Benchmarks turn flat in early deals

Indian equity benchmarks have erased initial gains to turn flat in early deals on Monday, as traders opted to remain on sidelines ahead of slew of corporate earnings including Tata Steel and Britannia. Traders were getting some support with the government’s statement that rollout of GST by and large has been smooth and it has deployed a large number of senior officials to regularly review the working of the new indirect tax regime. Traders also took some encouragement with the appointment of noted economist Rajiv Kumar as the new vice-chairman of the government think-tank Niti Aayog.

Firm opening in Asian counters too aided sentiments with most of the regional peers trading in green at this point of time, led by the Japanese market on strong US hiring data which bolstered optimism about economic growth in the world’s largest economy, though the Chinese market was marginally in red.

Back home, stocks related to gold and jewellery sector remained buzzing, as the Finance Ministry has turned down the Commerce Ministry’s pitch for a reduction in import duty on gold, citing improved data in respect of the current account deficit (CAD). The market breadth indicating the overall health of the market was strong, with 1,196 shares gaining and 683 shares declining, while a total of 93 shares were unchanged.

The BSE Sensex is currently trading at 32325.71, up by 0.30 points after trading in a range of 32295.78 and 32386.52. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.69%, while Small cap index was up by 0.70%.

The top gaining sectoral indices on the BSE were Metal up by 1.17%, Realty up by 0.96%, Auto up by 0.71%, Basic Materials up by 0.66% and Consumer Discretionary Goods & Services was up by 0.58%, while IT down by 0.78%, TECK down by 0.68%, Telecom down by 0.08% and Power was down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.88%, ICICI Bank up by 1.59%, Hero MotoCorp up by 1.22%, Adani Ports up by 0.96% and Sun Pharma up by 0.77%. On the flip side, NTPC down by 1.58%, Hindustan Unilever down by 1.33%, TCS down by 1.24%, Infosys down by 0.95% and Asian Paints down by 0.93% were the top losers.

Meanwhile, the GST Council will soon start publishing rates of various products to prod companies to pass on gains, including those from input tax credit. The Council in its latest meeting rationalised rates of 19 services including textile jobs and government work contracts, cut taxes on certain tractor parts to 18 percent from 28 percent, and approved e-way bill rules that will remove checkposts at state borders, it will likely be publishing rates of various products, as states such as Kerala, West Bengal and Bihar led the charge to lay down the process and pressurise companies to reduce prices as several ministers argued that prices have not come down after GST.

However, there were some dissent too and some ministers wanted to let companies decide on pricing, at least in the short term, arguing that it will be against the spirit of empowering businesses and making life simpler. Finance Minister Arun Jaitley too said that the benefit of input tax credit (ITC) should go to customers. 'Hope we don’t get to a situation where we have to immediately approve the authority'.

While the mechanism has been put in place, the Centre and states are yet to issue detailed guidelines on how prices would be monitored at the entity or product category level. Meanwhile, states will likely set up the screening committees for anti-profiteering within the next 15 days. Such a framework will ensure that companies don't arbitrarily raise prices of goods just before or after the implementation of GST from July 1. Under the rules, a National Anti-profiteering Authority can be set up that will be empowered to probe cases suspected to have not cut prices despite lower taxes.

The CNX Nifty is currently trading at 10065.45, down by 0.95 points or 0.01% after trading in a range of 10057.70 and 10088.10. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.80%, ICICI Bank up by 1.64%, Hero MotoCorp up by 1.35%, Bank of Baroda up by 1.04% and GAIL India up by 1.02%. On the flip side, NTPC down by 1.66%, TCS down by 1.60%, Hindustan Unilever down by 1.35%, Asian Paints down by 0.98% and Infosys down by 0.89% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.19 points or 0.01% to 1,774.72, KOSPI Index gained 9.71 points or 0.41% to 2,405.16, Jakarta Composite jumped 29.12 points or 0.5% to 5,806.60, Taiwan Weighted increased 68.88 points or 0.66% to 10,575.44, Hang Seng added 103.47 points or 0.38% to 27,666.15 and Nikkei 225 was up by 118.74 points or 0.6% to 20,071.07.

On the flip side, Shanghai Composite was down by 5.4 points or 0.17% to 3,256.68.