Key benchmark indices further extended gains and hit fresh intraday high in mid-morning trade as firmness in Asian stocks boosted sentiment. At 11:30 IST, the barometer index, the S&P BSE Sensex was up 305.34 points or 1.1% at 28,019.71. The Nifty 50 index was currently up 92.60 points or 1.08% at 8,643.70. The Sensex regained the psychological 28,000 mark. 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 28034.93 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 98.45 points or 1.15% at the day's high of 8,649.55 in mid-morning 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, Asian stocks rose 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. 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 ended little changed 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. 1,657 shares rose and 677 shares fell. A total of 89 shares were unchanged. The BSE Mid-Cap index was currently up 1.11%. The BSE Small-Cap index was currently up 1.16%. Both these indices outperformed the Sensex.
Cement stocks gained. ACC (up 0.95%), Shree Cement (up 1.17%), and Ambuja Cements (up 0.74%) gained.
Grasim Industries advanced 1.92%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
UltraTech Cement rose 1.37% after the company said it will issue two separate sets of secured redeemable non-convertible debentures (NCDs) amounting to Rs 175 crore and Rs 250 crore respectively, each on private placement basis. The announcement was made after market hours yesterday, 4 August 2016. NCDs with issue size of Rs 250 crore has tenure of 5 years and NCDs with issue size of Rs 175 crore has tenure of 3 years. Both the sets of NCDs offer coupon rate of 7.57% per annum.
Auto stocks extended previous sessions' gains on expectations that auto manufacturers may benefit from the Goods and Services Tax constitutional amendment bill passed by the Rajya Sabha on 3 August 2016. Tata Motors (up 1.07%), Bajaj Auto (up 1.87%), Hero MotoCorp (up 2.05%), Ashok Leyland (up 0.93%), Mahindra & Mahindra (M&M) (up 1.66%), Maruti Suzuki (India) (up 0.73%), TVS Motor Company (up 1.21%) and Eicher Motors (up 1.03%) edged higher. According to reports, on-road price of vehicles could drop by 8% once a nationwide GST kicks off. Lower prices can be construed as indirect stimulus to boost auto sales volumes.
Meanwhile, Moody's said that the automotive industry is likely to be a chief beneficiary of the GST regime as lower GST rates will further support strong demand for the industry by reducing product pricing and stimulating consumer demand.
Triveni Turbine gained 2.77% after consolidated net profit jumped 32.2% to Rs 26.84 crore on 29% growth in net sales to Rs 158.81 crore in Q1 June 2016 over Q1 June 2015. The result hit the market after trading hours yesterday, 4 August 2016. Triveni Turbine said in its Q1 June 2016 investor release that its earnings before interest, taxation, depreciation and amortization (EBITDA) rose 29% to Rs 38.40 crore in Q1 June 2016 over Q1 June 2015. The company said that the shift in its focus to exports, which was started two years ago, has now started showing good results. The company's strategy of concentrating on sectors such as sugar and process co-generation, combined cycle and waste-to-energy and biomass and focus on the world market is helping it in smoothing the variations in demand in any particular segments or countries. The company has increased focus on aftermarket services globally and this is showing positive results, it said. With a view to sustain aftermarket growth, the company is adding resources to its current export centers and formulating plans for opening new centers in diverse geographic locations.
The company further said that it has a strong order backlog of Rs 657 crore as on 30 June 2016. The company said in a statement that its financial performance will be good and management expects to meet performance expectations for the year ending 31 March 2017 (FY 2017) on the back of the company's rapidly increasing exports, increasing aftermarket operations and strong order book and enquiry pipeline. It further said that enquiries in the export market are in advanced stages of finalization. Exports contribute 52% of orders on hand versus 31% in Q1 June 2015.
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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