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Indian benchmarks erase early gains to close flat
May-19-2017

Indian equity indices scuttled between gains and losses to finally settle the day on flat note as 2-day GST Council meet ended where rates for various goods and services were decided.  According to many experts, the multi-tiered GST may not be inflationary as far as goods are concerned as 81% of them will be taxed at 18% or less with mass-consumption items at the lower end of the bands. Items like milk, fruit and vegetables, jaggery, food grain and cereals getting exemption from GST, while items like sugar, tea, coffee, edible oil, mithai, and newsprint will attract the lowest GST of 5%. However, those who were planning to buy a new car could be forced pay more after July 1 as most vehicles fall in the higher tax basket. Also, Motorcycles of more than 350 cc engine capacity will attract a total of 31% tax under the GST regime, same as the tax incidence on private aircraft and luxury yachts.  Some product like local made Mobiles phones might also get costlier, with the government imposing a 12% GST, taking away the benefit under duty differential that was being offered to local manufacturers.

The session largely remained characterized by choppiness as the aimless indices moved only sideways in a tight band as investors were evaluating the impact of GST on various product and services before adding new positions. The GST rates on telecom, financial services have been fixed at 18%, while healthcare and education were exempted from service tax. Decision is yet to be made on gold, silver and other goods. Adding to the optimism among investors, Union Minister Arjun Ram Meghwal said, the decision to implement GST from this July 1 is one of the important economic reforms and would be a major milestone in the growth of the country. He also said that demonetisation had helped improve the GDP of the country despite apprehensions to the contrary from certain quarters, noting that the growth has gone up and would reach 10%. Meanwhile, Narendra Modi government has set an ambitious target of awarding Rs 5 lakh crore worth of highway contracts, totalling about 50,000 km, in the last two years of its tenure, surpassing the cumulative road length awarded for paying in the last five years.

On the global front, Asian equity markets ended mostly higher on Friday as better-than-expected US economic data and higher oil prices offset concerns surrounding deepening political turmoil in Washington and the Brazilian political crisis. The number of Americans on unemployment fell mid-May to the lowest level since 1988, underscoring the strongest labor market in years. So-called continuing claims, or the number of people collecting jobless benefits, fell by 22,000 to 1.9 million in early May. Further, Chinese shares were little changed, as soothing regulatory comments and the central bank's injection offset worries over tighter regulations and economic growth. Official data showed foreign direct investment into China decreased 4.3% from last year in April. Meanwhile, fears have been growing that given his political troubles Trump may run into difficulties in enacting tax cuts and other business-friendly policies.

Back home, after gap up opening, the local benchmarks showed some strength in early trades, but the sentiments turned pessimistic in late morning trade and indices started drifting lower, however the markets regained their momentum in the final hour of trade and finished the day on flat note. Finally, Bombay Stock Exchange’s Sensitive Index, Sensex gained around thirty points and closed above the psychological 30,400 mark, while the NSE's 50-share broadly followed index - Nifty settled with modest cut of around two points below the psychological 9,450 levels. The broader markets underperformed their larger peers by quite a margin with BSE’s midcap shaving off 0.72% and BSE’s smallcap shelving 0.88%. The market breadth remained pessimistic, as there were 957 shares on the gaining side against 1789 shares on the losing side, while 165 shares remained unchanged.

Finally, the BSE Sensex gained 30.13 points or 0.10% to 30464.92, while the CNX Nifty was down by 1.55 points or 0.02% to 9,427.90. 

The BSE Sensex touched a high and a low of 30692.45 and 30519.14, respectively and there were 17 stocks on gainers side as against 13 stocks on the losers side on the index.

The broader indices ended in red; the BSE Mid cap index declined by 0.72%, while Small cap index was down by 0.88%.

The top gaining sectoral indices on the BSE were FMCG up by 1.86%, Bankex up by 0.39%, Telecom up by 0.28%, Power up by 0.18% and Realty up by 0.10%, while Consumer Durables down by 1.04%, Consumer Disc down by 0.94%, Oil & Gas down by 0.80%, IT down by 0.70% and Energy down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.82%, Hindustan Unilever up by 2.04%, Axis Bank up by 1.83%, SBI up by 1.72% and Tata Motors up by 1.08%. On the flip side, Asian Paints down by 2.43%, GAIL India down by 1.48%, Mahindra & Mahindra down by 1.35%, HDFC down by 1.16% and TCS down by 1.08% were the top losers.

Meanwhile, as the government came a step closer to implementing GST from July 1 after finialising the rates of over 1200 products, Union Minister Arjun Ram Meghwal has described 2017 as year of economic reforms for India, and said that the decision to implement Goods and Services Tax (GST) regime from this July 1 is one of the important economic reforms and would be a major milestone in the growth of the country. He further said that government's Pradhan Mantri Mudra Yojana, start-up and stand-up programs will help to improve the economic level of the people and economic disparities between the poor & the rich in the country will be reduced by 2020.

Union Minister pointed that demonetisation helped improve the Gross Domestic Product (GDP) of the country despite apprehensions from certain quarters, noting that the growth has gone up and would reach 10 per cent. Meghwal also mentioned the International Monetary Fund’s (IMF) positive perspective about the country which has said that Indian economy would be in a commanding position by the year 2030.

He said that digital transactions have gone up after demonetisation and South India in general and Karnataka in particular is leading this national trend. He added that the move was a reflection of the futuristic vision of Prime Minister Narendra Modi and the country was set to become a world power with these bold decisions.

The CNX Nifty traded in a range of 9,505.75 and 9,390.75. There were 19 stocks in green as against 32 stocks in red on the index.

The top gainers on Nifty were ITC up by 3.06%, Yes Bank up by 2.08%, Axis Bank up by 2.01%, SBI up by 1.98% and Hindustan Unilever up by 1.40%. On the flip side, Asian Paints down by 1.77%, BPCL down by 1.59%, Eicher Motors down by 1.56%, Hindalco down by 1.29% and TCS down by 1.28% were the top losers.

European markets were trading in green, UK’s FTSE 100 increased 33.51 points or 0.45% to 7,469.93, Germany’s DAX increased 49.92 points or 0.4% to 12,639.98 and France’s CAC increased 37.79 points or 0.71% to 5,327.52.

Asian equity markets ended mostly in green on Friday as better-than-expected US economic data and higher oil prices offset concerns surrounding deepening political turmoil in Washington and the Brazilian political crisis. Japanese shares closed higher even as the dollar edged lower after a modest recovery overnight. Further, Chinese shares were little changed, as soothing regulatory comments and the central bank's injection offset worries over tighter regulations and economic growth. Official data showed foreign direct investment into China decreased 4.3 percent from last year in April.

Asian Indices

Last Trade            

Change in Points

Change in %  

Shanghai Composite

3,090.63

0.49

0.02

Hang Seng

25,174.87

38.35

0.15

Jakarta Composite

5,791.88

146.43

2.59

KLSE Composite

1,768.28

1.11

0.06

Nikkei 225

19,590.76

36.90

0.19

Straits Times

3,216.92

-4.74

-0.15

KOSPI Composite

2,288.48

1.66

0.07

Taiwan Weighted

9,947.62

-21.83

-0.22


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