Markets trade firm; Nifty above 5500 levels

Indian equity indices are trading on a firm note hovering around its highest point of day with buying witnessed across all sectors and beaten down stocks. All sectoral indices on the BSE were trading in the green. Capital goods, power, auto, realty and healthcare sectors were trading firm with most of their gains intact. Index heavyweight Reliance Industries and engineering and construction major Larsen & Toubro have helped the key indices to stay on a firm note. While leads from the markets across the globe remained lackluster with Asian markets trading on a mixed note while the European counterparts got off to a flat start are now trading in green. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,500 and 18,400 levels, respectively. The Sensex outperformed the Midcap and the Small-cap indices. The market breadth on the BSE was in favor of advances in the ratio of 1599:1114 while 125 scrips remained unchanged.

The BSE Sensex was up 271.24 points or 1.50% at 18,412.64. The index touched a high and a low of 18,417.35 and 18,161.38 respectively.

The BSE Mid-cap index was up 0.90%, while the Small-cap index was trading with gains of 0.75%.

On the BSE sectoral front, Capital Goods up 2.73%, Power up 1.92%, Auto up 1.70%, Realty up 1.65% and Health Care up 1.59% were the major gainers. While, there were no laggards in the BSE sectoral space.

The top gainers on the Sensex were L&T up 3.95%, Reliance Infra up 3.15%, Cipla up 3.07%, Tata Steel up 2.99% and Bharti Airtel up 2.80%. On the flip side ONGC down 1.05% was the lone losers on the BSE index.

Meanwhile, the commerce department is suggesting an increase in repayment rates under the Duty Drawback Scheme. The commerce department's proposal is expected to assist exporters to facilitate in reducing their losses. The Duty Drawback Scheme enables exporting companies to obtain a refund of custom duty paid on imported goods where those goods will be treated, processed, or incorporated into other goods for export, or are exported unused since importation. However, the compensation under the Duty Drawback Scheme is lower than DEPB.
Besides, Exporters will not be able to use tax benefits under the Duty Entitlement Pass Book (DEPB) scheme after it is closed on June 30. The government reimburses about $1.77 million a year to exporters on duty paid on imported inputs under the DEPB scheme.

Both the commerce and revenue department secretary met on Thursday to discuss the issues. As per the commerce department official, "Exporters are resisting the phasing out of the DEPB scheme as the refund rates are lower in the duty drawback scheme. We will ask the finance ministry to recalibrate the rates to bring the 2%," The commerce department also wants more items to be included in the drawback list. Exporters say it is very important that additions are made to the drawback list, as there are no corresponding drawback rates for several products, such as electronic items.

'All exports will be zero-rated after the DEPB scheme ends. Two similar schemes cannot go on. It will save some revenue for the government,' said Sunil Mitra, revenue secretary. Exporters are worried that in hurry to provide drawback for all products, the finance ministry may come up with a residual list which will have low reimbursement rates.

The S&P CNX Nifty gained 88.75 points or 1.64% at 5,516.85. The index touched high and low of 5,517.55 and 5,432.75 respectively.

The top gainers on the Nifty were IDFC up 5.82%, L&T up 4.15%, RPower up 4.03%, SAIL up 3.78% and Tata Steel up 3.60%. While, ONGC down 1.01%, SesaGoa down 0.71%, GAIL down 0.48% and HCL Tech down 0.10% were the only losers on the index.

The Asian markets were trading mixed. Hang Seng up 0.16%, Jakarta Composite up 0.34% and Seoul Composite gained by 0.76%. On the flip side Nikkei 225 down 0.14%, Shanghai Composite down 0.04%, Taiwan Weighted down 0.63%, Strait Times down 0.22% and KLSE Composite down 0.19%.

The European markets were trading in green. CAC 40 up 0.54%, DAX advanced 0.59% and FTSE 100 gained 0.97%.

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