Benchmarks eke out slender gains; Nifty holds 10,300 mark

Indian equity benchmarks ended the volatile day of trade with marginal gains on Thursday. Sentiments remained up-beat in the beginning of the trade with traders eyeing on Goods and Services Tax (GST) Council meeting starting in Guwahati today. GST Council is likely to slash the indirect tax rates on as many as 165 items at its meeting in Guwahati, which begins later today. At present, these 165 items attract 28% tax, which could be moved to the 18% category. The street took note that a year after demonetization, India is getting ready to give digital payments yet another push. It could consider providing incentives in the GST regime for payments that are settled electronically. Investors took note that in a move that could unlock defence contracts of more than Rs 25,000 crore, the government is amending its defence procurement manual (DPM), which will enable the armed forces to procure the latest tech in a speedy manner.

Markets pared all of their early gains to enter into red terrain in noon deals, as traders turned cautious with Grant Thornton’s latest International Business Report (IBR) highlighting that India slipped to the 7th position in the September quarter from the 2nd spot in the previous three months in its ‘business optimism index’, showing clear signs of lag in the economy. Investors also took note of the finance ministry’s statement that raising the individual limit of foreign investment up to 15% in power exchanges would be unwise unless a clear business case is established and a strong and adequate regulatory mechanism exists. However, short covering in last leg of trade helped markets to end tad above their neutral lines.

Firm trade in European counters too provided some solace to the domestic markets, as a flurry of corporate earnings for the third quarter triggered sharp prices moves across some sectors and bourses. The European Central Bank is prepared to delay the introduction of stricter rules on bad bank loans after fierce criticism from the European Parliament and Italy. Asian markets exhibited mixed trend on Thursday, as optimism over US President Donald Trump's tax reforms faded and tensions continued to flare in the Middle East.

Back home, broader indices outperformed benchmarks and ended the session with a gain of around a percentage point. On the sectoral front, realty and power sector stocks remained on buyers’ radar despite report that in a significant widening of the tax base of the GST, the Centre and States will discuss including electricity and real estate within the ambit of the indirect levy. The power sector stocks additionally in focus on reports that thermal power plants are facing severe coal shortage and are running at less than half-a-day’s stocks.

Moreover, stocks related to Gems and Jewellery space edged higher despite apex industry body the Gems and Jewellery Export Promotion Council (GJEPC) stating that India's gems and jewellery exports are likely to remain flat in the financial year 2017-18, mainly due to economic slowdown in the overseas market, the introduction of VAT in Dubai and implementation of GST regime in July 2017. Select textile related stocks remianed buzzing in today’s trade on report that India’s textiles sector is likely to touch $250 billion in the next two years from the current level of $150 billion. The joint study by ASSOCHAM and Resurgent pointed out that the textile sector in India accounts for 10% of the country’s manufacturing production, 5% of its GDP, and 13% of exports earnings.

Finally, the BSE Sensex gained 32.12 points or 0.10% to 33,250.93, while the CNX Nifty was up by 5.80 points or 0.06% to 10,308.95.

The BSE Sensex touched a high and a low of 33,463.80 and 33,111.54, respectively and there were 17 stocks on gaining side as against 14 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index surged 0.98%, while Small cap index was up by 0.76%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 3.23%, Consumer Disc up by 0.86%, Power up by 0.62%, Energy up by 0.61% and Bankex was up by 0.53%, while Healthcare down by 0.27%, Auto down by 0.25%, FMCG down by 0.06% and Oil & Gas was down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.39%, Asian Paints up by 2.08%, ICICI Bank up by 1.90%, Tata Steel up by 1.66% and Reliance Industries up by 1.50%. On the flip side, ITC down by 2.00%, Coal India down by 1.53%, ONGC down by 1.33%, Lupin down by 1.24% and HDFC down by 1.20% were the top losers.

Meanwhile, a study carried out by Centre for Digital Financial Inclusion (CDFI) has indicated that the government’s move to demonetise Rs 500 and Rs 1,000 currency notes has broadened the scope for digitisation with around 63 percent retailers in rural as well as urban India willing to use digital payments such as mobile payments and card payments. The study, which was done in two stages i.e. pre-demonetisation and post-demonetisation, found growing acceptance of digital transaction among retailers before note ban. However, it observed that after note ban, more and more small traders showed their willingness to adopt the new payment gateways. 

The study further showed that till March 2017, the actual cashless transaction was only 11 percent, though the interview showed 63 percent retailers willing for it. It also noticed that there was 11 percent digital transaction across the board, whether rural or urban areas and the perception has changed substantially with large number of people willing to embrace it. Adding further, it noted that as note ban pushed the demand for cashless transaction, finance minister Arun Jaitley announced that additional 10 lakh point-of-sale would be made available in the market. It also highlighted that the country had 94 percent mobile users of which 41 percent people had smart phone, which was a good sign to adopt cashless payment. 

The CDFI further said that the road to digital transaction was faced with many challenges, and citied that opening the current accounts was still a complicated process. It was also noted that a fear existed among retailers that usage of digital platform would bring them in the tax net. Therefore, it pointed out that the fear could be countered by carrying out awareness campaign. It also feels that more digital interface would help create a transaction history for the small retailers and enable them to get loans from banks. It added that this would pave way for more entrepreneurs emerging from different parts of the country.

The CNX Nifty traded in a range of 10,368.45 and 10,266.95. There were 25 stocks in green as against 25 stocks in red on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 3.08%, Bharti Airtel up by 2.36%, Bosch up by 2.09%, ICICI Bank up by 2.08% and Asian Paints up by 2.07%. On the flip side, ITC down by 1.66%, ONGC down by 1.66%, Coal India down by 1.65%, Bharti Infratel down by 1.64% and Lupin down by 1.34% were the top losers.

European markets were trading mostly in green; Germany’s DAX increased 10.66 points or 0.08% to 13,393.08, France’s CAC increased 3.2 points or 0.06% to 5,474.63, while UK’s FTSE 100 decreased 3.42 points or 0.05% to 7,526.30.

Asian equity markets made a mixed closing on Thursday as optimism over US President Donald Trump's tax reforms faded and tensions continued to flare in the Middle East. The yen was a little weaker and oil held steady after overnight losses while strong inflation data out of China underscored the resilience of the world's second-largest economy. Chinese shares ended at a fresh two-year high as encouraging inflation data pointed to a pickup in global demand. China's inflation climbed at the fastest pace in nine months in October and producer price inflation exceeded expectations as measures taken to curb pollution raised commodity prices. Consumer price inflation rose to 1.9 percent in October from 1.6 percent in September, data from the National Bureau of Statistics showed. This was the highest rate since January, when inflation was 2.5 percent. Producer price inflation held steady at 6.9 percent in October, while it was forecast to ease to 6.6 percent. Meanwhile, Japanese shares ended down after dramatic intraday swings took the Nikkei and Topix indexes to multi-decade highs only to plunge in the afternoon on futures-driven trading ahead of the following day’s options settlement.