Benchmarks continue firm trade in noon session

Indian equity benchmarks continued to trade firm in noon session on continued buying activities by both funds and retail investors amid positive Asian cues. Sentiments got a boost with report that the government has ramped up capital spending by nearly 60% in the first two months of the current financial year, in a bid to perk up investment sentiment and crowd in private investment. Early passage of the budget in March has allowed the government start spending from the beginning of the new financial year in April. In April-May, the government spent Rs 52,536 crore, 58% more than the year earlier period. Adding optimism among investors, Moody's said GST will be credit positive for India. Implementation of the goods and services tax (GST) will be positive for India's rating as it would lead to higher GDP growth and increased tax revenues.

Some support also came with IMD report indicating that the first month of monsoon has been heartening with India recording a 4% surplus in rainfall combined with a well-distributed pattern, except in the eastern regions. The average rainfall in June was 170.2mm, 7mm higher than the usual 163.6mm. Meanwhile, Fertiliser stocks rallied after the Goods and Services Tax Council lowered the rate on fertiliser from 12% to 5% and on tractor parts from 28% to 18%. Finance Minister Arun Jaitley said the decision to reduce the tax rate on fertiliser was taken because of apprehensions that price of the crop nutrient may go up. Traders shrugged off the report indicating that growth in eight core sector slowed to 3.6% in the month of May 2017, as compared to 5.2% in May last year on account of contraction in output of coal and fertilizer.

On the global front, Asian markets were trading mostly higher on Monday, as private sector survey on China's manufacturing showed a surprise recovery in activity, adding to the evidence of steadying growth in the world's second largest economy. Japanese market is modestly higher following the lackluster cues from Wall Street on Friday and as investors digested the Bank of Japan's better-than-expected quarterly Tankan survey results. Meanwhile, Global bond yields have risen sharply following hawkish comments from European Central Bank President Mario Draghi last Tuesday, with German bond yields posting their biggest weekly jump since December 2015 last week.

Back home, all BSE sectoral indices were trading in the green. Among them, FMCG index gained the most by 3.53 per cent, followed by Metal 1.67 per cent, Telecom 1.51 per cent and Basic Materials 1.40 per cent. In scrip specific development, Ashok Leyland surged after the company reported a jump of 11% in June 2017 sales to 12,330 units, as against 11,108 units sold in the same period of last year. Furthermore, Kalpataru Power Transmission gained after the company secured new orders worth Rs 676 crore.

The market breadth remained optimistic, as there were 1653 shares on the gaining side against 627 shares on the losing side, while 123 shares remained unchanged.

The BSE Sensex is currently trading at 31199.97, up by 278.36 points or 0.90% after trading in a range of 31017.11 and 31258.33. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.78%, while Small cap index up by 0.92%.

The top gaining sectoral indices on the BSE were FMCG up by 3.53%, Metal up by 1.67%, Telecom up by 1.51%, Basic Materials up by 1.40% and Realty up by 1.01%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were ITC up by 6.14%, Maruti Suzuki up by 1.59%, Mahindra & Mahindra up by 1.52%, Tata Steel up by 1.20% and Coal India up by 1.13%. On the flip side, Wipro down by 1.57%, NTPC down by 1.55%, Bajaj Auto down by 1.04%, Kotak Mahindra Bank down by 0.73% and Sun Pharma down by 0.65% were the top losers.

Meanwhile, a day after the launch of the goods and services tax (GST), global ratings agency Moody's Investors Service, has said that the new tax regime will be positive for India’s rating as it will lead to higher government revenue generation and improve the country’s economic growth. At present, Moody's has a 'Baa3' rating on India with a positive outlook.

The credit rating agency in its latest report anticipated that the GST will boost gross domestic product (GDP) growth and productivity gains over the medium term, by improving the ease of doing business, unifying the national market and enhancing India's attractiveness as a foreign investment destination. The agency said that the GST will also support higher revenue generation for the government through improved tax compliance and administration.

Moody's expects improved tax compliance owing to incentivisation of tax credits in a GST system, greater ease of compliance through usage of a common, shared IT infrastructure between the central government & the states along with a reduction in the overall cost of compliance with simplified tax rates and a uniform system across the country.

The CNX Nifty is currently trading at 9604.45, up by 83.55 points or 0.88% 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 6.30%, Bharti Infratel up by 3.40%, Hindalco up by 2.91%, Vedanta up by 2.01% and Eicher Motors up by 1.81%. On the flip side, NTPC down by 1.82%, Wipro down by 1.41%, HCL Tech down by 1.28%, Sun Pharma down by 1.04% and Bajaj Auto down by 1.00% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted rose 0.17%, Hang Seng gained 0.07%, Jakarta Composite increased 0.57% and Nikkei 225 was up by 0.11%. On the flip side, Shanghai Composite slipped 0.03%, KOSPI Index decreased 0.11% and FTSE Bursa Malaysia KLCI was down by 0.02%.