Post Session: Quick Review

Indian equity benchmarks extended their losing streak for second straight session, as traders remained wary ahead of index of industrial production (IIP) data for November scheduled to be released later in the day. In morning trade, key indices traded on optimistic note, tracking positivity in other Asian markets. Traders took encouragement with report that the Goods and Services Tax (GST) Council approved a series of measures aimed at benefiting small businesses, such as a doubling of the exemption threshold to Rs 40 lakh and an increase in the turnover limit for service providers looking to avail of the low-compliance composition scheme. The higher turnover cap of Rs 1.5 crore, against the earlier Rs 1 crore, for availing composition scheme of paying 1 percent tax will be effective from April 01.

However, markets soon erased all gains and started trading on negative route, due to selling witnessed in Telecom, Realty and Capital Goods stocks. Sentiments turned pessimistic with a report that India's fiscal deficit target has overshot by 15 per cent in the first eight months of FY 2018-19, largely due to a revenue shortfall rather than front-loading of expenditure. Some anxiety also spread among the local traders with reports that the unemployment rate rose to a four-year high in 2016-17, when the government demonetised old currency notes, at the same time as more people joined the labour force looking for jobs. According to the findings of the Labour Bureau, the unemployment rate stood at 3.9 per cent, compared to 3.7 per cent in 2015-16 and 3.4 per cent in 2013-14.

But, in dying hour of trade, the markets managed to trim their initial losses to come off their intraday low points, as some optimism remained among the investors with Commerce Minister Suresh Prabhu’s statement that the government is considering providing transport subsidy to states for promoting agriculture exports. On credit issues being faced by exporters, he said, the financial services secretary would hold meeting with banks on the matter.

On the global front, Asian stocks ended in green on Friday, while European markets were trading in green, after China's commerce ministry said trade talks with the United States in Beijing were extensive and helped to establish a 'foundation' to resolve differences. Back home, textile sector was in focus with the Cotton Textiles Export Promotion Council stating that the Centre’s move to allow companies under composition scheme to file GST returns annually will improve ease of doing business for small textile companies. Besides, metal stocks too were in focus, after India has sought consultations with the European Union (EU) under the aegis of WTO against a move of the 28-nation bloc to impose safeguard duties on certain steel products. The country has sought these consultations under WTO's Agreement on Safeguards.

The BSE Sensex ended at 35969.89, down by 136.61 points or 0.38% after trading in a range of 35840.60 and 36214.26. There were 10 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.16%, while Small cap index was down by 0.27%. (Provisional)

The only gaining sectoral index on the BSE was FMCG up by 0.46%, while Telecom down by 1.46%, Realty down by 1.42%, Capital Goods down by 0.98%, Industrials down by 0.92% and Auto down by 0.86% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ITC up by 1.90%, Vedanta up by 0.67%, Axis Bank up by 0.51%, Infosys up by 0.50% and ONGC up by 0.49%. (Provisional)

On the flip side, Indusind Bank down by 3.31%, Tata Motors down by 3.02%, TCS down by 2.47%, Tata Motors - DVR down by 2.40% and Yes Bank down by 1.98% were the top losers. (Provisional)

Meanwhile, with an aim to give relief to small businesses, the all-powerful Goods and Services Tax (GST) Council has decided to double the limit for exemption from payment of GST to Rs 40 lakh from the earlier cap of Rs 20 lakh. It also decided that from the next fiscal year, businesses with annual turnover of Rs 1.5 crore will be able to pay GST at a fixed rate of their earnings under the composition scheme, while the current limit is Rs 1 crore. Besides, it allowed Kerala to levy a 1% calamity cess on intra-state sale of goods and services for a period of up to two years to mobilise revenues to meet the cost of rehabilitating parts of states that were ravaged by floods last year.

Finance Minister Arun Jaitley said the taxpayers with an aggregate turnover of Rs 40 lakh would now be exempted from the GST. For the north eastern states, the exemption would now be Rs 20 lakh. Currently, businesses with a turnover of up to Rs 20 lakh are exempt from GST registration, while the limit for hilly and north eastern states is Rs 10 lakh. He said the GST Composition Scheme, under which small traders and businesses pay a 1% tax based on turnover, can be availed by businesses with a turnover of Rs 1.5 crore, against the earlier Rs 1 crore, with effect from April 01, 2019. Also, service providers and suppliers of both goods and services up to a turnover of Rs 50 lakh would be eligible to opt for the GST composition scheme and pay a tax of 6%. He added that these decisions would give a relief to micro, small and medium enterprises (MSMEs).

The twin decision under the composition scheme would have an annual revenue impact of about Rs 3,000 crore. On GST rate for real estate, Jaitley said the council has decided for form a seven-member group of ministers after differences of opinion emerged at the meeting, and there were diverse views on lottery. A ministerial panel will look into it as well. He further said those opting for the composition scheme would have to file just one tax return annually but pay taxes once every quarter. He said there would be two thresholds -- Rs 40 lakh and Rs 20 lakh -- for exemption from registration and payment of the GST for the suppliers of goods, with the facility that one can 'opt up or opt down' depending on revenue.

The CNX Nifty ended at 10786.80, down by 34.80 points or 0.32% after trading in a range of 10739.40 and 10850.15. There were 20 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were ITC up by 1.85%, UPL up by 1.29%, Indian Oil Corp. up by 1.00%, Wipro up by 1.00% and Hindalco up by 0.78%. (Provisional)

On the flip side, Indusind Bank down by 3.31%, Tata Motors down by 3.12%, Bharti Infratel down by 2.88%, TCS down by 2.41% and Yes Bank down by 1.95% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 57.50 points or 0.83% to 7,000.37, France’s CAC added 12.56 points or 0.26% to 4,818.22 and Germany’s DAX was up by 12.24 points or 0.11% to 10,933.83.

Asian markets ended higher on Friday after China's commerce ministry said trade talks with the United States in Beijing were extensive and helped to establish a ‘foundation’ to resolve differences. Prospects for more Chinese stimulus to arrest the slowdown in growth and growing expectations that the US Federal Reserve will pause its rate tightening cycle this year also underpinned sentiment. Chinese and Hong Kong shares ended higher amid a strengthening yuan and mounting expectations that Beijing will roll out more stimulative policies. However, concerns about a slowing economy continued to weigh on investor sentiments. Further, Japanese stocks ended up, tracking strong US shares and overcoming falls by convenience stores which reported dismal quarterly earnings the previous day.