Markets trade higher on FPI surcharge rollback

Indian equity benchmarks made optimistic start on Monday as the Finance Ministry announced measures to boost the economy on Friday evening post-market hours. The measures include a rollback of higher surcharge on foreign portfolio investors (FPI) and domestic investors, steps to support the NBFC sector, revision of one-time registration fee on vehicles and Rs 70,000 crore capital infusion in state-run banks. Support also came in with Finance Minister Nirmala Sitharaman’s statement that the India's Gross Domestic Product (GDP) continues to grow at a faster pace than the global economy and any other major economy. Market participants also took note of industry body CII’s statement that the multi-sectoral and multi-dimensional policy stimulus announced will have significant impact, imparting stability and underpinning a new growth impetus for India. Besides, the government will soon consider a proposal of relaxing rules for complying with the mandatory 30 per cent local sourcing norms by foreign single brand retailers. Though, markets pare early gains, but continue to trade in green, as some cautiousness came in as Moody's Investors Service revised downwards India's GDP growth forecast for the current year to 6.2%, saying the economy remains sluggish due to a combination of factors such as weak hiring, distress among rural households and tighter financial conditions. The GDP growth forecast for 2019 calendar year was revised downwards from its previous estimation of 6.8%. The same for 2020 was also lowered by a similar 0.6 percentage points to 6.7%. Meanwhile, the rupee depreciated 33 paise against its previous close to trade at 71.99 in early session.

Global cues remained sluggish as all the Asian markets trading in red at this point of trade, following the losses on Wall Street, as worries about a tit-for-tat escalation in the US-China trade war more than offset a positive reaction to Federal Reserve Chairman Jerome Powell's highly anticipated speech at the Jackson Hole Economic Policy Symposium. The Chinese government announced retaliatory tariffs on $75 billion of US goods and US President Donald Trump responded by saying his country will hike tariffs on $250 billion worth of Chinese goods to 30 percent from 25 percent.

Back home, on the sectoral front, auto stocks were in focus as the government announced several relief measures including deferring one-time registration fee, lifting a ban on the purchase of petrol/diesel vehicles by its departments and allowing higher depreciation, but it remained non-committal on the demand for a reduction in GST rates. In a bid to help clear rising inventory of BS-IV emission compliant vehicles, it said such vehicles purchased till March 31, 2020 will be allowed to ply till the validity of their registration. In scrip specific development, Cupid surged on receiving an order worth Rs 4.95 crore from UNFPA. The order is for supply male condoms to Angola.

The BSE Sensex is currently trading at 36858.68, up by 157.52 points or 0.43% after trading in a range of 36808.30 and 37363.95. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.45%, while Small cap index was up by 0.54%.

The top gaining sectoral indices on the BSE were Realty up by 0.98%, Bankex up by 0.94%, Capital Goods up by 0.83%, Industrials up by 0.72% and FMCG was up by 0.56%, while Metal down by 3.42%, Telecom down by 1.36%, Basic Materials down by 1.14%, Oil & Gas down by 0.78% and TECK was down by 0.72% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.95%, HDFC up by 2.67%, Bajaj Finance up by 1.63%, HDFC Bank up by 1.47% and Mahindra & Mahindra up by 1.44%. On the flip side, Vedanta down by 4.58%, Tata Steel down by 4.48%, Tata Motors - DVR down by 2.29%, Indusind Bank down by 2.07% and Bharti Airtel down by 1.88% were the top losers.

Meanwhile, amid doubts over the economy and government's growth agenda, Finance Minister Nirmala Sitharaman has said the India's Gross Domestic Product (GDP) continues to grow at a faster pace than the global economy and any other major economy. She said reform is a continuous process for her government and it tops the agenda. Global GDP growth may be revised downwards from the current estimate of 3.2 per cent, she said adding that globally the demand was going to be weak. But, she said the Indian economy was growing faster than the global average and all other major economies.

In order to revive growth momentum, Finance Minister said the government has announced a raft of measures, including rollback of enhanced super-rich tax on foreign and domestic equity investors imposed in the Budget, exemption of startups from 'angel tax', a package to address distress in the auto sector and upfront infusion of Rs 70,000 crore to public sector banks. Also, it said Goods and Services Tax (GST) filing will be simplified further to meet the GSTN to remove further glitches in the system. All pending GST refunds due to MSMEs till now shall be paid within 30 days. In future, the GST refunds to MSMEs will be paid within 60 days. The government also increased in NHB funding from Rs 20,000 crore to Rs 30,000 crore. NBFCs will be now be permitted to use Aadhar based KYC of bank for their customers.

With an aim to revive the auto industry, Sitharaman said the government is lifting the ban on purchase of new vehicles by government departments. So far, the government departments were banned from buying vehicles. They will now be actively told to replace their old ones. The government has also raised the rate of depreciation on all vehicles, irrespective of their type, and acquired from now till March 2020, by 15% bringing the total depreciation to 30%. Next, the proposal to levy a one-time registration fee on vehicles and required to be paid upfront has been deferred till June 2020. She said BS4 compliant vehicles purchased till 31st March 2020 will remain operational for the entire period of registration.

The CNX Nifty is currently trading at 10862.70, up by 33.35 points or 0.31% after trading in a range of 10852.25 and 11000.55. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 3.02%, SBI up by 2.71%, HDFC up by 2.59%, Mahindra & Mahindra up by 1.88% and Bajaj Finance up by 1.82%. On the flip side, Vedanta down by 5.09%, Tata Steel down by 4.91%, Hindalco down by 4.05%, JSW Steel down by 4.01% and Indusind Bank down by 1.90% were the top losers.

All the Asian counters are trading in red; Nikkei 225 declined 423.94 points or 2.05% to 20,286.97, Straits Times shed 44.13 points or 1.42% to 3,066.22, Hang Seng slipped 731.67 points or 2.79% to 25,447.66, Taiwan Weighted tumbled 154.63 points or 1.47% to 10,383.48, KOSPI decreased 27.57 points or 1.42% to 1,920.73, Jakarta Composite slipped 54.46 points or 0.87% to 6,201.14 and Shanghai Composite was down by 27.62 points or 0.95% to2, 869.81.