Benchmarks continue firm trade in morning session

Indian equity benchmarks continued their firm trade in the morning session on account of buying in frontline blue chip counters. The rupee opened lower against dollar on account of buying of American currency by banks and importers. Foreign Portfolio Investors stood net sellers in domestic equity markets on Monday and sold shares worth Rs 745.45 crore with gross purchases and gross sales of Rs 3193.04 crore and Rs 3938.49 crore, respectively. Traders took some encouragement with Prime Minister Narendra Modi’s statement at BRICS Summit 2017 that the Goods and Services Tax (GST) introduced in July this year is the biggest economic reform ever in India. In one stroke, a unified market of 1.3 billion people has been created. He said that programmes like Digital India, Start-up India and Make in India were changing the economic landscape of the country. Investors also took note that the all powerful GST Council may consider lowering tax on items of common consumption if the high trajectory of collections continues over the next few months. The tax reduction could be either on items of common consumption or a cut in headline rate which will benefit consumers. The street shrugged off CRISIL report which lowered its growth forecast to 7% for fiscal 2018, down from 7.4% earlier, as it sees disruptions arising from the implementation of the new uniform tax regime to continue to impact the economy for a few more quarters. In the quarter to June, economic expansion slumped to 5.7%, the slowest in the past three years and the country lost the tag of being the fastest growing large economy again to China.

Traders were seen piling up position in Consumer Durables, Realty and Basic Materials stocks, while selling was witnessed in Telecom and TECK sector stocks. In scrip specific development, Hotel Leela Venture was trading in green on report that American PE fund Marigold Capital has agreed to buy hotel chain Leelaventure’s 326 room hotel in Chennai, ending years of speculation about the potential buyers of the property. Religare Enterprises is trading in red after some investors who hold pledged shares of the company, the listed diversified financial company of Malvinder Singh and Shivinder Singh, have filed a lawsuit in the Bombay High Court against the company’s promoters after the Singh brothers proposed the company pay Rs 500 crore from divestment proceeds and settle a loan given by Axis Bank to one of the Religare subsidiaries, Religare Capital Markets International Mauritius.

On the global front, Asian markets were trading mostly in red, as tensions on the Korean Peninsula remained in focus. Japan’s services sector expanded in August at the slowest rate in six months as the pace of new orders eased, a private survey showed in a sign the economy is losing some momentum after this year’s solid gains. The China Caixin services PMI jumped to 52.7, well above the 51.8 level expected. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,700 and 9,900 levels respectively. The market breadth on BSE was positive in the ratio of 1502:578, while 99 scrips remained unchanged.

The BSE Sensex is currently trading at 31781.85, up by 79.60 points or 0.25% after trading in a range of 31722.61 and 31819.99. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.47%, while Small cap index was up by 0.91%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.17%, Realty up by 0.95%, Basic Materials up by 0.81%, Energy up by 0.79% and Consumer Disc up by 0.74%, while, Telecom down by 1.04% and TECK down by 0.11% were the only losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.60%, Asian Paints up by 1.50%, Reliance Industries up by 1.12%, Tata Steel up by 0.99% and Dr. Reddy’s Lab up by 0.91%.

On the flip side, Bharti Airtel down by 1.70%, Sun Pharma down by 0.59%, Mahindra & Mahindra down by 0.52%, Lupin down by 0.44% and Coal India down by 0.26% were the top losers.

Meanwhile, amid the government’s quest to keep the deficit within the budgeted target, despite sluggish domestic demand, India’s gold imports in August nearly tripled from a year ago, as a recent tax change that allowed importers to ship in the yellow metal from South Korea without paying customs duty saw some traders purchasing heavily from the country.

The provisional data from consultancy GFMS (formally Gold Fields Mineral Services) showed that August gold imports climbed to an estimated 60 tonnes from 22.3 tonnes a year ago. In the first eight months of 2017, the imports rose to 617.5 tonnes, up 158 per cent from a year ago. Trade houses imported nearly 20 tonnes from South Korea as they were not required to pay import duty.

India imposes a 10 per cent import duty on gold, but this was not applicable to countries with which it has Free Trade Agreements (FTAs), like South Korea. To avoid duty-free imports from those countries, the government had previously imposed a 12.5 per cent excise duty, which was scrapped along with other local taxes when the GST was introduced on July 1, allowing buyers to import gold from South Korea without paying import tax. However, after realising the loophole the government on August 25 restricted imports of gold from South Korea.

The CNX Nifty is currently trading at 9935.70, up by 22.85 points or 0.23% after trading in a range of 9912.75 and 9948.90. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.68%, Ambuja Cement up by 1.55%, Bajaj Auto up by 1.51%, Ultratech Cement up by 1.49% and Asian Paints up by 1.47%.

On the flip side, Bharti Airtel down by 1.87%, Bharti Infratel down by 1.55%, Indiabulls Housing down by 0.86%, Bosch down by 0.75% and Sun Pharma down by 0.64% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 95.23 points or 0.49% to 19,413.02, Jakarta Composite decreased 18.48 points or 0.32% to 5,795.27, FTSE Bursa Malaysia KLCI decreased 6.46 points or 0.36% to 1,766.70 and KOSPI Index decreased 6.39 points or 0.27% to 2,323.26.

On the other hand, Shanghai Composite increased 6.34 points or 0.19% to 3,385.92, Taiwan Weighted increased 27.2 points or 0.26% to 10,597.07 and Hang Seng increased 67.63 points or 0.24% to 27,807.89.