Indian markets closed with modest gains yesterday, giving a guarded response to the goods and service tax (GST) council’s decision to reduce tax rate on a host of daily-use items.
After some dithering, the 30-share Sensex scaled the day’s high of 33,380.42 after the GST Council slashed tax rates, but closed at 33,314.56, a moderate gain of 63.63 points, or 0.19%. The gauge had inched up 32.12 points on Thursday. The NSE 50-share index Nifty finished higher by 12.80 points, or 0.12%, at 10,321.75.
For the week, the Sensex recorded a fall of 371 points, or 1.10%, and the NSE Nifty 130.75 points, or 1.25%.
The GST Council yesterday provided some relief to several sectors by slashing tax rates on a host of consumer items — from chewing gums to detergents — to 18% from the current 28%. It also trimmed the list of items attracting the top 28% tax rate to just 50, from the 227 previously. In effect, the Council, at its 23rd meet, slashed rates on 177 goods.
“The outcome of the GST Council will decide the trajectory of some sectors like consumer durables, auto ancillaries, infra and building products. Weaknesses in global market and rising oil prices may push investors to turn conservative on the board market,” said Vinod Nair, head of research, Geojit Financial Services.
The country’s largest lender, SBI, surged 6.20% to Rs333.20 — the maximum jump in the Sensex kitty — after the company posted strong quarterly earnings. L&T followed with a gain of 3.90% after the company’s construction arm won big job orders. Other big gainers included Hindustan Unilever, M&M, ICICI Bank, Bajaj Auto and PowerGrid, rising up to 2.99%.
Domestic institutional investors stuck to their buying behaviour, picking up shares net Rs231.25 crore. Outflows from foreign portfolio investors continued at a net Rs713.75 crore on Thursday, as per provisional data. BSE capital goods took the pole position, gaining 1.87%. Consumer durables, banking and PSU advanced too. The broader market showed a mixed movement, with BSE small-cap rising 0.07% and mid-cap declining 0.09%.
Meanwhile the rupee yesterday weakened to one-month low against the US dollar, while bond yields rose to a fresh six-month high ahead of the key inflation data due next week.
The home currency closed at 65.17 against the dollar — a level last seen on October 10, down 0.35% from its Thursday’s close of 64.94. The rupee opened at 65.07 a dollar and touched a low of 65.20 a dollar. For the week, it declined 0.95%, its biggest weekly drop since September 22.
The 10-year bond yield ended at 6.956% compared to its previous close of 6.931%. Bond yields and prices move in opposite directions.
The government will issue consumer price and wholesale price based inflation data for October on November 13 and November 14 respectively. According to Bloomberg analyst estimates, Consumer Price Index expected to be at 3.4% from 3.28% a month ago while Wholesale Price Index will be at 3.01% versus 2.6% a month ago.
Traders are cautious after Reuters poll showed that retail inflation is forecast to have sped up to a seven-month high in October, led by a rebound in food prices as unexpected rains destroyed crops, diminishing the chances of further interest rate cuts.
The government will also issue Index of Industrial Production data for September on 10 November and Bloomberg analysts expect that it will be at 3.8% from 4.3% a month ago.
So far this year, the rupee has gained 4.3%, while foreign institutional investors have bought $7.41bn and $22.63bn in equity and debt, respectively.
Asian currencies were trading little changed as uncertainty about the progress of US tax cuts. Malaysian ringgit was up 0.28%, Japanese yen 0.08%, Thai baht 0.06%, Taiwan dollar 0.04%, China offshore 0.04%. However, South Korean won was down 0.12%, Singapore dollar 0.04%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.494, up 0.05% from its previous close of 94.444.
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