RAJYA SABHA PASSES GST (CONSTITUTIONAL AMENDMENT) BILL; 8635 IS THE IMMEDIATE HURDLE

RAJYA SABHA PASSES GST (CONSTITUTIONAL AMENDMENT) BILL; 8635 IS THE IMMEDIATE HURDLE
WORLD MARKETS                             
US indices gained 0.2%-0.4% with the Dow snapping a seven-day slide amid a sharp rebound in oil prices.
US oil rose 3.3% to $40.83 a barrel after EIA said Gasoline inventory fell by 3.3 million barrels last week, versus a forecast for a 200,000-barrel drop. Oil inventories rose 1.4 million barrels. Brent rose 3.1% to $43.10.
The Markit Services PMI for July came in at 51.4, showing slight expansion.
Gold fell $8 to $1365 per ounce.
European markets ended mixed with modest changes amidst a slew of earnings, with banking stocks rallying.
AT HOME
Bears tightened their grip as benchmark indices plunged a percent with Sensex and Nifty closing at their lowest level since 11th July and 22nd July respectively. Sensex lost 284 points to settle at 27698 while Nifty finished at 8545, down 78 points. BSE mid-cap and small-cap indices lost 1.5% and 1.1% respectively. Except a marginally higher IT index, all the NSE sectoral indices ended in red with FMCG and Auto indices leading the tally, down 2.4% and 1.8% respectively.
HCL Tech earnings beat expectation on all parameters. Profit and Revenue increased by 6.3% and 6% respectively to Rs 2047 cr and 11336 cr respectively. Dollar revenue grew 6.5% to USD 1691 mn and was up 6% in constant currency. Operating profit increased 5% to Rs 2,333 crore and margin contracted by 22 basis points at 20.58%. The company expects FY17 constant currency revenue growth in the range of 12-14% that translates to 11.2-13.2% in US dollar terms.
FIIs net bought stocks worth Rs 578 cr but net sold index futures and stock futures worth Rs 33 cr and 1308 cr respectively. DIIs were net sellers to the tune of Rs 801 cr.
Rupee depreciated 26 paise to end at 66.99/$.
India’s services PMI rose to a three-month high of 51.9 in July, up from 50.3 in June.
In a historic moment, Rajay Sabha yesterday approved GST Constitutional Amendment Bill which seeks to replace more than a dozen central and state levies like central excise, service tax, VAT, Cess, Octroi, entry tax etc. with a single unified value added tax system to turn the country into world’s biggest single market. Instead of the good being taxed multiple times at different rates, under the new GST regime, goods would be taxed at point of consumption.
The Bill passed yesterday will create a GST Council comprising Union Finance Minister and his counterparts from the states. This body will determine the final rate.
The Constitution Amendment Bill had been approved by the Lok Sabha in May last year but the amendments made to it by the Rajya Sabha would mean the legislation would again travel to the Lower House before going to states assemblies. At least half of the 29 state legislatures need to approve the bill, after which Parliament will have to pass two legislations, CGST and IGST, detailing the new tax code, including the GST rate and other modalities. This could happen in the winter session of Parliament in November.
OUTLOOK
Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 40 points higher start for our market.
After achieving the 8700-8715 target on Monday, Nifty has been in a profit-booking mode. In yesterday’s report we had mentioned that 8590 is the immediate support a breach of which will generate “sell” on the hourly chart and can take the benchmark to 8490-8475 region, which is the next support area.
Nifty broke this support and plunged all the way to 8530 before closing at 8544 but is set to open higher today.
8635 is the immediate hurdle on the hourly chart a crossover should be awaited for turning the short term view bullish. 8475-8490 continues to be the downside target to eye.
Traders are advised to keep stop loss of 8635 in short positions.

Tata Power will report its quarterly earnings today.
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