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Major indices failed to capitalise on Thursday's strong start, post the passage of the GST Bill in the Rajya Sabha, as traders pressed sales on front line shares and investors refused to park fresh funds into equities trading near 16-month highs. 
 
Sentiment was supposed to take a major fillip after last night's overwhelming clearance of the amendment allowing the introduction of the Goods and Services Tax in India's business lexicon. The bitterly debated legislation, in works for over a decade, will result in a unified market across the country. However, the market remained as a sell on rallies. 
 
The Nifty rose 3 points at 8,547 in the first half hour of trade, retreating from an opening high of 8,600. Bharti Infratel, Lupin, Bharti Airtel, IndusInd Bank and ICICI Bank dropped between 1-1.8 percent. They were among 24 shares that dipped on the Nifty. Tata Motors, Sun Pharma, ONGC and Power Grid rose 1.1-2.8 percent and were among 27 stocks that gained ground on the index. 
 
Maruti, Tata Motors, and Bajaj Finance were the top three traded stocks by value. ICICI Bank, Jindal Steel &amp; Power, Ashok Leyland and GATI figured on the list of most active securities on the NSE. 
 
The Nifty 100, 200 and 500 indices slipped marginally in trade, down 0.1 percent each. The mood was mostly weak in the sectoral segment will all four banking benchmarks trading in the red. Mild profit booking continued in the FMCG, Realty and the Media sectors as well while modest upticks were seen on pharma stocks, metal shares and auto companies. 
 
The Sensex fell 39 points to 27,658 points on the Bombay Stock Exchange with Maruti, Tata Motors and ICICI Bank being the top traded shares on the index. Sun Pharma, ONGC and NTPC were the top gainers along with Bajaj Auto and Maruti. Stocks that slipped in trade were Cipla, HDFC, Asian Paints and State Bank. 
 
The trend was mostly positive in the wider market with 812 shares rising compared with 588 stocks that fell. The mood was bullish in the derivatives market where 110 futures gained ground versus 61 that dropped lower. 
 
Pricol, Bata India, Kewal Kiran clothing and Welspun India were present on the list of volume buzzers. 
 
Blue Star, Asian Paints, Yes Bank and Dhampur Sugar Mills hit fresh highs in the first half hour of trade on the National Stock Exchange.

GST
fails to bring cheer to the market

Following sharp declines in European shares after Greece said international lenders have rejected its latest proposal to attract credit in a bid to come out of the mounting debt crisis which began to raise its ugly head years ago but is now poised to literally destabilise its economy with clear negative ramifications for the entire Eurozone, India watchers wonder how discouraging cues from Europe and rest of Asia too would affect the domestic equity markets. With the <keyword id="35140" type="CITY" weightage="20" keywordseo="BSE">BSE</keyword> index taking cues from palpable jittery across Europe (Greece has to repay 1.6 billion euros to the International Monetary Fund next Tuesday or be declared in default) and falling on Wednesday, snapping an eight-day winning streak (its longest advance in nearly five months), market players are keenly watching how the fallout of the two-day summit of <keyword id="6355110" type="ORGANIZATION" weightage="20" keywordseo="European-Union">European Union</keyword> (EU) leaders beginning in Brussels on Thursday and resumption of talks between Greek Prime Minister Alexis Tsipras and creditors, are going to affect the Indian markets. This is in addition to the volatility witnessed by global markets in recent times triggered by many factors, which even includes the continued slowdown witnessed by China. 
 While addressing a conference at the Stockholm School of Economics on Wednesday, Reserve <keyword id="6355303" type="CITY" weightage="20" keywordseo="Bank-of-India">Bank of India</keyword> (RBI) governor <keyword id="6358908" type="PERSON" weightage="20" keywordseo="Raghuram-Rajan">Raghuram Rajan</keyword> said, the <keyword id="6356076" type="UNKNOWN" weightage="20" keywordseo="indian-economy">Indian economy</keyword> will see through any impact of the Greece crisis. “One factor helping India is its stronger foreign exchange reserves,” he said. A sizable number of India watchers share Rajan’s perceptive and hopes the domestic market would once again prove resilient. 
 
In fact, over the last week, the Indian stock market seemed to be on a comeback trail, posting 10 days of gains before European tremors played spoilsport. 
 The gains were supported by <keyword id="34523" type="CITY" weightage="20" keywordseo="fmcg">FMCG</keyword> counters on hopes that improving monsoon will boost sales. Forecasts that monsoon is likely to make a comeback also cast a good spell over the overall market sentiment, raising expectations that the RBI will cut rates in October than in 2016, as anticipated earlier after it delivered three cuts of 25 basis points each in 2015 so far. This perceptive was also supported by subdued levels of <keyword id="22195" type="COMPANY" weightage="20" keywordseo="Inflation">inflation</keyword> which has been falling since November last year. Exporters also began to rise after reasonably good US data and encouraging comments from <keyword id="6355253" type="ORGANIZATION" weightage="20" keywordseo="Federal-Reserve">Federal Reserve</keyword> Governor <keyword id="1727754" type="PERSON" weightage="20" keywordseo="Jerome-Powell">Jerome Powell</keyword>, who said that the Fed is prepared to raise interest rates twice this year. 
 In fact, in the recent past, India’s <keyword id="35199" type="UNKNOWN" weightage="20" keywordseo="stock-markets">stock markets</keyword> have been fairly resilient in the midst of all the gloom in other Asian emerging markets—it is the only market which posted positive returns in dollar terms since January this year. Though returns of 0.06% seems minuscule that should be seen against the fact that MSCI indices for most other Asian markets fell in June. 
 
Continued inflows from domestic institutional investors have been one reason that contributed to the momentum. Over the past two months, while FIIs sold equities worth close to Rs 15,000 crore, domestic institutions bought stocks worth Rs 26,700 crore. 
 
Some market players also see a 28% growth in the central government’s spending in April and growth in indirect tax collections in April and May as positivesigns. 
 
However, according to the more pragmatic ones, whether flows from domestic institutions can sustain the rich valuations of Indian stocks remains a key question. 
 
In addition, uncertainty over the government’s stance on tax issues continues to haunt investors. The recent move by the government to send demand notices to foreign institutional investors (FII) levying the minimum alternate tax (MAT) with a retrospective effect fanned the worst fears that India is yet to wake up from its crude, conventional approach when it comes to shore up tax revenue. 
 Besides, the government’s recent decision to review the Land Acquisition Bill and the Good and Services Tax (<keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword>) Amendment stirred concerns that the implementation of Narendra Modi’s much-acclaimed reforms may run into rough weather. Analysts say that without making remarkable headway in terms of pushing structural reforms—which FIIs have been expecting and that are necessary for the sustained, long-term health of the domestic markets—the government’s commitment to the reforms agenda will remain questionable. 
 
While improving corporate performance is welcomed by market players, better earnings in June quarter and the ones which follow will be crucial for sustaining the positivity that erupted over the last couple of weeks. 
(Image: The Economic Times)

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