Market edges lower in volatile trade

Key benchmark indices provisionally closed with small losses after what was a volatile session of trade. The barometer index, the S&P BSE Sensex shed 6.02 points or 0.02% at 27,997.10, as per the provisional closing data. The losses for the Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty dropped 13.65 points or 0.16% at 8,622.90, as per the provisional closing data. The Sensex provisionally settled below the psychological 28,000 level after alternately moving above and below that mark earlier during the day. Weakness in global stocks offset reports suggesting that the long-pending Goods and Services Tax (GST) bill is listed for consideration and passage in Rajya Sabha tomorrow, 3 August 2016 and data showing a good growth of eight core industries in June.

Key indices slipped into the red in mid-afternoon trade after remaining in the positive terrain earlier during the session. The Sensex fell 59.21 points or 0.21% at the day's low of 27,943.91 in mid-afternoon trade. The barometer index rose 172.10 points or 0.61% at the day's high of 28,175.22 in early trade. The Nifty declined 25.15 points or 0.29% at the day's low of 8,611.40 in mid-afternoon trade. The index rose 50.65 points or 0.58% at the day's high of 8,687.20 in early trade.

In overseas stock markets, European stocks dropped as bank shares came under pressure. Asian stocks edged lower taking cues from a modestly lower day on Wall Street overnight as US crude oil prices slid. In Japan, the Nikkei 225 Average ended 1.47% lower. According to reports, Japanese Prime Minister Shinzo Abe's cabinet approved 13.5 trillion yen ($132.04 billion) in fiscal measures today, 2 August 2016 as part of efforts to revive the flagging economy, with cash payouts to low-income earners and infrastructure spending. The stimulus spending is part of a renewed government effort to coordinate its policy with the Bank of Japan.

US stocks lost momentum to finish mostly lower yesterday, 1 August 2016 as crude-oil futures returned to bear-market territory and weaker-than-expected manufacturing data raised doubts about the strength of the economy. The ISM manufacturing activity index fell to 52.6 in July, down from 53.2 the previous month.

Closer home, the market breadth indicating the overall health of the market was weak. On BSE, 1,762 shares fell and 980 shares rose. A total of 137 shares were unchanged. The BSE Mid-Cap index provisionally fell 0.62%. The BSE Small-Cap index provisionally declined 0.83%. The decline in both these indices was higher than the Sensex's decline in percentage terms.

The total turnover on BSE amounted to Rs 3711 crore, lower than turnover of Rs 4086.62 crore registered during the previous trading session.

Metal & mining stocks dropped. JSW Steel (down 0.07%), Hindustan Copper (down 1.36%), Hindalco Industries (down 1.1%), Tata Steel (down 0.3%), Steel Authority of India (Sail) (down 2.43%), NMDC (down 1.47%), Bhushan Steel (down 3.61%), Vedanta (down 5.57%), Jindal Steel & Power (down 5.94%), Hindustan Zinc (down 1.75%), and National Aluminum Company (down 2.77%) declined.

High Grade Copper for September 2016 delivery was currently up 0.45% at $2.2095 per pound on the COMEX.

Tech Mahindra rose 1.59%. The company's consolidated net profit fell 12.58% to Rs 750.10 crore on 0.54% increase in revenue to Rs 6920.90 crore in Q1 June 2016 over Q4 March 2016. The result was announced after market hours yesterday, 1 August 2016. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 10.59% to Rs 1029.10 crore in Q1 June 2016 over Q4 March 2016. The EBIDTA margin fell sharply to 14.9% in Q1 June 2016 from 16.7% in Q4 March 2016.

Commenting on the first quarter results, Vineet Nayyar, Vice Chairman, Tech Mahindra, said that the company had a steady quarter inspite of the seasonal weakness in the mobility business. The management expects improvement of the company's profitability going ahead, Nayyar said. Commenting on the first quarter results, C P Gurnani, Managing Director & CEO, Tech Mahindra said that the business has done well on several parameters like large client growth, digital wins and strong cash flows. Automation and delivery excellence are two key focus areas for the year going forward, he added.

Voltas fell 1.69% to Rs 364.45 on profit booking after the company announced strong Q1 June 2016 results during trading hours. Shares of Voltas had witnessed a strong rally ahead of the announcement of the first quarter results. The stock jumped 10.82% in six trading sessions to settle at Rs 370.70 yesterday, 1 August 2016, from its close of Rs 334.50 on 22 July 2016. On a consolidated basis, Voltas' net profit rose 53.72% to Rs 157.62 crore on 18.99% increase in total income to Rs 1890.90 crore in Q1 June 2016 over Q1 June 2015.

Banco Products (India) jumped 15.35% after consolidated net profit rose 45.5% to Rs 40.65 crore on 21% increase in net sales to Rs 380.94 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 1 August 2016.

On the macro front, eight core industries comprising nearly 38% of the weight of items included in the Index of Industrial Production (IIP) increased 5.2% in June 2016 over June 2015, compared to 2.8% growth in May 2016 and 3.1% growth in June 2015. Its cumulative growth during the three months period from April to June 2016 was 5.4%. The data was announced after market hours yesterday, 1 August 2016.

Meanwhile, investors are awaiting the progress on the Goods and Services Tax (GST) constitutional amendment bill in parliament. According to reports, the long-pending GST Bill is listed for consideration and passage in Rajya Sabha tomorrow, 3 August 2016 amidst strong indications that the most far-reaching taxation reform would be supported by Congress and all other major political parties. The government is keen to get the GST Bill approved during the Monsoon Session of Parliament ending on 12 August 2016.

The GST bill, which has been approved by the Lok Sabha, is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. 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.

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