Benchmarks extend gains in morning session

Indian equity benchmarks extended gains in morning session continuing up-move for fourth consecutive session, while the broader markets also participated in rally, backed by positive global cues. The rupee opened higher against dollar on account of selling of American currency by banks and exporters. Foreign Portfolio Investors poured Rs 1,436.38 crore in the domestic equity markets on Monday with gross purchases and gross sales stood at Rs 6,832.46 and Rs 5396.08 crore, respectively. Sentiments remained upbeat with international rating agency Moody’s report which expecting growth to revive next year, has said a 7.6% GDP expansion can result in corporates reporting a pre-tax profit growth of 5-6% over the next 12-18 months. The rating agency over the weekend had revised upwards sovereign ratings to Baa2 after almost 14 years. According to the rating agency, growth will rebound strongly in 2018 because the supply chain disruptions of 2017 will end soon.

Investors took note that the government has moved a notch closer to achieving its disinvestment target through minority stake sales in state-run companies as it has garnered around Rs 14,500 crore through its latest offering - the Bharat-22 Exchange Traded Fund (ETF). The Bharat-22 ETF, which comprises shares of 22 firms, was oversubscribed four times and saw bids of nearly Rs 32,000 crore coming in, with foreign institutional investors (FII) putting in nearly one-third of the amount bid. Separately, chief economic adviser Arvind Subramanian has said that the government may combine the 12% and 18% slabs for goods and services tax (GST) into one in the near future and reserve the 28% rate only for demerit goods. 

Meanwhile, select consumer durables stocks were buzzing on reports that the government may soon cut rates on consumer durables such as refrigerators and washing machines, which are currently in the 28% tax bracket. The move is likely to be a significant boost for the sector plagued by excess capacity and slowdown. The economy will get a fillip from the likely consumption boost and better compliance in this key sector. Logistics stocks were buzzing in today’s trade after yesterday the government granted infrastructure status to the logistics sector, making it easier for companies operating cold chains, industrial parks and warehousing facilities to raise long-term credit from banks and other financial institutions at low rates, and attract foreign investment.

Traders were seen piling up position in Consumer Durables, Telecom and Utilities sector stocks. In scrip specific development, Reliance Communications (RCom) was trading in green after the lenders of debt ridden company have approved the sale of its real estate assets in Delhi and Chennai to Canada-based asset management firm Brookfield. The proceeds will be used for retiring debts. Business services provider Quess Corp was trading in green after the company acquired Tata Business Support Services (TBSS) for Rs 153 crore. It will own 51% of the Hyderabad-headquartered company, with Tata Sons holding the remaining stake.

On the global front, Asian markets were trading mostly in green. A poll showed that Singapore’s consumer price index probably edged up slightly in October from a year earlier due to higher private road transport costs, picking up from September’s pace. The all-items CPI in October was forecast to have risen 0.5%, up from 0.4% in September. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,500 and 10,300 levels respectively. The market breadth on BSE was positive in the ratio of 1565:676, while 121 scrips remained unchanged.

The BSE Sensex is currently trading at 33520.06, up by 160.16 points or 0.48% after trading in a range of 33437.61 and 33520.06. There were 23 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.53%, while Small cap index was up by 0.83%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.67%, Telecom up by 1.43%, Utilities up by 1.26%, Power up by 1.18% and Healthcare up by 1.13%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were NTPC up by 3.05%, Bharti Airtel up by 2.55%, Dr. Reddy’s Lab up by 2.04%, Tata Steel up by 1.77% and Reliance Industries up by 1.76%.

On the flip side, Coal India down by 0.92%, Power Grid down by 0.79%, ITC down by 0.58%, TCS down by 0.56% and Axis Bank down by 0.50% were the top losers.

Meanwhile, chief economic adviser (CEA) Arvind Subramanian has hinted that government may combine the 12 per cent and 18 per cent slabs for goods and services tax (GST) into one in the near future and reserve the 28 per cent rate only for demerit goods. According to Subramanian, it is only a matter of time before rates converge into three slabs and commodities such as land are brought under the purview of the GST.

He added that India will never move to a single GST rate, over time there would be a “poor man’s” rate (0 per cent and 5 per cent), a “core” rate (the 12 per cent-18 per cent combination), and the demerit rate (28 per cent). He also pointed that Cement and white goods are not demerited goods, but the government was deliberately “going slow” on those items due to revenue considerations. He said “I never liked the 28 per cent slab, which I think has created some of the transitional challenges. I think we are very close to making 28 per cent just for demerit goods… 0 per cent and 5 per cent has quite a lot of the tax base and there I think we will not be able to make that much progress as we have to protect the poor. But the 12 per cent and 18 per cent, at some point, can be combined in the foreseeable future into one rate.

Subramanian said land, real estate and natural gas could soon come within the purview of GST, and added that he supported the early inclusion of electricity as well. According to Subramanian, the rollout of the goods and services tax (GST) had initiated a very welcome recast of the federal polity of India and should serve as a template to address the overhang of development challenges.

The CNX Nifty is currently trading at 10347.15, up by 48.40 points or 0.47% after trading in a range of 10323.75 and 10347.15. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.85%, Bharti Airtel up by 2.54%, Tech Mahindra up by 2.32%, Dr. Reddy’s Lab up by 2.18% and Tata Steel up by 1.79%.

On the flip side, Coal India down by 0.90%, Power Grid down by 0.74%, Larsen & Toubro down by 0.67%, Axis Bank down by 0.65% and ITC down by 0.46% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 3.06 points or 0.18% to 1,721.42, KOSPI Index increased 3.59 points or 0.14% to 2,531.26, Shanghai Composite increased 13.43 points or 0.4% to 3,405.83, Taiwan Weighted increased 99.74 points or 0.94% to 10,764.29, Nikkei 225 increased 226.01 points or 1.02% to 22,487.77 and Hang Seng increased 359.49 points or 1.23% to 29,619.80.

On the other hand, Jakarta Composite decreased 24.52 points or 0.41% to 6,028.76.