Benchmarks gyrate around neutral line

Indian equity benchmarks erased their gains and started gyrating around neutral line in the morning session. The rupee opened higher against dollar on account of buying in American currency by banks and importers. Foreign portfolio investors stood net sellers in domestic equity markets on July 31 and sold shares worth Rs 11.45 crore with gross purchases and gross sales of Rs 5,204.81 crore and Rs 5,216.26 crore, respectively. Some cautiousness crept in after the Nikkei India Manufacturing Purchasing Managers’ Index, or PMI, dropped to a near eight-and-a-half year low of 47.9 in July from 50.9 in June. The sector has been adversely affected by the implementation of the goods and services tax. Separately, India’s infrastructure sector growth slowed to a 19-month low in June, strengthening the case for an interest rate cut to support the economy as inflation fell to record lows. Reduced output of cement, electricity and coal slowed the pace of expansion of the country’s eight infrastructure sectors in June to 0.4%. Separately, monsoon rainfall was slightly above normal in July after being 4% in excess in the previous month. It is likely to remain positive although it’s expected to be in a lean phase for about 10 days.

However, traders were taking some encouragement with report that the collection of Integrated Goods and Services Tax from imports crossed Rs 20,000 crore in July - the first month of the roll out of the new indirect tax regime, pointing towards a major jump in revenues. Total customs revenues in July 2017 stood at Rs 26,500 crore as against Rs 16,625 crore collected in July 2016. Adding to the optimism, global rating agency Moody’s has reported that India's GDP growth will remain in the range of 6.5-7.5 percent over the next 12-18 months and GST will support the momentum for faster growth.

Traders were seen piling up position in Auto, Metal and Consumer Discretionary stocks, while selling was witnessed in Capital Goods, Realty and Power sector stocks. The auto stocks were buzzing as all eyes would be set on how well automakers boosted sales post GST implementation. Tyre stocks will be in limelight as in a massive relief for domestic tyre manufacturers the government may soon levy an anti dumping duty on radial tyres. In scrip specific development, Om Metals Infraprojects was trading in green after the arbitral tribunal awarded an arbitration award for a sum of Rs 44.5 crore in favour of the company for outstanding claims arising out of the EPC contract for H M work towards project delay. The claim of award shall carry interest at 9.25 percent per annum from the award date till the actual date of realization.

On the global front, Asian markets were trading mostly in green, as investors prepared to assess a fresh round of corporate earnings reports and data releases on the global economy, starting with an upbeat Chinese factory numbers. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 32,500 and 10,050 levels respectively. The market breadth on BSE was positive in the ratio of 1082:1077, while 132 scrips remained unchanged.

The BSE Sensex is currently trading at 32500.62, down by 14.32 points or 0.04% after trading in a range of 32498.47 and 32615.45. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.42%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Auto up by 1.15%, Metal up by 0.84%, Consumer Disc up by 0.63%, Healthcare up by 0.62% and Basic Materials up by 0.55%, while Capital Goods down by 0.86%, Realty down by 0.38%, Power down by 0.26%, Consumer Durables down by 0.22% and FMCG down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 2.37%, Maruti Suzuki up by 2.25%, Wipro up by 2.01%, Hindustan Unilever up by 1.62% and Mahindra & Mahindra up by 1.46%.

On the flip side, HDFC down by 1.46%, Larsen & Toubro down by 1.35%, ONGC down by 1.30%, Asian Paints down by 1.08% and Infosys down by 0.69% were the top losers.

Meanwhile, amid the apprehensions that revenues may take a hit because of sluggish sales across the country in the first month of GST, there is a good news for the government, the collection of Integrated Goods and Services Tax (IGST) from imports crossed Rs 20,000 crore in July - the first month of the roll out of the new indirect tax regime, pointing towards a major jump in revenues. Total customs revenues in July 2017 stood at Rs 26,500 crore as against Rs 16,625 crore collected in July 2016.

IGST collections have also received a boost from the fact that there is a component of state GST as well in the tax. The rise in customs revenues on imports should take care of any decline in GST collections because of any production-related disruption after the rollout of the new regime. IGST collections are first revenue trends on the new tax as also indication of the largely smooth rollout.

Collection of IGST on imports started at midnight on rollout day as the levy became payable soon after goods entered the country unless specifically exempted. IGST on imports has replaced countervailing duty (CVD), levied in lieu of excise duty, and special additional duty (SAD).  IGST is the sum of central GST and state GST levied on a local product and is in addition to the basic customs duty.

Overall GST trends would be available only in August when the final tax collection numbers for July are collated. Central Board of Excise and Customs would carry out a detailed analysis of the initial trends when the final numbers become available.

The CNX Nifty is currently trading at 10078.35, up by 1.25 points or 0.01% after trading in a range of 10077.45 and 10101.90. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 4.20%, Hindalco up by 2.69%, Dr. Reddy’s Lab up by 2.64%, Wipro up by 2.24% and BPCL up by 2.11%.

On the flip side, HDFC down by 1.56%, Larsen & Toubro down by 1.50%, Asian Paints down by 1.39%, HCL Tech. down by 1.36% and ONGC down by 1.33% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 8.15 points or 0.46% to 1,768.18, Shanghai Composite increased 15.04 points or 0.46% to 3,288.07, KOSPI Index increased 22.88 points or 0.95% to 2,425.59, Taiwan Weighted increased 29.68 points or 0.28% to 10,457.01, Nikkei 225 increased 57.62 points or 0.29% to 19,982.80 and Hang Seng increased 215.26 points or 0.79% to 27,539.25.

On the other hand, Jakarta Composite decreased 12.09 points or 0.21% to 5,828.85.