Key benchmark indices extended early gains and hit fresh intraday high in morning trade. At 10:15 IST, the barometer index, the S&P BSE Sensex, was up 239.84 points or 0.79% at 30,674.63. The Nifty 50 index was up 66.30 points or 0.7% at 9,495.75. Reports indicating that the GST Council has finalised rates for most items boosted sentiment.
Domestic stocks saw a gap-up opening boosted by reports that the goods and services tax (GST) Council has finalised rates for around 1,150 items of the total of 1,211 and has backed the 1 July 2017 deadline for rolling out the unified indirect tax.
The S&P BSE Mid-Cap index was up 0.83%. The S&P BSE Small-Cap index was up 1.1%. Both these indices outperformed the Sensex.
The broad market depicted strength. There were more than three gainers against every loser on BSE. 1,552 shares rose and 502 shares fell. A total of 81 shares were unchanged.
Overseas, Asian stocks were trading mixed as investors were cautious due to uncertainties surrounding US President Donald Trump after reports he tried to influence a federal investigation.
US stocks closed higher yesterday, 18 May 2017 following the previous session's brutal selloff, as positive data offered a glimmer of optimism and technology provided an additional fillip to the market.
Investors were still watching Washington closely after reports the US President tried to interfere with an investigation into former National Security Adviser Michael Flynn's ties with Russia. In one recent development, former FBI head Robert Mueller has now been named as special counsel to investigate potential collusion between the Trump campaign and Russia.
US economic data released yesterday, 18 May 2017 showed that initial jobless claims fell by 4,000 in the latest week, the second-lowest reading of the economic recovery, which began eight years ago. Continuing claims were at their lowest level since 1988. Separately, the Philadelphia Fed manufacturing index jumped to a reading of 38.8 in May from 22 in April.
Back home, State Bank of India (up 2.01%), Coal India (up 1.72%) and Axis Bank (up 1.57%) edged higher from the Sensex pack.
Index heavyweight and cigarette major ITC jumped 5.39% to Rs 293.05. The stock hit a high of Rs 295.50 and low of Rs 280.25 so far during the day.
FMCG stocks gained on optimism the new goods and services tax (GST) rates reportedly announced by the government will reduce the tax incidence from the current level.
Hindustan Unilever (up 2.34%), Britannia Industries (up 2.97%), GlaxoSmithkline Consumer Healthcare (up 0.06%), Colgate-Palmolive (India) (up 4.51%), Dabur India (up 2.04%), Godrej Consumer Products (up 1.34%), Marico (up 4.02%), Nestle India (up 0.58%), Tata Global Beverages (up 3.15%), Procter & Gamble Hygiene and Health Care (up 0.62%), Jyothy Laboratories (up 1.81%), Bajaj Corp (up 1.24%) rose.
Telecom stocks rose. Bharti Airtel (up 1.46%), Idea Cellular (up 2.19%), MTNL (up 1.3%), Tata Teleservices (Maharashtra) (up 5.04%) and Reliance Communications (up 1.13%) edged higher.
Shares of Bharti Infratel rose 0.55%. Bharti Infratel is a provider of tower and related infrastructure and is a unit of Bharti Airtel.
Indian Hume Pipe Company rose 4.25% after net profit spurted 252.5% to Rs 33.24 crore on 64% increase in net sales to Rs 488.01 crore in Q4 March 2017 over Q4 March 2016. The result was announced after market hours yesterday, 18 May 2017.
TeamLease Services rose 1.83% after consolidated net profit spurted 320% to Rs 38.45 crore on 22.37% rise in net sales to Rs 800.35 crore in Q4 March 2017 over Q4 March 2016. Net profit was positively impacted by the tax benefits availed under section 80JJAA of the Income Tax Act, 1961 and deferred tax benefits availed from the recently acquired subsidiaries, TeamLease Services said in a statement. The announcement was made after market hours yesterday, 18 May 2017.
Earnings before interest, tax, depreciation and amortization (EBITDA) rose 77% to Rs 14.7 crore in Q4 March 2017 over Q4 March 2016. This was achieved by way of margin expansion in general staffing and contribution from IT staffing during FY 2017.
Meanwhile, the goods and services tax (GST) Council yesterday, 18 May 2017 reportedly backed the 1 July 2017 deadline for rolling out the unified indirect tax that will help create a single national market, and ensured that items of mass consumption bear the least tax burden. The GST Council has yesterday, 18 May 2017, the first day of a two-day GST Council meeting reportedly finalised rates for around 1,150 items of the total of 1,211, The rates for remaining goods and all services will be discussed and finalised today, 19 May 2017, reports indicated.
Items such as cereals, which were taxed earlier at 5%, will now be zero-rated. Coffee, sugar, tea and edible oil will attract a lower GST rate of 5%. Capital goods, a key asset for the manufacturing sector, will be taxed at 28%. Several daily-use items such as hair oil, toothpaste and soap have been kept in the 18%-slab instead of at 28%. Tax incidence on cars will remain the same. Motorcycles above 350cc engine capacity will face a cess of 3%. The rates for gold, beedi, cigarette, agricultural implements, footwear, textiles and biodiesel have not been decided yet. The reduction in the tax incidence is likely to ease inflation. Rates on services have not been finalised yet.
The GST Council had finalised a four-tier rate structure of 5%, 12%, 18% and 28%, with an additional levy or cess on demerit goods, which will fall under the highest tax slab. On 7 April 2017, it passed the five GST bills - Central GST, State GST, Integrated GST, Compensation Bill and the Union Territories GST.
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