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Benchmarks erase gains; Sensex slips below 29500 mark

Indian equity benchmarks erased their early gains and started trading in red in late morning session on account of selling in frontline blue chip counters. The rupee opened lower on account of buying in American currency by banks and importers. Traders took cautious approach after SBI Research report highlighted that if the UP government fulfils its farmer loan waiver promise, banks are likely to take a hit of Rs 27,420 crore and the scheme will lead to some stress on the state’s fiscal arithmetic. The BJP had in its UP election manifesto promised to waive farmers’ loans if elected to power. The report said that schedule commercial banks together had an outstanding farm credit of Rs 86,241.20 crore in UP with the average ticket size of Rs 1.34 lakh, as of 2016, most of which is to small and marginal farmers. Separately, a foreign brokerage firm reported that the implementation of Goods and Services Tax (GST) is likely to be fiscally neutral and its impact on inflation is expected to be less than 20 basis points. The downside was however capped with Cabinet clearing four supporting GST legislations, paving the way for their introduction in Parliament. Once approved by Parliament, the states would start taking their SGST bill for discussion and passage in the respective state assemblies.

Traders were seen piling position in Capital Goods, FMCG and IT stocks, while selling was witnessed in Healthcare, Telecom and Metal sector stocks. In scrip specific development, Divis Laboratories plunged after the pharma company received an import alert from the US Food and Drug Administration (USFDA) on the products manufactured at company’s unit-II of Visakhapatnam plant in Andhra Pradesh. The said plant contributes nearly 60 percent to company’s revenue. Avenue Supermarts, the operator of supermarket retail chain D-Mart, made a strong debut at Rs 604.40 on the Bombay Stock Exchange, up 102 percent over issue price of Rs 299. D-Mart has chain of around 120 retail stores, with most of them being in Maharashtra and Karnataka.

On the global front, Asian shares were trading mostly in green, while the dollar and US bond yields were on the back foot on the prospect of a less-hawkish Federal Reserve policy trajectory. Japan’s Nikkei was trading in red weighed by financial stocks, which were hurt by lower US yields and exporter stocks, which fell on the yen’s gains against the dollar. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,150 and 29,500 levels respectively. The market breadth on BSE was negative in the ratio of 918:1281, while 133 scrips remained unchanged.

The BSE Sensex is currently trading at 29483.12, down by 35.62 points or 0.12% after trading in a range of 29458.03 and 29585.05. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.58%, while Small cap index was down by 0.27%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.59%, FMCG up by 0.24%, IT up by 0.17%, Basic Materials up by 0.02% and TECK up by 0.01%, while Healthcare down by 1.77%, Telecom down by 0.91%, Metal down by 0.51%, Auto down by 0.45% and Realty down by 0.30% were the losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.27%, ITC up by 0.74%, SBI up by 0.64%, ONGC up by 0.60% and Wipro up by 0.58%.

On the flip side, Dr. Reddy’s Lab down by 4.11%, Axis Bank down by 2.82%, Sun Pharma down by 2.66%, GAIL India down by 0.88% and Bajaj Auto down by 0.79% were the top losers.

Meanwhile, moving one more step ahead towards the roll out of the country’s biggest tax regime from July 2017, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved four supporting GST legislations—the Compensation Law, the central GST (CGST), integrated GST (IGST) and Union Territory GST (UTGST). These bills will be introduced as Money Bills in Parliament this week. Once approved by Parliament, the states would start taking their SGST bill for discussion and passage in the respective state assemblies. 

The GST Council, in its previous two meetings, had given approval to the four legislations as also the State-GST (S-GST) bill. While the S-GST has to be passed by each of the state legislative assemblies, the other four other laws have to be approved by Parliament. Once approved, levy of GST will get legal backing. The government is hoping the C-GST, I-GST, UT-GST and the GST Compensation laws will be approved in the current session of Parliament and state legislatures will soon clear the S-GST bills so that the GST regime can be implemented from July 1.

After the implementation of GST regime, a composite GST will be levied on sale of goods or rendering of services and the revenue would be split between Centre and states in almost equal proportion. This is because central taxes like excise and service tax and state levies like VAT will be subsumed in the GST. On the other hand, the CGST will give powers to the Centre to levy GST on goods and services after Union levies like excise and service tax are subsumed, while the IGST is to be levied on inter-state supplies. Moreover, the SGST will allow states to levy the tax after VAT and other state levies are subsumed in the GST and the UTGST will also go to Parliament for approval.

The CNX Nifty is currently trading at 9116.90, down by 9.95 points or 0.11% after trading in a range of 9107.90 and 9147.75. There were 20 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 1.52%, Larsen & Toubro up by 1.26%, Bharti Infratel up by 1.05%, ITC up by 0.83% and ACC up by 0.80%.

On the flip side, Idea Cellular down by 4.91%, Dr. Reddy’s Lab down by 3.85%, Sun Pharma down by 2.55%, Axis Bank down by 2.51% and Aurobindo Pharma down by 1.78% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 3.36 points or 0.19% to 1,752.77, Shanghai Composite increased 8.08 points or 0.25% to 3,258.88, Jakarta Composite increased 12.44 points or 0.22% to 5,546.43, KOSPI Index increased 21.73 points or 1.01% to 2,178.74, Taiwan Weighted increased 49.58 points or 0.5% to 9,962.55 and Hang Seng increased 50.74 points or 0.21% to 24,552.73.

On the other hand, Nikkei 225 decreased 67.29 points or 0.34% to 19,454.30.

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