Markets ascend to day’s high on broad based buying activities

Going from strength to strength, the local equity indices gathered further ground and hit fresh intraday highs in early afternoon trade, supported by buying mainly in realty, Telecom and PSU stocks, coupled with positive global cues. The frontline gauges were trading comfortably above the crucial 9,800 (Nifty) and 31,400 (Sensex) marks. The broader markets too were broadly in-line with the benchmark indices. 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. Some comfort also came 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. In scrip specific development, Shriram Transport Finance Company was up by over one and half percent after raising Rs 25 crore on private placement basis.

On the global front, Asian markets were trading mostly in green, supported by improving risk sentiment due to easing concerns over geopolitical risks in the region. Back home, the BSE Sensex is currently trading at 31483.08, up by 191.23 points or 0.61% after trading in a range of 31379.25 and 31494.16. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.93%, while Small cap index was up by 1.02%.

The top gaining sectoral indices on the BSE were Realty up by 2.80%, Telecom up by 1.38%, PSU up by 1.10%, Utilities up by 1.00% and Bankex up by 0.91%, while Consumer Durables down by 0.65% was the only losing index on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 2.81%, Infosys up by 2.49%, Adani Ports & SEZ up by 2.15%, Bharti Airtel up by 1.84% and NTPC up by 1.82%. On the flip side, Hindustan Unilever down by 1.00%, TCS down by 0.24%, Reliance Industries down by 0.09% and Coal India down by 0.02% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that 11 states may require additional compensation of Rs 9,500 crore from the Centre under the goods and services tax (GST) regime in the financial year 2017-18. Under the new tax regime, it is expecting that revenues of all states combined will grow at a compound annual growth rate (CAGR) of 16.6% in FY18 over FY16.

However, the ratings agency said that since the picture at the individual state level differs, eight states namely Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Madhya Pradesh, Odisha, Punjab and Tamil Nadu would need compensation from the central government for any revenue loss under baseline scenario worth Rs 5,600 crore in this fiscal year, whereas three more states namely, Goa, Jammu and Kashmir and Jharkhand would need Rs 3,900 crore compensation.  It also expects that the growth of GST component of states’ own tax revenue for all states in such a case would drop to 15.5% in FY18 with a base line scenario 16.6% as input tax credit is available on both goods and services under GST. 

Therefore, the report noted that the total compensation amount would rise to Rs 9,500 crore in FY18 (baseline scenario Rs 5,600 crore).  It also explained that this is based on the assumption that in the final production of goods and services, service tax accounts for 10%. Adding further, it said that unlike the value added tax (VAT), which was rolled out from April 2005 to January 2008, implementation of GST will also bring in more efficiency gains in tax mop up. To be able to absorb the positive impact of GST on state governments’ finances, Ind-Ra believes that states will have to keep a constant vigil on the buoyancy of taxes that are outside the purview of GST as also their own non-tax revenues.

The CNX Nifty is currently trading at 9816.75, up by 51.20 points or 0.52% after trading in a range of 9786.75 and 9817.85. There were 38 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 3.04%, Infosys up by 2.24%, GAIL India up by 2.18%, Adani Ports & SEZ up by 2.09% and Bharti Airtel up by 1.66%. On the flip side, Tata Power down by 1.50%, Bharti Infratel down by 1.29%, Eicher Motors down by 1.21%, HCL Tech. down by 1.12% and Tech Mahindra down by 1.10% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 1.07 points or 0.05% to 2,366.40, Shanghai Composite was up by 2.28 points or 0.07% to 3,292.50, Jakarta Composite added 6.12 points or 0.1% to 5,886.41, Taiwan Weighted surged 14.74 points or 0.14% to 10,406.81, Nikkei 225 rose 50.8 points or 0.26% to 19,434.64 and Hang Seng gained 246.99 points or 0.91% to 27,401.67.

On the flip side, FTSE Bursa Malaysia KLCI was down by 1.56 points or 0.09% to 1,772.66.