Benchmarks make positive start on GST hopes

Indian equity benchmarks have made a positive start and are trading slightly in green, as traders took some encouragement by the news that India will likely be able to roll out the goods and services tax (GST) from July1, following a breakthrough on Monday over the seemingly intractable issue of tax administration after the Centre accommodated states’ concerns. Under the proposed tax regime, 90% of all assessees with a turnover of Rs 1.5 crore or less will be assessed for scrutiny and audit by state authorities, the remaining 10% by the Centre. However, gains remained capped on report that IMF has cut India’s growth rate for this financial year to 6.6 per cent from 7.6 per cent earlier due to the 'temporary negative consumption shock' of demonetisation. Though, it has said that the Indian economy is likely to revive to go back to its previously estimated growth rate of 7.7 per cent in 2018.

On the global front, the Asian markets were trading mostly in green at this point of time, but gains remained capped as investors turned cautious ahead of U.K. Prime Minister Theresa May's speech on her government's Brexit plans later today. Back home, foreign portfolio investors (FPIs) sold shares worth a net Rs 347.25 crore, while Domestic institutional investors (DIIs) bought shares worth a net Rs 203.45 crore, on January 16, 2017.

The market breadth indicating the overall health of the market was strong, with 1,309 shares gaining and 567 shares declining, while a total of 89 shares were unchanged.

The BSE Sensex is currently trading at 27338.07, up by 49.90 points or 0.18% after trading in a range of 27313.10 and 27381.43. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.57%, while Small cap index was up by 0.72%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.80%, FMCG up by 0.62%, IT up by 0.61%, Realty up by 0.58% and Bankex was up by 0.54%, while Metal down by 0.38% and Oil & Gas was down by 0.13% were the only losing indices on BSE sectoral front.

The top gainers on the Sensex were Asian Paints up by 1.41%, Hindustan Unilever up by 1.32%, Axis Bank up by 1.17%, TCS up by 1.08% and NTPC was up by 0.91%. On the flip side, Reliance Industries down by 1.95%, Lupin down by 0.73%, Cipla down by 0.69%, Tata Steel down by 0.62% and Adani Ports was down by 0.53% were the top losers.

Meanwhile, the much awaited goods and services tax (GST) is likely be rolled out from July 1, as the Centre and the states came to a consensus on dual control of the GST with the Centre agreeing to allow the states to control over small tax payers. Under the proposed tax regime, 90% of all assessees with a turnover of Rs 1.5 crore or less will be assessed for scrutiny and audit by state authorities, the remaining 10% by the Centre. Above that limit of annual turnover of over Rs 1.5 crore, Centre and states will share control of assessees in 50:50 ratio even as Finance Minister Arun Jaitley insisted that each tax payer will be assessed only once and by only one authority.

Besides ceding control, the Centre also agreed to the demand of coastal states, allowing them to tax economic activity in 12 nautical miles even though constitutionally the Centre has jurisdiction over territorial waters.

Union Finance Minister Arun Jaitley after the meeting of the GST Council said 'It's a significant headway,' with both sides agreeing on most matters. Putting to rest fears over dual administration by both state and the Centre, Jaitley said that 'Each assessee would be assessed only by one authority.' Jaitley further said that the power to levy and collect the I-GST lies with the central government but states will also be cross-empowered in the same ratio as above through a special provision in law. Any IGST disputes among states will be resolved by the Centre. With the legislative calendar drawn up, Jaitley said 'realistic' date for implementation of GST will be July 1 instead of previously planned April 1.

The draft of Integrated GST or IGST, the tax which will be levied by the Centre on inter-state movement of goods and services, as well as SGST and CGST will be finalised in the next meeting of the GST. The constitutionally mandated timetable requires GST has to be in place by September at the latest.
The CNX Nifty is currently trading at 8430.85, up by 18.05 points or 0.21% after trading in a range of 8414.35 and 8440.90. There were 32 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 1.36%, Hindustan Unilever up by 1.31%, Bank of Baroda up by 1.28%, Zee Entertainment up by 1.26% and Axis Bank was up by 1.16%. On the flip side, Reliance Industries down by 1.94%, Cipla down by 0.99%, ACC down by 0.86%, Adani Ports &Special down by 0.86% and Lupin was down by 0.72% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 5.41 points or 0.33% to 1,664.25, Jakarta Composite rose 5.43 points or 0.1% to 5,275.45, KOSPI Index gained 9.72 points or 0.47% to 2,073.89, Taiwan Weighted added 58.01 points or 0.62% to 9,350.34 and Hang Seng was up by 99.27 points or 0.44% to 22,817.42.

On the flip side, Nikkei 225 decreased 152.43 points or 0.8% to 18,942.81 and Shanghai Composite was down by 15.52 points or 0.5% to 3,087.91.