Benchmarks extend southward journey ahead of GDP data

Extending their previous session’s downfall, Indian equity benchmarks ended the Wednesday’s trade in red terrain, with frontline gauges ending with a cut of around half a percent, declining below their crucial 10,500 (Nifty) and 34,200 (Sensex) levels. Markets made pessimistic start and traded in red terrain throughout the session, as traders remained on sidelines ahead of December quarter GDP data to be announced later in the day. Sentiments also remained downbeat with report that the collection of Goods and Services Tax (GST) slipped marginally to Rs 86,318 crore in January 2018 (received in January/February up to February 25, 2018), from Rs 86,703 crore in December 2017. Markets extended losses, as growth in India’s factory activity slowed to a four-month low in February as new orders eased and weighed on output after manufacturers raised prices at the fastest pace in a year. The Nikkei Manufacturing Purchasing Managers’ Index (PMI) fell to 52.1 in February from January’s 52.4.

Markets made an attempt to pare losses and recovery was seen in second half of the session, but it proved short-lived and selling in dying hour of trade dragged markets lower. Sentiments remained dampened on report that the fiscal deficit for the April-January period stood at Rs 6.77 lakh crore. That is 113.7% of FY18 target, which means Modi government may not do any extra spending in the remaining two months of the year. The government outlined a fiscal deficit target of 3.3 per cent of GDP in 2018-19 as against a revised estimate of 3.5 per cent in 2017-18, indicating some fiscal consolidation, albeit at a slower pace than that recommended under the Fiscal Responsibility and Budget Management (FRBM) framework. Investors shrugged off Finance Minister Arun Jaitley’s statement that India’s economy has the potential to achieve a growth rate of more than 7-8 per cent in view of policy changes accompanied by a supportive global environment. He also said India will continue to remain one of the fastest growing economies in the world.

Global cues too remained sluggish with European markets making negative start after new Fed Chairman Jerome Powell laid out a case for a faster pace of interest-rate increases, saying that further gradual increases in interest rates would be appropriate to attain objectives of maximum employment and stable consumer prices. Asian markets ended in red terrain on Wednesday, as weak Chinese and Japanese manufacturing data revived worries about global growth amid anxiety over faster rate rises in the United States.

Back home, traders failed to draw any solace with Moody’s Investors Service’s report that India will grow 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetisation and GST. Separately, a private poll showed that India might have regained the status of the world’s fastest-growing major economy in the October-December quarter, driven by higher government spending and a pick-up in manufacturing and services. On the sectoral front, steel related stocks lost sheen despite World Steel Association’s report that India’s crude steel production grew 2.5 per cent to 9.02 million tonne (MT) in January 2018 compared to 8.81 MT in the year-ago month.

Finally, the BSE Sensex shed 162.35 points or 0.47% to 34,184.04, while the CNX Nifty was down by 61.45 points or 0.58% to 10,492.85.

The BSE Sensex touched a high and a low of 34,302.74 and 34,076.45, respectively and there were 7 stocks on gaining side as against 24 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index slipped 0.23%, while Small cap index was up by 0.21%.

The few gaining sectoral indices on the BSE were IT up by 0.85%, TECK up by 0.55%, Consumer Durables up by 0.23% and Realty was up by 0.12%, while Metal down by 1.21%, Bankex down by 0.96%, Basic Materials down by 0.71%, FMCG down by 0.69% and Capital Goods was down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.26%, Asian Paints up by 0.52%, SBI up by 0.35%, Power Grid Corporation up by 0.28% and Reliance Industries up by 0.26%. On the flip side, Hindustan Unilever down by 2.02%, ICICI Bank down by 1.92%, Sun Pharma down by 1.75%, Mahindra & Mahindra down by 1.62% and Axis Bank down by 1.47% were the top losers.

Meanwhile, the government’s revenue collection under the Goods and Services Tax (GST) has registered a marginal fall in the month of January 2018 (received up to February 25, 2018). According to the latest data released by the government, the total revenue mop-up under GST slipped by 0.44% to Rs 86,318 crore in January 2018 as compared to Rs 86,703 crore in December 2017. The GST collections had increased marginally in December after falling in the two previous months of November and October following the decision of the GST Council to cut rates on more than 200 items.

The government data indicated that 1.03 crore taxpayers have been registered under GST till February 25, of which 17.65 lakh are composition dealers who need to file returns every quarter. Of the total, 1.23 lakh composition dealers have opted out of scheme and have thus become regular taxpayers. Till February 25, there are 16.42 lakh composition dealers which are required to file returns every quarter and the rest of 87.03 lakh taxpayers are required to file monthly returns. 

As per the data, so far 57.78 lakh GSTR 3B returns have been filed for the month of January till February 25, 2018. This is 69% of total taxpayers who are required to file monthly returns. Of the Rs 86,318 crore collected under the GST up to February 25, Rs 14,233 crore have been collected as CGST, Rs 19,961 crore as SGST, Rs 43,794 crore as IGST and Rs 8,331 as Compensation cess.

Further, Rs 11,327 crore is being transferred from IGST to CGST account, and Rs 13,479 crore to SGST account by way of settlement of funds on account of cross utilisation of IGST credit for payment of CGST and SGST, respectively or due to inter State B2C transactions. A total amount of Rs 24,806 crore is being transferred from IGST to CGST/SGST account by way of settlement.

The CNX Nifty traded in a range of 10,535.50 and 10,461.55. There were 21 stocks in green as against 29 stocks in red on the index.

The top gainers on Nifty were Infosys up by 1.71%, UPL up by 1.05%, Eicher Motors up by 0.98%, HPCL up by 0.93% and Cipla up by 0.77%. On the flip side, Vedanta down by 3.11%, ICICI Bank down by 2.53%, Hindustan Unilever down by 2.37%, Indiabulls Housing Finance down by 2.30% and Axis Bank down by 2.17% were the top losers.

European markets were trading in red; Germany’s DAX decreased 26.92 points or 0.22% to 12,463.81, France’s CAC shed 17.05 points or 0.32% to 5,326.88 and UK’s FTSE 100 was down by 16.53 points or 0.23% to 7,265.92.

The Asian markets closed in red on Wednesday after hawkish comments from Federal Reserve Chairman Jerome Powell triggered speculation that the Fed might hike rates four times this year instead of the expected three. Chinese shares ended lower as official data showed the manufacturing PMI for February hit a 19-month low. The manufacturing PMI came in at 50.3, missing forecasts for 51.1 and down from 51.3 in January. The non-manufacturing PMI slowed to 54.4 versus forecasts for 55.0 and down from 55.3 in the previous month. Further, Japanese shares fell as the Bank of Japan's decision to trim purchases of super long government bonds helped to lift the yen and a slew of data releases disappointed investors. Japan's industrial production fell at a faster rate than forecast in January and retail sales dropped 1.8 percent month-on-month, while housing starts logged a double-digit decline at the start of the year, separate reports showed. Meanwhile, the markets in Taiwan remained closed for Peace Memorial Day.