Sensex, Nifty trade flat; Mid cap performs better

Indian equity benchmarks were trading flat with a positive bias in late morning session amid mixed Asian markets. Sentiments remained upbeat with the report that the commerce ministry is reviewing the foreign trade policy (FTP) with a view to effectively address the concerns of exporters post-GST. Some support also came with report stating that the country's agricultural sector has potential to double farmer income and grow exports to $100 billion by 2022 from the present $36 billion. Meanwhile, the government has decided to set up an Alternative Mechanism to oversee the proposals for consolidation of public sector banks (PSBs) with a view to creating fewer but stronger lenders. However, the broader markets showed some fervor and traded with notable gains, performing better than their larger peers.

On the global front, Asian markets were trading mixed amid cautious trades after US President Donald Trump's threat to shut down the government if he does not secure funds for building the Mexico border wall. Investors also turned their attention to the global central banking conference, which begins in Jackson Hole later in the day. Back home, in scrip specific development, United Bank of India was trading higher after the bank issued and allotment of 5,000 units of Unsecured, Non-Convertible, Fully Paid-Up, Redeemable, Listed, BASEL III Compliant, Tier 2 Bonds (Series IX) in form of Promissory Note of Face Value of Rs 10 lakh each, aggregating to Rs 500 crore on private placement basis.

The BSE Sensex is currently trading at 31589.61, up by 21.60 points or 0.07% after trading in a range of 31546.05 and 31678.19. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.37%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.70%, IT up by 0.88%, Power up by 0.63%, Utilities up by 0.60% and TECK up by 0.59%, while Realty down by 0.37%, Telecom down by 0.25%, Bankex down by 0.03% and FMCG down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 3.40%, Infosys up by 2.12%, Sun Pharma up by 2.10%, Cipla up by 1.29% and Dr. Reddy’s Lab up by 1.18%. On the flip side, Adani Ports & SEZ down by 1.23%, Bajaj Auto down by 0.74%, Maruti Suzuki down by 0.68%, HDFC down by 0.62% and Kotak Mahindra Bank down by 0.62% were the top losers.

Meanwhile, in a bid to help exporters deal with issues related to Goods and Services Tax (GST) regime, the commerce and industry ministry is reviewing the foreign trade policy (FTP). The Federation of Indian Export Organisations (FIEO) has stated that exporters are concerned as they have to arrange funds for payment of GST which will be refunded to them upon exports. It also noted that paying the duty first and then seeking a refund may lead to blockage of funds for over six months in many cases, thus affecting the competitiveness of exports.

For dealing with the issue of blockage of fund, the ministry has suggested to the GST Council that an e-wallet kind of mechanism could be evolved for virtual payment of GST so that the GST chain is not affected. Therefore, the ministry is looking at all these issues and that is why it is taking time to release the revised FTP.  Also, the ministry is taking exporters’ inputs and trying to address that.

Exporters have also raised concerns as implementation of the new tax regime has limited the use of duty credit scrips by them as these can now be utilized only for payment of basic Customs duty and not IGST.  As per the exporters, working capital of Rs 1.85 lakh crore will get stuck annually with the government under the GST. This would push up the manufacturing cost of the exporters as they have to borrow more from banks.

The CNX Nifty is currently trading at 9860.25, up by 7.75 points or 0.08% after trading in a range of 9848.85 and 9881.50. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Lupin up by 3.22%, Infosys up by 2.26%, Sun Pharma up by 2.15%, Aurobindo Pharma up by 2.00% and Tata Power up by 1.52%. On the flip side, Adani Ports & SEZ down by 1.22%, Indiabulls Housing Finance down by 0.83%, HDFC down by 0.81%, Zee Entertainment down by 0.74% and Maruti Suzuki down by 0.72% were the top losers.

Asian markets were trading mixed; KOSPI Index increased 9.62 points or 0.41% to 2,376.02, Taiwan Weighted increased 82.15 points or 0.79% to 10,488.96 and Hang Seng increased 160.34 points or 0.59% to 27,562.01.

On the flip side, Nikkei 225 decreased 81.36 points or 0.42% to 19,353.28, Jakarta Composite decreased 22.88 points or 0.39% to 5,891.14, Shanghai Composite decreased 4.28 points or 0.13% to 3,283.42 and FTSE Bursa Malaysia KLCI decreased 0.09 points or 0.01% to 1,772.85.