Domestic indices trade in fine-fettle in early deals; Services PMI eyed

Indian equity benchmarks extended their previous session’s gains with optimistic start on Tuesday. Soon, markets enlarge their northward journey and are trading in fine-fettle with 0.78% gains each in early deals. Buying in all the sector indices, led by Power, Metal and Utilities, aiding the markets sentiments. Investors are eyeing services PMI data to be out later in the day. Traders took note of a private report that the Centre is committed to stick to the fiscal deficit target of 6.4 percent despite strong global headwinds. Besides, the government will review the just introduced windfall tax on domestically produced crude oil and fuel exports every two weeks based on foreign currency rates and international oil prices, but no levels have been fixed for its recall. Also, India’s exports grew 16.8 per cent year-on-year to $38 billion in June, while imports jumped 51 per cent to $63.6 billion.

On the global front, Asian markets are trading mixed following the positive cues from European markets overnight, as investors remained cautious amid persisting worries about inflation, slowing growth and rising interest rates by major central banks pushing towards a potential recession. Signs of new waves of COVID-19 infections in China also hurt market sentiment. Back home, hotel industry stocks were in focus with a private report that as tourism has started in full swing in the nation, Indian hotels are on a growth path as Mumbai continue to be the market leader. In stock specific movement, Marksans Pharma surged after the company said it will consider a share buyback.

The BSE Sensex is currently trading at 53648.28, up by 413.51 points or 0.78% after trading in a range of 53437.98 and 53649.79. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.56%, while Small cap index was up by 0.91%.

The top gaining sectoral indices on the BSE were Power up by 1.59%, Metal up by 1.57%, Utilities up by 1.56%, Basic Materials up by 1.11%, IT up by 0.92%, while there was no sellers on the BSE sectoral front.

The top gainers on the Sensex were Bajaj Finserv up by 2.29%, Power Grid up by 2.09%, Dr. Reddy's Lab up by 1.70%, Tata Steel up by 1.57% and Tech Mahindra up by 1.52%. On the flip side, ITC down by 0.17%, Mahindra & Mahindra down by 0.16% and Larsen & Toubro down by 0.06% were the few losers.

Meanwhile, Revenue Secretary Tarun Bajaj has said that the rate rationalisation exercise of the GST Council is a result of introspection of GST, and policymakers do not have a ‘fetish’ to raise the tax rates to the revenue-neutral level of 15.5 per cent. He said the government intends to continue with the top GST slab of 28 per cent for luxury and sin goods. But, he said the government is open to discussing narrowing down the three slabs of 5, 12 and 18 per cent into two. On the industry demand for bringing petroleum products under GST net, he said since fuel constitutes a larger part of their revenues, both the Centre and states have some apprehension.

Bajaj said ‘we will have to wait for some time. Of the 5, 12, 18 and 28 per cent, we would have to continue with 28 per cent because in a developing economy, in an economy with so much of income disparity, there would be some luxury and sin items that would and should attract a higher rate of taxation. But, whether on 5, 12 and 18 (per cent), we can bring down to 2 rates to start with and then see how the country grows and whether there is a capacity to bring it to one rate or not is something to be seen. It is a very difficult challenge.’

Under the GST, a four-rate structure that exempts or imposes a low rate of tax of 5 per cent on essential items and a top rate of 28 per cent on cars is levied. The other slabs of tax are 12 and 18 per cent. Besides, there is a special 3 per cent rate for gold, jewellery and precious stones and 1.5 per cent on cut and polished diamonds. Also, a cess is levied on the highest tax slab of 28 per cent on luxury, sin and demerit goods. The collection from the cess goes to a separate corpus -- Compensation fund -- which is used to make up for revenue loss suffered by the state due to the GST rollout.

The CNX Nifty is currently trading at 15958.45, up by 123.10 points or 0.78% after trading in a range of 15891.55 and 15960.20. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.29%, Tata Motors up by 2.14%, Bajaj Finserv up by 2.09%, Power Grid up by 2.04% and Dr. Reddy's Lab up by 2.03%. On the flip side, Britannia Industries down by 0.59%, ITC down by 0.41%, Hero MotoCorp down by 0.35%, Mahindra & Mahindra down by 0.20% and Bajaj Auto down by 0.05% were the top losers.

Asian markets are trading mixed; Nikkei 225 rose 162.64 points or 0.62% to 26,316.45, Hang Seng added 131.78 points or 0.60% to 21,962.13, KOSPI surged 24.89 points or 1.08% to 2,325.23 and Jakarta Composite was up by 99.98 points or 1.51% to 6,739.15. On the other hand, Straits Times fell 16.80 points or 0.54% to 3,103.44, Taiwan Weighted lost 68.80 points or 0.48% to 14,148.26 and Shanghai Composite was down by 6.45 points or 0.19% to 3,398.98.