Markets to get a positive start on supportive regional cues

The Indian markets coming off their early euphoria of Goods and Services Tax (GST) Bill passage in Rajya Sabha made a flat closing in the last session. Today, the start is likely to be in green on supportive regional cues. Traders will also be getting some advantage with the government setting a target of April 1, 2017 for rollout of the Goods and Services Tax and unveiling a detailed roadmap for its implementation. Finance Minister Arun Jaitley has said the tax rate will be 'optimum' even as there were indications that it may be higher than 18 percent. However, there will be some cautiousness too, as the Revenue Secretary Hasmukh Adhia has listed seven challenges which need to be dealt with for smooth implementation of the Goods and Services Tax. He said that fixing the GST rate, deciding on exempt items and ensuring no dual control by the Centre and states are among the seven key challenges which have to be overcome before GST can be rolled out by April 1, 2017. There will be buzz in the steel sector, as the government has decided to extend the Minimum Import Price (MIP) regime on 66 items for a period of two months. Following this, the MIP regime introduced for a six-month period in February 2016 and was due to end on August 5, will now be applicable on these items till October 4, 2016. The textile sector will be under pressure on reports that India's handloom export has declined by 30% within a year after a gradual rise for several years. There will lots of earnings related action as many important companies will be reporting their numbers.

The US markets once again showed a lackluster trade and made a mixed closing in the last session, following the Bank of England's announcement of its decision to reduce interest rates following Britain's vote to leave the European Union. Traders also awaited the Labor Department's monthly jobs report due to be released on Friday for further cues. The Asian markets have made mostly a positive start, with BoE’s policy easing soothing concern over the impact of the Brexit votes, on the same time oil held steady after a good surge.

Back home, the Indian markets were unable to make any significant recovery after plunging in last session and witnessed a cautious day of trade, finally closing in green with marginal gains. The key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction ahead of the Bank of England's (BOE) monetary policy meeting later in the day. In early trade sentiments remained up-beat with Finance Ministry stating that all efforts are being made to roll out GST from April 1, 2017, and allayed fears that it will have an impact on inflation even if the rate is kept at 20 per cent. Also, the US India Business Council (USIBC) termed the passage of GST bill by the Indian Parliament as a game-changer, saying it is a significant milestone in efforts to improve the country's ranking in World Bank's ease of doing business index. USIBC believes that the GST will boost economic growth by streamlining domestic supply chains and removing the compliance burden of contradictory state tax regimes. Meanwhile, Auto counters gained traction as GST will have a significantly positive impact on the automotive sector. Today all passenger vehicles’ are taxed in four slabs of excise duty of 12 percent, 24 percent, 27 percent and 30 percent depending on the length of vehicle, engine displacement and ground clearance. Apart from excise duty, there is value added tax (VAT) ranging from 12.5 percent to 14.5 percent and central sales tax (CST) of 2 percent (for vehicles sold outside the manufacturing state). Post GST, all these taxes are going to be subsumed into a single tax and all passenger vehicles are likely to fall in only two slabs of 18 percent /20 percent and 40 percent. Some buying was also observed in Oil exploration counters after Petroleum Minister Dharmendra Pradhan asked Finance Ministry to cut cess on domestically produced crude oil to 10-12 percent from current 20 percent to provide relief to producers hit by slump in prices. On the other hand, IT counters came under selling pressure as industry body Nasscom enlightened that margins of Indian IT companies are under pressure due to reasons like global economic turbulence, while there may be a marginal decline in hiring because of increased automation and efficiency. Finally, the BSE Sensex surged by 16.86 points or 0.06% to 27714.37, while the CNX Nifty rose by 6.25 points or 0.07% to 8,551.10.