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. Global investors were relieved from the fact that North Korea did not indulge in any fresh provocative move that may flare up geopolitical tensions. Foreign Portfolio Investors stood net sellers in domestic equity markets on Friday and sold shares worth Rs 302.65 crore with gross purchases and gross sales of Rs 5,234.93 crore and Rs 5,537.58 crore, respectively. Traders reacted positively to the outcome of the crucial meeting of the Goods and Services Tax (GST) Council that took place on Saturday, where the council cut GST rate for over 40 items of mass consumption. Separately, welcoming the decision of the GST Council of reducing the rate on supply of various scrips from 12 per cent to 5 per cent, the Federation of Indian Export Organizations (FIEO) said the move will give a boost to the exports sector. Some support also came on foreign brokerage report that India’s trade deficit is expected to improve in August to about $10.3 billion from $11.5 billion in July, largely on moderation in export as well as import growth. According to the global financial services major, the moderation, on a year-on-year basis, is likely owing to higher oil prices and unfavourable base effects. It estimates a moderation of export growth to 3.4% year-on-year in August from 3.9% in July and imports of 11.3% in August from 15.4% in July.

Traders were seen piling up position in Capital Goods, Industrials and Oil & Gas stocks, while selling was witnessed in Telecom sector stocks. In scrip specific development, IndusInd Bank and Bharat Financial Inclusion (BFIL) were trading in green on entering into a Confidentiality, Exclusivity, and Standstill Agreement (Exclusivity Agreement). The Exclusivity Agreement provides for a mutually agreed exclusivity period for due diligence and discussions to evaluate a potential strategic combination between the company and BFIL by way of amalgamation through a Scheme of Arrangement, or any other suitable structure. Jenburkt Pharmaceuticals was trading in green on receiving approval to buy back shares worth Rs 12 crore.

On the sectoral front, shares of auto companies were trading higher as domestic car companies sounded relieved after the GST Council on Saturday raised the vehicle cess by less than the maximum possible, although luxury automakers were more circumspect in their assessment of the new rates.  Majority of hotel stocks were trading in green taking cues from a survey that the domestic hotel industry is expected to see room revenue rising at about 11-13 per cent CAGR over the next five years, mainly on the back of economic growth. According to the study by CARE Ratings, the industry is expected to register an overall healthy increase in revenue on back of economic growth and consistently growing middle-class along with rising disposable income.

On the global front, Asian markets were trading mostly in green. China’s producer price inflation accelerated more than expected to a four-month high in August, fueled by strong gains in raw materials prices and pointing to strong, sustained growth for both factory profits and the economy. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,800 and 9,950 levels respectively. The market breadth on BSE was positive in the ratio of 1452:759, while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 31835.53, up by 148.01 points or 0.47% after trading in a range of 31797.89 and 31874.13. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.77%, while Small cap index was up by 0.73%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.93%, Industrials up by 1.26%, Oil & Gas up by 1.04%, Utilities up by 0.94% and Energy up by 0.87%, while Telecom down by 0.41% was the only losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.55%, Tata Motors - DVR up by 1.81%, Hindustan Unilever up by 1.61%, Maruti Suzuki up by 1.23% and HDFC Bank up by 1.23%.

On the flip side, SBI down by 0.63%, Kotak Mahindra Bank down by 0.58%, Power Grid down by 0.56%, Bharti Airtel down by 0.46% and ONGC down by 0.40% were the top losers.

Meanwhile, following the fitment committee’s observations of anomalies in GST levied in different products, the rates of 40 items of mass consumption has been reduced. The Goods and Services Tax (GST) Council, at its 21st meeting in Hyderabad chaired by Finance Minister Arun Jaitley and attended by finance ministers of states and GST Secretariat officials, took the decision to reduce the rates. Finance Minister Arun Jaitley said that in consonance with the recommendations of the fitment committee, the tax rates on approximately 30 goods of common man’s utility, including raincoats, rubberbands and batter for idli and dosa, have been reduced.

As per the notification, plastic raincoats and rubber bands have been fitted in the slab of 18 per cent and 12 per cent, respectively, as against the earlier 28 per cent. Idli and dosa batter will attract 12 per cent GST, against 18 per cent before, while brooms and brushes have been totally exempted from the levy.

Kitchen gas lighters will attract 18 per cent compared to 28 per cent GST earlier while prayer beads will fall in the 5 per cent slab against 18 per cent previously. As against 28 per cent, computer monitors with size of up to 20 inches will attract 18 per cent, bringing it on par with those whose screen size is up to 17 inches.

Cotton quilts costing up to Rs. 1,000 will attract 5 per cent GST, while those above that will face 12 per cent GST, against the earlier uniform rate of 18 per cent. Tableware, kitchenware, other household items and toilet articles of porcelain or china or those other than porcelain or china clay will be levied 12 per cent against 18 per cent and 28 per cent, respectively.

As per the list of items uploaded on the website of the Central Board of Excise and Customs (CBEC), khadi fabric sold through KVIC shops have been exempted from GST, which was implemented from July 1. Also, rate on saree fall, dhoop batti, corduroy fabric, walnut, dried tamarind and roasted gram has been brought down to 5 per cent, from 12 per cent earlier.

The CNX Nifty is currently trading at 9979.55, up by 44.75 points or 0.45% after trading in a range of 9968.80 and 10000.55. There were 34 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 4.58%, Larsen & Toubro up by 2.67%, Tata Power up by 2.47%, Tech Mahindra up by 2.08% and Hindustan Unilever up by 1.63%.

On the flip side, Bharti Infratel down by 0.70%, Indiabulls Housing down by 0.70%, Vedanta down by 0.67%, SBI down by 0.63% and Power Grid down by 0.56% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.85 points or 0.1% to 1,781.75, Shanghai Composite increased 5.76 points or 0.17% to 3,371.00, KOSPI Index increased 16.36 points or 0.7% to 2,360.08, Jakarta Composite increased 17.63 points or 0.3% to 5,874.75, Nikkei 225 increased 260.69 points or 1.35% to 19,535.51 and Hang Seng increased 273.82 points or 0.99% to 27,942.29.

On the other hand, Taiwan Weighted decreased 32.02 points or 0.3% to 10,577.93.