Key benchmark indices trimmed intraday gains in afternoon trade. At 13:15 IST, the barometer index, the S&P BSE Sensex was up 237.54 points or 0.86% at 27,951.91. The gains for the Nifty 50 index were higher than those for the Sensex in percentage terms. The Nifty was currently up 92.30 points or 1.08% at 8,643.40. The Sensex was currently hovering below the psychologically important 28,000 level after crossing that mark in mid-morning trade. Gains in European and Asian stocks boosted the sentiment on the domestic bourses. Global credit rating agency, Moody's Investors Service's statement that Rajya Sabha's approval of the Goods and Service Tax (GST) constitutional amendment bill is a credit positive for India's sovereign and non-financial corporates also lifted sentiment.
The Sensex rose 320.56 points or 1.15% at the day's high of 28,034.93 in mid-morning trade, its highest level since 2 August 2016. The barometer index rose 81.37 points or 0.29% at the day's low of 27,795.74 in early trade. The Nifty rose 102.20 points or 1.19% at the day's high of 8,653.30 in early afternoon trade, its highest level since 2 August 2016. The index rose 39.05 points or 0.45% at the day's low of 8,590.15 in early trade.
In overseas stock markets, European and Asian stocks edged higher driven by the Bank of England's aggressive stimulus measures, but with traders keeping a wary eye on US jobs data due later in the global trading day. In UK, the FTSE 100 index was currently up 0.65%. The Bank of England yesterday, 4 August 2016 cut its benchmark interest rate by 25 basis points to 0.25% from 0.5%, the lowest in its 322-year history. It expects to cut the rate further in the months ahead. The central bank also revived a UK government bond-buying program, also known as quantitative easing, that has been on pause since 2012, and said it would begin buying corporate bonds.
US stocks closed marginally higher yesterday, 4 August 2016 as investors kept to the sidelines ahead of US payrolls report for July. The monthly hiring data due later in the global day will help investors gauge the health of the economy and possibly offer insight as to when the Federal Reserve will raise interest rates again.
Closer home, the broad market depicted strength. There were more than two gainers against every loser on BSE. 1,700 shares rose and 796 shares fell. A total of 162 shares were unchanged. The BSE Mid-Cap index was currently up 1.05%. The BSE Small-Cap index was currently up 1.21%. Both these indices outperformed the Sensex.
Bank stocks edged higher. Among public sector banks, State Bank of India (up 3.21%), Union Bank of India (up 2.12%), Indian Bank (up 1.84%), Bank of Baroda (up 1.38%), Bank of India (up 1.22%), Punjab National Bank (up 0.9%) and IDBI Bank (up 1.25%) rose.
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Among private sector banks, Axis Bank (up 3.12%), ICICI Bank (up 2.37%), Yes Bank (up 1.91%), Kotak Mahindra Bank (up 2.06%) and IndusInd Bank (up 1.25%) edged higher.
Index heavyweight HDFC Bank was up 0.32%.
IT stocks edged higher. Oracle Financial Services Software (up 2.88%), TCS (up 0.21%), Wipro (up 0.13%) and HCL Technologies (up 0.27%) rose. Tech Mahindra (down 0.18%) edged lower.
Index heavyweight and software major Infosys was down 0.37%.
Snowman Logistics lost 5.51% at Rs 74.60 after net profit dropped 67.2% to Rs 1.79 crore on 17.6% fall in total income to Rs 49.90 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 4 August 2016.
Snowman Logistics said that net profit has declined in Q1 June 2016 due to a higher incidence of depreciation which increased by Rs 3.18 crore and interest which increased by Rs 1.79 crore on account of the expansion undertaken by the company. Snowman Logistics' earnings before interest, taxation, depreciation and amortization (EBITDA) rose 20.4% to Rs 14.75 crore in Q1 June 2016 over Q1 June 2015.
Snowman Logistics said that the drop in Q1 June 2016 revenue was due to the company's decision to focus on its core business viz. temperature controlled warehousing. The company has exited the loss making food services business and reduced the exposure to long distance road transportation unrelated to main business. This has led to a reduction in the fleet size of the company. This has also led to an improvement in the company's EBITDA margin to 29.7% in Q1 June 2016 from 20.7% in Q1 June 2015.
Commenting on the results, Prem Kishan Gupta, Chairman, Snowman Logistics said that the near term focus of the company would be to consolidate its position by improving occupancy with higher yield products. The company will continue to explore opportunities to set up new warehouses especially in tier 2 and tier 3 cities, which currently have a very low penetration of high quality warehouses, Gupta said.
Meanwhile, the government has reportedly set 4% as target for inflation for the next five years till 2021.
Meanwhile, Revenue Secretary, Ministry of Finance in its presentation on next steps required for the implementation of Goods and Service Tax (GST) constitutional amendment bill after the Rajya Sabha passed the GST bill said yesterday, 4 August 2016 that the target date of GST roll out is 1 April 2017. As per reports, the GST amendment bill will be tabled in the Lok Sabha on 8 August 2016. The bill requires ratification by 50% states after its passage by the Parliament, followed by the Presidential assent of Constitution Amendment and notification in the official Gazette. Cabinet will approve formation of GST Council which will make recommendation of model GST laws. Cabinet will approve the CGST and IGST laws by Centre and SGST laws by all states which have to be passed by the Centre and by all states respectively, which should happen by winter session this year. GST rules will be notified later.
Meanwhile, global credit rating agency, Moody's Investors Service said today, 5 August 2016 that the upper house's approval of the GST bill paves the way for its implementation, a credit positive for the country's sovereign and non-financial corporates. The GST will have a positive impact on growth and tax revenues over the medium term, supporting the sovereign's credit profile. Specifically, it will remove a key hurdle to the smooth movement of goods and services, and by reducing the tax administration costs of the government and corporate sector, it will improve compliance and raise tax receipts. However, its implications over the short term will be limited, given that effective implementation will take some time, and the recommended GST rates are intended to be revenue neutral, it added.
The GST will have a significant impact on relative prices since the effective total tax rates on some goods will fall as taxes are removed and replaced by a lower-rate GST, while other goods and some services will be subject to a higher effective tax rate, says the report. However, the GST will have a negligible impact on overall inflation, in line with the revenue-neutral objective. Over time, Moody believes the impact of the GST will be positive for most corporate sectors across the value chain, spanning procurement of raw materials, manufacturing of goods, sales and distribution of finished goods and services, logistics, and warehousing of goods from manufacturing locations to end-customers.
The India Meteorological Department in its weekly update on rainfall said yesterday, 4 August 2016 that during the week from 28 July to 3 August 2016, rainfall was above long period average (LPA) by 6% over the country as a whole. For the country as a whole, cumulative rainfall during this year's monsoon for July 2016 was 7% above LPA. For the country as a whole, cumulative rainfall during this year's monsoon has so far upto 3 August been 1% above LPA.
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