Benchmarks continue weak trade in morning session

Indian equity benchmarks continued their weak trade in morning session on account of selling in front line blue chip counters. The rupee opened higher against dollar on account of selling of American currency by banks and exporters. Foreign Portfolio Investors stood net sellers in domestic equity markets on Monday and sold shares worth Rs 27.72 crore with gross purchases and gross sales of Rs 5,144.76 crore and Rs 5,172.48 crore, respectively. Traders remained cautious with rising crude prices and tax relief on some items under the Goods and Services Tax (GST) which is expected to threaten the government’s fiscal targets on back of possible dip in revenues. Giving hint of further rationalization of GST rates, Finance Minister Arun Jaitley has said that there is scope for further rationalization of GST rates and revenue buoyancy will decide the course of rationalization. The rising crude will also prevent the Reserve Bank of India from cutting interest rates any further. The sentiments were also dampened as India’s retail inflation accelerated to seven-month high of 3.58% in the month of October 2017, as compared to 3.28% in September 2017, but lower than 4.20% in October 2016. Consumer inflation rise was mainly due to an increase in prices of consumer food items. The inflation data showed that the Consumer Food Price Index (CFPI) - an indicator for food prices - also rose to 1.90% in October from 1.25% in September.

The downside was, however, capped as investors took note of a private report that business confidence in the country during the ongoing quarter has improved on account of government measures, macroeconomic boost and festive season demand, among others. The index stood at 76.7 during October-December of 2017, an increase of 6.4% from the preceding three months. The index, however, fell 4.1% against the corresponding three months a year ago. Separately, another report enlightened that India may emerge as the third largest economy overtaking Japan over the next ten years on the back of falling dependency, financial maturity and higher income and affordability. The report says that India is likely to cross Germany and Japan in nominal GDP in USD by 2028, assuming the economy grows at 10% in US dollar terms over the next 10 years, ahead of Japan’s 1.6%. Select infrastructure related stocks were buzzing after ICRA in its report said that even though many infrastructure players are still struggling with stressed balance sheets there has been an improvement in financial profile of firms having exposure to airport and highways projects indicating a revival in the sector. The agency added that early signs of a revival of the infrastructure sector are evident with the improvement in the financial profile of players.

Traders were seen piling up position in Consumer Durables, Consumer Disc and Auto stocks, while selling was witnessed in Oil & Gas, TECK and IT sector stocks. In scrip specific development, footwear retailer Khadim India made a tepid listing in red on the bourses following the conclusion of its Rs 543 crore Initial Public Offer last week. The company’s IPO was subscribed 1.90 times during November 2-6. The price band for the offer was fixed at Rs 745-750 per share. JP Associates tumbled after the Supreme Court on Monday directed the non-institutional directors of infrastructure firm to appear in person before it next week and furnish details of their personal assets. The apex court’s direction came in the wake of its September 11 directive to the Jaypee Associates to deposit Rs 2,000 crore by October 27 to protect the interests of homebuyers and creditors.

On the global front, Asian markets were trading mostly in red. China’s economy cooled further last month, with industrial output, fixed asset investment and retail sales missing expectations as the government extended a crackdown on debt risks and factory pollution. Beijing is already in the second year of a campaign to reduce high levels of debt as authorities’ worry that riskier lending practices, especially in the real estate sector, could imperil the economy. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 33,100 and 10,250 levels respectively. The market breadth on BSE was positive in the ratio of 1162:1084, while 112 scrips remained unchanged.

The BSE Sensex is currently trading at 33030.73, down by 2.83 points or 0.01% after trading in a range of 32971.78 and 33126.55. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.09%, while Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.68%, Consumer Disc up by 0.46%, Auto up by 0.46%, Power up by 0.42% and Utilities up by 0.36%, while Oil & Gas down by 0.70%, TECK down by 0.57%, IT down by 0.54%, Telecom down by 0.50% and Capital Goods down by 0.43% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.70%, Hero MotoCorp up by 1.46%, Lupin up by 1.26%, Reliance Industries up by 1.10% and Bajaj Auto up by 1.01%.

On the flip side, TCS down by 1.45%, Adani Ports & Special Economic Zone down by 1.29%, Coal India down by 1.25%, Power Grid down by 1.23% and Larsen & Toubro down by 0.98% were the top losers.

Meanwhile, giving hint of further rationalisation of goods and services tax (GST) rates, Finance Minister Arun Jaitley has said that there is scope for further rationalisation of GST rates and revenue buoyancy will decide the course of rationalization. He also ruled out single tax rate of GST, saying those seeking single rate have no understanding of tariff structure.

Brushing aside the charge of GST rate rationalisation with elections or political demand, the Finance minister said that it was “juvenile politics” to link the reduction in rates to the state assembly polls. He added that the decisions in the GST Council are “all consensus decisions” and the body has been pragmatic and not rigid.

Jaitley said that with the rate cuts, the government is expecting the gains on a host of products- from cosmetics and razors to washing powder - to be passed on to consumers. He added that GST has brought down inflation. 'This actually reduces inflation. This is one of the advantages of a more efficient tax system... Effectively, today, almost all items in the goods category are better off than they were prior to July 1.'

Earlier in the biggest GST rejig yet, tax rates on over 200 items, were cut by the GST Council, to provide relief to consumers and businesses amid economic slowdown. As many as 178 items of daily use were shifted from the top tax bracket of 28 percent to 18 percent, while a uniform 5 percent tax was prescribed for all restaurants, both air- conditioned and non-AC.

The CNX Nifty is currently trading at 10219.45, down by 5.50 points or 0.05% after trading in a range of 10197.45 and 10248.00. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were NTPC up by 1.75%, Hero MotoCorp up by 1.58%, Lupin up by 1.46%, UPL up by 1.26% and Ambuja Cement up by 1.25%.

On the flip side, Bharti Infratel down by 3.59%, BPCL down by 2.17%, Indian Oil Corporation down by 2.13%, HPCL down by 1.90% and IndusInd Bank down by 1.59% were the top losers.

The Asian markets were trading mostly in red; Shanghai Composite decreased 15.42 points or 0.45% to 3,432.41, KOSPI Index decreased 4.62 points or 0.18% to 2,525.73, FTSE Bursa Malaysia KLCI decreased 1.52 points or 0.09% to 1,735.97 and Jakarta Composite decreased 0.26 points to 6,021.20.

On the other hand, Taiwan Weighted increased 1.34 points or 0.01% to 10,685.26, Hang Seng increased 15.99 points or 0.05% to 29,198.17 and Nikkei 225 increased 79.94 points or 0.36% to 22,460.93.