Benchmarks trade flat in late morning session

Indian equity benchmarks traded on a lackluster note gyrating around neutral line in late morning session taking cues from regional counterparts and ahead of RBI’s meet. Asian stocks retreated after Wall Street’s stumble overnight, while oil inched up from the previous day losses as lower Libyan oil production assuaged concerns that the severing of ties with Qatar by other Arab states could impede a deal to cut crude output. Extending its gains for the fifth straight day, the rupee opened higher against dollar on selling of the American currency by banks and exporters. Foreign portfolio investors stood net buyers in domestic equity markets on Monday and bought shares worth Rs 113.37 crore, with gross purchases and gross sales of Rs 4535.70 crore and Rs 4422.33 crore, respectively. Traders remained on sidelines ahead of the two-day policy review by Reserve Bank of India’s (RBI) monetary policy committee (MPC) starting today. The street is expecting the MPC to turn dovish and to be open for a 25 bps cut in interest rates on August 2 if rains are normal. Investors took note of a foreign firm report that with the Indian economy expected to see a consumption driven rather than investment driven growth, the new trend of farm loan waivers is likely to stimulate rural demand. Farm loan waivers will amount to 2% of GDP by 2019 polls as other states may follow BJP’s Maharashtra and UP governments.

Meanwhile, Prime Minister Narendra Modi has reviewed preparations for the rollout of the goods and services tax (GST) regime from July 1, and said it would be a turning point for the economy. He has asserted that the implementation of GST is the culmination of the concerted efforts of all stakeholders, including political parties, trade and industry bodies. With less than a month left for GST rollout, seven states, including West Bengal, Tamil Nadu and Jammu & Kashmir, are yet to pass their legislations required for implementing the new indirect tax regime. So far, 24 states and Union Territories, including Delhi, Odisha and Puducherry, have passed the State Goods and Services Tax (SGST) Act in their respective legislative assemblies.

Traders were seen piling up position in IT, TECK and Oil & Gas stocks, while selling was witnessed in Consumer Durables, FMCG and Realty stocks. In scrip specific development, Cadila Healthcare was trading in green as the company received Establishment Inspection Report (EIR) from the US health regulator for its Baddi facility in Himachal Pradesh. The United States Food and Drug Administration (USFDA) had earlier given three observations under Form 483 after the inspection of the facility. Credit Analysis and Research or Care Ratings, which counts Franklin Templeton and LIC as its promoters, was trading in green as the company is planning about 10 per cent share buyback, for which it may seek the approval of its board in a month or two.

On the global front, Asian shares were trading mostly in red, in cautious trade ahead of key events later in the week with Britain heading to polls on Thursday and former FBI chief James Comey set to testify to Congress. Japan’s real wages were flat in April from the same period a year earlier, with rising prices offsetting gains in nominal pay and possibly hurting households’ purchasing power. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,650 and 31,300 levels respectively. The market breadth on BSE was negative in the ratio of 936:1191, while 132 scrips remained unchanged.

The BSE Sensex is currently trading at 31314.27, up by 4.78 points or 0.02% after trading in a range of 31251.90 and 31430.32. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.15%, while Small cap index was down by 0.02%.

The top gaining sectoral indices on the BSE were IT up by 2.46%, TECK up by 1.81%, Oil & Gas up by 0.08% and PSU up by 0.03%, while Consumer Durables down by 1.29%, FMCG down by 1.01%, Realty down by 0.89%, Power down by 0.66% and Utilities down by 0.47% were the losing indices on BSE.

The top gainers on the Sensex were TCS up by 3.44%, Infosys up by 2.11%, SBI up by 1.03%, GAIL India up by 0.97% and HDFC up by 0.80%.

On the flip side, ITC down by 1.76%, ONGC down by 1.48%, Asian Paints down by 1.38%, Power Grid down by 1.02% and Lupin down by 0.96% were the top losers.

Meanwhile, Union finance minister Arun Jaitley has said that the Comptroller and Auditor General of India (CAG) will be auditing the Goods and Services Tax Network (GSTN), which is the nationwide electronic backbone of the new tax regime. In a refusal of party colleague Subramanian Swamy, he defended the equity structure of GSTN and said that he did not find anything wrong in government holding 49 percent stake in the company. BJP member Subramanian Swamy has repeatedly questioned the shareholding pattern in the GSTN, terming it a shady organisation that was a grave security issue.

The minister has stated that the present structure of GST Network was decided by the United Progressive Alliance (UPA) when P Chidambaram was the finance minister. He said “I have personally reviewed the entire structure and I saw no reason to disagree with him.” He pointed out that GSTN is going to match hundreds of crores of vouchers every month and therefore there has to be an extremely efficient IT network.

Jaitley further said that the structure which was conceived was that the central and the state governments will together own 49 percent of the equity. He also said that the other 51 percent will belong to some very responsible bodies like LIC Housing, National Stock Exchange, HDFC Bank and so on. Therefore, he noted that it technically gave flexibility to the GSTN to hire the best IT experts. 

The CNX Nifty is currently trading at 9673.50, down by 1.60 points or 0.02% after trading in a range of 9652.55 and 9709.30. There were 14 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were HCL Technologies up by 4.34%, TCS up by 3.39%, Infosys up by 2.28%, Tech Mahindra up by 1.48% and SBI up by 1.11%.

On the flip side, ITC down by 1.75%, Indiabulls Housing Finance down by 1.72%, ONGC down by 1.54%, Asian Paints down by 1.42% and Tata Motors - DVR down by 1.35% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 107.63 points or 0.53% to 20,063.19, Jakarta Composite decreased 17.92 points or 0.31% to 5,730.31, Taiwan Weighted decreased 17.88 points or 0.17% to 10,208.96 and Shanghai Composite decreased 7.55 points or 0.24% to 3,084.11.

On the other hand, FTSE Bursa Malaysia KLCI increased 1.52 points or 0.09% to 1,789.47 and Hang Seng increased 84.78 points or 0.33% to 25,947.77.

Seoul Stock Exchange is closed on account of ‘Memorial Day’ holiday.