Indian markets trade flat with positive bias

Indian equity benchmarks were trading flat with bit of positive bias in afternoon session, on account of buying in frontline blue chip counters. Besides, Investors' sentiments got some support with positive global cues and healthy buying witnessed in Basic Materials, Metal, Energy and Industrials stocks. Some support also came with report that India's services PMI rose to an eight month high in June at 53.1 as against 52.2 in May of 2017. This was also the fifth consecutive month of expansion as business environment for services sector in the country continued to improve. In scrip specific development, Granules India was up by over two percent after receiving an approval to increase the present limit of FII / FPIs shareholding in the company to 49% of the total paid-up equity share capital of the company.

On the global front, Asian markets were trading mostly in green, despite geopolitical concerns due to tensions on the Korean peninsula, with investors seeking out safe-haven assets such as the Japanese yen and gold. Back home, the BSE Sensex is currently trading at 31212.63, up by 2.84 points or 0.01% after trading in a range of 31189.90 and 31284.64. 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 0.62%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.01%, Metal up by 0.90%, Energy up by 0.87%, Industrials up by 0.74% and Oil & Gas up by 0.67%, while IT down by 0.47%, TECK down by 0.47%, Telecom down by 0.43%, FMCG down by 0.41% and Realty down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.20%, Asian Paints up by 1.53%, Reliance Industries up by 1.15%, Tata Motors - DVR up by 0.99% and Tata Motors up by 0.97%. On the flip side, ITC down by 1.23%, Bharti Airtel down by 1.00%, Infosys down by 0.99%, HDFC down by 0.88% and Wipro down by 0.85% were the top losers.

Meanwhile, with Goods and Services Tax (GST) rate being lower than 6% levy prevailing in a majority of the states, domestic credit rating agency, ICRA in its latest report has said that retail prices of fertiliser will come down marginally, which would in turn benefit the farmers. Nevertheless, it also said that a few states such as Haryana, Punjab and Andhra Pradesh, where fertiliser sales were exempt from value-added tax (VAT) and attract only 1% excise duty, will face increased tax incidence of 5% and thus prices will see upward movement in these states.

The rating agency said that the government has paid attention to the industry and farmer demand to reduce the GST on fertilisers to 5% from 12%, which is positive for the farming community. It noted that the earlier 12% tax rate would have led to an increase in fertiliser prices by 6-10% and could have impacted the demand. Though, it said that the new rate of 5% will result in a marginal reduction in retail prices of fertilisers. Besides, ICRA expects that the move would reduce the cost of a 50 kg bag of urea by Rs 3. However, it added that the decision is credit neutral for the industry as the working capital requirement would remain unchanged as before.

According to the report, for DAP and NPK manufacturers there is no relief as the tax on the key raw materials, that is phosphoric acid and ammonia, has been retained at 18%, giving rise to an inverted duty structure, where the final output (DAP or NPK) fertilisers are taxed at 5%, while raw material is taxed at 18%. As a result, it noted that the competitiveness of domestic manufacturers against importers will erode. It pointed out that a timely refund of excess input tax credit by the government will be the key to the liquidity position of both domestic manufacturers and importers of P&K fertilisers.

The CNX Nifty is currently trading at 9620.70, up by 7.40 points or 0.08% after trading in a range of 9607.35 and 9637.10. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 2.20%, Ultratech Cement up by 1.54%, Vedanta up by 1.51%, Bank of Baroda up by 1.47% and Asian Paints up by 1.40%. On the flip side, ITC down by 1.39%, Infosys down by 1.21%, Bharti Airtel down by 1.07%, Aurobindo Pharma down by 0.83% and Wipro down by 0.79% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.62 points or 0.04% to 1,762.70, KOSPI Index rose 7.83 points or 0.33% to 2,388.35, Shanghai Composite was up by 22.77 points or 0.72% to 3,205.57, Nikkei 225 surged 49.28 points or 0.25% to 20,081.63, Taiwan Weighted added 57.01 points or 0.55% to 10,404.79 and Hang Seng increased 115.97 points or 0.46% to 25,504.98.

On the flip side, Jakarta Composite was down by 7.11 points or 0.12% to 5,858.26.