Benchmarks trim losses; trade continues in red

Indian equity benchmarks trimmed their losses but continued to trade in red in late morning session, on account of selling in frontline blue chip counters. The countdown for launch of GST at midnight has begun as the country braces for one nation, one tax. A gong will be sounded to mark the launch and President Pranab Mukherjee, Prime Minister Narendra Modi and Finance Minister Arun Jaitley will address lawmakers and other dignitaries invited. The sentiments were under pressure after Asian Development Bank (ADB) said that implementation of Goods and Services Tax (GST) will remain a challenge for the government. GST has been very important achievement of the Indian government and it will integrate the country into one market, while expressing apprehension that implementation would be an important challenge. There can be some transitional issues like filing of returns and its scrutiny; another issue might be that of enforcement by state and central government tax officials.

Traders were seen piling up position in Healthcare, FMCG and Power stocks, while selling was witnessed in Telecom, Capital goods and Realty sector stocks. Telecom stocks were buzzing on ICRA’s report that intense competition and pricing pressure will continue to take a toll on the telecom sector with industry revenue expected to plunge by another 6 per cent during the current financial year. Mixed reaction was witnessed in real estate stocks after the government on Thursday hiked the GST rate for the construction sector to 18 per cent from 12 per cent, but removed land value from computation of tax liability. In scrip specific development, Central Depository Services (India) (CDSL) made a stellar debut on NSE over its issue price of Rs 149 apiece. The Rs 3.51 crore share issue, which was sold during June 19-21, was subscribed 170.19 times, with the qualified institutional buyers (QIBs) portion getting 148.71 times oversubscription, while non-institutional investors and retail investors categories received bids 563.03 times and 23.83 times, respectively, of their respective quotas.

On the global front, Asian shares were trading in red, tracking dismal performances of European and US markets. The Korean won weakened against the dollar after the country reported industrial production rose by 0.2 percent in May from a month earlier, missing expectations for growth of 1.5 percent. That followed a 2.2 percent decline in April. Chinese Manufacturing PMI rose to an annual rate of 51.7, from 51.2 in the preceding month. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,500 and 30,900 levels respectively. The market breadth on BSE was negative in the ratio of 955:1080, while 124 scrips remained unchanged.

The BSE Sensex is currently trading at 30819.99, down by 37.53 points or 0.12% after trading in a range of 30680.66 and 30828.51. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.02%, while Small cap index was down by 0.07%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.24%, FMCG up by 1.17%, Power up by 0.29%, Basic Materials up by 0.23% and Consumer Durables up by 0.19%, while Telecom down by 1.25%, Capital Goods down by 1.03%, Realty down by 1.00%, Industrials down by 0.58% and Auto down by 0.57% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.56%, ITC up by 2.09%, Dr. Reddy’s Lab up by 1.53%, Cipla up by 1.15% and Power Grid up by 1.03%.

On the flip side, Larsen & Toubro down by 1.98%, Bharti Airtel down by 1.78%, Tata Motors - DVR down by 1.47%, ICICI Bank down by 1.07% and Bajaj Auto down by 1.00% were the top losers.

Meanwhile, with India’s biggest tax reform goods and services tax (GST) set to launch on July 1, the Industry body, Federation of Indian Chambers of Commerce and Industry (FICCI) has said that the rollout of new tax regime will bring about significant gains to Indian economy and advantages for the stakeholders. FICCI also looks forward to working closely with the government to ensure successful implementation of GST.

The Industry body has clarified that GST will bring down the tax burden of taxpayers in understanding and complying with tax laws and help curb black money generation. Adding further, it also said that GST regime will prevent cascading effect of taxation since input tax credit (ITC) will be available across goods and services at each stage of the supply chain. It also noted that the harmonisation of the laws, procedures and rates of taxes enforced by the Centre and the states will bring transparency/uniformity in tax regime.

Moreover, the chamber has said that the establishment of GST Network automates the processing of tax related filings, enabling automation of processes like registration, returns, refunds, tax payments, etc. which is expected to reduce the interface between the taxpayer and the tax administration and will go a long way to reduce unwarranted litigation on indirect tax matters. Emphasizing that the GST will help curb the spread of the country's parallel economy, FICCI said that the framework of the tax structure, whereby input tax credit is available for the subsequent activity of manufacture or trading, serves as an incentive to be more tax compliant.

The CNX Nifty is currently trading at 9486.00, down by 18.10 points or 0.19% after trading in a range of 9448.75 and 9490.65. There were 15 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 3.12%, Bank of Baroda up by 2.28%, ITC up by 1.96%, Aurobindo Pharma up by 1.81% and Dr. Reddy’s Lab up by 1.39%.

On the flip side, Indiabulls Housing Finance down by 2.54%, Larsen & Toubro down by 2.15%, Bharti Airtel down by 1.70%, Tech Mahindra down by 1.40% and Bharti Infratel down by 1.30% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 242.94 points or 1.2% to 19,977.36, Hang Seng decreased 225.76 points or 0.87% to 25,739.66, Taiwan Weighted decreased 40.6 points or 0.39% to 10,381.05, KOSPI Index decreased 6.83 points or 0.29% to 2,388.83, Shanghai Composite decreased 5.72 points or 0.18% to 3,182.34 and FTSE Bursa Malaysia KLCI decreased 2.73 points or 0.15% to 1,768.63.

Jakarta Stock Exchange was closed on account of national holiday.