Bourses extend losses on high retail inflation data

Key Indian benchmarks extended their losses in late morning session, on account of high retail inflation data. 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, due to an increase in prices of consumer food items. Selling pressure in Capital Goods, Telecom and Oil & Gas stocks also weighed on the sentiments. Traders paid no heed towards Finance Minister Arun Jaitley’s statement that there is scope for further rationalisation of GST rates and revenue buoyancy will decide the course of rationalization. Meanwhile, Prime Minister Narendra Modi’s statement that the demonetisation of high value currency notes along with a series of other reform measures have resulted in formalising a large part of the Indian economy, also failed to provide any relief to the markets.

On the global front, Asian markets were trading in mostly in green, following the modest gains overnight on Wall Street, while investors await movement on stalled US tax cuts with fears growing that the reform push could come off the rails. Back home, in scrip specific development, Mercator traded higher after the company received approval from QIP Committee of the Board of Directors to allot around 3.26 crore equity shares of face value Rs 1 each at a premium of Rs 43.65 a share, aggregating to Rs 145.413 crore.

The BSE Sensex is currently trading at 32943.88, down by 89.68 points or 0.27% after trading in a range of 32938.63 and 33126.55. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.09%, while Small cap index was up by 0.02%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.72%, Auto up by 0.35%, Consumer Disc up by 0.30%, Healthcare up by 0.11% and Basic Materials up by 0.06%, while Capital Goods down by 0.95%, Telecom down by 0.89%, Oil & Gas down by 0.85%, TECK down by 0.77% and IT down by 0.69% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.63%, Bajaj Auto up by 1.38%, Lupin up by 1.37%, Cipla up by 1.30% and NTPC up by 1.05%. On the flip side, Power Grid Corporation down by 1.92%, Larsen & Toubro down by 1.72%, Asian Paints down by 1.69%, TCS down by 1.48% and Adani Ports & SEZ down by 1.18% were the top losers.

Meanwhile, welcoming the move by Goods and Services Tax (GST) Council to levy 5 percent tax rate on all restaurants, both air-conditioned and non-AC, the domestic rating agency, ICRA in its latest report has said that the revision in rates for all restaurants is positive as it would bring down the cost of dining out, supporting footfalls and revenues at a time when most organized restaurants are struggling to grow demand.

The rating agency has stated that last week, the GST council slashed the tax rate of restaurants to a uniform 5 percent from 12 percent on non-AC restaurants and 18 percent on air-conditioned ones. It also pointed out that all these restaurants were also given an input tax credit (ITC) benefit, a facility which sets off tax paid on inputs against the final tax to be paid by consumers. Adding further, it mentioned that these restaurants, however, did not pass on the ITC benefit to customers and so the ITC facility is being withdrawn and a uniform 5 percent tax is levied on all restaurants without the distinction of AC or non-AC.

The report further highlighted that restaurants in starred-hotels that charge Rs 7,500 or more per day room tariff will be levied 18 per cent GST but ITC is allowed for them. It also noted that those restaurants in hotels charging less than Rs 7,500 room tariff will charge 5 per cent GST but will not get ITC. Besides, it said that as most major inputs for restaurants like grains (not packaged), vegetables, poultry and seafood are exempt from GST, the input credit advantage available for restaurants was negligible. It added that restaurants were also not passing on any benefit of input tax credit to the consumers under GST.

The CNX Nifty is currently trading at 10197.05, down by 27.90 points or 0.27% after trading in a range of 10191.75 and 10248.00. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 1.62%, Lupin up by 1.48%, Cipla up by 1.20%, Bajaj Auto up by 1.12% and NTPC up by 1.10%. On the flip side, Bharti Infratel down by 4.02%, Indian Oil Corporation down by 2.22%, BPCL down by 2.19%, Power Grid Corporation down by 1.90% and HPCL down by 1.82% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 0.4 points or 0.02% to 2,530.75, Jakarta Composite increased 0.94 points or 0.02% to 6,022.40, Taiwan Weighted increased 3.26 points or 0.03% to 10,687.18, Hang Seng increased 27.55 points or 0.09% to 29,209.73 and Nikkei 225 increased 45.25 points or 0.2% to 22,426.24.

On the flip side, Shanghai Composite decreased 7.42 points or 0.22% to 3,440.42 and FTSE Bursa Malaysia KLCI decreased 1.52 points or 0.09% to 1,735.97.