Post Session: Quick Review

Extending their previous session’s southward journey, Indian equity benchmarks ended in red with a cut of over one percent on Thursday, breaching their crucial 35,600 (Sensex) and 10,700 (Nifty) levels. Markets after initial weakness gained traction and entered into green terrain as traders turned optimistic after the Finance Ministry in its 2018 review stated that the Indian economy is projected to be the fastest-growing major economy in the current and upcoming fiscal 2019-20. It also emphasized that the government has taken several steps to boost investors’ confidence. It added that the average growth of the Indian economy between 2014-15 and 2017-18 was 7.3%, fastest among the major economies in the world. Market participants also took some support with the Finance Ministry’s another statement that the direct tax-to-GDP ratio of 5.98% achieved during 2017-18 fiscal is the best in the last 10 years. It was 5.57% in 2016-17 and 5.47% in 2015-16. Also, traders got some encouragement with the government’s decision to provide 3% interest subsidy to merchant exporters, entailing an expenditure of Rs 600 crore, to enhance liquidity with a view to boosting outbound shipments.

However, sell-off in second half of trade mainly played spoil sports for the key indices and dragged them near intraday lows. Sentiments turned downbeat as trade took a toll with a private report stating that global economic growth is expected to slow down in 2019, as tighter monetary policy, weaker earnings growth and political challenges confront the world's major economies. The report said for the year ahead that it expected global economic growth to slow to 3.6 percent in 2019, after seeing a growth of 3.8 percent in 2018. Traders paid no heed towards Finance Minister Arun Jaitley’s statement that Rs 80,000 crore has been recovered by creditors in 66 cases resolved by NCLT and around Rs 70,000 crore more is likely to be realised by March-end.

Weakness in European counters too dampened sentiments, as Eurozone manufacturing expanded at the weakest pace since early 2016 in December as new orders fell for a third month and business confidence eroded to a six-year low. As per results of the survey by IHS Markit, the final Eurozone Manufacturing Purchasing Managers' Index, or PMI, was 51.4, unchanged from the flash estimate, but lower than November's 51.8. Asian markets ended in red after Apple Inc cut its revenue forecast due in part to weaker sales in China, adding to concerns about the slowing global economy.

Back home, banking sector stocks ended in red after the Reserve Bank of India’s (RBI) data showed that the banking sector failed to meet the priority-sector lending (PSL) targets overall. The banks also failed to meet targets of specific sectors such as agriculture and micro, small and medium enterprises (MSMEs). PSBs met their PSL target for agriculture of 18%, private banks and foreign banks failed to meet the targets at 16.2% and 16.7%, respectively. Coal sector stocks edged lower despite Minister for Coal, Piyush Goyal’s statement that the current focus of the government is on boosting production from operational coal mines. Telecom stocks ended lower as data shows poor growth in mobile phone customer base. The country’s mobile phone customer base rose 0.06 per cent, or a net 0.72 million, to 1.17 billion in October.

The BSE Sensex ended at 35513.71, down by 377.81 points or 1.05% after trading in a range of 35475.57 and 35999.66. There were 5 stocks advancing against 26 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 1.03%, while Small cap index was down by 0.58%. (Provisional)

The only gaining sectoral indices on the BSE were Telecom up by 0.57% and FMCG was up by 0.07%, while Metal down by 2.35%, Oil & Gas down by 1.75%, Basic Materials down by 1.66%, Capital Goods down by 1.63% and Energy was down by 1.52% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were HCL Tech. up by 0.50%, Asian Paints up by 0.32%, Hindustan Unilever up by 0.29%, Bharti Airtel up by 0.06% and Bajaj Auto up by 0.06%. On the flip side, ONGC down by 3.59%, Mahindra & Mahindra down by 3.23%, Tata Steel down by 2.54%, Vedanta down by 2.49% and HDFC down by 2.07% were the top losers. (Provisional)

Meanwhile, the Finance Ministry has stated that India achieved the direct tax-to-GDP ratio of 5.98% in fiscal year 2017-18 (FY18) and it is the best in the last 10 years. Besides, in the previous years that is in 2016-17 and 2015-16 it was 5.57% and 5.47% respectively. The ministry said the larger purpose of demonetisation was to move India from a tax non-compliant society to a compliant society and the impact of note ban has been felt on collection of personal income tax.

The Ministry in its 2018 review said there is a constant growth in direct tax-GDP ratio over last three years and the ratio of 5.98% in FY18 is the best DT-GDP ratio in last 10 years. It further said there is a growth of over 80% in the number of returns filed in the last four financial years from 3.79 crore in 2013-14 to 6.85 crore in 2017-18. It added that the number of individuals filing return of income has also increased by about 65% during this period from 3.31 crore in 2013-14 to 5.44 crore in 2017-18.It also said there has been a continuous increase in the amount of income declared in the returns filed by all categories of taxpayers over the last three assessment years (AYs).

For AY 2014-15, corresponding to FY 2013-14 (base year), the return filers had declared gross total income of Rs 26.92 lakh crore, which has increased by 67% to Rs 44.88 lakh crore for AY 2017-18, showing higher level of compliance resulting from various legislative and administrative measures taken by the government, including effective enforcement measures against tax evasion. Refunds amounting to Rs 1.23 lakh crore have been issued during the April-November 2018 period, which is 20.8% higher than refunds issued during the corresponding period in the preceding year. Growth rate for corporate income tax (CIT) and personal income tax (PIT) stood at 17.7% and 18.3%, respectively.

The CNX Nifty ended at 10672.25, down by 120.25 points or 1.11% after trading in a range of 10661.25 and 10814.05. There were 7 stocks advancing against 43 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Infratel up by 2.78%, Asian Paints up by 0.36%, Bajaj Auto up by 0.35%, Bharti Airtel up by 0.27% and Hindustan Unilever up by 0.21%. On the flip side, Eicher Motors down by 4.49%, Indian Oil Corp. down by 3.35%, HPCL down by 3.22%, ONGC down by 3.16% and Mahindra & Mahindra down by 3.15% were the top losers. (Provisional)

All the European markets are trading in red; FTSE shed 34.06 points or 0.51% to 6,700.17, CAC slumped 49.21 points or 1.05% to 4,640.18 and DAX was down by 114.50 points or 1.08% to 10,465.69.

Asian shares ended mostly lower on Thursday as Apple's profit warning weighed on tech shares across Asia, most notably in Taiwan and South Korea. Apple specifically highlighted slowing Chinese growth and Sino-US trade tensions, exacerbating investors’ concerns about the health of the global economy. The news also sparked a 'flash crash' in holiday-thinned currency markets as investors rushed to less risky assets, with the Japanese yen soaring against most major currencies in a matter of seconds. Meanwhile, the Japanese market was closed for a public holiday.