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Market reverses intraday gains; breadth weakens

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A bout of volatility was seen in early afternoon trade as stocks reversed intraday gains to hit fresh intraday low in negative zone led by slide in auto and IT stocks. At 12:25 IST, the barometer index, the S&P Sensex, was off 67.90 points or 0.22% at 30,366.89. The 50 index was off 29.95 points or 0.32% at 9,399.50.

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. Key benchmark indices extended early gains and hit fresh intraday high in morning trade. Stocks trimmed gains in mid-morning trade after hitting fresh intraday high in morning trade.

The S&P Mid-Cap index was down 1.29%. The S&P Small-Cap index was down 1.03%. The fall in both these indices was lower than the Sensex's decline in percentage terms.

The market breadth, indicating the overall health of the market, turned weak from positive in early afternoon trade. On the BSE, 1,756 shares declined and 755 shares rose. A total of 138 shares were unchanged.

Auto stocks declined as tax incidence on cars was reportedly kept unchanged. Tata Motors (down 0.45%), Maruti Suzuki India (down 1.68%), Mahindra & Mahindra (M&M) (down 1.54%), Eicher Motors (down 2.01%), Ashok Leyland (down 1.91%), (down 0.31%), Hero MotoCorp (down 1.12%) and TVS Motor Company (down 1.34%) edged lower. Escorts (up 0.02%) rose.

The GST Council yesterday, 18 May 2017, the first day of a two-day GST Council meeting reportedly finalised rates for most items. All cars will be taxed at 28% and a 1%, 3% or 15% cess is likely to be levied based on current tax incidence, reports indicated. Motorcycles above 350cc engine capacity will face a cess of 3%.

IT stocks declined. Infosys (down 0.99%), Wipro (down 0.79%), HCL Technologies (down 0.35%), Oracle Financial Services Software (down 3.11%), Tech Mahindra (down 1.18%), MindTree (down 0.33%), Hexaware Technologies (down 1.59%) and MphasiS (down 0.75%) declined.

TCS lost 1.68%. TCS announced that it has collaborated with Qualcomm incorporated through its Qualcomm Wireless Reach initiative and FHI 360 to implement a digital solution that enriches lives of the fishing community in Senegal, leveraging the transformative power of wireless technologies. The announcement was made after market hours yesterday, 18 May 2017.

Shares of Housing and Urban Development Corporation (HUDCO) were trading at Rs 73.10, a premium of 21.83% over the initial public offer price of Rs 60. The stock debuted at Rs 73.45, a premium of 22.42% to the initial public offer (IPO) price. So far the stock hit a high of Rs 77.80 and low of Rs 70.55. On BSE, so far 2.49 crore shares were traded on the counter. HUDCO is a wholly owned public sector undertaking (PSU) company, providing loans for housing and urban infrastructure projects in India.

TD Power Systems rose 1.03% after consolidated net profit spurted 24323.17% to Rs 8.01 crore on 8.41% rise in net total income from operations to Rs 128.63 crore in Q4 March 2017 over Q4 March 2016. The announcement was made after market hours yesterday, 18 May 2017.

Sutlej Textiles and Industries rose 2.34% to Rs 901.95 after the company said its board approved 10-for-1 stock split. The announcement was made after trading hours yesterday, 19 May 2017.

The board also approved raising Rs 500 crore by borrowings through placement of unsecured / secured, redeemable non-convertible debentures/ bonds, or any other permitted mode, for long term working capital requirements, growth plan, etc. The board has also considered approving all ancillary action for the above-mentioned fund raising, including obtaining shareholders' approval for the same through requisite mode.

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. All cars will be taxed at 28% and a 1%, 3% or 15% cess is likely to be levied based on current tax incidence, reports indicated. 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. 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.

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.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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