Benchmarks trade in red in early deals; Nifty breaches 9,500 mark

Indian equity markets have made a flat-to-cautious-start and are trading in red in early deals with frontline gauges breaching their crucial 30,900 (Sensex) and 9,500 (Nifty) levels, tracking weak global cues. Traders also remained concerned with Finance Minister Arun Jaitley’s statement that people may have to face some difficulty initially as the GST is rolled out but in the long run the new indirect tax regime would help cut tax evasion and check price rise. He also said the GST Council will look at bringing real estate within the GST net by next year and revisit taxing of petroleum products under the new regime in 1-2 years.

Global cues too remained sluggish with Asian counters trading in red tracking the weak cues overnight from Wall Street and comments from European Central Bank Mario Draghi that the central bank could pare back stimulus this year. The US markets ended in red terrain in last session, as the International Monetary Fund lowered its outlook for U.S. economic growth. The International Monetary Fund cut its growth forecasts for the US economy to 2.1 percent for both 2017 and 2018.

Back home, banking stocks edged lower as maintaining its negative outlook on Indian banks, Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of eight Indian banks -- State Bank of India, Bank of Baroda, Bank of Baroda (New Zealand), Punjab National Bank, Canara Bank, Bank of India, ICICI Bank and Axis Bank. However, stocks related to oil space remained on buyers’ radar on report that the GST Council may decide to include natural gas in the Goods and Services Tax (GST) regime as a measure to provide some relief to the oil and gas sector.

The BSE Sensex is currently trading at 30887.48, down by 70.77 points or 0.23% after trading in a range of 30876.25 and 31000.48. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.11%, while Small cap index was down by 0.18%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.49%, Utilities up by 0.45%, Auto up by 0.22%, Metal up by 0.22% and PSU up by 0.21%, while Consumer Durables down by 1.50%, Capital Goods down by 0.58%, FMCG down by 0.44%, Telecom down by 0.44% and TECK down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 0.98%, Power Grid Corporation up by 0.90%, Tata Steel up by 0.88%, Axis Bank up by 0.73% and ICICI Bank up by 0.68%. On the flip side, Asian Paints down by 2.68%, SBI down by 1.68%, Bharti Airtel down by 0.87%, ITC down by 0.79% and Reliance Industries down by 0.75% were the top losers.

Meanwhile, just few days before the implementation of new indirect tax regime, Finance Minister Arun Jaitley has said that people may have to face some difficulty initially during the Goods and Services Tax (GST) is rolled out, but in the long run the new indirect tax regime would help cut tax evasion and check price rise. He also said that the GST Council will look at bringing real estate within the GST net by next year and revisit taxing of petroleum products under the new regime in 1-2 years.

Jaitley added that while negotiating with the states on GST there were some tough issues like petroleum and potable alcohol on which states were unwilling to leave their taxation powers. He said “If we insisted on that, then the deal would have been broken. The Constitution amendment provides that petroleum products can be taxed under GST as and when GST Council decides. And once GST is implemented, in 1-2 years once again the Council will get opportunity to revisit it.”

Finance Minister said that he was in favour of a proposal mooted by Delhi Deputy Chief Minister Manish Sisodia to bring real estate under GST, but few other states were not in favour. Besides, the GST will be launched on July 1 and will subsume a host of indirect levies like excise, service tax and VAT. While products like kerosene, naphtha and LPG will be under GST, five items including crude oil, diesel and petrol have been excluded.

The CNX Nifty is currently trading at 9492.65, down by 18.75 points or 0.20% after trading in a range of 9479.80 and 9522.50. There were 27 stocks advancing against 23 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Indian Oil Corporation up by 1.77%, Tech Mahindra up by 1.62%, BPCL up by 1.44%, GAIL India up by 1.24% and HCL Tech up by 1.01%. On the flip side, Asian Paints down by 2.74%, ACC down by 2.26%, Zee Entertainment down by 1.79%, SBI down by 1.72% and Indusind Bank down by 1.64% were the top losers.

Asian markets were trading mostly in red, Taiwan Weighted declined 114.77 points or 1.09% to 10,397.29, Hang Seng shed 92.09 points or 0.36% to 25,747.90, Nikkei 225 decreased 65.41 points or 0.32% to 20,159.68, KOSPI Index slipped 6.49 points or 0.27% to 2,385.46 and FTSE Bursa Malaysia KLCI was down by 5.33 points or 0.3% to 1,774.12.

On the flip side, Shanghai Composite was up by 1.62 points or 0.05% to 3,192.82.