Benchmarks make firm start; Nifty reclaims 9,800 mark

Buoyed by firm global cues, Indian equity benchmarks have made a gap-up opening and are trading in fine fettle in early deals on Wednesday, with frontline gauges recapturing their crucial 9,800 (Nifty) and 31,400 (Sensex) levels. Sentiments remained up-beat with a blog on Asian Development Bank’s website, stating that the goods and services tax in India will benefit the lower and lower-middle income class as it is likely to reduce the tax rate on goods. It further stated that in general, Goods and Services Tax (GST) is likely to reduce the tax rate on goods as compared to previously, while tax rates on services are expected to increase. Traders also took some encouragement with the Financial Stability & Development Council’s (FSDC) statement that India has macro-economic stability today on the back of improvement in its macro-economic fundamentals and structural reforms with the launch of the GST.

Global cues remained strong with most of the regional peers making positive start, tracking overnight gains on Wall Street, as political tensions took a back seat to optimism about U.S. tax reform and global central bankers' commitment to loose monetary policy. The US markets surged in the last session, with tech-heavy Nasdaq rebounding strongly.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. On the sectoral front, telecom stocks remained buzzing, as the Inter-Ministerial Group (IMG) on telecom industry has hinted on extending the timeline for deferred spectrum payment by telcos to 16 years instead of 10 at present. Meanwhile, the market breadth remained in favor of advances, as there were 1,297 shares on the gaining side against 512 shares on the losing side while 74 shares remain unchanged.

The BSE Sensex is currently trading at 31452.14, up by 160.29 points or 0.51% after trading in a range of 31379.25 and 31460.38. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.53%, while Small cap index was up by 0.80%.

The top gaining sectoral indices on the BSE were Realty up by 1.83%, Telecom up by 0.95%, PSU up by 0.89%, Bankex up by 0.73% and Utilities was up by 0.72%, while Consumer Durables down by 1.00% was lone loser on the BSE sectoral front.

The top gainers on the Sensex were Adani Ports up by 2.14%, Bharti Airtel up by 1.65%, Dr. Reddy’s Lab up by 1.62%, Tata Motors up by 1.29% and NTPC up by 1.10%. On the flip side, Hindustan Unilever down by 1.05%, Asian Paints down by 0.36%, Sun Pharma down by 0.16% and Tata Steel down by 0.05% were the top losers.

Meanwhile, with disruption in production schedules and discounts offered ahead of the implementation of the goods and services tax (GST) regime, rating agency ICRA in its latest report has estimated that India’s gross value added (GVA) growth likely to slow down to 6.3% in April-June quarter (Q1) of fiscal year 2017-18 from 7.6% in the same period of pervious year, however it also added that it is improving in sequential quarters, relative to the initial estimate of 5.6% for the Q4 FY17. It noted that there is also the impact of appreciation of the rupee relative to the dollar on export earnings.

As per the report, the growth of the GVA at basic prices, excluding agriculture, forestry and fishing, public administration, defence and other services, is likely to be at 4.8% in Q1, in line with the modest 4.8% rise in gross corporate income tax collections. The report stated that specific issues related to sectors such as banking and telecom are likely to weigh upon the GVA growth in Q1 FY18, offsetting the impact of the up-fronting of the government’s expenditure and a healthy rabi harvest of several crops.

The rating agency also expects gross domestic product (GDP) to rise by 6.1% in year-on-year terms in the first quarter, lower than the GVA expansion, led by an anticipated slowdown in growth of taxes on products less subsidies on products. Besides, Industrial growth is expected to slow to a modest 3.9% in the quarter from the healthy 7.4% in the year-ago period, led by manufacturing, electricity, gas, water supply and other utility services and construction.

ICRA expects the services sector growth to ease to 8.2% in the period from 9% in Q1 FY17, led by the weak trend in earnings, displayed by two of the key sub-sectors, namely banks and telecom, as well as the sluggish momentum recorded by non-food bank credit, commercial paper. It further said while the average CPI inflation eased to 2.2% in Q1FY18 from 5.7% in Q1FY17, the average WPI inflation posted a turnaround to (+) 2.3% from (-) 0.7%, which is likely to affect the deflators for various sectors.

The CNX Nifty is currently trading at 9807.25, up by 41.70 points or 0.43% after trading in a range of 9786.75 and 9816.70. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 1.94%, GAIL India up by 1.76%, Bank of Baroda up by 1.61%, Bharti Airtel up by 1.59% and Dr. Reddy’s Lab up by 1.49%. On the flip side, Tata Power down by 1.25%, Bharti Infratel down by 1.01%, Zee Entertainment down by 0.94%, Hindustan Unilever down by 0.81% and Eicher Motors down by 0.81% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite rose 8.76 points or 0.15% to 5,889.06, Taiwan Weighted increased 41.93 points or 0.4% to 10,434.00 and Nikkei 225 gained 71.31 points or 0.37% to 19,455.15.

On the flip side, Shanghai Composite decreased 6.82 points or 0.21% to 3,283.41, FTSE Bursa Malaysia KLCI slipped 0.8 points or 0.05% to 1,773.42 and KOSPI Index was down by 0.56 points or 0.02% to 2,364.77.