Choppiness continues on Dalal Street in noon deals

Indian equity benchmarks continued to trade choppy in noon deals after surrendering all their initial gains. Lack of definite domestic cues and weakness in other Asian counterparts affected momentum. Sentiments also remained dampened on report that foreign portfolio investors (FPIs) sold shares worth Rs 2,442.61 crore on net basis on June 20. Traders remained concerned with former NASSCOM president R Chandrashekhar’s statement that the economy could be disrupted if job growth was not constant. He added that the government statistics showed that nearly four million jobs in the formal sector were created from September 2017 to March 2018, of which about 50% were in the service sector. Meanwhile, India has hiked customs duty on several goods, including Bengal gram, lentils and artemia, imported from the US. The import duty hike would be effective from August 4. Shares of cement companies remained under pressure with most of the frontline stocks hitting 52-week lows on concerns of a delay in the pickup of demand trends, lower-than-expected pricing realizations and higher-than-expected increases in costs.

The BSE Sensex is currently trading at 35478.51, down by 68.82 points or 0.19% after trading in a range of 35475.44 and 35678.69. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.27%, while Small cap index was down by 0.49%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.37%, Energy up by 0.30% and IT was up by 0.13%, while PSU down by 1.05%, Telecom down by 1.03%, Utilities down by 0.77%, Healthcare down by 0.72% and Power was down by 0.67% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 1.41%, ICICI Bank up by 1.35%, Reliance Industries up by 1.02%, Vedanta up by 0.50% and Infosys up by 0.38%. On the flip side, Power Grid Corporation down by 2.48%, ONGC down by 1.72%, Mahindra & Mahindra down by 1.48%, Axis Bank down by 1.11% and ITC down by 0.97% were the top losers.

Meanwhile, amid suggestions to bring petrol and diesel under ambit of new indirect tax to curb the price hike, the government has said that a peak tax rate of 28% plus states levying some amount of local sales tax or Value Added Tax (VAT) on petrol and diesel is likely to be the tax structure when the two auto fuels are covered under the Goods and Services Tax (GST) regime. It added that the peak GST rate plus VAT will be equal to the present tax incidence, which is made up of excise duty, levied by the central government, and VAT charged by the states. It also said that there is no pure GST on petrol and diesel anywhere in the world and so in India too it will have to be a combination of GST and VAT.

However, the government highlighted that before the two fuels are put under new indirect tax, the Centre has to decide if it is willing to let go the Rs 20,000 crore input tax credit it currently pockets by keeping petrol, diesel, natural gas, jet fuel and crude oil out of the GST regime that came into force from July 1, 2017. It added that the timing of including petro products in GST will be a political call which the centre and states will have to take collectively.

Besides, the Centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel. On top of this, states levy VAT - the lowest being in Andaman and Nicobar Islands where a 6% sales tax is charged on both the fuel. Mumbai has the highest VAT of 39.12% on petrol, while Telangana levies highest VAT of 26% on diesel. Delhi charges a VAT of 27% on petrol and 17.24% on diesel. The total tax incidence on petrol comes to 45-50% and on diesel it is 35-40%.

As per the government, under GST the total incidence of taxation on a particular good or a service has been kept at the same level as the sum total of central and state levies existing pre-July 1, 2017. This was done by fitting them into one of the four GST tax slabs of 5, 12, 18 and 28%. For petrol and diesel, the total incidence of present taxation is already beyond the peak rate and if the tax rate was to be kept at just 28% it would result in a big loss of revenue to both centre and states.

The CNX Nifty is currently trading at 10749.85, down by 22.20 points or 0.21% after trading in a range of 10748.55 and 10809.60. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 1.55%, Zee Entertainment up by 1.52%, ICICI Bank up by 1.43%, Reliance Industries up by 1.08% and Bajaj Finserv up by 1.05%. On the flip side, Power Grid Corporation down by 2.31%, Dr. Reddys Lab down by 2.02%, Mahindra & Mahindra down by 1.84%, Bharti Infratel down by 1.82% and ONGC down by 1.69% were the top losers.

Most of the Asian markets were trading in green; Hang Seng plunged 368.33 points or 1.26% to 29,327.84, Shanghai Composite fell 29.94 points or 1.04% to 2,885.79, KOSPI shed by 26.08 points or 1.12% to 2,337.83, Straits Times moved down 11.39 points or 0.34% to 3,304.51 and Jakarta Composite was down by 22.13 points or 0.38% to 5,861.91.

On the flip side, Nikkei 225 surged 137.61 points or 0.61% to 22,693.04 and Taiwan Weighted increased 13.63 points or 0.12% to 10,941.07.