Benchmarks make optimistic start; Nifty reclaims 9,850 mark

Indian equity benchmarks have made a gap-up opening and are trading in fine fettle in early deals, with frontline gauges recapturing their crucial 9,850 (Nifty) and 31,800 (Sensex) levels. Sentiments remained upbeat with NITI Aayog Vice Chairman Arvind Panagariya’s statement that India’s GDP could rise to about $8 trillion over the next 15 years if the country registers an economic growth of 8 per cent annually and come very close to eliminating abject poverty entirely. Traders also took some encouragement with rating agency Fitch’s latest report stating that new indirect tax regime Goods and Services Tax (GST) is likely to be beneficial for auto, cement and organised retail sectors, but will have a negative impact on oil and gas, and SME sectors.

Firm trade in Asian counters too aided sentiments with most of the regional counters trading in green at this point of time, as the dollar nursed losses after it hit 10-month lows overnight on dimmed prospects for U.S. health care reforms. The US markets made another mixed closing in the last session.

Back home, pharma stocks remained on buyers’ radar on report that the government is looking at introducing a new National Pharmaceuticals Policy and is already in the process of working out details. The oil & gas stocks too remained in action, as the government is likely to consider the sale of government's 51.11 per cent stake in Hindustan Petroleum Corp (HPCL) to Oil and Natural Gas Corporation (ONGC) for over Rs 28,000 crore.

The BSE Sensex is currently trading at 31846.34, up by 135.35 points or 0.43% after trading in a range of 31793.72 and 31885.17. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.56%, while Small cap index was up by 0.80%.

The top gaining sectoral indices on the BSE were Realty up by 1.46%, Healthcare up by 1.42%, Telecom up by 1.21%, FMCG up by 0.91% and Metal was up by 0.79%, while IT down by 0.02% was the lone losing index on the BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 1.45%, Cipla up by 1.44%, Bharti Airtel up by 1.40%, Lupin up by 1.31% and Sun Pharma up by 1.26%. On the flip side, Infosys down by 1.11%, Hero MotoCorp down by 0.60%, Bajaj Auto down by 0.46%, ONGC down by 0.28% and Adani Ports &Special down by 0.13% were the top losers.

Meanwhile, ruling out demand of textile traders to exempt fabrics under the new indirect tax regime, the government has said that a zero percent GST on fabrics will make imported items cheaper and disrupt the existing input tax credit chain for the domestic industry. Finance Minister Arun Jaitley clarified that the textiles sector had been taxed in the past, as well. In fact, in 2003-04, the entire textiles sector was subjected to central excise duty. He added that the GST rates are equal or lower than the pre-GST tax incidence and therefore, the price of fabrics is not likely to go up.

Jaitley said the GST rate structure for the textiles sector enables ease of classification and determination of rate. The main demand of the textile trader is not to put any tax on fabrics, Jaitley said as he shot down the demand by saying that ‘nil GST on fabrics will break the input tax credit chain and then the garments/made ups manufacturers will not be able to get the credit of tax on previous stages’. He also said that nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of input taxes.

Under the Goods and Services Tax (GST) regime, yarn and fibres made from silk, wool, cotton or other vegetable fibres attract 5 percent tax, while garments and made up clothings costing less than Rs 1,000 attract either 5 percent and those exceeding Rs 1,000 attract 12 percent levy. Besides, yarns made of man-made fibre or filament attracts 18 percent GST, while the same is 5 percent for fabrics.

The CNX Nifty is currently trading at 9866.35, up by 39.20 points or 0.40% after trading in a range of 9851.65 and 9875.60. There were 36 stocks advancing against 13 stocks declining, while two stocks remain unchanged on the index.

The top gainers on Nifty were Aurobindo Pharma up by 5.56%, Zee Entertainment up by 2.42%, Hindalco up by 1.95%, HCL Tech. up by 1.56% and Cipla up by 1.45%. On the flip side, Ultratech Cement down by 1.45%, Infosys down by 1.16%, Bajaj Auto down by 0.76%, ACC down by 0.69% and Hero MotoCorp down by 0.34% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 1.26 points or 0.07% to 1,756.18, Nikkei 225 advanced 12.36 points or 0.06% to 20,012.27, Shanghai Composite increased 25.52 points or 0.8% to 3,213.09, Taiwan Weighted added 38.41 points or 0.37% to 10,519.67 and Hang Seng was up by 127.16 points or 0.48% to 26,652.10.

On the flip side, Jakarta Composite decreased 13.43 points or 0.23% to 5,808.92 and KOSPI Index was down by 4.01 points or 0.17% to 2,422.03.