Benchmarks hit new record high at open; NSE shuts down trading

Indian equity benchmarks have opened higher, with both Sensex and Nifty hitting their all-time high at open tracking positive cues from Asian stocks. Presently, Sensex off its day’s high but still trading in fine fettle with a gain of over half a percent, however trade at National Stock Exchange (NSE) shut due to a technical glitch, with the exchange having to halt trade in its futures and options segment as well. Sentiments remained up-beat with reports that foreign investors have pumped in nearly $ 23 billion into the Indian capital markets in January-June 2017 on several factors, including expectations of accelerated pace of reforms. Traders also took some encouragement after Prime Minister Narendra Modi, noting that the GST (Goods and Services Tax), which was implemented last week, was the biggest tax reform in the last 70 years has said it would help businesses and create a unified market of 1.3 billion people. Modi also underlined support for free and open trade regime of World Trade Organization (WTO).

On the global front, Asian markets were trading mostly in green at this point of time led by the Japanese market which is up by around a percent in early deals as the yen fell. The Chinese shares were lower even though producer prices showed robust demand in Asia’s largest economy. The US markets came out of the sluggish mood in the last session and posted good gains on getting an upbeat job data.

Back home, stocks related to aviation sector flying higher as the Finance Ministry has exempted aircraft imported on lease from the 5 per cent Goods and Service Tax (GST) levy. Under the recently introduced GST regime, aircraft imported on lease basis attracted integrated GST (iGST) of 5 per cent. The market breadth indicating the overall health of the market was strong, with 1,275 shares gaining and 559 shares declining, while a total of 79 shares were unchanged.

The BSE Sensex is currently trading at 31531.20, up by 170.57 points or 0.54% after trading in a range of 31471.41 and 31602.50. There were 25 stocks advancing against 5 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index gained 0.36%, while Small cap index was up by 0.60%.

The top gaining sectoral indices on the BSE were Telecom up by 2.22%, TECK up by 1.65%, IT up by 1.59%, Realty up by 1.27% and PSU up by 1.03%, while Consumer Durables down by 0.21% and FMCG down by 0.10% were the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.26%, TCS up by 2.98%, Wipro up by 2.67%, Sun Pharma up by 2.31% and Lupin up by 2.26%. On the flip side, ITC down by 0.55%, Hindustan Unilever down by 0.35%, HDFC down by 0.15%, Asian Paints down by 0.11% and Tata Steel down by 0.09% were the top losers.

Meanwhile, the Associated Chambers of Commerce and Industry of India (Assocham), citing its report on the unified pan-India indirect tax regime has said that the Goods and Services Tax (GST) will boost the competitiveness of micro, small and medium enterprises (MSMEs). The industry body in the report has said that the GST is set to impart better competitiveness to micro, small and medium enterprises and provide them a level-playing field with large firms owing to factors like an easier process of availing input credit and simpler tax regime.

The Assocham and Ashvin Parekh Advisory Services (APAS) joint study titled 'Emerging Mantras for Bankers-Borrowers', said that from an MSME perspective, GST will bring many positives compared to the current systems such as easy process of availing input credit, single point tax, elimination of cascading tax system, and simpler taxation. It said that the GST regime will usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganized to organised players and added that with it Indian MSMEs would be able to compete with foreign competition coming from cheap cost centers such as China, Philippines, and Bangladesh.

Assocham though also said that the GST designed to increase the taxpayer base and bring more MSMEs into its scope, would put some burden of compliance and associated costs to them. The study also listed the negative implications of the GST for MSMEs as being the lower threshold, no tax differentiation for luxury items and services, increase in product cost, selective tax levying, and higher tax rate for service provider. Among other negatives it listed excess working capital requirement, realignment of purchase and supply chain, dual control, high compliance burden and tax on advances, tax under reverse charge for un-registered purchases, tax on stock transfers and deemed supplies etc.

Asian markets were trading mostly in green; Taiwan Weighted gained 4 points or 0.04% to 10,301.25, KOSPI Index rose 6.79 points or 0.29% to 2,386.66, Nikkei 225 increased 164.49 points or 0.83% to 20,093.58 and Hang Seng was up by 267.31 points or 1.05% to 25,608.16.

On the flip side, Jakarta Composite decreased 34.78 points or 0.59% to 5,814.79, Shanghai Composite shed 6.65 points or 0.21% to 3,211.31 and FTSE Bursa Malaysia KLCI was down by 3.02 points or 0.17% to 1,756.91.