Bourses trim some gains ahead of derivatives expiry

Indian equity benchmarks trimmed some of their gains in late afternoon session ahead of derivatives expiry of August series due tomorrow. Anxiety spread among the investors with ICRA’s latest report stating that the profitability of India Inc got hurt with the margins contracting by as much as 1.80% to 15.7% on a year-on-year basis on account of introduction of new tax regime. Some concerns also came with the private report that India's economic growth is likely to remain soft and the GDP is expected to grow by 6 per cent in April-June, down from 6.1 per cent in the preceding quarter. However, the indices remained in green with the gains of more than half a percent, taking support from Finance Minister Arun Jaitley’s statement that Goods and Services Tax (GST) collections have exceeded estimates in the first month of the landmark levy’s rollout, despite a significant number of assessees not having filed returns yet. Jaitley added that the total collection under GST for July is pegged at Rs 92,283 crore. Meanwhile, the Cabinet cleared promulgation of an Ordinance to increase the cess on mid-size, large cars and SUVs from current 15 per cent under the new GST regime.

On the global front, European markets were trading in green, as investors tried to oust any nerves surrounding North Korea tensions and took advantage of the positive sentiment seen overseas. Asian markets were also trading in green. Back home, in scrip specific development, Kesar Terminals & Infrastructure gained after its arm - Kesar Multimodal Logistics (KMLL) commenced operation of Inland Container Depot (ICD) and Rail Transportation of Containers from the Private Freight Terminal (PFT) of KMLL served by Powarkheda (PRKD) station, near Itarsi railway Junction.

The BSE Sensex is currently trading at 31629.13, up by 240.74 points or 0.77% after trading in a range of 31533.02 and 31727.98. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.36%, while Small cap index was up by 1.27%.

The top gaining sectoral indices on the BSE were Metal up by 2.39%, Oil & Gas up by 2.31%, Energy up by 2.25%, Basic Materials up by 1.66% and Realty up by 1.45%, while there were no losing indices on the BSE.

The top gainers on the Sensex were Reliance Industries up by 2.07%, HDFC up by 1.74%, Coal India up by 1.62%, Tata Steel up by 1.28% and Adani Ports & SEZ up by 1.16%. On the flip side, Mahindra & Mahindra down by 0.69%, NTPC down by 0.30%, Asian Paints down by 0.27%, Power Grid Corpn. down by 0.21% and Cipla down by 0.05% were the losers.

India Inc, which was recovering from the demonetization move, has been hit by Goods and Services Tax (GST). Credit rating agency, ICRA in its latest report has said that the profitability of India Inc got hurt with the margins contracting by as much as 1.80% to 15.7% on a year-on-year basis on account of introduction of new tax regime.

As per the report, the aggregate revenues growth rate of 448 companies reduced to 5.3% in the preceding January-March period, as against growth rate of 8.3% in the quarter-ago period and 10.6% in the year-ago period and this has led to a major contraction in profit margins of India Inc. The rating agency further noted that companies’ rushing to clear inventory by offering discounts and lower primary sales ahead of the GST rollout, were the main reasons for fall in earnings.

ICRA also blamed recovery in raw material prices for contraction in earnings across few sectors, noting that sector-specific dynamics like increasing competitive pressure in telecom and regulatory hurdles in pharmaceuticals played a spoil sport.

The CNX Nifty is currently trading at 9876.65, up by 80.60 points or 0.82% after trading in a range of 9850.80 and 9909.45. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corp. up by 4.21%, Hindalco up by 3.85%, BPCL up by 3.57%, Reliance Industries up by 1.99% and Vedanta up by 1.91%. On the flip side, Tech Mahindra down by 1.20%, HCL Tech. down by 0.89%, Mahindra & Mahindra down by 0.65%, Bank of Baroda down by 0.39% and Cipla down by 0.33% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 5.83 points or 0.33% to 1,766.97, KOSPI Index increased 7.55 points or 0.32% to 2,372.29, Taiwan Weighted increased 72.83 points or 0.69% to 10,569.40, Nikkei 225 increased 143.99 points or 0.74% to 19,506.54 and Hang Seng increased 329.6 points or 1.19% to 28,094.61. On the flip side, Jakarta Composite decreased 19.77 points or 0.34% to 5,868.44 and Shanghai Composite decreased 1.6 points or 0.05% to 3,363.63.

All European markets were trading in green; France’s CAC increased 20.08 points or 0.4% to 5,052.00, UK’s FTSE 100 increased 22.44 points or 0.31% to 7,359.87 and Germany’s DAX increased 65.97 points or 0.55% to 12,011.85.