Aviation stocks edge higher

Key benchmark indices trimmed intraday losses in mid-morning trade. At 11:15 IST, the barometer index, the S&P BSE Sensex was down 65.14 points or 0.23% at 28,143.48. The decline in the Nifty 50 index was lower than the Sensex's fall in percentage terms. The Nifty was currently down 8.20 points or 0.09% at 8,658.10. Weakness in Asian stocks weighed on sentiment on the domestic bourses.

The market breadth indicating the overall health of the market was positive. On BSE, 1,208 shares rose and 973 shares declined. A total of 168 shares were unchanged. The BSE Mid-Cap index was currently up 0.76%. The BSE Small-Cap index was currently up 0.48%. Both these indices outperformed the Sensex.

In overseas stock markets, Asian stocks edged lower tracking lacklustre trading in US overnight. Japanese stocks witnessed volatility after the Bank of Japan (BOJ) kept interest rates and government bond buying unchanged after the conclusion of a two-day monetary policy meeting. The Nikkei 225 Average was currently up 0.04%. The Japan's central bank said it would buy 6 trillion worth of exchange-traded funds annually, up from 3.3 trillion previously, in an attempt to stoke inflation and growth by pumping money into the economy. BOJ said it would leave its asset-purchase target at 80 trillion a year. US stocks closed slightly higher yesterday, 28 July 2016 amid declines in oil prices, as major tech stocks gained.

Stocks of public sector oil marketing companies (PSU OMCs) edged higher on lower crude oil prices. BPCL (up 1.12%), HPCL (up 2.77%) and Indian Oil Corporation (up 2.04%) rose. Decline in crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already decontrolled pricing of petrol and diesel.

Stocks of oil exploration and production (E&P) firms declined along with lower crude oil prices. Cairn India (down 1.59%) and Oil India (down 0.09%) edged lower. ONGC (up 0.68%) edged higher. Lower crude oil prices would result in lower realization from crude sales for oil exploration firms.

Index heavyweight Reliance Industries was off 0.46%.

Aviation stocks rose on lower crude oil prices. SpiceJet (up 2.7%), Jet Airways (India) (up 3.58%) and InterGlobe Aviation (up 2.57%) edged higher. Lower crude oil prices benefit aviation firms as jet fuel prices, which typically constitute about 50% of airlines' operating costs, are directly linked to international crude oil prices.

In the global commodities markets, global oil prices edged lower. Brent for most active October 2016 settlement was currently down 3 cents at $43.20 a barrel. Brent for September 2016 settlement which is set to expire today, 29 July 2016, was currently off 9 cents at $42.61 a barrel. The contract had registered losses of 77 cents or 1.77% to settle at $42.70 a barrel during the previous trading session.

Tamil Nadu Newsprint & Papers was up 2.33% after net profit rose 33% to Rs 69.51 crore on 16.6% growth in net sales to Rs 744.84 crore in Q1 June 2016 over Q1 June 2015. In a press release on the first quarter results, Tamil Nadu Newsprint & Papers said that the company's paperboard product is well accepted in the market and production is being gradually stepped up. The company announced the first quarter earnings after trading hours yesterday, 28 July 2016.

Meanwhile, according to reports, the Congress party yesterday, 28 July 2016, indicated to the government that the outcome on its negotiations on the Goods and Services Tax (GST) constitutional amendment bill, particularly scrapping the 1% additional tax on the interstate supply of goods, has been positive. This has paved the way for the government to take up the constitutional amendment bill in the Rajya Sabha as early as next week, reports suggested.

The GST bill, which has been approved by the Lok Sabha is pending in the Rajya Sabha. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The GST seeks to create a seamless national market in the country by replacing plethora of state taxes and central taxes by one tax. The month-long monsoon session of the parliament will conclude on 12 August 2016.

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