Markets hover near Day’s high; Sensex nearing 33,500 mark

The local equity benchmarks added some gains in late afternoon session to hover near day’s high, with Sensex nearing a psychological level of 33,500, aided by higher opening in European markets. The markets were holding their gains as the government’s revenue collection during April-November period of fiscal year 2017-18 has shown a healthy growth. Direct Tax collections, which comprise personal income and corporate tax, surged 14.4 percent to Rs 4.8 lakh crore in the first eight months ending November 2017, mainly on account of income tax mop-up from individuals. Separately, the CII’s Business Confidence Index has climbed to 59.7 during October-December 2017, against 58.3 in the previous quarter, showing improvement in perception regarding overall economic conditions amidst indications of a normalisation in business situation after the recent interruptions like Goods and Services Tax. Some optimism also came with the private report that the government's target of achieving $1 trillion worth of digital services is possible by 2022, with right policy initiatives. On the sectoral front, airlines stocks were trading higher amid IATA’s report stating that the outlook for the fastest growing Indian aviation market is ‘very good’. However, the report noted that infrastructure and taxation issues could be detrimental for its growth.

On the global front, European markets were trading in green, as stronger-than-expected US job growth figures for November as well as progress in Brexit talks added to optimism about global growth. Asian markets were also trading in green. Back home, in scrip specific development, Parag Milk Foods was trading in green after the company joined hands with Taj Group to supply its products on international flights. The company has entered into a MOU for the first time with TajSATS for the same.

The BSE Sensex is currently trading at 33482.60, up by 232.30 points or 0.70% after trading in a range of 33313.17 and 33482.60. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were FMCG up by 0.96%, Healthcare up by 0.91%, Auto up by 0.75%, Consumer Disc up by 0.72% and Basic Materials up by 0.59%, while Oil & Gas down by 0.04% and Energy down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.26%, Mahindra & Mahindra up by 2.24%, HDFC up by 1.72%, ITC up by 1.68% and Wipro up by 1.54%. On the flip side, NTPC down by 0.97%, ONGC down by 0.97%, Asian Paints down by 0.53%, Reliance Industries down by 0.41% and Adani Ports & SEZ down by 0.41% were the top losers.

Meanwhile, making a strong case for elimination of tax exemptions, Prime Minister's Economic Advisory Council chairman Bibek Debroy has said that exemptions are restricting the tax-to-GDP ratio from rising and compliance costs to come down and if such exemptions are eliminated, the tax-to-GDP ratio of the country can increase to 22 per cent.

He further pointed that the total amount of revenue foregone (on account of tax exemptions) is a little over 5% the GDP. Further adding that there is a tendency to interpret tax avoidance as tax evasion, while tax evasion is illegal, tax avoidance is perfectly legitimate because it arrays of exemptions that are allowed.

Debroy blamed Indian industry for the inclusion of exemptions in the first place and expressed his hopes that that the government panel tasked with reviewing the Income Tax Act will look into the issue of exemptions. He also pointed that the Goods and Services Tax (GST) is not perfect as it has multiple tax rates structure and also includes exemptions, but stressed that the new tax reform is a step in the right direction. On the development front, Bibek Debroy said that there are a slew of areas where the changes in social infrastructure are visible like with financial inclusion and expressed need to focus on skills of country immediately.

The CNX Nifty is currently trading at 10316.75, up by 51.10 points or 0.50% after trading in a range of 10282.05 and 10322.40. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.38%, Mahindra & Mahindra up by 2.27%, Lupin up by 2.16%, Ultratech Cement up by 2.11% and ITC up by 1.70%. On the flip side, Bharti Infratel down by 1.38%, NTPC down by 0.97%, ONGC down by 0.89%, Asian Paints down by 0.80% and Indiabulls Housing Finance down by 0.62% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 7.49 points or 0.3% to 2,471.49, Shanghai Composite increased 32.2 points or 0.98% to 3,322.20, Taiwan Weighted increased 74.47 points or 0.72% to 10,473.09, Nikkei 225 increased 127.65 points or 0.56% to 22,938.73 and Hang Seng increased 325.44 points or 1.14% to 28,965.29. On the flip side, Jakarta Composite decreased 5 points or 0.08% to 6,025.96 and FTSE Bursa Malaysia KLCI decreased 2.47 points or 0.14% to 1,718.78.

All European markets were trading in green; France’s CAC increased 8.29 points or 0.15% to 5,407.38, Germany’s DAX increased 18.17 points or 0.14% to 13,171.87 and UK’s FTSE 100 increased 40.32 points or 0.55% to 7,434.28.