Sensex, Nifty pare losses but trade continues in red

Indian bourses pared most of their initial losses but continued to trade marginally in red in the afternoon deals as weak cues from global markets and anxiety ahead of midnight rollout of landmark tax reform Goods and Services Tax (GST) today weighted on markets. Besides, depreciation in Indian rupee too aided the downtrend. Extending its losses for the fourth day in a row, the rupee depreciated by 14 paise to 64.76 against US dollar in early trade on fresh demand for the American currency from importers. However, investors got some support with Industry body Ficci’s statement that GST will bring about significant gains to India’s economy and it looks forward to working with the government for successful implementation of the crucial tax reform. In scrip specific development, PVV Infra was up by around five percent after bagging an order from Tata Trusts for pre-cast Demo Individual Household Latrine (IHHL) installation at Kesarapalli Village, Krishna District in Andhra Pradesh.

On the global front, Asian markets were trading mostly in red, tracking the weak cues from US and European markets overnight, while the US dollar extended losses as major central banks indicated that tighter monetary policy is on the way. Investors also shrugged off data showing that the manufacturing sector in China continued to expand in June at a faster pace.

The BSE Sensex is currently trading at 30848.65, down by 8.87 points or 0.03% after trading in a range of 30680.66 and 30858.44. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.21%, while Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.32%, FMCG up by 0.89%, Power up by 0.53%, Basic Materials up by 0.51% and IT up by 0.50%, while Telecom down by 1.20%, Capital Goods down by 0.81%, Auto down by 0.65%, Realty down by 0.60% and Industrials down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.31%, ITC up by 1.91%, Dr. Reddy’s Lab up by 1.65%, TCS up by 1.28% and Cipla up by 1.28%. On the flip side, Tata Motors - DVR down by 2.08%, Bharti Airtel down by 1.79%, Larsen & Toubro down by 1.76%, ICICI Bank down by 1.33% and Tata Motors down by 1.31% were the top losers.

Meanwhile, ahead of the roll out of the goods and services tax (GST), Asian Development Bank (ADB) described it as a very important step towards integrating the domestic economy. ADB has said that the new tax regime is a good initiative and a big achievement for the government but its implementation could bring some challenges for the government on account of several factors -especially its multiple tax rate structure.

ADB noted that businesses would be forced to think of adjusting prices to the new tax burden and the new tax burden will be reflected in the prices as businesses try to shift it to the consumer. Further citing challenges like filing of returns and its scrutiny, enforcement by state and central government tax officials and doing away with anomalies on input credit and output tax, ADB said that the arrangement should be very clear.

ADB, while talking about impact of GST implementation on growth, said that it is difficult to assess because impact is at different level and it is multi layered. Further, it said that multi taxes are going to be rationalised which will have positive impact on businesses. Cross trade transfer would be much simpler and for some industry and business, taxes would be lowered so it is very difficult to tell the impact.

The CNX Nifty is currently trading at 9493.75, down by 10.35 points or 0.11% after trading in a range of 9448.75 and 9494.05. There were 18 stocks advancing against 32 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Sun Pharma up by 3.67%, Bank of Baroda up by 3.25%, Aurobindo Pharma up by 1.96%, ITC up by 1.88% and Cipla up by 1.55%. On the flip side, Bosch down by 2.10%, Larsen & Toubro down by 1.99%, Tata Motors - DVR down by 1.98%, Bharti Airtel down by 1.71% and Indiabulls Housing Finance down by 1.52% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 186.87 points or 0.92% to 20,033.43, Hang Seng dipped 182.4 points or 0.7% to 25,783.02, Taiwan Weighted shed 26.58 points or 0.26% to 10,395.07, KOSPI Index was down by 3.87 points or 0.16% to 2,391.79 and FTSE Bursa Malaysia KLCI decreased 3.45 points or 0.19% to 1,767.91.

On the flip side, Shanghai Composite was up by 0.99 points or 0.03% to 3,189.05.