Benchmarks trade above neutral line with minor gains

Indian equity benchmarks continued their trade above neutral line with minor gains in morning session. The Indian rupee opened higher against the US dollar. The activity in the currency market is expected to be muted due to the Thanksgiving holiday in the US. Traders were taking support with Moody’s Investors Service report that Indian companies will see improved credit profiles in 2018 driven by solid economic and EBITDA growth, backed by new production capacity and benign commodity prices. In a report titled Non-financial corporate - India, 2018 Outlook, the rating agency said that with the disruption from the Good and Services Tax (GST) implementation diminishing, economic activity in India would recover by next year. Investors took note that the government sought to tighten the Insolvency and Bankruptcy Code (IBC) through an ordinance to ensure that willful defaulters and promoters of companies in loan default over an extended period of time won’t be able to get their hands back on assets during the resolution process. The upside was, however, capped after a foreign brokerage report highlighted that trade deficit has ballooned to $88 billion between April and October, up 60 percent from the comparable period a year ago due to weak exports and a sharp rise in imports. The composition of the export basket, even if well- diversified, has prevented the economy from benefiting from the upturn in the regional export cycle this year. The report noted that further, GST-related uncertainty and the effect of duty-drawback have added to the headwinds.

Meanwhile, there will be buzz in today’s trade with the Cabinet giving its nod for constitution of the 15th Finance Commission that will decide the tax-sharing formula between the Centre and states for five years beginning FY21. Its recommendations will have to be in place before April 1, 2020. Separately, a report highlighted that Corporate India witnessed significant deal activity in the September quarter this year, as private equity invested $8.7 billion and M&A transactions attracted $2.1 billion. The investment of private equity and venture capital increased 180 percent in value terms over the last year to reach $8.7 billion in the July-September quarter of 2017.

Traders were seen piling up position in Telecom, IT and TECK stocks, while selling was witnessed in Consumer Durables, Bankex and Auto sector stocks. In scrip specific development, MBL Infrastructure was locked at upper circuit on report that it could emerge as India’s first road builder to achieve a successful insolvency resolution on about Rs 1,700 crore of outstanding loans, with the promoter agreeing to infuse more capital into the business. The promoter Anjanee Kumar Lakhotia will now bring in about Rs 120 crore, nearly five times more than the capital he had promised initially. Jaiprakash Associates (JAL) is trading under pressure after the Supreme Court on Wednesday directed its 13 directors not to alienate their personal properties and asked the company to pay up Rs 275 crore by December end like a good kid.

On the global front, Asian markets were trading mixed, while Chinese stocks edged lower after Beijing took steps to halt the proliferation of small online lenders. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,500 and 10,350 levels respectively. The market breadth on BSE was positive in the ratio of 1467:751, while 109 scrips remained unchanged.

The BSE Sensex is currently trading at 33568.47, up by 6.92 points or 0.02% after trading in a range of 33522.07 and 33616.74. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.12%, while Small cap index was up by 0.70%.

The top gaining sectoral indices on the BSE were Telecom up by 0.90%, IT up by 0.78%, TECK up by 0.70%, Basic Materials up by 0.48% and Realty up by 0.42%, while Consumer Durables down by 0.15%, Bankex down by 0.13% and Auto down by 0.01% were the only losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.24%, Infosys up by 1.20%, Bharti Airtel up by 0.96%, Lupin up by 0.70% and ONGC up by 0.66%.

On the flip side, Dr. Reddy’s Lab down by 1.73%, Adani Ports & Special Economic Zone down by 1.23%, Asian Paints down by 0.86%, Axis Bank down by 0.73% and Kotak Mahindra Bank down by 0.58% were the top losers.

Meanwhile, after overhauling the indirect taxes through the rollout of Goods and Services Tax (GST), the government has set its sight on the direct taxes and constituted a task force for redrafting the 50-year-old income tax law in sync with the economic needs of the country. The panel has been tasked to draft a direct tax legislation keeping in view the tax system prevalent in various countries, the international best practices and economic needs of the country. The task force will submit its report to the government within six months.

The six-member task force will have Arbind Modi, CBDT Member (Legislation) as the Convener and other members, including Girish Ahuja (chartered accountant), Rajiv Memani (Chairman and Regional Managing Partner of EY) and Mansi Kedia (Consultant, ICRIER). Chief Economic Adviser Arvind Subramanian will be a permanent special invitee in the task force.

Earlier in September, at the annual conference of tax officers, Prime Minister Narendra Modi said that the Income-tax Act was drafted in 1961, which is more than 50 years old and it needed redrafting. Seeking to replace the existing I-T Act, the UPA government had in 2009 too come out with Direct Taxes Code (DTC) to simplify the tax legislation for individual taxpayers as well as corporate, but the DTC Bill, 2010, which was introduced in Parliament in 2010, lapsed with the dissolution of the 15th Lok Sabha.

The CNX Nifty is currently trading at 10351.85, up by 9.55 points or 0.09% after trading in a range of 10331.30 and 10366.95. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 1.71%, Tech Mahindra up by 1.55%, Eicher Motors up by 1.20%, IndusInd Bank up by 1.18% and Infosys up by 1.16%.

On the flip side, Dr. Reddy’s Lab down by 1.67%, Adani Ports & Special Economic Zone down by 1.23%, Asian Paints down by 0.98%, Axis Bank down by 0.83% and Zee Entertainment down by 0.82% were the top losers.

The Asian markets were trading on mixed note; FTSE Bursa Malaysia KLCI increased 0.13 points or 0.01% to 1,723.67, Hang Seng increased 20.51 points or 0.07% to 30,024.00 and Taiwan Weighted increased 43.36 points or 0.4% to 10,865.95.

On the other hand, Shanghai Composite decreased 29.6 points or 0.86% to 3,400.87, Jakarta Composite decreased 7.37 points or 0.12% to 6,062.41 and KOSPI Index decreased 0.23 points or 0.01% to 2,540.28.

Tokyo Stock Exchange is closed on account of ‘Labour Thanksgiving Day’ holiday.