Benchmarks trade with traction in early deals; Sensex reclaims 31,300 mark

Indian equity benchmarks have made a positive start and are trading with traction in early deals with frontline gauges recapturing their crucial 31,300 (Sensex) and 9,650 (Nifty) levels. Sentiments remained up-beat with an ASSOCHAM study stating that Industry is expected to contribute $ 280 billion to India's GDP in eight to nine years due to positive fallout of the Goods and Services Tax (GST) as structural changes in the ease of doing business will propel growth. Traders also took some encouragement with Finance Minister Arun Jaitley’s statement that despite the anticipation of initial disruptions on account of the Goods and Services Tax (GST), the rollout of the new indirect tax regime from July 1 was smooth and without any significant glitches.

On the global front, Asian markets were trading mostly in red at this point of time with investors digesting details from the Federal Reserve’s most recent meeting, ahead of a G-20 summit and a key U.S. jobs report. Japanese market has led the losers, as the yen strengthened. The US markets made another mixed closing in the last session after a lackluster performance, as many traders remained away from their desks after the market holiday.

Back home, power sector remained under pressure despite the Power Ministry launching a portal for optimum utilisation of domestic coal by Independent Power Producers. Producers can reduce power costs by 10 paisa per unit through rationalising of coal supply made possible through the e-bid portal. The market breadth indicating the overall health of the market was strong, with 1,407 shares gaining and 567 shares declining, while a total of 78 shares were unchanged.

The BSE Sensex is currently trading at 31374.10, up by 128.54 points or 0.41% after trading in a range of 31264.86 and 31374.61. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.49%, while Small cap index was up by 0.70%.

The top gaining sectoral indices on the BSE were Realty up by 1.00%, FMCG up by 0.92%, Healthcare up by 0.61%, Industrials up by 0.59% and Auto up by 0.49%, while Utilities down by 0.34%, Telecom down by 0.23%, Oil & Gas down by 0.16%, Power down by 0.06% and TECK down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.86%, Lupin up by 1.61%, SBI up by 1.31%, Maruti Suzuki up by 0.92% and Hero MotoCorp up by 0.89%. On the flip side, Bajaj Auto down by 1.44%, ONGC down by 1.14%, Hindustan Unilever down by 0.85%, NTPC down by 0.76% and Axis Bank down by 0.43% were the top losers.

Meanwhile, a joint study carried out by the industry body Associated Chambers of Commerce & Industry of India (ASSOCHAM) and Ashvin Parekh Advisory Services (APAS), a global management consulting firm has stated that with the implementation of new indirect tax regime, the industry alone is expected to contribute $280 billion to India's Gross Domestic Product (GDP) in the next 8-9 years. As per the industry body, the Goods and Services Tax (GST) will enable positive structural changes in the ease of doing business, which in turn would propel the growth.

The study described GST, in the short-term, as a mini budget short of projection of estimated revenue and noted that most businesses would be able to get significantly more credits under the GST, thus proving to be beneficial for most of them. As per the study paper, GST will bring a systematic approach and enhance transparency, which will aid growth of business and would help the industry to concentrate on its core business. Industry body believes that the GST is a structural reform and is expected to accelerate the pace of GDP growth in India, despite implementation challenges in the near term. It would usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganised to organised players.

ASSOCHAM highlighted that one of the most visible benefits accruing immediately from the GST is the removal of the octroi check posts at the inter-state borders. It added that notwithstanding the teething troubles, the GST would make even the micro, small and medium enterprises (MSMEs) more efficient and confident, integrating them well into the mainstream of the economy. Eventually, the GST will make these MSMEs more competitive with a level playing field between large enterprises and them.  Among the other benefits to the industry and particularly the SMEs, they would find it easier to start the business and improvement in the market for the MSMEs.

The CNX Nifty is currently trading at 9664.55, up by 26.95 points or 0.28% after trading in a range of 9639.95 and 9668.85. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were ITC up by 1.69%, Bank of Baroda up by 1.55%, SBI up by 1.49%, Lupin up by 1.46% and Asian Paints up by 0.88%. On the flip side, Bajaj Auto down by 1.43%, ONGC down by 1.35%, NTPC down by 1.01%, GAIL India down by 0.87% and Bharti Infratel down by 0.69% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 107.82 points or 0.54% to 19,973.81, Hang Seng shed 81.62 points or 0.32% to 25,440.35, Taiwan Weighted decreased 46.16 points or 0.44% to 10,358.63, Shanghai Composite dropped 10.01 points or 0.31% to 3,197.12, KOSPI Index slipped 4.49 points or 0.19% to 2,383.86 and FTSE Bursa Malaysia KLCI was down by 2.08 points or 0.12% to 1,766.08.

On the flip side, Jakarta Composite was up by 22.49 points or 0.39% to 5,847.54.