Indices trade in fine-fettle in early deals; Manufacturing PMI eyed

Indian equity benchmarks made optimistic start on Monday following Friday’s firm trade on Wall Street and positive cues from Asian counterparts as traders react to the unexpected cooler-than-expected US inflation for May. Markets soon added strength and are trading in fine-fettle with gains of around 0.75% each in early deals ahead of Manufacturing PMI data to be out later in the day. HDFC twins, which are up by around 3%, are leading the gainers on the indices. All the sectoral indices are trading in green. Foreign fund inflows also aided domestic sentiments. According to the provisional data available on the NSE, foreign institutional investors (FII) net bought shares worth net Rs 6,397.13 crore on June 30. Some support came in with report that the southwest monsoon covered the entire country on Sunday, six days earlier than usual. Traders took encouragement as the Ministry of Finance said India's gross GST revenue collection in June stood at Rs 1,61,497 crore, registering a 12 per cent year-on-year rise. 

On the sectoral front, auto stocks are in focus reacting to their monthly sales numbers. A private report noted that domestic wholesale of passenger vehicles (PVs) observed a lukewarm growth in June this year due to a strong base effect. In stock specific development, Mazagon Dock Shipbuilders soared on winning a contract worth Rs. 2,724.63 crore from Indian Navy.

The BSE Sensex is currently trading at 65218.42, up by 499.86 points or 0.77% after trading in a range of 64836.16 and 65221.71. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.32%, while Small cap index was up by 0.65%.

The top gaining sectoral indices on the BSE were Bankex up by 1.13%, Metal up by 1.04%, Oil & Gas up by 0.59%, Telecom up by 0.59% and Consumer Durables up by 0.56%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were HDFC up by 3.39%, HDFC Bank up by 2.91%, Ultratech Cement up by 1.81%, ICICI Bank up by 1.05% and Tata Steel up by 0.89%. On the flip side, Power Grid down by 0.90%, Maruti Suzuki down by 0.84%, Tech Mahindra down by 0.76%, Sun Pharma down by 0.58% and Larsen & Toubro down by 0.34% were the top losers.

Meanwhile, expressing optimism over GST collection, Finance Minister Nirmala Sitharaman has said Goods and Services Tax (GST) has increased revenue buoyancy of states and helped bring down the taxes for consumers by removing the cascading effect of 'tax-on-tax'. She said the GST system has seen massive scaling up since its implementation on July 1, 2017, and the benefit accrued to consumers and governments because of GST implementation is an ‘exemplar’. She said ‘GST has brought in greater tax buoyancy as a result of which, more than your GSDP growth, your tax collection is growing. Therefore, both Centre and states benefit...We have to dispel this myth that states are losing out after having joined hands for GST...Today, no state suffers after GST, and that is despite Covid’.

Giving a comparison of tax rates pre and post-GST, Sitharaman said ‘GST has done justice to the consumers by bringing the rates down compared to the previous regime’. Before GST was introduced, India's indirect tax system was fragmented, where every state was effectively a distinct market for the industry as well as the consumer. The multiplicity of taxes in the pre-GST regime resulted in a ‘tax-on-tax’ effect, causing the same product to be taxed multiple times and hence becoming costlier for the consumers. She noted ‘The introduction of GST has brought the actual tax on consumers down and in some cases, remarkably down. Despite this reality, you still have a lot of people confusing the minds of people saying 'GST has burdened the society'. Actually not’.

GST has also made sure that only that much tax, which is genuinely due to the government, is being collected systematically without any personal level of discretion, she said, adding GST has made life easy for small businesses and easy for goods to move freely in the country. The minister further said ‘Whether it is common consumer, whether it is the state government, a matter of tax buoyancy, whether it is making it digital and simpler, GST stands out as an exemplar’. Giving data, Sitharaman said the revenue buoyancy of states improved from 0.72 in the pre-GST era, to 1.22 post-GST rollout. 

Before GST, the state's tax revenue growth was 8.3 per cent while GDP growth was 11.5 per cent, which means a low tax buoyancy of 0.72. This means that states' tax revenues were growing slower than the GDP. After GST, tax growth was 12.3 per cent, while GDP growth was 9.8 per cent, resulting in a higher buoyancy of 1.22. Post-GST revenue buoyancy of states is much higher than pre-GST buoyancy. She highlighted that ‘Now the quick recovery, the new normal (in the collection) all prove that states have not lost out, and on the contrary, their tax buoyancy has gone up post GST’. The minister said GST means double tax being avoided and relief to the common man in terms of tax rates coming down. She said it is ‘completely fair to the common man’.

The CNX Nifty is currently trading at 19328.50, up by 139.45 points or 0.73% after trading in a range of 19234.40 and 19330.35. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were HDFC up by 3.51%, HDFC Bank up by 3.12%, JSW Steel up by 1.92%, Ultratech Cement up by 1.57% and Divi's Lab up by 1.47%. On the flip side, Maruti Suzuki down by 1.10%, Power Grid down by 1.00%, Bajaj Auto down by 0.94%, Tech Mahindra down by 0.80% and UPL down by 0.73% were the top losers.

All Asian markets are trading higher; Nikkei 225 surged 545.13 points or 1.62% to 33,734.17, Hang Seng advanced 357.74 points or 1.86% to 19,274.17, Taiwan Weighted added 179.99 points or 1.05% to 17,095.53, Shanghai Composite strengthened 41.18 points or 1.27% to 3,243.24, KOSPI increased 36.39 points or 1.4% to 2,600.67, Jakarta Composite gained 13.49 points or 0.2% to 6,675.37 and Straits Times was up by 8.55 points or 0.27% to 3,214.46.