Bulls back on the Street; Bank Nifty sees sharp recovery

Indian equity indices staged a smart rally in late afternoon session and were trading near their intraday highs, following higher opening in European markets. Traders remained optimistic as India’s merchandise exports grew by 3.94% to $22543.80 million in July 2017, on the back of higher shipments of petroleum products, engineering goods and iron ore. Besides, the country’s trade deficit narrowed to $11.45 billion in July from a month ago, following a slowdown in merchandise imports. Some support also came with the report that Markets regulator SEBI notified relaxed norms for stake purchase in distressed listed companies by lenders, exempting them from making open offers for shareholders. The relaxation will be subject to certain conditions, including shareholders’ approval of the stake acquisition by way of special resolution.

On the global front, European markets were trading in green, as geopolitical tensions regarding the Korean peninsula eased and investors tracked a muted performance overnight on Wall Street. Asian markets were trading in green. Back home, in scrip specific development, Vikas WSP touched the roof after the company received a trial export order for $10,36,800.00 of newly developed Guar Gum binder for enhancing water stability of aquatic feeds to prevent fast disintegration of feed pallets.

The BSE Sensex is currently trading at 31724.72, up by 275.69 points or 0.88% after trading in a range of 31399.35 and 31733.23. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.07%, while Small cap index was up by 1.17%.

The top gaining sectoral indices on the BSE were FMCG up by 2.43%, Auto up by 1.59%, Metal up by 1.30%, Basic Materials up by 1.01% and Industrials up by 1.00%, while there were no losing indices on the BSE.

The top gainers on the Sensex were Tata Motors up by 3.55%, ITC up by 3.19%, Hindustan Unilever up by 2.57%, Kotak Mahindra Bank up by 2.09% and Hero MotoCorp up by 2.00%. On the flip side, Asian Paints down by 1.03%, Coal India down by 0.96%, Bharti Airtel down by 0.85%, Power Grid Corporation down by 0.72% and NTPC down by 0.67% were the top losers.

Meanwhile, raising worries over imposition of 28% Goods and Services Tax (GST) rate on the leasing industry, Finance Industry Development Council (FIDC) has said that this rate is high for the Rs 5,500 crore capital goods leasing sector as compared to the earlier 5% to 15% tax rate and may slow the overall growth rate of the industry.

FIDC director general Mahesh Thakkar, while noting the impacts of higher GST rate, said that it leads to higher working capital requirement at any point of time along with increment in the cost of leasing equipment. In view of this, Thakkar suggested that the government should actively consider not bracketing the capital goods in the same GST bracket as luxury goods and sin goods.

Thakkar further pointed that in gross domestic capital formation, the leasing industry’s contribution is less than 2%, while on the global average; it is 10% and said that a lower GST rate will help increasing share of leasing in gross capital formation.

The CNX Nifty is currently trading at 9872.60, up by 78.45 points or 0.80% after trading in a range of 9773.85 and 9877.95. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 4.34%, Tata Motors up by 3.80%, Tata Power up by 3.52%, ITC up by 3.17% and Indiabulls Housing Finance up by 2.71%. On the flip side, Yes Bank down by 1.33%, Asian Paints down by 1.17%, Infosys down by 0.99%, Ultratech Cement down by 0.90% and Coal India down by 0.86% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.59 points or 0.09% to 1,773.98, KOSPI Index increased 14.04 points or 0.6% to 2,348.26, Jakarta Composite increased 36.71 points or 0.63% to 5,871.75 and Hang Seng increased 234.11 points or 0.86% to 27,409.07. On the flip side, Nikkei 225 decreased 24.03 points or 0.12% to 19,729.28, Taiwan Weighted decreased 20.77 points or 0.2% to 10,290.39 and Shanghai Composite decreased 4.81 points or 0.15% to 3,246.45.

European markets were trading in green; UK’s FTSE 100 increased 45.66 points or 0.62% to 7,429.51, France’s CAC increased 50.73 points or 0.99% to 5,190.98 and Germany’s DAX increased 99.02 points or 0.81% to 12,276.06.