax gold and gold jewellery, silver and processed diamonds at 3 percent under Goods and Services Tax.

On the global front, Asian markets were trading mostly in red, as investors mulled the impact of a weekend terror attack in London that saw the pound lose ground in early trading. Back home, the BSE Sensex is currently trading at 31334.73, up by 61.44 points or 0.20% after trading in a range of 31198.22 and 31355.42. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 7.13%, Consumer Disc up by 1.21%, Realty up by 1.03%, Telecom up by 1.00% and Oil & Gas up by 0.90%, while Utilities down by 0.09% and IT down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.00%, ONGC up by 1.81%, Axis Bank up by 1.41%, Adani Ports &SEZ up by 1.16% and Larsen & Toubro up by 1.05%. On the flip side, Coal India down by 1.08%, Infosys down by 0.74%, Power Grid down by 0.63%, Lupin down by 0.52% and ITC down by 0.41% were the top losers.

Meanwhile, government’s announcement of the demonetization of high-value notes seven months ago has received some support from the World Bank. The unilateral agency in its latest ‘India Development Report’ has said that in the long term, demonetization has potential to accelerate the formalization of the economy and will help in raising revenues on sustained basis as more & more people will come under the tax net.

In its exclusive section ‘India’s Great Currency Exchange’ of the report, the World Bank has stated that even if the initial impact of demonetization on banks was negative, the longer-term impact may be more positive if the new steady-state level of deposits is higher and usage of electronic payments increases. Besides, it has said that demonetization promotes a reallocation of resources from the informal to the formal economy.

The World Bank report is of the view that demonetisation has the potential to accelerate the formalisation of the economy, saying that formalization is ultimately a positive transformation that can lead to greater efficiency, adding that India's low aggregate productivity is in part due to the prevalence of a large number of informal unproductive firms. World Bank though said that India still needs to bring in complementary measures for ease of doing business to ensure that the new equilibrium of higher formalisation prevails.

While highlighting the country’s other complementary measures related to the ease of doing business, the report has said that the smooth implementation of GST will be another major complementary reform to promote formalization, as firms have a strong incentive to register with GST to obtain input tax credits.

The CNX Nifty is currently trading at 9683.90, up by 30.40 points or 0.31% after trading in a range of 9640.70 and 9686.55. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.47%, Indiabulls Housing up by 2.26%, Bharti Infratel up by 2.06%, ONGC up by 2.04% and Bajaj Auto up by 1.97%. On the flip side, Coal India down by 1.06%, Ultratech Cement down by 1.04%, Infosys down by 0.90%, Lupin down by 0.75% and Power Grid down by 0.56% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 69.93 points or 0.27% to 25,854.12, Shanghai Composite dipped 14.99 points or 0.48% to 3,090.55, Nikkei 225 shed 6.46 points or 0.03% to 20,170.82 and KOSPI Index was down by 3.1 points or 0.13% to 2,368.62.

On the flip side, FTSE Bursa Malaysia KLCI increased 8.24 points or 0.46% to 1,785.19, Jakarta Composite rose 14.05 points or 0.24% to 5,756.50 and Taiwan Weighted added 68.69 points or 0.68% to 10,226.84.