Markets continue to trade in high spirit; Nifty above 9,550 mark

Indian equity benchmarks were trading in high spirit in early afternoon session, with the Sensex and Nifty continue to trade above their psychological marks of 31,000 and 9,550 respectively ahead of the June derivative expiry. Sentiments remained optimistic with India Meteorological Department’s (IMD) statement that 79 percent of the country has received normal-to-above-normal rainfall. It is seeing a steady progress in rainfall in central India and expects average July rainfall at 96 percent. Meanwhile, in a bonanza to 48 lakh central government employees, the Union Cabinet has approved recommendations of 7th Central Pay Commission with 34 modifications which will impose an additional annual burden of Rs 30,748 crore on the exchequer. In scrip specific development, JSW Steel was up by over two and half percent after receiving its board’s approval to set up a Slurry Pipeline to transport iron ore from coastal Karnataka to the Vijayanagar works.

On the global front, Asian markets were trading in green, with finance stocks broadly leading gains after all major US financial institutions received approval from the Federal Reserve to ramp up dividend payouts and share buybacks. Back home, the BSE Sensex is currently trading at 31071.88, up by 237.56 points or 0.77% after trading in a range of 30905.86 and 31097.92. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.84%, while Small cap index up by 1.33%.

The top gaining sectoral indices on the BSE were Metal up by 1.80%, Telecom up by 1.50%, Basic Materials up by 1.25%, TECK up by 1.22% and IT up by 1.17%, while there were no losers on BSE sectoral space.

The top gainers on the Sensex were Axis Bank up by 3.36%, Tata Steel up by 2.30%, Infosys up by 2.01%, Bharti Airtel up by 1.87% and Mahindra & Mahindra up by 1.56%. On the flip side, Kotak Mahindra Bank down by 1.49%, Sun Pharma down by 1.26%, Dr. Reddy’s Lab down by 0.17% and SBI down by 0.07% were the top losers.

Meanwhile, Union Cabinet led by Prime Minister Narendra Modi has approved the recommendations of the 7th Central Pay Commission (CPC) on allowances for Central government employees with 34 modifications which will impose an additional annual burden of Rs 30,748 crore on the exchequer. The revised rates of the allowances shall come into effect from July 1, 2017 and shall benefit over 48 lakh employees. The modifications are based on the recommendations made by the Committee on Allowances (CoA) in its report submitted to the Finance Minister on April 27, and the Empowered Committee of Secretaries set up to screen the recommendations of the 7th Pay Commission. The 7th CPC had examined a total of 197 allowances, suggesting abolition of 53 allowances and subsumption of 37 others. The government made 34 modifications, deciding not to do away with 12 allowances.

Sharing the details of it, Finance Minister Arun Jaitley has said that Pay Commission had recommended reduction in the HRA rates to 24% for X, 16% for Y and 8% for Z category of cities. He noted that current HRA is at 30% for X, 20% for Y and 10% for Z category of cities. However, he pointed out that as the HRA at the reduced rates may not be sufficient for employees falling in lower pay bracket, it has been decided that HRA will not be less than Rs 5,400, Rs 3,600 and Rs 1,800 for X, Y and Z category of cities, respectively. He noted that this floor rate has been calculated at 30%, 20% and 10% of the minimum pay of Rs 18,000 and added that this will benefit more than 7.5 lakh 1 to 3 levels of employees.

Talking about Siachen allowance, Jaitley has said that level 9 and above will get Rs 42,500 as compared to Rs 31,500 recommended by Pay Commission. He also said that for level 8 and below it would be Rs 30,000 against Rs 21,000 recommended by the Pay Commission. Adding further, he said that additional allowances has been restructured, the government has doubled medical allowance for pensioners to Rs 1,000. However, he noted that the Pay Commission had recommended Rs 500 as medical allowance for pensioners.

On the dress allowance, the minister has stated that various types of allowances are paid at present for provisioning and maintenance of uniforms/outfits such as Washing Allowance, Uniform Allowance, Kit Maintenance Allowance and Outfit Allowance. He explained that these have been rationalised and subsumed in newly proposed Dress Allowance to be paid annually in four slabs-Rs 5,000, Rs 10,000, Rs 15,000 and Rs 20,000 for various category of employees. He added that this allowance will continue to be paid to nurses on a monthly basis in view of high maintenance and hygiene requirements.

The CNX Nifty is currently trading at 9569.60, up by 78.35 points or 0.83% after trading in a range of 9522.45 and 9575.80. There were 44 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 3.90%, Indiabulls Housing Finance up by 2.69%, Vedanta up by 2.23%, Tata Steel up by 2.14% and Infosys up by 2.04%. On the flip side, Sun Pharma down by 1.32%, Kotak Mahindra Bank down by 1.06%, Dr. Reddy’s Lab down by 0.27%, Ultratech Cement down by 0.11% and Adani Ports & SEZ down by 0.10% were the top losers.

The Asian markets were trading in green, FTSE Bursa Malaysia KLCI increased 0.29 points or 0.02% to 1,771.52, Shanghai Composite rose 10.28 points or 0.32% to 3,183.48, KOSPI Index added 13.1 points or 0.55% to 2,395.66, Taiwan Weighted surged 31.1 points or 0.3% to 10,421.65, Nikkei 225 was up by 89.89 points or 0.45% to 20,220.30 and Hang Seng increased 246.89 points or 0.96% to 25,930.39.