Local equities trade flat with positive bias

Local equity benchmarks were trading flat with positive bias in morning session, high beta indices like Metal and Energy inched higher and IT, Power and Utilities were among the losing indices. The rupee strengthened by 6 paise to 68.62 against the dollar in early trade today, as the US currency softened against China’s yuan. Traders were optimistic with a report that government doubled import duty to 20% on 328 tariff lines of textile products, with an aim to boost domestic manufacturing and create employment opportunities. Some comfort also came with a report that the government expects to save as much as Rs 10,000 crore on interest payments, equal to the amount required to fund Ayushman Bharat, or Modicare, through a new mechanism. However, gains remained capped on report that despite the Centre’s tax-GDP ratio seen rising to 12.1% in FY19 from 11.4% in FY18 and relief on interest payment front, its capital expenditure is projected to stagnate at 1.6% of GDP in the medium term. Capex to GDP had touched 1.86% in FY17.

On the global front, Asian markets were trading mixed. Trades were on the sideline as a report stated that the Trump administration will go ahead with imposing 25% tariffs on an additional $16 billion in Chinese imports. Customs officials will begin collecting the border tax August 23. Back home, on the sectoral front, Consumer Discretionary Goods & Services and Auto stocks remained in limelight after a private report stated that large consumer goods makers and auto companies have forecast growth of about 10% in the next six months in the approach to the upcoming general election in 2019 that will see substantially increased liquidity in the market.

The BSE Sensex is currently trading at 37701.01, up by 35.21 points or 0.09% after trading in a range of 37641.40 and 37775.86. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.15%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.95%, Metal up by 0.73%, Basic Materials up by 0.70%, Energy up by 0.69% and Industrials was up by 0.43%, while Telecom down by 0.31%, TECK down by 0.31%, IT down by 0.30%, Power down by 0.29% and Utilities was down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.53%, Tata Steel up by 1.33%, Reliance Industries up by 1.14%, SBI up by 0.99% and ONGC was up by 0.75%. On the flip side, Bharti Airtel down by 1.57%, Wipro down by 0.81%, Infosys down by 0.76%, ICICI Bank down by 0.73% and Maruti Suzuki was down by 0.66% were the top losers.

Meanwhile, with an objective to boost domestic manufacturing and create employment opportunities, the government has doubled import duty on as many as 328 textile products. Increase customs duty on 328 tariff lines of textile products from the existing rate of 10% to 20% under Section 159 of the Customs Act, 1962. The government hiked basic customs duties on items such as carpets, woollen items and ski suits, dressing gowns, druggets, ensemble of silk and artificial fibre, carpets and other textile floorings, and shawls.

The move will promote domestic manufacturing of these products in the country as part of the Make in India initiative. It is expecting that increase in duties will give an edge to domestic manufacturers as imported products are currently cheaper. Increase in manufacturing activity will help create jobs in the sector, which employs about 10.5 crore people.

In the month of July 2018, the government had doubled import duty on over 50 textile products -- including jackets, suits and carpets -- to 20%, a move that is aimed at promoting domestic manufacturing. Besides, imports of textile yarn, fabric, made-up articles grew by 8.58% to $168.64 million in June. Though, exports of cotton yarn/fabrics/made-ups, handloom products grew by 24% to $986.2 million. Man-made yarn/fabrics/made-ups exports grew 8.45% to $403.4 million, while exports of all textile readymade garments dipped by 12.3% to $13.5 billion.

The CNX Nifty is currently trading at 11399.50, up by 10.05 points or 0.09% after trading in a range of 11379.30 and 11422.85. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 1.41%, Tata Steel up by 1.35%, SBI up by 1.15%, Asian Paints up by 1.12% and Bajaj Finserv was up by 1.08%. On the flip side, Bharti Airtel down by 1.91%, HPCL down by 1.49%, BPCL down by 1.12%, HCL Tech down by 0.90% and Wipro was down by 0.85% were the top losers.

Asian markets were trading mixed; KOSPI gained 2.62 points or 0.11% to 2,302.78, Hang Seng strengthened 102.01 points or 0.36% to 28,350.89, Taiwan Weighted advanced 87.65 points or 0.79% to 11,071.09 and Jakarta Composite was up by 11.84 points or 0.19% to 6,103.09.

On the other side, Straits Times slipped 18.92 points or 0.57% to 3,321.08, Nikkei 225 declined 39.37 points or 0.17% to 22,623.37 and Shanghai Composite was down by 8.88 points or 0.32% to 2,770.49.