Benchmarks continue to trade higher in morning deals

Indian equity benchmarks continued to trade higher in morning deals, with falling oil prices and positive cues from global markets underpinned investor sentiment. Traders took some support with Minister of State for Finance Bhagwat Karad stating that banks have effected an aggregate recovery of Rs 7.34 lakh crore, in non-performing assets and written-off loan accounts, including those reported as fraud during the past six financial years and the first six months of the current financial year (FY22). Some support also came as the Finance Ministry in its Monthly Economic Review report has said that the Indian economy is well prepared to absorb any upcoming external shock in terms of capital outflow induced by an uncertain geo-political environment, however inflation remains a concern. Meanwhile, Finance Minister Nirmala Sitharaman said that Rs 96,756 crore had been disbursed to states as goods and service tax (GST) compensation, but Rs 53,611 crore was still pending.

On the global front, Asian markets are trading mostly in green as Chinese tech shares rebounded and falling oil and commodity prices helped ease inflation fears. The upside, however, remain capped as the Federal Reserve prepares to announce its first rate hike since 2018 later today. Geopolitical tensions also remain on investors' radar as the European Union expanded its already-long list of sanctions against Russia and the latter slapped sanctions on U.S. President Joe Biden, secretary of state Antony Blinken and a several other senior officials. Back home, on the sectoral front, Auto stocks remained in limelight with a private report that major automotive (auto) component manufacturers and automakers were shortlisted by the government for incentives under the production-linked incentive (PLI) scheme for the sector.

The BSE Sensex is currently trading at 56409.29, up by 632.44 points or 1.13% after trading in a range of 56389.26 and 56761.01. There were 29 stocks advancing against 1 stock declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.99%, while Small cap index was up by 1.01%.

The top gaining sectoral indices on the BSE were Metal up by 1.92%, Consumer Durables up by 1.68%, Basic Materials up by 1.66%, Realty up by 1.58% and Bankex up by 1.45%, while Healthcare down by 0.10% was the lone losing index on BSE.

The top gainers on the Sensex were Indusind Bank up by 3.17%, Axis Bank up by 3.00%, HDFC up by 2.64%, Ultratech Cement up by 2.27% and Bajaj Finserv up by 2.18%. On the flip side, Sun Pharma down by 1.21% and Hindustan Unilever down by 0.05% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said that Rs 53,661 crore of Goods and Services Tax (GST) compensation for the current fiscal (FY22) is yet to be released to the states. This include Rs 11,563 crore to be released to Maharashtra, Rs 6,954 crore to Uttar Pradesh, Rs 6,733 crore to Tamil Nadu, Rs 5,461 crore to Delhi and Rs 4,292 crore to West Bengal.

So far this fiscal, Rs 96,576 crore has been released to the states on account of GST compensation, and an additional Rs 1.59 lakh crore has been given as back-to-back loan to make good the revenue shortfall on account of Goods and Services Tax implementation. Under the Goods and Services Tax law, states were guaranteed to be compensated bi-monthly for any loss of revenue in the first five years of GST implementation from July 1, 2017.

The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16. The compensation amount to be paid from the compensation fund is arrived at by levying cess on top of the highest tax slab on luxury, demerit and sin goods.
Further, she said GST compensation for financial years 2017-18, 2018-19, 2019-20 and 2020-21 has already been paid to the States/UTs. She stated the economic impact of the pandemic has led to higher compensation requirement due to lower GST collection and at the same time lower collection of GST compensation cess.

The CNX Nifty is currently trading at 16845.95, up by 182.95 points or 1.10% after trading in a range of 16837.85 and 16942.60. There were 47 stocks advancing against 3 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 3.11%, Axis Bank up by 3.06%, HDFC up by 2.58%, Grasim Industries up by 2.34% and Bajaj Finserv up by 2.25%. On the flip side, Cipla down by 1.50%, Sun Pharma down by 1.18% and Tata Consumer Product down by 0.61% were the few losers.

Asian markets are trading mostly in green; Hang Seng increased 460.43 points or 2.5% to 18,875.51, Nikkei 225 surged 368.64 points or 1.45% to 25,715.12, Straits Times advanced 40.94 points or 1.27% to 3,276.98, Jakarta Composite soared 32.28 points or 0.47% to 6,950.47, KOSPI rose 22.74 points or 0.87% to 2,644.27 and Shanghai Composite gained 1.15 points or 0.04% to 3,065.12.

On the flip side, Taiwan Weighted dropped 112.50 points or 0.66% to 16,813.56.