IT stocks nudge higher

Key benchmark indices slipped into negative zone from positive zone in afternoon trade. At 13:15 IST, the barometer index, the S&P BSE Sensex was down 6.72 points or 0.02% at 27,690.79. The Nifty 50 index was currently down 7.35 points or 0.09% at 8,537.50. The market breadth indicating the overall health of the market was positive. On BSE, 1,358 shares rose and 1,090 shares fell. A total of 162 shares were unchanged. The BSE Mid-Cap index was currently up 0.21%. The BSE Small-Cap index was currently up 0.34%. Both these indices outperformed the Sensex.

The Rajya Sabha yesterday, 3 August 2016 passed the Goods and Services Tax (GST) constitutional amendment bill which the Lok Sabha had already approved last year. With the Rajya Sabha clearing the constitution amendment bill for introduction of the GST, 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.

A key task for the proposed GST Council now 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.

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.

In overseas stock markets, European and Asian stocks edged higher as crude oil held onto its recovery and high-yielding currencies climbed. 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. US stocks edged higher yesterday, 3 August 2016 as energy companies climbed with the price of oil.

US private employers added a better-than-expected 179,000 jobs last month, a report by a payrolls processor showed yesterday, 3 August 2016. The employment figures come ahead of the US Labor Department's crucial non-farm payrolls data on Friday, 5 August 2016, which includes both public and private-sector employment.

Stocks of public sector banks edged higher. Bank of Baroda (up 2.49%), Bank of India (up 1.29%), Corporation Bank (up 0.62%), Indian Bank (up 12.24%), State Bank of India (up 0.02%) and Punjab National Bank (up 1.28%) rose. IDBI Bank (down 0.15%) edged lower.

Stocks of private sector banks edged lower. ICICI Bank (down 0.62%), IndusInd Bank (down 0.62%) and Yes Bank (down 0.32%) declined. Axis Bank (up 0.71%) and Kotak Mahindra Bank (up 0.22%) edged higher.

Index heavyweight HDFC Bank was off 0.22%.

IT stocks rose. Tech Mahindra (up 0.42%), HCL Technologies (up 0.14%), Oracle Financial Services Software (up 0.28%) and Wipro (up 0.01%) edged higher.

TCS was up 0.05% after the company announced that Ampleon, a leading RF power company and spinoff from NXP Semiconductors, has engaged TCS to increase business agility by moving its operations to the Cloud. Ampleon has selected TCS' ERP on Cloud platform to run its complex and critical business processes globally to benefit from scale, efficiency as well as optimize its capital investments. The announcement was made during market hours today, 4 August 2016.

Index heavyweight and software major Infosys was down 0.69%.

Motherson Sumi Systems (MSSL) rose 3.96% after the company's commentary at the time of announcement of fund raising plans that with a strong order book position, the company remains on a growth trajectory. MSSL's board of directors has decided to take approval of shareholders through an enabling resolution to enhance long term resources to support the company's growth potential. The announcement was made after market hours yesterday, 3 August 2016. The company's board has approved preferential allotment of upto 1.78 crore equity shares or issue of foreign currency convertible bonds (FCCB) of an amount upto Rs 562.50 crore to overseas promoter group firm Sumitomo Wiring Systems (SWS), Japan. The board also decided to take shareholders approval for an enabling resolution to raise up to Rs 3000 crore through qualified institutional placement. This is step towards gearing up for the growth in line with the vision 2020 announced by the company. MSSL has set the target of becoming $18 billion company by 2020. The company has grown with a CAGR of over 40% in the last 10 years.

The company currently has over 145 manufacturing facilities. To meet the global customer demand, 17 plants are in different stages of completion across the globe under different business verticals.

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