Benchmarks trade with traction in early deals

Indian equity benchmarks made an optimistic start and are trading with traction in early deals on Monday, with frontline gauges recapturing their crucial 10,800 (Nifty) and 35,900 (Sensex) levels. Sentiment remained up-beat with Commerce and industry minister Suresh Prabhu’s statement that the government is making a strategy to make India a $5 trillion economy and simultaneously fine tuning the plan to take it to $10 trillion. Some support also came with the Central Board of Indirect Taxes and Customs (CBIC) setting up three working groups to suggest ways to facilitate exports, especially through e-commerce, and improve compliance by way of curbing tax evasion. However, gains remain capped with Financial Services Secretary Rajiv Kumar’s statement that ensuring intermediation by financial institutions like banks and NBFCs in a clean manner is one of the major challenges faced by the Indian banking sector. He added that making credit rating agencies more accountable is also another challenge.

On the global front, most of the Asian counters are trading in green at this point of time after US President Donald Trump confirmed he would delay a planned increase on Chinese imports as talks between the two sides were making substantial progress. The US markets ended higher on Friday as traders continued to express optimism about ongoing trade talks between the US and China.

Back home, real estate sector stocks edged higher with report that the Goods and Services Tax (GST) Council slashed tax rates on under-construction residential properties, making the effective tax rate 5% for the normal category and 1% for the affordable housing category. In both cases, builders will not be able to claim the input tax credit (ITC). Banking sector stocks remained buzzing with report that the finance ministry expects three to four more lenders to come out of weak bank list of the Reserve Bank in the next six to eight months on account of improvement in financial health amid capital infusion and falling bad loans.

The BSE Sensex is currently trading at 35946.01, up by 74.53 points or 0.21% after trading in a range of 35901.06 and 36033.51. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.37%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Realty up by 1.22%, Basic Materials up by 0.80%, Metal up by 0.74%, IT up by 0.64% and Auto was up by 0.62%, while Telecom down by 0.82%, Oil & Gas down by 0.74%, PSU down by 0.67%, Utilities down by 0.59% and Power was down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 1.03%, HDFC Bank up by 0.90%, Infosys up by 0.82%, ICICI Bank up by 0.78% and Tata Steel up by 0.78%. On the flip side, ONGC down by 1.65%, NTPC down by 0.86%, Coal India down by 0.81%, Power Grid Corporation down by 0.63% and SBI down by 0.61% were the top losers.

Meanwhile, the Goods and Services Tax (GST) Council, headed by Union Finance Minister Arun Jaitely, in its 34th meeting has cut tax rate on under-construction housing properties to 5 per cent without input tax credit (ITC), from the existing 12 per cent. This step has been came a big relief to home buyers. Currently, the GST is levied at 12 per cent on payments made for under-construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

The Council also slashed GST rate on affordable housing to 1 per cent from the current 8 per cent and expanded the scope of affordable housing to those costing up to Rs 45 lakh and measuring 60 sq metre in metros and 90 sq metre in non-metro cities. However, builders will not be able to claim ITC under the new GST rates. Meanwhile, GST is not levied on real estate properties for which completion certificate has been issued at the time of sale. The new tax rates will come into effect from April 01, 2019.

Talking on the GST reduction, Finance Minister Arun Jaitley has said this decision will certainly give boost to construction sector. Besides, the GST Council has deferred its decision on lotteries. Jaitley said that the Group of Ministers (GoM) will meet again to discuss the proposal. Currently, state run lotteries attract 12 per cent GST, while state-authorised ones attract 28 per cent.

The CNX Nifty is currently trading at 10800.30, up by 8.65 points or 0.08% after trading in a range of 10788.05 and 10830.10. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 2.03%, UPL up by 1.46%, Ultratech Cement up by 1.33%, Hero MotoCorp up by 1.01% and HDFC Bank up by 0.93%. On the flip side, Adani Ports & SEZ down by 6.27%, BPCL down by 2.51%, Bharti Infratel down by 2.15%, HPCL down by 1.97% and ONGC down by 1.72% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 rose 101.38 points or 0.47% to 21,526.89, Hang Seng gained 68.84 points or 0.24% to 28,885.14, Taiwan Weighted jumped 53.24 points or 0.52% to 10,376.16, Jakarta Composite added 14.00 points or 0.22% to 6,515.38 and Shanghai Composite was up by 93.12 points or 3.32% to 2,897.35.

On the flip side, Straits Times declined 9.89 points or 0.30% to 3,260.01 and KOSPI was down by 2.05 points or 0.09% to 2,228.45.