Post Session: Quick Review

Wednesday turned-out to be a daunting day of trade for Indian equity benchmarks with frontline gauges ending with a cut of over a percent, breaching their crucial 35,900 (Sensex) and 10,800 (Nifty) levels. Markets started the session with cautious tone as traders remained cautious with the government once again missing the target of garnering more than one lakh crore rupees from Goods and Services Tax (GST) in the month of December, giving rise to concerns that the government may not be able to contain the fiscal deficit to 3.2% of the GDP. The government has collected Rs 94,726 crore from GST in the month of December. Some concerns also came in with a private report stating that the Reserve Bank of India's (RBI) estimates of the gross non-performing asset (GNPA) ratio, in severe stress scenarios, for the quarter ahead have been inaccurate five out of six times in its financial stability reports (FSR) since FY16. Adding to the pessimism, Anil Gupta, vice president of ICRA said that MSME restructuring scheme will spoil credit culture because earlier the borrowers were sticking to their repayment schedule but now with this forbearance definitely any borrower will try to get a restructuring with a longer repayment schedule. So overall it is not good for the credit culture.

Selling got intensified in second half of the session with report that Indian manufacturing sector slowed down in the month of December. Growth was curtailed by competitive pressures, labour issues and challenging public policies. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 53.2 in December from 54 in November. Traders shrugged off report that India remained ahead of China to retain the tag world’s fastest growing large economy withstanding several ups and downs, spike in oil prices and global trade war like situation during 2018. Indian economy’s roller-coaster ride during the year gone by was best captured by the Gross Domestic Product (GDP) growth. In the first quarter of 2018-19 ending June 30, it grew at an impressive 8.2%.

Weakness in European counters too dampened sentiments as traders returned to their desks after the New Year break. Investors look ahead to Friday's US December jobs report as well as the annual meeting of the American Economic Association, where Fed Chair Powell is interviewed with predecessors Janet Yellen and Ben Bernanke, for clues on the outlook for interest rates. Asian markets ended mostly in red on report that factory activity weakened across Asia in December as the Sino-US trade war and a slowdown in Chinese demand hit production in most economies, strengthening the case for a pause in interest rate hikes in the region in 2019.

Back home, auto stocks ended lower after the auto companies such as Eicher Motors, Mahindra and Mahindra, Tata Motors and Maruti Suzuki India reported lower-than-expected auto sales numbers for December. Shares of metal companies edged lower after reports said foreign brokerage firm CLSA has downgraded the stocks saying deteriorating Chinese demand outlook will weigh on commodity prices. Realty stocks declined despite reports that the GST Council is slated to meet on January 10 to discuss lowering GST on under-construction flats and houses to 5 per cent, as well as hiking exemption threshold for small and medium enterprises.

The BSE Sensex ended at 35891.52, down by 363.05 points or 1.00% after trading in a range of 35734.01 and 36236.70. There were 6 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices were trading in red; the BSE Mid cap index was down by 1.26%, while Small cap index down by 0.74%. (Provisional)

The only gaining sectoral indices on the BSE were IT up by 0.28% and TECK was up by 0.03%, while Metal down by 3.45%, Auto down by 3.01%, Consumer Disc down by 1.83%, Basic Materials down by 1.75% and Utilities was down by 1.71% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 1.50%, TCS up by 0.93%, Asian Paints up by 0.66%, Infosys up by 0.46% and Yes Bank up by 0.24%. On the flip side, Vedanta down by 4.35%, Mahindra & Mahindra down by 4.28%, Tata Steel down by 4.18%, Tata Motors - DVR down by 3.28% and Tata Motors down by 3.23% were the top losers. (Provisional)

Meanwhile, the government has once again missed its Rs 1 lakh crore target of gathering revenue from Goods and Services Tax (GST) in the month of December 2018. The GST collection declined to Rs 94,726 crore in December, lower than Rs 97,637 crore collected in November. However, compliance improved during the month under review as the total number of sales returns or GSTR-3B filed in December stood at 72.44 lakh, as against 69.6 lakh filed in November.

The fall in revenue collection raised concerns that the government may not be able to contain the fiscal deficit to 3.2% of the Gross Domestic Product (GDP). As per the data, out of the total collection Rs 94,726 crore, Central GST (CGST) collection was Rs 16,442 crore, State GST (SGST) was Rs 22,459 crore, Integrated GST (IGST) was Rs 47,936 crore and Cess was Rs 7,888 crore.

Besides, the government has settled Rs 18,409 crore to CGST and Rs 14,793 crore to SGST from IGST as regular settlement.  The total revenue earned by central government and state governments after regular settlement in December was Rs 43,851 crore for CGST and Rs 46,252 crore for SGST.

During the April-December period of the current fiscal, the government has mopped up over Rs 8.71 lakh crore from GST. The 2018-19 budget had estimated annual GST collection at Rs 13.48 lakh crore, which means a monthly target of Rs 1.12 lakh crore. Meanwhile, the monthly average GST collection in last fiscal (July 2017 - March 2018) was Rs 89,885 crore.

The CNX Nifty is currently trading at 10792.50, down by 117.60 points or 1.08% after trading in a range of 10735.05 and 10895.35. There were 9 stocks advancing against 41 stocks declining on the index. (Provisional)

The top gainers on Nifty were Sun Pharma up by 1.50%, Bharti Infratel up by 1.12%, TCS up by 1.08%, Asian Paints up by 0.86% and Infosys up by 0.44%. On the flip side, Eicher Motors down by 9.46%, JSW Steel down by 5.41%, Tata Steel down by 4.47%, Vedanta down by 4.43% and Mahindra & Mahindra down by 4.09% were the top losers. (Provisional)

All European markets were trading in red; UK’s FTSE 100 lost 72.11 points or 1.07% to 6,656.02, Germany’s DAX fell 50.79 or 0.48% points to 10,508.17 and France’s CAC was down by 88.55 points or 1.87% to 4,642.14.

Asian markets ended in red on Wednesday as the US government shutdown entered its 12th day and a private survey showed that China's manufacturing sector contracted for the first time in 19 months in December, due to ongoing trade frictions between the world's two largest economies. Chinese shares ended lower as the Caixin/Markit manufacturing PMI dropped to 49.7 from 50.2 in November, adding to investor concerns over slowing growth. Further, Singapore and Malaysia shares were down around 1 percent in the absence of fresh overnight cues from Wall Street and Europe, which were closed for the New Year's Day holiday. Meanwhile, markets in Japan remained closed for the New Year holidays.