Firm trade prevails; Metal, Realty lead

Indian equity benchmarks continued their firm trade in morning session on account of buying in frontline blue chip counters after Moody’s upgraded India’s rating following a gap of 13 years. The rupee strengthened against dollar in early trade. Foreign Portfolio Investors remained net buyers in equity segment on Thursday and bought shares worth of Rs 1,830.78 crore with gross purchases and gross sales of Rs 7,564.20 and Rs 5,733.42 crore, respectively. Sentiments were upbeat after Moody’s Investor Service raised India’s government bond rating, citing continued progress in the nation’s economic and institutional reforms. The rating agency upgraded India’s bond rating to ‘stable’ (BAA2) from ‘positive’ (BAA3) and said reforms being pushed through by the government will help stabilize debt. The agency has also upgraded India’s local currency senior unsecured rating to Baa2 from Baa3 and its short-term local currency rating to P-2 from P-3. Separately, highlighting ‘massive’ economic reforms undertaken by India, Finance Minister Arun Jaitley has said that the country’s economic slowdown has bottomed out and now it should start moving upwards after recovering from the temporary blip. He acknowledged that there was a ‘temporary blip’ as a result of structural changes initiated by the government.

Additionally, Commerce and Industry Minister Suresh Prabhu exuded confidence that exports will gather momentum going forward as the economy is on course to double to $5 trillion and become the third largest in the world, over the next few years. Investors took note of Former RBI Governor C Rangarajan’s statement that inflation, which rose to 3.58 per cent in October, may ease by December and remain below the 4 per cent level by the end of the current fiscal. There will be a seasonal decline in food prices by next month. Realty sector stocks were buzzing in today’s trade as the government decided to increase the carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG) under Pradhan Mantri Awas Yojana (PMAY). The move also means that the private developers will have incentives to increase scale.

Traders were seen piling up position in Metal, Realty and Bankex stocks, while selling was witnessed in IT and TECK sector stocks. IT stocks were trading under pressure after the rupee appreciated against the US dollar and was the best-performing Asian currency. An appreciation in rupee dents top line of IT firms that derive most of their revenues in dollar terms. In scrip specific development, GTL Infrastructure was trading in green after lenders to GTL received bids from four players for buying up to 58% stake in the telecom tower company. The four bidders include Bain-Piramal joint venture asset reconstruction firm, Aion Capital, a foreign telecom company, and a lesser known investment firm - Beam Investments. HDFC Standard Life Insurance Company was trading in green after debuting on the exchanges. The IPO, which was open for subscription on November 7-9, was subscribed 4.89 times at a price band of Rs 275-290 per share.

On the global front, Asian markets were trading mostly in green, as strong US earnings and a step forward in Congress on US tax reform brightened the mood, even though investors noted that many hurdles remain to passage of a deal on tax cuts. A poll showed that Japan’s exports are expected to have risen for an eleventh straight month in October, led by robust demand for cars and electronics manufacturing equipment as the world’s third-largest economy continues its recovery. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,400 and 10,300 levels respectively. The market breadth on BSE was positive in the ratio of 1722:564, while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 33477.38, up by 370.56 points or 1.12% after trading in a range of 33387.37 and 33520.82. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.46%, while Small cap index was up by 1.22%.

The top gaining sectoral indices on the BSE were Metal up by 2.51%, Realty up by 2.43%, Bankex up by 1.85%, Basic Materials up by 1.81% and Consumer Durables up by 1.63%, while IT down by 0.78% and TECK down by 0.41% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.96%, ICICI Bank up by 2.62%, SBI up by 2.56%, Cipla up by 2.56% and Bharti Airtel up by 2.27%.

On the flip side, Infosys down by 1.58%, Dr. Reddy’s Lab down by 0.68%, TCS down by 0.64%, Power Grid down by 0.10% and NTPC down by 0.08% were the top losers.

Meanwhile, just after notifying the latest set of cuts in the rate of tax to be levied on a wide range of goods as part of the Goods and Services Tax (GST), the Union Cabinet has given its approval for the creation of the National Anti-profiteering Authority (NAA) to ensure that businesses pass on the benefits of GST to consumers. It has approved the creation of the posts of chairman and technical members of the NAA under GST. The authority will have a sunset date of two years from the date on which the chairman assumes charge. The chairman and the four members of the authority have to be less than 62 years.

The 'anti-profiteering' measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers. This institutional framework comprises the NAA, a Standing Committee, Screening Committees in every state and the Directorate General of Safeguards in the Central Board of Excise & Customs (CBEC).

Affected consumers who feel the benefit of commensurate reduction in prices is not being passed on when they purchase any goods or services may apply for relief to the Screening Committee in the particular State. However, in case the incident of profiteering relates to an item of mass impact with ‘All India’ ramification, the application may be directly made to the Standing Committee.

If the complaints have merit, the respective committees would refer the cases for further investigation to the Directorate General of Safeguards (DGS). The DG Safeguards would generally take about three months to complete the investigation and send the report to the anti-profiteering authority. As per the anti profiteering rules the authority will suggest return of the undue profit earned from not passing on the reduction in incidence of tax to consumers along with an 18 per cent interest, as also impose penalty.

The CNX Nifty is currently trading at 10331.25, up by 116.50 points or 1.14% after trading in a range of 10313.55 and 10343.60. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.72%, Yes Bank up by 3.39%, Tata Steel up by 3.22%, Hindalco up by 3.20% and Cipla up by 2.98%.

On the flip side, Infosys down by 1.53%, Tech Mahindra down by 1.14%, TCS down by 0.68%, Dr. Reddy’s Lab down by 0.64% and HCL Tech down by 0.55% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 1.12 points or 0.04% to 2,535.91, FTSE Bursa Malaysia KLCI increased 3.84 points or 0.22% to 1,721.95, Jakarta Composite increased 40.02 points or 0.66% to 6,077.93, Nikkei 225 increased 88.01 points or 0.39% to 22,439.13, Taiwan Weighted increased 91.38 points or 0.86% to 10,716.42 and Hang Seng increased 248.06 points or 0.85% to 29,266.82.

On the other hand, Shanghai Composite decreased 19.89 points or 0.59% to 3,379.36.