Benchmarks continue lackluster trade; Nifty below 9,650 mark

Indian equity benchmarks continued their lackluster trade, trading in negative territory in noon session, as investors remained wary ahead of IIP and inflation data due later in the day. Sentiments remained downbeat after the State Bank of India expressed concern that demonetisation, announced in November 2016, may continue to result in slowing down of the economy, and adversely affect its business. It said that the long-term impact of this move on the Indian economy and the banking sector is uncertain. Meanwhile, government of Maharashtra on Sunday announced a loan waiver for farmers and decided to form a committee to decide the criteria of debt relief. The loan waiver of around Rs 30,000 crore will affect the state fiscal and ‘impact the credit discipline’ among borrowers.

However, investors failed to get any sense of relief with the report that the southwest monsoon is making a steady advance into Maharashtra & West Bengal and the weatherman has predicted a good week ahead. India Meteorological Department Director General K J Ramesh said monsoon is in an active phase and has reached Mumbai, Mahabaleshwar (in Maharashtra) and several parts of the Konkan region, apart from Bijapur district in north Karnataka. Meanwhile, Jewellery stocks rallied after the GST Council decided to reduce GST rates for jewellery making charges to 5% from 18% earlier. The Council’s earlier decision of 18% attracted much discontent among jewellery manufacturers, as impractical and likely to cause immense job losses, as 95% of jewellery is made on the basis of job work. On the other hand, banking stocks came under selling pressure after Maharashtra government agreed to a farm loan waiver to the state's small & marginal farmers and set up a panel to decide the criteria of debt relief & implement the scheme.

On the global front, Asian markets were trading mostly in red on Monday, as markets turned cautious, ahead of a US Federal Reserve policy meeting that could give hints on the pace of further rate tightening in the months to come and next year. With the Fed widely expected to raise interest rates at its two-day meeting that ends on Wednesday, investors will be focusing on whether the central bank thinks the U.S. economy is robust enough to withstand further rate hikes through 2017 and how it plans to whittle down its massive balance sheet. China and Hong Kong stocks started the week on a bearish note, as tech plays in both markets tracked the sell-off in US counterparts, with sentiments also hurt by the prospect of renewed China slowdown in the second half amid tighter credit. Meanwhile, Japan's core machinery orders fell more than expected in April, casting doubt on the strength of companies' capital spending and adding to concerns about the country's fragile economic recovery. The 3.1% fall in the core orders from a month earlier was much bigger than the 1.3% decline expected by many economists, potentially dragging on economic growth in the current quarter.

Back home, stocks from Realty, Healthcare and Oil & Gas counters were supporting the markets’ uptrend, while those from Capital Goods, Industrials and Bankex counters were adding to the underlying cautious undertone. In scrip specific development, Scanpoint Geomatics surged after the company received a project for Base Map preparation, Implementation and Post implementation of Enterprise GIS Application for Pune Municipal Corporation. Furthermore, Prakash Industries gained after the company secured additional coal linkages of a total quantity of 5.43 lakh tonnes per annum for the next 5 years in the recent coal linkage auction conducted by Coal India (CIL).

The market breadth remained pessimistic, as there were 1055 shares on the gaining side against 1301 shares on the losing side, while 134 shares remained unchanged.

The BSE Sensex is currently trading at 31134.66, down by 127.40 points or 0.41% after trading in a range of 31070.65 and 31225.43. There were 10 stocks advancing against 18 stocks declining on the index, while 2 stocks remained unchanged.

The broader indices were trading in red; the BSE Mid cap index was down by 0.17%, while Small cap index down by 0.04%.

The top gaining sectoral indices on the BSE were Realty up by 0.70%, Healthcare up by 0.58%, Oil & Gas up by 0.16% and Metal up by 0.06%, while Capital Goods down by 0.89%, Industrials down by 0.66%, Bankex down by 0.54%, Power down by 0.52% and Utilities down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.94%, GAIL India up by 1.13%, Mahindra & Mahindra up by 0.95%, Tata Steel up by 0.61% and ONGC up by 0.44%. On the flip side, Wipro down by 2.57%, Larsen & Toubro down by 1.45%, NTPC down by 1.20%, Reliance Industries down by 1.10% and ICICI Bank down by 1.01% were the top losers.

Meanwhile, ahead of the roll out of the goods and services tax (GST) from July 1, 2017, the all-powerful GST Council headed by Union Finance Minister Arun Jaitley, at its sixteenth meeting has reduced the tax rates of as many as 66 items ranging from the most common packaged foods to school bags, computer printers, tractor components and insulin. A total of 133 representations were made to lower taxes for different categories of goods and commodities.

Following the revised tax rates, movie tickets costing Rs 100 and below will now attract 18% tax, as against 28% proposed earlier, while those above Rs 100 will continue to attract 28% GST. People with diabetes also have something to cheer as insulin will be cheaper as tax rate on insulin has been cut to 5% from the earlier 12%. While the tax rate on cashew has also been cut to 5% from the earlier 12%, food items like pickles and ketchup will attract a tax of 12% against the earlier proposal of 18%.

The GST Council also lowered rates on children's drawing books to nil from 12%. Computer printers will attract 18% tax as against 28% earlier. In addition, the council gave traders, manufacturers and restaurants some respite by raising the upper limit for the ‘composition scheme’ to Rs 75 lakh from the earlier Rs 50 lakh. Now traders, manufacturers and restaurants with an annual turnover of Rs 20 lakh to Rs 75 lakh can opt for the scheme and pay tax at 1%, 2% and 5% respectively.

Moreover, the tax rate on job workers in textile, diamond processing, leather, jewellery and printing, has been decided at 5%, as against the normal 18% GST rate for services. On the issue of review of GST rate on hybrid cars, it was decided that the council will take it up after considering states comments on a detailed paper issued on the matter earlier. The GST council will meet again on June 18 to discuss any pending issues, including the e-way bill rules and the rates on lotteries. 

The CNX Nifty is currently trading at 9632.45, down by 35.80 points or 0.37% after trading in a range of 9606.40 and 9647.05. There were 20 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.12%, Sun Pharma up by 2.06%, GAIL India up by 1.18%, Mahindra & Mahindra up by 1.00% and Yes Bank up by 0.83%. On the flip side, Wipro down by 2.69%, Bank Of Baroda down by 2.10%, Tata Motors - DVR down by 1.65%, Larsen & Toubro down by 1.52% and Zee Entertainment down by 1.22% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 1.15%, Nikkei 225 decreased 0.56%, Taiwan Weighted shed 0.88%, KOSPI Index dropped 1.04% and Shanghai Composite was down by 0.34%.

On the flip side, Jakarta Composite was up by 0.57%.