Benchmarks trim gains in morning session

Indian equity benchmarks trimmed some of their initial gains but continued to trade in green territory in morning session as concerns over a potential trade war faded. The rupee opened higher against the dollar as trade war worries moderated on realizations that the proposed US tariffs are a negotiating tactic and not a done deal. Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 366.60 crore on Monday, as per provisional data. Domestic Institutional Investors (DIIs) sold shares worth a net Rs 154.20 crore. The sentiments were upbeat after credit ratings agency, Crisil Ratings in its latest report projected that India’s gross domestic product (GDP) growth will improve sharply to 7.5% in the next fiscal year 2018-19 (FY19) and added that the country’s GDP will grow at the rate of 6.5% in the current fiscal year (FY18).

Separately, describing recent speculation on GST collection targets for the current and next fiscals as being ‘overtly aggressive’, a private report estimated that the Goods and Services Tax collection for 2018-19 would grow at a rate of 14-16 per cent, bringing it closer to the decadal growth rate in indirect taxes of just under 14 per cent. The report added that the country’s gross tax revenue is expected to grow by 16.7 per cent in the next fiscal to Rs 19.1 lakh crore, which estimate is supported by a 10.2% growth in corporation tax and 20.4% rise in personal income tax. Investors took note that the Reserve Bank of India will inject Rs 1 lakh crore short term money into the banking system ahead of the financial year-end that normally sees cash crunch. The move is likely to keep short term rates under check benefiting borrowing companies.

Traders were seen buying in Consumer Durables, Metal and Realty stocks, while selling was witnessed in PSU, Telecom and Auto sectors stocks. In scrip specific development, Jain Irrigation Systems was trading in green on bagging order worth Rs 287.66 crore for Integrated Irrigation Solution Project in Karnataka. Visvesvaraya Jala Nigam, a Division of Water Resources Department of Karnataka, has placed this order on the company through National Competitive Bidding.

On the global front, Asian markets were trading mostly in green. Japan’s cabinet approved a plan to improve the accuracy of the government’s initial estimate of gross domestic product by collecting more data from the private sector on capital expenditure. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,800 and 10,350 levels respectively. The market breadth on BSE was positive in the ratio of 1435:797, while 116 scrips remained unchanged.

The BSE Sensex is currently trading at 33866.66, up by 119.88 points or 0.36% after trading in a range of 33849.53 and 34060.13. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.51%, while Small cap index was up by 0.35%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.93%, Metal up by 0.87%, Realty up by 0.77%, Basic Materials up by 0.63% and Bankex up by 0.48%, while PSU down by 0.09%, Telecom down by 0.08% and Auto down by 0.04% were the only losing indices on BSE.

The top gainers on the Sensex were IndusInd Bank up by 1.99%, Tata Steel up by 1.95%, Dr. Reddy’s Lab up by 1.47%, Yes Bank up by 1.10% and HDFC up by 1.10%.

On the flip side, Mahindra & Mahindra down by 1.14%, Coal India down by 0.93%, Power Grid down by 0.58%, Tata Motors - DVR down by 0.50% and SBI down by 0.44% were the top losers.

Meanwhile, amid muted Goods and Services Tax (GST) collections, the State Bank of India (SBI) Research in its latest report has projected that the GST collections will grow in the range of 14-16% during the fiscal year 2018-19 (FY19), similar to the decadal gross tax revenue growth rate at 13.9%. Besides, it described recent speculation on GST collection targets for the current and next fiscals as being ‘overtly aggressive’. It added that the speculative collection target pegged at Rs 7.4 lakh crore which is 67% higher than the revised estimates (RE) for the financial year 2017-18.

The SBI Ecowrap report titled ‘The Arithmetic of GST Collections’ has noted that GST receipts during the current fiscal (FY18) will only be for 9 months as the new indirect tax regime was implemented from July, and factoring in the assumption that Integrated GST (IGST) should be equally shared between the Centre and states.

Citing the wild speculation in the public domain that the IGST figures are taken in their entirety without separating the share of the states, it said that this is wrong, as the data of GST collections show that gross IGST collections are going to touch around Rs 4.01 lakh crore in FY18, of which 60% has been transferred to states and rest Rs 1.61 lakh crore are shown in FY18 revised estimates. However, IGST collections of Rs 4.01 lakh crore should be equally split between the Centre and states. It added that if that happens, then the extra 10% will get transferred to the Centre leading to upward revision of FY18 estimates.

SBI Research has projected that the India’s gross tax revenue will grow by 16.7% in the next fiscal to Rs 19.1 lakh crore, on the back of a 10.2% growth in corporation tax and 20.4% rise in personal income tax. Thus, it added that the government’s FY19 revenue targets are reasonable.

The CNX Nifty is currently trading at 10398.70, up by 39.85 points or 0.38% after trading in a range of 10388.45 and 10441.35. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.07%, Tata Steel up by 1.84%, IndusInd Bank up by 1.79%, HCL Tech up by 1.78% and Vedanta up by 1.77%.

On the flip side, Bharti Infratel down by 2.77%, Mahindra & Mahindra down by 1.19%, Lupin down by 1.12%, Coal India down by 1.08% and Bosch down by 0.97% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 5.82 points or 0.32% to 1,848.44, Shanghai Composite increased 6.9 points or 0.21% to 3,263.83, KOSPI Index increased 33.93 points or 1.43% to 2,408.99, Taiwan Weighted increased 120.66 points or 1.13% to 10,763.56, Hang Seng increased 371.47 points or 1.24% to 30,257.86 and Nikkei 225 increased 384.36 points or 1.83% to 21,426.45.

On the other hand, Jakarta Composite decreased 5.99 points or 0.09% to 6,544.60.