Sensex trades in green; NSE to resume normal trading at 11:15

Indian equity benchmark continued its firm trade in late morning session, on account of buying in frontline blue chip counters. The rupee opened higher against dollar on account of renewed selling of the American currency by banks and exporters. Foreign Portfolio Investors stood net buyers in domestic equity markets on Friday and bought shares worth Rs 606.18 crore with gross purchases and gross sales of Rs 4,829.86 crore and Rs 4,223.68 crore, respectively. The trade is presently being carried out only in Bombay Stock Exchange (BSE). National Stock Exchange (NSE) will commence trading soon after it was hit by a major technical glitch early morning. The premier stock exchange will start Cash and F&O trading at 11.15 am, with pre-opening session from 11:00 to 11:07. Traders were taking support after 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. 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. In comparison, FPIs had invested about $1.2 billion (Rs 7,600 crore) in the first half of 2016. The most prominent reason for FPIs’ net inflow is the expectation from the government that it would speed up development and economic reforms in their last two years in office before going for elections in 2019.

Traders were seen piling up position in IT, TECK and Telecom stocks, while selling was witnessed in FMCG sector stocks. In scrip specific development, AU Small Finance Bank was trading on firm note after making a decent debut on BSE, as the scrip got listed at a premium to the issue price of Rs 358 apiece. The Rs 1,912 crore IPO, which was sold between June 28 and June 30, was subscribed 53.60 times. Aviation sector stocks like Jet airways, SpiceJet and InterGlobe Aviation were trading in green as the Finance Ministry exempted aircraft imported on lease from the 5 percent Goods and Service Tax (GST) levy. Under the recently introduced GST regime, aircraft imported on lease basis attracted integrated GST (iGST) of 5 percent.

On the global front, Asian shares were trading mostly in green, lifted by Wall Street’s strong performance on Friday. China’s producer price inflation was unchanged in June and remained well off highs seen earlier this year, amid lingering oversupply issues in the steel sector and as signs of economic weakness weighed on the outlook for prices. Back home, the BSE Sensex were trading above the psychological 31,500 levels. The market breadth on BSE was positive in the ratio of 1433:694, while 97 scrips remained unchanged.

The BSE Sensex is currently trading at 31568.26, up by 207.63 points or 0.66% after trading in a range of 31471.41 and 31602.50. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.36%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were IT up by 1.65%, TECK up by 1.61%, Telecom up by 1.52%, PSU up by 1.14% and Realty up by 1.10%, while FMCG down by 0.30% was the sole losing index on BSE.

The top gainers on the Sensex were TCS up by 3.14%, Tata Motors up by 2.52%, Bharti Airtel up by 1.99%, Sun Pharma up by 1.96% and Tata Motors - DVR up by 1.89%.

On the flip side, ITC down by 0.69%, Dr. Reddy’s Lab down by 0.38%, Tata Steel down by 0.27%, Hindustan Unilever down by 0.25% and Power Grid down by 0.19% were the top losers.

Meanwhile, with pickup in consumption, the ratings agency CRISIL in its latest report has said that the aggregate top-line of listed companies, excluding banking, financial services and oil, are likely to grow 7% in the first quarter of fiscal year 2017-18. But it also highlighted that difficulties in the export-linked sectors and the Goods and Services Tax (GST) introduction may cap the same, pulling down the margins by 1.2% on the pre-tax level to 20.4%. It added that there could be demand and supply disruptions in the short-term due to GST, though from a long-term perspective, the new regime will lead to efficiency gains and greater tax compliance.

In its ‘Q1 FY18 Results Outlook,’ CRISIL said that the growth in the sectors, accounting for 61% of the market capitalisation of companies listed on the National Stock Exchange, was hemmed in by factors such as a rise in input costs, an appreciating rupee and output cuts ahead of the GST regime rollout from July 1. The report mostly held responsible the introduction of Goods and Services Tax (GST) from July 1 for the poor revenue growth, saying revenue growth across sectors could have been higher but for the new tax regime, which led to a lot of companies going slow on sales.

The report added that consumption-driven sectors, including automobiles, airlines, FMCG and retail, but excluding telecom, are estimated to have grown at a healthy pace of 10-11%. Terming the likely spike in revenues as a heartening trend, CRISIL said the same sectors were affected by the note-ban and growth had fallen to 4-7% levels in the second half of the last fiscal. However, it is the export-linked sectors like information technology which is a cause of worry, as growth is expected to come down to 3% from the double-digit levels earlier.

As per the report, a rise in key commodity prices such as crude oil, steel, aluminium and cement is expected to have pared the profitability of end-user sectors such as automobiles, petrochemicals, housing and tyres by 1.30%, 2.30%, 3.30% and 4.70%, respectively. It added that for the pharma sector, the margin contraction can be much higher at 5.50% on pricing pressure and lack of exclusivity period for generic drugs, but IT companies will manage to hold on to the spreads on a rise in the share of high-margin digital services. The report observed an improvement in the outlook for earnings for FY18, as it expects rural demand to pick up on the back of favourable monsoons, farm loan waivers and higher MSP for crops. It however said that the all important revival in private investment activity is still a few quarters away.

The Asian markets were trading mostly in green; Taiwan Weighted increased 0.64 points or 0.01% to 10,297.89, KOSPI Index increased 5.32 points or 0.22% to 2,385.19, Nikkei 225 increased 129.13 points or 0.65% to 20,058.22 and Hang Seng increased 265.71 points or 1.05% to 25,606.56.

On the other hand, Jakarta Composite decreased 15.4 points or 0.26% to 5,799.39, Shanghai Composite decreased 7.09 points or 0.22% to 3,210.87 and FTSE Bursa Malaysia KLCI decreased 3.11 points or 0.18% to 1,756.82.