Benchmarks trim losses in morning session

Indian equity benchmarks trimmed their losses but continued to trade below neutral lines in morning session on account of selling in frontline counters. The rupee opened down against dollar on account of buying of American currency by banks and corporates. Foreign Portfolio Investors stood net buyers in domestic equity markets on Friday and bought worth a net of Rs 1,537.10 crore with gross purchases and gross sales of Rs 5,921.01 crore and Rs 4,383.88 crore, respectively. Sentiments were dampened on foreign brokerage report which highlighting adverse macroeconomic impact of rise in crude oil prices, said every $10 per barrel rise in the price will worsen India’s fiscal balance by 0.1 percent and current account balance by 0.4 percent of GDP. At the same time, it also estimates that every $10/bbl rise in crude oil price would hit the central government’s fiscal balance by 0.1 percent of GDP. It also added that every $10/bbl rise in crude oil price would increases CPI inflation by 0.6-0.7 percentage points. Separately, the National Highways Authority of India (NHAI) has issued show cause notice to over a dozen infrastructure companies asking why they should not be barred from bidding for highway projects for 2-3 years. 20 highway projects executed by these companies were terminated for builders default.

Investors took note that the Goods and Services Tax could be in for a revamp that’s more comprehensive than the tweaks that have been made thus far to iron out kinks to make compliance less onerous. The GST Council has set up a new advisory group that includes industry representatives to look into such changes. Auto stocks were buzzing after ICRA said that the domestic commercial vehicle (CV) sales are expected to grow by around 7 percent in the current fiscal on the back of pent-up demand post GST and replacement cycle in CVs driving the sales. The rating agency added that the industry will find its momentum back aided by increased thrust on infrastructure and rural sectors in the recent budget, potential implementation of fleet modernization and higher demand from consumption-driven sectors.  PSU banking stocks were buzzing on report that the Finance Ministry may infuse about Rs 70,000 crore through recapitalization bonds in the NPA-hit public sector banks in the next four months.

Traders were seen piling up position in Consumer Durables, Auto and Consumer Discretionary stocks, while selling was witnessed in Energy, Telecom and Metal sector stocks. In scrip specific development, Reliance Nippon Life Asset Management was trading in green at a premium over issue price of Rs 252. The company’s Rs 1,540-crore IPO was oversubscribed 81.54 times during October 25-27. Titan Company was trading firm after the jewellery-to-watch maker reported robust performance for the quarter ended September 2017 as consolidated profit showed a whopping 67.4 percent growth, driven by jewellery business.

On the global front, Asian markets were trading mostly in red, as investors took risk stances after a surprise shakeup over the weekend in Saudi Arabia and with President Donald Trump in Asia for more than a week of high-profile meetings. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 33,700 and 10,450 levels respectively. The market breadth on BSE was positive in the ratio of 1319:1025, while 125 scrips remained unchanged.

The BSE Sensex is currently trading at 33681.92, down by 3.64 points or 0.01% after trading in a range of 33582.38 and 33710.15. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.55%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 6.93%, Auto up by 1.13%, Consumer Disc up by 1.06%, Realty up by 0.93% and Industrials up by 0.67%, while Energy down by 0.61%, Telecom down by 0.58%, Metal down by 0.46%, Oil & Gas down by 0.29% and TECK down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.81%, Tata Motors - DVR up by 2.75%, Tata Motors up by 2.00%, ONGC up by 1.70% and Maruti Suzuki up by 1.44%.

On the flip side, Bharti Airtel down by 1.51%, Reliance Industries down by 1.12%, Sun Pharma down by 1.07%, Kotak Mahindra Bank down by 1.03% and Asian Paints down by 0.89% were the top losers.

Meanwhile, with an aim to give relief to the common man as well as businesses, The Goods and Services Tax (GST) Council is likely to consider lowering of 28% GST rate on certain items. The Council, headed by Finance Minister Arun Jaitley may approve lowering of the tax rates on a number of goods, including handmade furniture, plastic products and daily use items like shampoo, and simplify return filing rules in its next meeting scheduled to be convened on November 10, 2017.

All types of furniture attract a 28% tax under GST. Wooden furniture is handmade by unorganised sector artisans and is mostly used by middle class families and there have been demands for lowering tax incidence on them. Also, some items of plastic attract 18% GST but goods like shower baths, sinks, wash basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware of plastics attract 28% levy. The GST panel is also expected to rationalise tax rate where tax rates have gone up because the items were either exempt from excise or were attracted lower VAT rates in the previous indirect tax regime. This may come as a big relief for small and medium enterprises.

Stressing on need to rationalise the tax incidence, the plastic manufacturers in their representation to the revenue department had said that 80% of the industry is in MSME category. Besides, the GST rate on weighing machines, compressors may also be rationalised to 18% from 28%. 90% of the manufacturers are from small and medium industries and in the pre-GST era were exempt from excise duty on manufactured value of less than Rs 1.5 crore. Hence, such machines only attracted VAT of 14.5%. With regard to compressors, the total pre-GST incidence was 17.5% (12.5% excise duty and 5% VAT).

The CNX Nifty is currently trading at 10445.35, down by 7.15 points or 0.07% after trading in a range of 10413.75 and 10450.40. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 3.04%, Bharti Infratel up by 2.56%, Ultratech Cement up by 1.63%, Tata Motors up by 1.61% and Aurobindo Pharma up by 1.59%.

On the flip side, HPCL down by 2.27%, BPCL down by 1.57%, Bharti Airtel down by 1.47%, Kotak Mahindra Bank down by 1.17% and IndusInd Bank down by 1.16% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 154.82 points or 0.54% to 28,448.79, Nikkei 225 decreased 18.08 points or 0.08% to 22,521.04, KOSPI Index decreased 15.26 points or 0.6% to 2,542.71 and Taiwan Weighted decreased 10.14 points or 0.09% to 10,790.63.

On the other hand, Shanghai Composite increased 1.33 points or 0.04% to 3,373.08, FTSE Bursa Malaysia KLCI increased 2.73 points or 0.16% to 1,743.66 and Jakarta Composite increased 8.04 points or 0.13% to 6,047.58.