Sensex, Nifty continue lackluster trade in late morning session

Indian equity benchmarks continued their lackluster trade in late morning session, tracking selloff in Asian markets after North Korea fired a missile over northern Japan. Sentiments also remained down-beat with NITI Aayog’s report highlighting that there is a huge gap between what the state governments have done to improve ease of doing business and what the enterprises know of these improvements. Investors paid no heed towards the India Ratings and Research’s (Ind-Ra) latest report which enlightened that a new nationwide goods and services tax (GST) rollout will have positive impact on state governments’ finances in the medium to long term. Meanwhile, traders also shrugged off report that India has entered into a pact with Germany to improve parameters for grid integration of renewable energies.

On the global front, Asian markets were trading in red, as investors sought out safe havens such as gold after North Korea fired a missile over northern Japan. Back home, in scrip specific development, Rajshree Sugars & Chemicals traded jubilantly after the company reported over two fold jump in its net profit at Rs 18.18 crore for the quarter under review as compared to Rs 7.52 crore for the same quarter in the previous year. Total income of the company increased by 63.18% at Rs 234.36 crore for Q1FY18 as compared Rs 143.62 crore for the corresponding quarter previous year.

The BSE Sensex is currently trading at 31498.77, down by 252.05 points or 0.79% after trading in a range of 31471.95 and 31739.80. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.19%, while Small cap index was down by 0.31%.

The top losing sectoral indices on the BSE were Telecom down by 1.46%, Power down by 0.80%, TECK down by 0.79%, Capital Goods down by 0.71% and IT down by 0.67%, while there were no gainers on BSE sectoral front.

The top gainers on the Sensex were Tata Motors up by 0.73%, Dr. Reddy’s Lab up by 0.30%, Bajaj Auto up by 0.23%, Lupin up by 0.19% and ICICI Bank up by 0.15%. On the flip side, NTPC down by 3.00%, HDFC down by 2.03%, Axis Bank down by 1.41%, Bharti Airtel down by 1.40% and Coal India down by 1.36% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that a new nationwide goods and services tax (GST) rollout will have positive impact on state governments’ finances in the medium to long term. Even in the short term, it said that the impact on aggregate state finances will be positive but the picture varies across states.

Under the new tax regime, the ratings agency 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, it 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 require compensation from the central government for any revenue loss under baseline scenario. Post rollout of GST, it showed that input tax credit is available on both goods and services. It also expects that the growth of GST component of states’ own tax revenue for all states in such a case to drop to 15.5 percent in FY18 and three more states namely, Goa, Jammu and Kashmir and Jharkhand would require compensation from the central government.

Therefore, the report noted that the total compensation amount would rise to Rs 95 billion in the financial year 2017-18. It explained that this is based on the assumption that in the final production of goods and services, service tax accounts for 10 percent. To be able to absorb the positive impact of GST on state 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 revenue. 

The CNX Nifty is currently trading at 9835.00, down by 77.80 points or 0.78% after trading in a range of 9821.80 and 9887.35. There were 11 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.07%, Tata Motors up by 0.54%, Vedanta up by 0.38%, Mahindra & Mahindra up by 0.36% and Indian Oil Corporation up by 0.32%. On the flip side, NTPC down by 3.00%, HDFC down by 2.01%, HCL Tech down by 1.98%, Indiabulls Housing Finance down by 1.72% and Bank of Baroda down by 1.49% were the top losers.

All the Asian markets were trading in red; Hang Seng decreased 115.51 points or 0.41% to 27,747.78, Nikkei 225 decreased 98.43 points or 0.51% to 19,351.47, Jakarta Composite decreased 37.35 points or 0.63% to 5,865.99, Taiwan Weighted decreased 29.41 points or 0.28% to 10,496.57, KOSPI Index decreased 11.1 points or 0.47% to 2,359.20, FTSE Bursa Malaysia KLCI decreased 8.09 points or 0.46% to 1,761.40 and Shanghai Composite decreased 2.62 points or 0.08% to 3,360.03.