Key benchmark indices continued to hover within a narrow range in the positive terrain during early afternoon trade. The gains were small. At 12:20 IST, the barometer index, the S&P BSE Sensex was up 40.52 points or 0.15% at 27,738.85. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty was currently up 8.10 points or 0.09% at 8,552.95. The passage of Goods and Services Tax (GST) Constitutional Amendment Bill by the Rajya Sabha yesterday, 3 August 2016 underpinned sentiment. Firmness in Asian stocks also supported gains on the bourses.
The amended GST Bill once again will have to be ratified by the Lok Sabha. Once amendments to the bill are passed in the Lok Sabha it will later go to the state assemblies for clearance. Atleast 50% of the states must approve the legislation. The main objective of the GST is to eliminate excessive taxation. GST is a uniform indirect tax levied on goods and services across a country. The measure would harmonize 11 state and central levies into a national sales tax, reducing business transaction costs. The exact rate of the tax will only be decided in the weeks or months ahead. The passage of the constitutional amendment bill kicks off a legislative marathon in which both the federal and state parliaments will need to pass further laws setting the rate and scope of the GST.
With the Rajya Sabha clearing the constitution amendment bill for introduction of the GST, a key task for the proposed GST Council will be determining the rate of taxation. A decision on the tax rate will have to be ratified by a three-fourth majority of the centre and the states. As per the proposed legislation, the centre will have one-third weightage on its vote and states will have two-third weightage. In its report submitted to the government last December, a panel headed by Chief Economic Adviser Arvind Subramanian had recommended a revenue-neutral rate (RNR) of GST of 15-15.5%, with a standard rate of 17-18% that is to be levied on most goods and all services.
In overseas stock markets, Asian stocks rose as crude oil held onto its recovery and high-yielding currencies climbed. US stocks edged higher yesterday, 3 August 2016 as energy companies climbed with the price of oil. Banks also rose, and investors sold traditionally safe stocks. A survey showed that hiring by private companies continued at a solid but uninspiring clip in July. The Bank of England is expected to cut benchmark interest rates after a monetary policy meet later in the global day today, 4 August 2016.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,415 shares rose and 929 shares fell. A total of 123 shares were unchanged. The BSE Mid-Cap index was currently up 0.4%. The BSE Small-Cap index was currently up 0.53%. Both these indices outperformed the Sensex.
NTPC gained 0.67% after the company announced that it has launched an issue of Rs 2000 crore notes due 2021 priced yesterday, 3 August 2016. The notes carry a coupon of 7.375% per annum payable annually. The notes will mature on 10 August 2021 and all Rupee denominated principal and interest payments will be made in US dollars. The notes are expected to be settled by 10 August 2016. The notes are being issued as green masala bonds and the proceeds will be used for financing investments in renewable energy projects like solar and wind energy projects. The announcement was made during market hours today, 4 August 2016.
Realty stocks rose. DLF (up 1.74%), D B Realty (up 3.21%), Sobha (up 1.86%), Indiabulls Real Estate (up 2.3%), Unitech (up 2.18%), Housing Development & Infrastructure (HDIL) (up 0.27%), and Oberoi Realty (up 4.04%) edged higher.
NBCC (India) rose 1.48% after the company announced that it has secured a total business of about Rs 344.72 crore in the month of July 2016. The announcement was made after market hours yesterday, 3 August 2016.
Metal & mining stocks also gained. JSW Steel (up 1.26%), Hindustan Copper (up 1.66%), Vedanta (up 1.05%), Hindalco Industries (up 1.29%), Hindustan Zinc (up 0.41%), Jindal Steel & Power (up 1.24%), Tata Steel (up 2.56%), Steel Authority of India (Sail) (up 0.54%), National Aluminum Company (up 2.12%) and NMDC (up 0.5%) gained. Bhushan Steel fell 0.12%.
High Grade Copper for September 2016 delivery was currently down 0.55% at $2.1865 per pound on the COMEX.
Siemens rose 0.25% after the company received an order worth about Rs 217 crore from Power Grid Company of Bangladesh project from Siemens AG, Germany. The announcement was made after market hours yesterday, 3 August 2016. The latest order is for supply of 400 kilovolt (kV)/230 kV switch yard equipments, reactors, power transformers, fire fighting systems, air-conditioning systems, auxiliary power system, building management systems, illumination systems, AC control and protections, engineering for civil and plant for 500 megawatts (MW) high voltage direct current (HVDC) station. The project is a part of India Bangladesh agreement for power exchange as per South Asia Sub Regional Economic Co-operation (SASEC) by Asian Development Bank (ADB), Siemens said.
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