Benchmarks continue firm trade; Telecom, Realty lead

Indian equity benchmarks continued their firm trade in morning session, on account of buying in frontline blue chip counters backed by short covering in beaten down stocks after yesterday’s steep fall. The rupee opened lower against dollar on fresh bouts of dollar unwinding by exporters. Foreign Portfolio Investors stood net buyers in domestic equity markets on Tuesday and bought shares worth Rs 375.79 crore with gross purchases and gross sales of Rs 4,567.92 crore and Rs 4,192.13 crore, respectively. Traders were taking support with NITI Aayog Vice Chairman Arvind Panagariya’s statement that the country’s Gross Domestic Product (GDP) could touch $8 trillion over the coming 15 years by maintaining 8 percent growth annually. With the current level of growth, he noted that living standards and amenities that are taken for granted by Western countries could become available to a very large part of the Indian population in the next 15 years. Some support also came 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 organized retail sectors, but will have a negative impact on oil and gas, and SME sectors.

Meanwhile, investors took note that state governments are taking several steps such as setting up of single window system for approvals with an aim to improve ease of doing business. Department of Industrial Policy and Promotion (DIPP) Secretary said that as many as 17 states have made laws to provide single window system. Investors will be keeping an eye on companies coming out with June quarter results. Among them would be lender Canara Bank, NBFCs Bajaj Finserv and Bajaj Finance, auto component maker Amtek Auto, IT firms Mastek, Mindtree and KPIT and electrical equipment firm Havells India.

Traders were seen piling up position in Telecom, Realty and Healthcare sector stocks. In scrip specific development, Bhansali Engineering Polymers was trading in green after the company proposed a production capacity expansion programme at its ABU Road Plant at Sirohi, Rajasthan to enhance its ABS production capacity from the existing 80 KTPA to 137 KTPA by 31 December, 2018 with the estimated capex of Rs 300 crore, which will be funded through internal accruals only. On the other hand, Sasken Technologies was trading in red after the company reported a 60 percent fall in Q1 net profit on a flat revenue. EBITDA fell 9.8 percent for the quarter.

On the global front, Asian shares were trading mostly in green, with China turning around after a few days of losses and other markets resuming their upwards trends. Japanese manufacturers and service providers’ business confidence held steady at high levels in July, a poll found, underlining the central bank’s upbeat view on the economy. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,800 and 9,850 levels respectively. The market breadth on BSE was positive in the ratio of 1509:640, while 115 scrips remained unchanged.

The BSE Sensex is currently trading at 31871.15, up by 160.16 points or 0.51% after trading in a range of 31793.72 and 31885.17. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.71%, while Small cap index was up by 0.88%.

The top gaining sectoral indices on the BSE were Telecom up by 1.58%, Realty up by 1.57%, Healthcare up by 1.54%, Metal up by 1.38% and Utilities up by 1.10%, while there were no losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.13%, Dr. Reddy’s Lab up by 1.63%, NTPC up by 1.59%, ITC up by 1.42% and Sun Pharma up by 1.38%.

On the flip side, Bajaj Auto down by 0.69%, Hero MotoCorp down by 0.66%, Infosys down by 0.63%, ONGC down by 0.37% and Adani Ports & Special Economic Zone down by 0.13% were the top losers.

Meanwhile, global ratings agency Fitch Ratings in its latest report on impact of Goods and Services Tax (GST) on different sectors, has said that the new indirect tax regime 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. It further said that the impact would be broadly neutral for property, electricity, telecom, pharmaceutical and fertiliser sectors.

Fitch though said that GST is unlikely to lead to rating changes for any of its internationally rated corporates despite being negative for certain sectors, and added that implementation risks will remain over the next 12 months due to the complexities of adopting the new system amid a culture of poor compliance, particularly among the traditional retail and SME sectors.

The rating agency pointed that under the Indian GST regime, a corporate will only be able to apply GST input tax credits after its supplier of goods or services has first settled its GST payment with the government. This means that the burden of non-compliance by the supplier will rest with the purchaser and not the government, it further added that GST tax truancy by financially weak and non-compliant companies lower down the supply chain could limit the amount of input tax credits available for the larger and financially strong corporate.

The CNX Nifty is currently trading at 9875.40, up by 48.25 points or 0.49% after trading in a range of 9851.65 and 9876.45. There were 38 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 5.37%, Hindalco up by 2.39%, Zee Entertainment up by 2.39%, Bharti Airtel up by 2.11% and Eicher Motors up by 1.53%.

On the flip side, Ultratech Cement down by 1.98%, ACC down by 1.75%, Ambuja Cement down by 0.81%, Bajaj Auto down by 0.80% and Infosys down by 0.65% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 2.74 points or 0.16% to 1,757.66, Taiwan Weighted increased 19.95 points or 0.19% to 10,501.21, Shanghai Composite increased 28.43 points or 0.89% to 3,216.00 and Hang Seng increased 128.78 points or 0.49% to 26,653.72.

On the other hand, Jakarta Composite decreased 15.93 points or 0.27% to 5,806.43, Nikkei 225 decreased 1.25 points or 0.01% to 19,998.66 and KOSPI Index decreased 0.46 points or 0.02% to 2,425.58.