By Bharath Rajeswaran
(Reuters) -Indian shares gave up early gains on Friday as profit booking in consumer stocks and a drop in information technology offset a rally in autos after tax cuts.
The NSE Nifty 50 was down 0.03% at 24,724.1 and the BSE Sensex fell 0.13% to 80,608.99 as of 10:32 a.m. IST. Both benchmarks gained 0.3% each in intraday trade.
Eight of the 16 major sectors logged losses. The small-caps and mid-caps rose about 0.3% each.
The blue-chips settled higher in the previous session, led by auto and consumer stocks, after the Goods and Services Tax Council approved a shift to a two-rate structure and cut levies on everyday goods to spur demand.
“The market’s excitement over GST 2.0 reforms is proving to be short-lived as the benchmarks are facing profit booking at higher levels,” said Nandish Shah, deputy vice president at HDFC Securities.
While the tax cuts support the investment landscape, much of the optimism is already priced in, prompting profit-booking, two analysts said.
The auto index advanced 1%, building on Thursday’s gains of 0.9%. The government lowered GST on small cars, motorcycles, buses, trucks and ambulances to 18% from 28%.
Consumer stocks, which rose 2.7% over the past five sessions, slipped 1.1%, dragged down by ITC. The stock fell 2% after a media report said the government may impose a fresh levy on tobacco products once the 40% GST compensation cess expires.
Meanwhile, Asian markets advanced on Friday after Wall Street rose overnight as softer U.S. labour data and dovish commentary from Federal Reserve officials fuelled expectations of a rate cut later this month.
However, IT companies, which earn a significant share of their revenue from the U.S, fell 1.2%, reversing early gains of about 0.5% as the weak labour data stoked concerns over sluggish economic growth in the United States.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sumana Nandy, Nivedita Bhattacharjee and Sonia Cheema)
