Post Session: Quick Review

Indian equity benchmarks ended at fresh closing highs on Tuesday. Key indices started the trading day in red terrain, amid reports that India's tax pie seems to have undergone a subtle change with a sharp drop in direct tax collections resulting from a disproportionate impact of the COVID-19 carnage on incomes. The share of indirect taxes, which mainly comprise of levy on goods and services as well as import duty, has risen while that of direct taxes - made up of corporate and personal income tax - has gone down in 2020. Domestic sentiments also remained down-beat with report stated that under the Trump administration, US-India tensions have increased over each side’s tariff policies. It also noted that the two sides have also held concerted negotiations to address these trade frictions.

In afternoon deals, markets turned positive to end the session higher, taking support with Minister of State for Finance Anurag Thakur’s statement that the central government is making efforts to turn India into a manufacturing and export powerhouse. Thakur said manufacturing will now be broad-based in the country. Besides, the Ministry of Finance has released the 10th weekly instalment of Rs 6,000 crore to the States. Out of this, an amount of Rs 5,516.60 crore has been released to 23 States and an amount of Rs 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

On the global front, European markets were trading mostly in red as investors monitored the coronavirus pandemic and the imposition of further restrictions, along with a U.S. Senate runoff election in Georgia. Asian markets ended mostly higher on Tuesday, after Singapore's manufacturing sector expanded for a sixth straight month amid further expansion in the electronics sector. The survey data from the SIPMM Institute showed that the purchasing manager's index for the manufacturing sector edged up to 50.5 from 50.4 in November. A reading above 50 suggests growth in the sector. In October, the score was 50.5. The PMI for the electronics sector also added a 0.1 point to reach 51.2 in December. The sector grew for the fifth month in a row and the reading was the highest since September 2018, when it was 51.4.

The BSE Sensex ended at 48437.78, up by 260.98 points or 0.54% after trading in a range of 47903.38 and 48486.24. There were 16 stocks advancing against 14 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.38%, while Small cap index up by 0.71%. (Provisional)

The top gaining sectoral indices on the BSE were Bankex up by 1.48%, IT up by 1.23%, TECK up by 1.06%, Consumer Disc up by 0.96% and Consumer Durables up by 0.78%, while Metal down by 1.36%, Energy down by 1.08%, Realty down by 0.39%, Oil & Gas down by 0.33% and PSU down by 0.24% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 6.31%, HDFC up by 2.78%, Indusind Bank up by 2.68%, TCS up by 1.75% and Asian Paints up by 1.40%. On the flip side, ONGC down by 2.06%, Bajaj Finance down by 1.83%, NTPC down by 1.31%, Mahindra & Mahindra down by 1.24% and Reliance Industries down by 1.24% were the top losers. (Provisional)

Meanwhile, in order to meet the GST compensation shortfall, the Ministry of Finance has released the 10th weekly instalment of Rs 6,000 crore to the States. Out of this, an amount of Rs 5,516.60 crore has been released to 23 States and an amount of Rs 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

Now, more than 50 percent of the estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly. The amount released this week was the 10th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 4.1526%. So far, an amount of Rs 60,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.6892%.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government of India has also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources.

The CNX Nifty ended at 14199.50, up by 66.60 points or 0.47% after trading in a range of 14048.15 and 14215.60. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 6.36%, HDFC up by 2.84%, Indusind Bank up by 2.65%, HDFC Life Insurance up by 2.57% and Wipro up by 2.50%. On the flip side, ONGC down by 2.06%, JSW Steel down by 1.95%, Bajaj Finance down by 1.86%, Tata Steel down by 1.80% and Hindalco down by 1.57% were the top losers. (Provisional)

European markets were trading mostly in red, France’s CAC decreased 11.38 points or 0.2% to 5,577.58 and Germany’s DAX was down by 10.81 points or 0.08% to 13,715.93. On the flip side, UK’s FTSE 100 was up by 26.16 points or 0.4% to 6,598.04.

Asian markets ended mostly higher on Tuesday, despite concerns over persisted surge in corona virus cases. Chinese shares ended up after the New York Stock Exchange said it is withdrawing plans to delist China's three big telecommunication companies. Though, Japanese shares settled lower amid the yen strengthened following reports that the government will declare a state of emergency in Tokyo and surrounding cities from Thursday. Uncertainty ahead of crucial Senate election run-offs in the US state of Georgia has capped further gains.