Benchmarks add gains in late morning session

Indian equity benchmarks added gains and continued their firm trade in late morning session, on account of buying in frontline blue chip counters. The rollout of the country’s most comprehensive indirect tax reform - the Goods and Services Tax (GST) - has been positive and largely hassle-free, with no checks on state borders, smooth customs operations and no major problems reported. The government is now looking at a massive outreach to consumers as well as industry to clarify all issues and highlight the benefits of the tax regime. Traders were taking support after Association of Chartered Certified Accountants (ACCA) highlighted that the ‘shadow economy’ in India will shrink to 13.6% of the GDP by 2025. Shadow economy refers to the production of and trade in goods and services that are deliberately and often illegally concealed from public authorities. Moody’s Investors Service said that implementation of the GST will be positive for India’s rating as it will lead to higher GDP growth and increased tax revenues. The agency expects improved tax compliance to be driven by incentivisation of tax credits in a GST system.

Investors took note that the southwest monsoon advanced over the National Capital Region (NCR) and most parts of Jammu & Kashmir and other Himalayan states. It is expected to race ahead and cover the rest of the country, including western Rajasthan, in the next two weeks. Rainfall on Sunday was 50% above normal in most regions except the southern peninsula. Foreign Investors have pumped over Rs 29,000 crore in the country’s capital market in June, making it the highest inflow in three months, enthused by the GST and forecast of a normal monsoon. This also marks the fifth consecutive monthly inflow by overseas investors. According to latest depository data, FPIs invested a net Rs 3,617 crore in equities last month, while they poured Rs 25,685 crore in the debt markets during the period under review, translating into a net inflow of Rs 29,302 crore ($4.55 billion).

Traders were seen piling up position in FMCG, Metal and Basic Materials stocks, while selling was witnessed in IT and TECK sector stocks. In scrip specific development, NBCC (India) was trading in green after inking a Memorandum of Understanding with Rail Development Authority, a statutory authority under the Ministry of Railways, for re-development of 10 Railway stations. The re-development of railway station would be integrated with Smart City features. The announcement was made after market hours on Friday, June 30, 2017. Fertilizer stocks were buzzing after the GST rate on fertilizer prices were being slashed to 5 per cent from 12 per cent proposed earlier, a decision taken in the interest of farmers.

On the global front, Asian shares were trading mostly in red. Caixin’s China manufacturing PMI for June beat expectations, offering hope the world’s second-largest economy continues to defy expectations for a slowdown. The private survey came in at 50.4, marking a three-month high. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,550 and 31,100 levels respectively. The market breadth on BSE was positive in the ratio of 1583:537, while 98 scrips remained unchanged.

The BSE Sensex is currently trading at 31157.54, up by 235.93 points or 0.76% after trading in a range of 31017.11 and 31258.33. There were 23 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.72%, while Small cap index was up by 0.90%.

The top gaining sectoral indices on the BSE were FMCG up by 3.45%, Metal up by 1.53%, Basic Materials up by 1.37%, Realty up by 1.34% and Telecom up by 1.04%, while IT down by 0.26% and TECK down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 6.14%, Maruti Suzuki up by 1.58%, Mahindra & Mahindra up by 1.37%, Tata Steel up by 1.05% and Hindustan Unilever up by 0.73%.

On the flip side, NTPC down by 1.77%, Wipro down by 1.62%, Bajaj Auto down by 0.98%, Kotak Mahindra Bank down by 0.52% and Tata Motors down by 0.47% were the top losers.

Meanwhile, with the Goods and Services Tax (GST) rollout taking place in a special midnight session on June 30, Confederation of Indian Industry (CII) has said that implementation of the crucial tax reform will make Indian industries more competitive, incentivise exports as well as help expand the tax net. The industry body has also said that GST regime gives tremendous confidence to the industry that the government will continue to facilitate investments and simplify the business environment.

Asserting that GST would stand as an exemplar of collaborative reform for the world, CII President Shobana Kamineni has said that they have emerged into a new era of economic reform with the introduction of the game-changing GST. She also pointed out that going forward, GST will contribute to the ease of doing business and accelerate new business ventures.

Kamineni further said that input tax credit will curb inflation by avoiding tax-on-tax and they believe that most businesses would pass on the benefits of input tax credit to consumers so that inflation would be curbed. She also said that large numbers of government officials, tax experts, and CII are committed to ensuring the success of GST for boosting India's growth and development.

The CNX Nifty is currently trading at 9586.85, up by 65.95 points or 0.69% after trading in a range of 9543.55 and 9612.75. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were ITC up by 6.29%, Hindalco up by 3.14%, Bharti Infratel up by 2.79%, Maruti Suzuki up by 1.61% and Vedanta up by 1.59%.

On the flip side, NTPC down by 2.14%, HCL Tech. down by 1.67%, Wipro down by 1.55%, Bajaj Auto down by 0.91% and Dr. Reddy’s Lab down by 0.66% were the top losers.

The Asian markets were trading mostly in red; KOSPI Index decreased 4 points or 0.17% to 2,387.79, Shanghai Composite decreased 2.08 points or 0.07% to 3,190.35, FTSE Bursa Malaysia KLCI decreased 0.56 points or 0.03% to 1,763.11 and Taiwan Weighted decreased 0.3 points or 0% to 10,394.77.

On the other hand, Hang Seng increased 5.96 points or 0.02% to 25,770.54, Jakarta Composite increased 33.07 points or 0.57% to 5,862.78 and Nikkei 225 increased 39.82 points or 0.2% to 20,073.25.