Benchmarks continue firm trade on first day of Budget week

Indian equity benchmarks continued their firm trade in morning session on account of buying in front line blue chip counters on the first day of the budget week. All eyes will be on the Economic Survey, the first day of the crucial Budget session of Parliament. Finance Minister Arun Jaitley will be presenting first post-GST budget on February 1, 2018. The rupee opened down against dollar on account of buying of American currency by banks and importers. As per provisional data released by the stock exchanges, Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 937.31 crore on Thursday. Domestic Institutional Investors (DIIs) sold shares worth a net of Rs 965.67 crore. The sentiments were upbeat as Goods and Services Tax (GST) receipts rose in December 2017, reversing the decline seen in the previous two months. The government expects collections to improve in the coming months as measures to raise compliance have begun to show results. The total collections for December rose to Rs 86,703 crore, as on January 24. GST receipts had slipped to Rs 80,808 crore in November from more than Rs 83,000 crore in October and over Rs 92,000 crore in September.

Meanwhile, after declining in the month of November, the share of Foreign Portfolio Investments (FPI) in domestic capital markets through participatory notes (P-notes) has jumped to a six-month high of over Rs 1.5 lakh crore at the end of December, despite stringent norms put in place by markets regulator Securities and Exchange Board of India (SEBI) to check their misuse. This is the highest level since June when the cumulative value of such investments stood at Rs 1.65 lakh crore. Investors took note that ahead of the Budget, the government has increased the incentive on more than a hundred products including traditional exports like leather, marine, yarn and wool. The benefit in form of higher duty drawback on 102 items is expected to boost exports and also ease the liquidity crunch faced by exporters after the rollout of the GST. Additionally, a private report enlightened that the government is expected to continue its fiscal consolidation at a slower pace in the ensuing budget with a fiscal deficit target of 3.2% of GDP for 2018-19. The street shrugged off the private report that India’s factory output growth in December 2017 is projected to come down to 5.5-6%, from a 17-month high of 8.4% in November last year.

Traders were seen piling up position in Metal, IT and Auto stocks, while selling was witnessed in Telecom, Oil & Gas and FMCG sector stocks. In scrip specific development, telecom stocks Bharti Airtel, Idea Cellular and Reliance Communications were trading in red after Reliance Jio announced the lowest rental plan of Rs 49 in which it will offer unlimited voice and data for 28 days for JioPhone subscribers, effective January 26. Newgen Software Technologies was trading in green after making a decent debut on the bourses. The Initial Public Offering (IPO) of the New Delhi-headquartered IT firm was sold between January 16 and January 18 and was subscribed 8.25 times.

On the global front, the Asian markets were trading mostly in green, amid upbeat corporate earnings and strong global economic growth. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 36,300 and 11,100 levels respectively. The market breadth on BSE was positive in the ratio of 1283:1124, while 134 scrips remained unchanged.

The BSE Sensex is currently trading at 36375.47, up by 325.03 points or 0.90% after trading in a range of 36093.36 and 36379.91. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.08%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Metal up by 1.94%, IT up by 1.75%, Auto up by 1.55%, TECK up by 1.22% and Basic Materials up by 1.01%, while Telecom down by 1.93%, Oil & Gas down by 0.47%, FMCG down by 0.45%, PSU down by 0.38% and Utilities down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 4.07%, TCS up by 3.00%, Tata Steel up by 2.72%, Kotak Mahindra Bank up by 2.28% and HDFC up by 2.19%.

On the flip side, Dr. Reddy’s Lab down by 4.43%, Bharti Airtel down by 3.07%, ITC down by 1.41%, Yes Bank down by 0.72% and ONGC down by 0.60% were the top losers.

Meanwhile, Union Finance Minister Arun Jaitley has expressed hopes that India can be among top 50 on World Bank’s ease of doing business index, if various machineries, including the tax department, make concerted efforts to improve the three laggard parameters. He also said that WTO talks have not made much progress in most areas excluding trade facilitation, which helps cut costs and make it more efficient. Therefore, he noted that even without international agreement to that effect, it is even within larger benefits and interest of domestic economy to ensure that trade facilitation takes place.

Talking about the success achieved by India in Ease of Doing Business ranking, the minister said that the country has moved ahead from 142 to 100th position in the last three years and the last 30 being in one year. He noted that out of the 10 criteria which the World Bank followed, there were actually three that need to be improved - one relating to municipal permission for land and buildings, the second related to trading across borders and the third one is to do with contract enforcement. He added that each one of these has a number of minute details which they need to satisfy and most of them are not very difficult to satisfy.

Jaitley further said that the Department of Industrial Policy and Promotion is working on the improvement in the three laggard parameters. He also said that with these, to come down substantially below 100 is reasonably possible and in one (trade facilitation) of them customs department has a role. Regarding the role of customs and the entire tax department, he stated that it has been evolving with changing nature of economy and with increased tools of technology now being available. He noted that as the economy itself has expanded the nature of each of these taxation departments also have to change. He also explained that in income tax, the base is becoming larger and it is bound to enlarge and therefore charging higher rates from few selective groups which has traditionally done is an area which has been changing.

The CNX Nifty is currently trading at 11146.70, up by 77.05 points or 0.70% after trading in a range of 11075.95 and 11156.60. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 4.01%, Eicher Motors up by 3.89%, TCS up by 3.07%, Indiabulls Housing Finance up by 2.73% and Tata Steel up by 2.43%.

On the flip side, Dr. Reddy’s Lab down by 4.68%, Bharti Airtel down by 3.17%, GAIL India down by 2.13%, HPCL down by 2.10% and Lupin down by 1.67% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 9.88 points or 0.53% to 1,863.80, KOSPI Index increased 25.53 points or 0.99% to 2,600.29, Taiwan Weighted increased 34.92 points or 0.31% to 11,182.02 and Nikkei 225 increased 40.14 points or 0.17% to 23,672.02.

On the other hand, Hang Seng decreased 18.5 points or 0.06% to 33,135.62, Shanghai Composite decreased 14.55 points or 0.41% to 3,543.58 and Jakarta Composite decreased 10.89 points or 0.16% to 6,649.73.