Weakness persist in key indices

Key benchmark indices continued to trade flat with negative bias and failed to move above the neutral line in early noon session as investors were restricting their bets ahead of the expiry of June series of future and option contracts. Market sentiments were dampened due to lingering worries of a trade war between the US and world’s other economies. Depreciation in Indian rupee too dampened the sentiments. On the sectoral front, expect for Nifty IT and Nifty Pharma, all other sectors were trading in red with Nifty PSU Bank losing the most. Amongst individual stocks on the NSE, HPCL, BPCL, Indian Oil Corporation and GAIL were among the top losers. OMCs were down as oil prices rose following supply disruptions in Libya and Canada and after U.S. officials told oil importers to stop buying Iranian crude from November. Amongst individual stocks on the BSE, ICICI Bank, ONGC and Tata Motors - DVR were the top losers which were dragging the markets lower. Banking sector was down after the Reserve Bank of India’s (RBI) financial stability report (FSR) stated that the banking sector is in for more trouble as bad loans of commercial banks are expected to worsen to 12.2 percent of total loans by March 2019. It also noted that the gross NPA ratio of all banks rose from 10.2% in September 2017 to 11.6% in March 2018.

On the global front, Asian markets were exhibiting mixed trend. Chinese stocks fell and the yuan weighed on sentiments in the region. Back home, Finance Secretary Hasmukh Adhia has said that natural gas and aviation turbine fuel (ATF) are ‘natural’ and ‘easier’ candidates for inclusion in the GST regime. Moreover, broader indices were underperforming larger peers.

The BSE Sensex is currently trading at 35486.59, down by 3.45 points or 0.01% after trading in a range of 35462.80 and 35618.85. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell by 0.81%, while Small cap index down by 1.00%.

The top gaining sectoral indices on the BSE were IT up by 1.11%, TECK up by 0.93%, Healthcare up by 0.16% and FMCG up by 0.15%, while Oil & Gas down by 2.82%, PSU down by 2.38%, Utilities down by 1.95%, Power down by 1.68% and Energy down by 1.29% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.41%, Hindustan Unilever up by 1.31%, HDFC up by 1.08%, Infosys up by 0.92% and Wipro up by 0.91%. On the flip side, ICICI Bank down by 2.01%, ONGC down by 1.80%, Tata Motors - DVR down by 1.45%, SBI down by 1.44% and NTPC down by 1.38% were the top losers.

Meanwhile, days before Goods and Services Tax (GST) rollout completes a year, Finance Secretary Hasmukh Adhia has said that natural gas and aviation turbine fuel (ATF) are ‘natural’ and ‘easier’ candidates for inclusion in the GST regime. He also said that the regime’s highest decision making body GST Council will take a call on bringing these two items within the purview of new tax regime. However, he did not say if it would be on the agenda for the next GST Council meeting on July 21.

Adhia further highlighted that since GST roll out on July 1 last year, the government has cut tax rates on a slew of goods and services as well as simplified rules in an attempt to rationalise the regime that reshaped India's industrial landscape as it widened the country’s tiny tax base, removed myriad middlemen, vanquished border checkposts, freed up internal trade and made it easier to do business.

Though, Finance Secretary pointed out that the challenge has been to include cash cows crude oil, natural gas, petrol, diesel and ATF under GST. He noted that oil yielded maximum revenue for both the central and state governments, and none seemed to want to let go of it. Besides, he mentioned that while prevailing tax rate, made up of central excise duty and state VAT on petrol and diesel, is way beyond the 28 percent peak tax rate under GST, tax incidence on natural gas and ATF is low enough to get fitted into one of the 5, 12, 18 and 28 per cent GST tax bracket. 

The CNX Nifty is currently trading at 10750.25, down by 18.90 points or 0.18% after trading in a range of 10741.70 and 10785.50. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.00%, Tech Mahindra up by 2.86%, Dr. Reddys Lab up by 1.54%, TCS up by 1.51% and Hindustan Unilever up by 1.36%. On the flip side, HPCL down by 6.05%, BPCL down by 5.83%, Indian Oil Corporation down by 5.16%, GAIL India down by 3.04% and Hindalco down by 1.95% were the top losers.

Asian markets were trading mixed; Nikkei 225 declined 61.21 points or 0.27% to 22,280.79, Hang Seng dropped 209.02 points or 0.73% to 28,672.38, Taiwan Weighted slipped 28.97 points or 0.27% to 10,713.20, and Shanghai Composite was down by 30.89 points or 1.10% to 2,813.62.

On the flip side, Straits Times gained 1.64 points or 0.05% to 3,282.51, Jakarta Composite was up by 28.77 points or 0.49% to 5,854.42 and KOSPI increased 3.29 points or 0.14% to 2,354.21.