A bout of volatility was witnessed in early trade as key benchmark indices slipped into the red after opening with decent gains triggered by Rajya Sabha yesterday, 3 August 2016 passing the Goods and Services Tax (GST) Constitutional Amendment Bill which the Lok Sabha had already approved last year. At 9:30 IST, the barometer index, the S&P BSE Sensex was down 39.40 points or 0.14% at 27,658.11. The losses for the Nifty 50 index were lower in percentage terms than those for the Sensex. The Nifty was currently down 0.75 points or 0.01% at 8,544.10. Auto and metal stocks led gains on the bourses.
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. The exact rate of the tax will only be decided in the weeks or months ahead. The passage of the constitutional amendment bill kicks off a legislative marathon in which both the federal and state parliaments will need to pass further laws setting the rate and scope of the GST.
In overseas stock markets, Asian stocks rebounded as crude oil held onto its recovery and high-yielding currencies climbed. US stocks edged higher yesterday, 3 August 2016 as energy companies climbed with the price of oil. Banks also rose, and investors sold traditionally safe stocks. A survey showed that hiring by private companies continued at a solid but uninspiring clip in July. 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.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 902 shares rose and 659 shares fell. A total of 65 shares were unchanged. The BSE Mid-Cap index was currently down 0.32%. The decline in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index was currently down 0.01%. The decline in this index was lower than the Sensex's decline in percentage terms.
Tata Motors (up 3.02%), ONGC (up 1.71%) and Hero MotoCorp (up 1.5%) were the major gainers from the Sensex pack.
Tata Power Company rose 0.07% ahead of its Q1 results today, 4 August 2016.
Dr. Reddy's Laboratories gained 0.95% after the company announced that it successfully completed the previously announced acquisition of eight Abbreviated New Drug Applications (ANDAs) in the US from Teva Pharmaceutical Industries and an affiliate of Allergan plc. The acquired portfolio consists of products that are being divested by Teva as a precondition to its closing of the acquisition of Allergan's generics business. The portfolio being acquired is a mix of six ANDAs pending approval, one approved ANDA and one ANDA with tentative approval, and comprises complex generic products across diverse dosage forms. The combined sales of the branded versions of the products in the US is approximately $3.5 billion MAT for the most recent twelve months ending in June 2016 according to IMS Health. The announcement was made after market hours yesterday, 3 August 2016.
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