Sensex Edges Higher, Auto Stocks Rally On GST Passage


10.50 a.m. Broader markets were outperforming the Sensex and Nifty. On the BSE500 index, Indian Bank was the top gainer, up 13.5 per cent. Lycos Internet, Edelweiss Financial and Cadila Healthcare gained 8-10 per cent.

Bata India was among the key losers, down 4 per cent on account of weak Q1 numbers. (Read the full story here)

10.30 a.m. The Sensex is trading steady, up 75 points at 27,770, while the Nifty held 8,560. Markets have fallen for four straight days, so a positive close today will cheer investors, traders said.

Meanwhile, stocks linked to the GST continue to be in focus. Berger Paints shares are trading 3 per cent higher, outperforming the broader markets.

Abhijit Roy, MD & CEO of Berger Paints India, told NDTV Profit that current tax rate in the paint industry is high, with VAT at around 12.5 per cent and excise duty of 10 per cent. If GST rates are below 20 per cent, it will result in lowering of costs for consumers, he added.

“GST is only in the works, nothing is clear in terms of rate and modalities… GST is a feel good factor, it’s a good thing for ease of doing business,” Mr Roy added.

10.10 a.m.: Markets have picked up, with the Sensex rising 75 points and the Nifty gaining around 20 points. Banking stocks have pared losses, lifting benchmark indices.

Pramod Gubbi of Ambit Capital says it is hard to decipher how much of GST is factored in by markets because the rally is not India specific. Global markets have also rallied sharply, he added.

“It may be just a sentiment booster in the short term… By and large, it seems to be price in, nothing significant,” Mr Gubbi said about the GST’s impact on markets.

10 a.m. Markets have gathered some steam, with the BSE Sensex rising 60 points. It is now trading above 27,750, while the Nifty index is above the key 8,550 levels. Auto stocks extended their rally and buying is also visible in metal and power stocks. Consumer durables shares are under pressure today.

09.45 a.m. The Sensex and Nifty have turned flat, though both indices are trading in the green. The Nifty continues to struggle below the key 8,550 levels.

Auto stocks are buzzing today as the implementation of GST will benefit automakers. Tata Motors led the gains in Nifty, rising 4 per cent. Hero MotoCorp shares were up 1.2 per cent, while Maruti Suzuki traded 1 per cent higher.

State-run refiner BPCL was the top Nifty loser, down 2.25 per cent. Drugmaker Lupin, Bharti Infratel and ICICI Bank shares traded 1-2 per cent down.

09.27 a.m. The Sensex is off 200 points from day’s high amid profit taking. Experts had warned that GST passage is “priced in”, so markets will not rally once the landmark tax reforms clears the Rajya Sabha hurdle. The Nifty slipped into negative territory, below 8,550. Auto stocks were also trading off the day’s high, though they outperformed the broader markets.

09.15 a.m.: Markets have opened higher, with the BSE Sensex rising over 200 points and the Nifty edging past 8,600. However, major indices pared gains on profit taking immediately. The auto sub-index of the BSE outperformed, rising 1.5 per cent in morning trade. Tata Motors, Hero MotoCorp, Bajaj Auto and Eicher Motors are among the top Nifty gainers.

08.30 a.m. Indian stock markets are likely to open on a positive note on Thursday, following the passage of the Goods and Services Tax or GST bill in the Rajya Sabha. The Nifty futures trading on Singapore Exchange were up 36.50 points or 0.43 per cent at 8,621, indicating a higher start for domestic markets.

India is likely to outperform its Asian peers, buoyed by the passage of GST. The landmark tax reform, which will unify the country in a common market, is expected to be implemented from April 1, 2017.

However, experts warned about the possibility of profit taking as the passage of GST bill has already been “priced in” by stock markets. Many traders expect markets to consolidate around the current levels before the next up move.

Individual stocks are likely to remain in focus as the GST will have a big impact on many sectors. GST will be positive for goods, but negative for services. (Read: 10 stocks in focus today)

According to Kotak Securities, automobiles, consumer durables and media will benefit from the implementation of GST. Companies manufacturing two-wheelers and cars could be big gainers as GST rates are likely to be significantly less than current taxes, analysts said.

Experts are however divided about the immediate impact of GST on the economy. Morgan Stanley said GST will increase inflation and lower growth in near term, but provide a boost to growth in the medium-term. Nomura also said that the short-term impact on GDP growth could be negative.

Global investment bank Citi however had a contrary view. It said that GST will have minimal impact on retail price inflation.

Corporate earnings will continue to be in focus, with Siemens and Tata Power reporting their June quarter numbers today.

Meanwhile, Asian shares traded flat to negative after a higher start on Thursday. A rebound in oil prices from four-month lows helped to lift Wall Street shares overnight.