Bulls continue to hold tight grip on Dalal Street

Bulls continued to hold tight grip on Dalal Street with key gauges conquering fresh highs at regular intervals on Monday. Sentiments remained up-beat after Finance Minister Arun Jaitley has said that a series of reforms taken by the government transformed the weak economy. He also said that the reform measures has substantially cleaned up the system and made it more transparent, noting that decisiveness has led to easier decision-making and made the economy stand out before several other countries. Some support also came with Former Niti Aayog vice-chairman Arvind Panagariya’s statement that Rupee depreciation is not cause to worry and it was pending for a long time. He also said India’s macroeconomic management is sound. He further said that the country’s export has suffered losses due to appreciation in exchange rates.

Global cues too aided sentiments with all the Asian counters are trading in green at this point of time, tracking the record closing highs on Wall Street Friday after Federal Reserve Chairman Jerome Powell said that the strength of the U.S. economic expansion justified gradual interest rate hikes. Back home, shares of public sector banks (PSBs) remained on buyers’ radar ahead of the Allahabad Court verdict on stressed power assets as the Reserve Bank of India (RBI) deadline ends today. The RBI’s February 12 circular said all stressed assets will either get resolved by August 27 or get taken to the NCLT. Stocks related to Textile counter exhibiting mixed trend despite India’s textiles and clothing exports have surged 11% in July 2018 in comparison to same period of last year, on account of favourable government policies and rupee depreciation.  Rise in India’s textiles and apparel exports was mainly due to supportive government policies which prompted the government to expedite refund on state and Goods and Services Tax (GST) levies on raw materials.

The BSE Sensex is currently trading at 38676.33, up by 424.53 points or 1.11% after trading in a range of 38416.73 and 38679.11. There were 30 stocks advancing against 1 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.92%, while Small cap index was up by 0.85%.

The top gaining sectoral indices on the BSE were Utilities up by 1.94%, Bankex up by 1.79%, PSU up by 1.78%, Metal up by 1.77% and Power was up by 1.74%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were ICICI Bank up by 3.17%, Power Grid Corporation up by 3.14%, SBI up by 3.10%, Yes Bank up by 1.72% and Bharti Airtel up by 1.70%. On the flip side, Sun Pharma Industries down by 0.68% were the top losers.

Meanwhile, in order to create a tax compliant system within the gold sector, the government think tank Niti Aayog in its latest report has recommended the government to reduce the basic customs duty on gold from the existing level of 10% to as low as possible. It also suggested that slash the Goods and Services Tax (GST) rate on the precious metal from the current 3%. It recommended the government to review and revamp the gold monetisation scheme and the sovereign gold bond scheme and introduce new gold savings account in banks besides setting up of a gold board and bullion exchanges across the country to have greater financialisation of the yellow metal.

The committee headed by Niti Aayog Principal Adviser Ratan P Watal in its latest report said a reduction in the customs duty in the past in India has been argued to support tax compliance coupled with a significant reduction in the quantum of gold smuggled into India. Thus, it said in this context, to create a tax compliant system within the sector, it is important to reduce the basic customs duty on gold to as low as possible.

The committee also suggested exemption of 3% Integrated Goods and Services Tax (IGST) to be paid by exporter on line with custom duty with a provision of bank guarantee. This IGST exemption should also be extended to the supply of gold by foreign buyer. Further, it said the threshold for exemption under GST, which at present is Rs 20 lakh, should be revised on the basis of value-added, which can be determined by using average ratio of value added to value of sales for the sector concerned. Also, the GST rate for repair service of jewellery should be reduced from 18% to 3%.

The report has recommended scrapping of commodity transaction tax (CTT) on gold derivatives and provision for capital gains tax exemption for gold related financial instruments. With regard to gold monetisation scheme (GMS), the committee said the finance ministry must review and revamp the scheme, with time-bound targets that may be set through a comprehensive gold policy. It also said that banks should be encouraged to set up more branches to accept gold deposits under the GMS, allow deposits as low as one gram, and multiples thereof, and exempt the transfer of gold collected under the GMS from the purview of the GST.

The committee suggested introduction of a new financial product for banks ‘Gold Savings Account’ that will accept rupee and credit grams of gold, with passbook facility. It also proposed to set up a new body ‘The Gold Board of India’ and bullion exchanges under the Ministry of Finance. This would be positioned as a single window one stop interface - assigned the responsibility to formulate policies. It added that gold as a foreign exchange asset would continue to be professionally managed by the regulator Reserve Bank of India (RBI).

The CNX Nifty is currently trading at 11682.35, up by 125.25 points or 1.08% after trading in a range of 11595.60 and 11684.40. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 3.23%, Hindalco up by 3.20%, SBI up by 3.13%, Power Grid Corporation up by 3.12% and Grasim Industries up by 2.50%. On the flip side, Sun Pharma Industries down by 0.79%, Bharti Infratel down by 0.44%, Eicher Motors down by 0.35%, Cipla down by 0.25% and Zee Entertainment down by 0.04% were the top losers.

All the Asian markets are trading in green; Nikkei 225 surged 197.87 points or 0.87% to 22,799.64, Taiwan Weighted increased 92.86 points or 0.85% to 10,902.21, Straits Times jumped 19.69 points or 0.61% to 3,232.69, Jakarta Composite rose 42.27 points or 0.7% to 6,011.02, Hang Seng soared 605.65 points or 2.14% to 28,277.52, KOSPI added 6.09 points or 0.26% to 2,299.30 and Shanghai Composite was up by 48.25 points or 1.74% to 2,777.68.