Benchmarks continue to trade on weak note

Indian equity benchmarks continued their weak trade in morning session, on account of selling in frontline blue chip counters. The Nifty was struggling below 9900 mark, due to correction in heavyweights like Reliance Industries and ITC. The rupee opened higher against dollar on fresh bouts of dollar unwinding by exporters. Foreign portfolio investors stood net buyers in domestic equity markets on Monday and bought shares worth Rs 535.54 crore with gross purchases and gross sales of Rs 4307.53 crore and Rs 3771.99 crore, respectively. Traders remained on sidelines after the industry body, Associated Chambers of Commerce & Industry of India (ASSOCHAM) in its latest report stated that the inflation outlook is expected to remain quite muted at least till festival season of Durga Puja and Diwali. Investors shrugged off a private report that Indian CEOs are confident about the growth prospects of the country over the next three years, compared to that of global economy.  The report highlighted that more than half of the respondents believe their organization will be completely transformed in the next three years.

Traders were seen piling up position in IT, TECK and Healthcare stocks, while selling was witnessed in FMCG, Energy and Oil & Gas sector stocks. There was some buzz in Pharma stocks after CARE Ratings report highlighted that despite pricing pressure and stiff competition, the Indian Pharma exports to the USA may go up in 2017-18 as $50 billion worth of drugs are expected to become off-patented during the current year giving hope to boost export market. Cigarette stocks like ITC, VST Industries, Golden Tobacco, NTC Industries and Godfrey Phillips India were trading under pressure after the GST Council revised the cess rates on cigarettes upwards to address an anomaly under the new regime that had resulted in lower tax incidence than before under GST regime. In scrip specific development, Coal India was trading under pressure after the government decided to defer stake sale in the company this year after the share price fell sharply, close to a 52-week low, making it impossible to fetch the sum it hoped for. The government planned to sell up to a 10% stake in the company by August to raise Rs 20,000 crore.

On the global front, Asian shares were trading mostly in red, with market across the region down on profit taking following a recent rally. China’s markets continued to drop on Tuesday despite the strong data reported a day earlier. China’s economy expanded faster-than-expected in the second quarter, setting the country on course to comfortably meet its 2017 growth target and giving policymakers room to tackle big economic challenges ahead of key leadership changes later this year.  Back home, the BSE Sensex and NSE Nifty were trading below the psychological 31,900 and 9,900 levels respectively. The market breadth on BSE was positive in the ratio of 1100:1063, while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 31873.34, down by 201.44 points or 0.63% after trading in a range of 31626.44 and 31911.61. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.17%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were IT up by 0.91%, TECK up by 0.88%, Healthcare up by 0.83%, Telecom up by 0.69% and Auto up by 0.59%, while FMCG down by 5.24%, Energy down by 0.84%, Oil & Gas down by 0.43%, Consumer Durables down by 0.42% and Metal down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.65%, Sun Pharma up by 1.55%, Bharti Airtel up by 1.51%, Dr. Reddy’s Lab up by 1.29% and Infosys up by 1.17%.

On the flip side, ITC down by 11.04%, Reliance Industries down by 1.68% and Coal India down by 0.24% were the top losers.

Meanwhile, on concern raised by the telecom operators on higher GST rates, the Telecom Minister Manoj Sinha has said that Communications Ministry will “analyse” the impact of Goods and Services Tax (GST) on telecom subscribers, and approach the Finance Ministry in case consumers or players face “genuine problems”.

Sinha said that “If there are genuine problems then definitely I will consult the finance minister....We will analyse what people were paying earlier, the impact of GST, and whether input credit is being passed on to consumers.” Though, he also added that as of now there are no plans to approach the GST Council or finance ministry in this regard.

The GST rate for telecom services is 18 per cent, higher than 15 per cent that consumers paid on their phone bills in taxes and cess, before GST regime. However, under GST, the telecom operators will also get the benefit of input tax credit, bringing the overall effective rates lower for consumers. The minister noted that the impact of input credit will bring taxation levels lower, and hence the effective rate will be closer to 16 per cent, though he also accepted that there may be an operational difficulty for players to claim input tax credit since they operate across geographies.

The CNX Nifty is currently trading at 9872.55, down by 43.40 points or 0.44% after trading in a range of 9792.05 and 9885.35. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were ACC up by 1.95%, Ultratech Cement up by 1.88%, Sun Pharma up by 1.62%, Bharti Airtel up by 1.55% and Cipla up by 1.53%.

On the flip side, ITC down by 10.92%, GAIL India down by 1.89%, Reliance Industries down by 1.71%, Aurobindo Pharma down by 0.92% and Hindalco down by 0.62% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 129.48 points or 0.64% to 19,989.38, Hang Seng decreased 40.6 points or 0.15% to 26,429.98, Jakarta Composite decreased 28.01 points or 0.48% to 5,813.27, Shanghai Composite decreased 19.09 points or 0.6% to 3,157.38, KOSPI Index decreased 2.57 points or 0.11% to 2,422.53 and FTSE Bursa Malaysia KLCI decreased 0.8 points or 0.05% to 1,754.39.

On the other hand, Taiwan Weighted increased 0.51 points or 0% to 10,458.05.