Post Session: Quick Review

Extending previous session’s northward journey, Indian equity benchmarks ended the first day of the week at their fresh record closing levels. Both the S&P BSE Sensex and the NSE Nifty 50 settled above crucial 37,650 and 11,350 levels, respectively. Markets made an optimistic start and traded at all-time high levels, tracking mostly positive trade in Asian equities. Sentiments remained up-beat with the Confederation of Indian Industry’s (CII) statement that with the US imposing an additional 25% duty on imports worth $34 billion from China, certain Indian products may become more competitive. Traders also reacted positively to a report that the Goods and Services Tax (GST) Council headed by Finance Minister Piyush Goyal approved setting up of a group of ministers (GoM) to tackle taxation related issues faced by micro, small and medium enterprises (MSMEs). Traders also took note of Principal Economic Adviser to the Finance Ministry, Sanjeev Sanyal’s statement that GST slabs may come down to three in addition to the exempted category, in the long-term. He also said the three slabs could be a low of 5%, a central 15% (merging the 12% and 18% slabs that exist now) and a top rate of 25%.

However, key indices gave up some of their gains in last leg of trade to come off their intraday high points, as selling appeared in Auto, Healthcare, FMCG and Utilities stocks. Market-men got anxious as the government said it will take action against over 2.25 lakh companies as they have not filed requisite financial statement for 2015-16 and 2016-17. Anxiety also spread among the investors with credit rating agency, Care Ratings’ latest report that the monsoon deficit is likely to lead to lower production. The report further noted that the country is still facing a rainfall deficit of 7%, on a cumulative basis and the overall sown area is 7.5% less than last year.  But, markets managed to close the session at fresh record high level, as some support came with the Reserve Bank of India (RBI) in its latest data showing that bank credit jumped 12.44% to Rs 86,13,164 crore in the fortnight to July 20 as compared to Rs 76,59,898 crore same period last year. 

On the global front, Asian markets ended mostly in green, following the gains on Wall Street Friday after the release of the closely-watched U.S. monthly jobs report for July. European markets were trading in green in early deals on Monday.

Back home, Auto sector was in focus with report indicating that auto makers in India are set to spend up to Rs 58,000 crore in capital expenditure over the next two years-the highest in a decade-underscoring healthy demand prospects in the local market and impending safety and emission norms. Stocks related to textile sector remained in lime-light with a report that the government is likely to hike import duty on about 300 textile products to boost domestic manufacturing and create employment opportunities.

The BSE Sensex ended at 37688.01, up by 131.85 points or 0.35% after trading in a range of 37643.29 and 37805.25. There were 14 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.20%, while Small cap index was up by 0.36%. (Provisional)

The top gaining sectoral indices on the BSE were Bankex up by 1.10%, Energy up by 0.96%, PSU up by 0.87%, Metal up by 0.86% and Telecom up by 0.85%, while Realty down by 0.50%, Healthcare down by 0.42%, FMCG down by 0.30%, Utilities down by 0.28% and IT down by 0.24% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 3.82%, ICICI Bank up by 3.33%, SBI up by 3.32%, Bharti Airtel up by 2.62% and Coal India up by 1.78%. (Provisional)

On the flip side, Tata Motors down by 2.03%, Tata Motors - DVR down by 1.86%, Kotak Mahindra Bank down by 1.86%, Hindustan Unilever down by 1.67% and Sun Pharma down by 1.52% were the top losers. (Provisional)

Meanwhile, in order to further simplify the India’s tax regime, Principal Economic advisor to the Finance Ministry Sanjeev Sanyal has said that the Goods and Services Tax (GST) slabs may be brought down to three in the long-term, along with the exemption category. He added that the three slabs could be a low of 5 percent, the middle bracket of 15 percent (merging 12 percent and 18 percent slabs that exist now) and a top rate of 25 percent. Presently, there are four GST slabs of 5, 12, 18 and 28 percent, plus the exempted category which attracts zero percent GST.

Sanyal also said that the central rate of 15 percent will be applied for the bulk of goods. He said they are looking to have a simple tax rate with round figures and most of the goods with the same rate. He further said that as the tax system gets simplified, more and more people will be paying their taxes.

Principal Economic advisor added that the tax collection has significantly gone up since the introduction of GST and now a lot of people are paying direct taxes. He noted that so if the direct tax revenues continue to do well, the centre may further simplify the direct tax system, lower the rates and would ultimately move towards the corporate tax rate of 25 percent.

The CNX Nifty ended at 11387.35, up by 26.55 points or 0.23% after trading in a range of 11370.60 and 11427.65. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 3.72%, ICICI Bank up by 3.36%, SBI up by 3.17%, Bharti Airtel up by 2.83% and UPL up by 2.46%. (Provisional)

On the flip side, GAIL India down by 3.14%, Titan Co down by 2.07%, Tata Motors down by 2.03%, Dr. Reddys Lab down by 2.01% and Kotak Mahindra Bank down by 1.90% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 rose by 4.54 points or 0.06% to 7,663.64, France’s CAC was up by 9.42 points or 0.17% to 5,488.40  and Germany’s DAX surged by 46.75 points or 0.37% to 12,662.51.

Asian equity markets ended mixed on Monday as investors digested a mixed US jobs report and kept an eye on intensifying trade tensions between the US and China. Chinese shares fell after Beijing's latest tariff threats escalated the tit-for-tat Sino-US trade war. The overseas edition of the ruling Communist Party's People's Daily newspaper said US President Donald Trump was ‘starring in his own carefully orchestrated street fighter-style deceitful drama’ in which diplomacy had been reduced to a ‘trading game in which everything should follow the rule of America first’. The yuan also weakened despite China's central bank late on Friday raising the reserve requirement on foreign exchange forward positions. Further, Japanese shares ended lower in cautious trade as investors looked forward to a raft of corporate earnings as well as this week's bilateral talks between Washington and Tokyo.