Benchmarks continue to trade in green

Indian equity benchmarks continued their trade in green in the morning session on account of buying in frontline blue chip counters amid a firming trend in Asian markets. The rupee opened higher against dollar on account of selling of American currency from bankers and exporters. Foreign Portfolio Investors sold shares worth Rs 1,849 crore on Monday with gross purchases and gross sales of Rs 5035.17 crore and Rs 6884.58 crore, respectively. Traders were taking support with report that Foreign Direct Investment (FDI) into the country grew by 37% to $10.4 billion during the first quarter of the current fiscal. According to DIPP, India had received $7.59 billion FDI during April-June 2016-17. The main sectors which attracted the highest foreign inflows include services, telecom, trading, computer hardware and software and automobile. Bulk of the FDI came in from Singapore, Mauritius, the Netherlands and Japan. Some support also came with report that as much as Rs 42,000 crore has already come in as taxes so far in the first monthly filing under the new Goods and Services Tax (GST) regime and the revenues are expected to swell further as the filing cycle closes later this week. So far, 10 lakh tax payers have filed returns and another 20 lakh have logged in and saved return forms.

Investors took note of foreign brokerage firm report that retail inflation is likely to stay well within the RBI’s 2-6% mandate in the coming months and accordingly, the central bank is expected to cut policy rates by 25 bps on December 6. The report enlightened that inflationary pressures are expected to remain contained by good rains, low growth and subdued imported inflation amid decrease in global commodity prices. Meanwhile, the Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley, will meet today to take stock of the prevailing economic situation. Fiscal situation, external sector environment, financial sector reforms, rising non-performing assets and regulatory issues are likely to figure in the meeting.

Traders were seen piling up position in Oil & gas, Energy and PSU stocks, while selling was witnessed in Realty, Power and Consumer Disc sector stocks. In scrip specific development, Dr. Reddy’s Laboratories was trading in green after the pharma major through its wholly owned subsidiary Promius Pharma, LLC, has out-licensed the future development, manufacturing, and commercialization rights of DFD-06, a topical high potency steroid, to Encore Dermatology Inc. The drug is intended to be used for treatment of moderate to severe plaque psoriasis.

On the global front, Asian markets were trading mostly in green, with geopolitical concerns in the background. Malaysia’s consumer price index likely rose 3.3 percent in July from a year earlier, a poll showed, slowing in pace for the fourth month in a row. Malaysia’s central bank has set a 2017 inflation target of 3-4 percent. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,300 and 9,750 levels respectively. The market breadth on BSE was negative in the ratio of 721:1361, while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 31307.00, up by 48.15 points or 0.15% after trading in a range of 31241.50 and 31484.28. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.28%, while Small cap index was down by 0.52%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.19%, Energy up by 0.86%, PSU up by 0.23%, Healthcare up by 0.21% and FMCG up by 0.19%, while Realty down by 0.98%, Power down by 0.44%, Consumer Disc down by 0.40%, Basic Materials down by 0.32% and Auto down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 1.81%, Tata Motors - DVR up by 1.32%, Sun Pharma up by 1.26%, Axis Bank up by 1.25% and Dr. Reddy’s Lab up by 1.13%.

On the flip side, Power Grid down by 0.84%, Tata Steel down by 0.82%, SBI down by 0.62%, Asian Paints down by 0.61% and Hero MotoCorp down by 0.54% were the top losers.

Meanwhile, the government has clarified that upstream oil and gas companies can avail an input tax credit (ITC) on Goods and Services Tax paid only on the value added products that are manufactured and covered under GST. The clarification came in the wake of a query, whether ONGC would be eligible to avail credit of five per cent GST paid on specified goods procured by it for petroleum operations.

The Ministry of Petroleum and Natural Gas said, '…In few cases in Gujarat and Mumbai where some value added products (VAP) are being manufactured which are covered under GST, credit on common inputs would be available on proportionate basis. In few cases, the credit would be available on invoice level for inputs which are meant for exclusive use for supply of value added products.' The government also said that ITC will not be available for GST paid on procurement of goods and services in exploration and production operations that are used for production of crude oil and natural gas.

The government however maintained that the main output of ONGC, that is crude oil and natural gas, are outside levy of GST and output would be subject to levy of existing taxes, central excise (oil cess), VAT/CST etc. Accordingly, since GST is not payable on output, the credit of input would not be available.

The CNX Nifty is currently trading at 9772.25, up by 17.90 points or 0.18% after trading in a range of 9752.60 and 9828.45. There were 32 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Indian Oil up by 2.54%, Lupin up by 1.69%, Tech Mahindra up by 1.66%, Bharti Infratel up by 1.44% and Hindalco up by 1.40%.

On the flip side, Indiabulls Housing down by 2.01%, Bank of Baroda down by 1.41%, Yes Bank down by 1.14%, Hero MotoCorp down by 1.01% and Tata Steel down by 0.80% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 2.54 points or 0.14% to 1,774.16, Shanghai Composite increased 5.49 points or 0.17% to 3,292.39, Jakarta Composite increased 8.81 points or 0.15% to 5,869.81, KOSPI Index increased 9.18 points or 0.39% to 2,364.18, Taiwan Weighted increased 61.65 points or 0.6% to 10,388.04 and Hang Seng increased 284.43 points or 1.05% to 27,439.11.

On the other hand, Nikkei 225 decreased 8.49 points or 0.04% to 19,384.64.