Jubilation continues on Dalal Street

Indian equity markets continued their jubilation in late morning session, with Sensex rallying more than 350 points, supported by other firm Asian markets. Surge in Direct tax collection along with buying in Banking, FMCG and Capital Goods stocks also aided the sentiments. The government’s revenue collection during the first nine-and-a-half months of the current fiscal have risen by 18.7 per cent to Rs. 6.89 lakh crore, higher than the net collections for the corresponding period of last year, mainly on account of a healthy growth in advance tax mop-up. Traders were also taking some encouragement with Commerce and Industries Minister Suresh Prabhu’s statement that India is expected to become a $ 5 trillion economy in the next 8-9 years with the manufacturing sector contributing 20 per cent to that.  On the sectoral front, aviation stocks were trading lower amid CRISIL’s Research report stating that rising crude, congestion are likely to cap domestic airline passenger traffic growth. The rating agency noted that domestic passenger traffic to grow 17-19% in fiscal 2018 compared with 22% in fiscal 2017, on account of rise in fares and airport congestion. In fiscal 2019, rating agency expects growth to moderate further to 15-17%, as fares are expected to feel the heat of higher crude oil prices.

On the global front, Asian markets were trading mostly in green, tracking substantial overnight gains on Wall Street. Investors also awaited a raft of China data, as well as interest rate decisions from South Korea’s and Indonesia’s central banks due later in the day. Back home in scrip specific development, Varun Beverages traded higher after the company received an approval to acquire franchisee rights for PepsiCo India’s previously franchised sub-territory in the state of Bihar.

The BSE Sensex is currently trading at 35456.81, up by 374.99 points or 1.07% after trading in a range of 35338.75 and 35489.53. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in mixed; the BSE Mid cap index was down by 0.15%, while Small cap index was up by 0.38%.

The top gaining sectoral indices on the BSE were Bankex up by 1.67%, FMCG up by 1.39%, Capital Goods up by 0.94%, Auto up by 0.60% and Industrials up by 0.43%, while Metal down by 1.67%, Realty down by 0.73%, Utilities down by 0.69%, Telecom down by 0.61% and Basic Materials down by 0.54% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.11%, Indusind Bank up by 2.84%, ITC up by 2.76%, HDFC Bank up by 2.35% and Larsen & Toubro up by 2.02%. On the flip side, Tata Steel down by 1.70%, Infosys down by 1.12%, Wipro down by 0.77%, Asian Paints down by 0.58% and Coal India down by 0.46% were the top losers.

Meanwhile, Confederation of Indian Industry (CII) has urged the government for inclusion of all petroleum products under the ambit of Goods and Services Tax (GST) at the earliest. It noted that as of now, petroleum products like crude oil, petrol, diesel, jet fuel or aviation turbine fuel (ATF) and natural gas are not included in GST, which kicked in from July 1, 2017. It also said that until this is done, C Forms should be continued to avoid high tax incidence on these products.

In accordance with the Industry body, though the understanding is that the previous VAT and CST rules would continue to apply to the excluded products, however, the related sectors continue to incur huge GST impact on all inputs without any set-off, as sale of crude oil and natural gas are outside the purview of GST and are subject to existing OIDA (Oil Industry Development Act) Cess, Central Sales Tax Act and State Value Added Tax. Besides, it noted that after GST rollout, credit on VAT paid on petroleum products including natural gas is not available and the amendment of the CST Act has significantly altered inter-state sale of the products. Therefore, it pointed out that post GST, there has been an increased tax cost on the products, which was not the intent of the government. It added that the central government vide Taxation Laws Amendment Act 2017, amended the definition of 'Goods' under the CST Act to include only crude petroleum, diesel, petrol, ATF, natural gas and alcoholic liquor for human consumption.

CII further stated that consequently, certain State Commercial Tax Departments have taken a narrow interpretation that the concessional rate of 2 percent against C Forms can be availed only if the specified goods are used for resale, or manufacture of the same goods and not for manufacture of any other goods, or in telecommunication, or mining, or generation of power. As a result, it noted that fertiliser companies are not eligible for C Form as the gas is used to manufacture urea and not for manufacture of natural gas. Likewise, it pointed out that automobile manufacturers are not eligible for C Form for inter-state purchase of diesel, petrol or natural gas, which they have to mandatorily fill in the tanks of new vehicles. It added that if purchasing dealer is not engaged in inter-state supply of goods (as defined under the CST Act), then he will not be liable for registration and thus not eligible for the issuance of Form-C which imposes an additional tax cost burden.

The CNX Nifty is currently trading at 10854.75, up by 66.20 points or 0.61% after trading in a range of 10850.20 and 10887.50. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.95%, UPL up by 2.89%, ITC up by 2.54%, Indusind Bank up by 2.51% and HDFC Bank up by 2.46%. On the flip side, Bharti Infratel down by 4.77%, Hindalco down by 2.74%, Vedanta down by 2.67%, GAIL India down by 2.60% and Tata Steel down by 1.89% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 8.91 points or 0.03% to 31,992.32, Shanghai Composite increased 15.4 points or 0.45% to 3,460.07, Jakarta Composite increased 23.63 points or 0.37% to 6,468.15 and Taiwan Weighted increased 66.77 points or 0.61% to 11,071.57.

On the flip side, Nikkei 225 decreased 45.4 points or 0.19% to 23,822.94, FTSE Bursa Malaysia KLCI decreased 4.68 points or 0.26% to 1,823.95 and KOSPI Index decreased 1.45 points or 0.06% to 2,513.98.