Benchmarks end flat in highly volatile session

Indian equity benchmarks fluctuated between gains and losses throughout the day and finally ended flat with negative bias on Tuesday due to profit-taking in select Telecom, Banking and Auto shares. Markets opened at record highs but soon wiped out all their gains and slipped into red, as a surge in crude oil prices to a two-month high revived concerns about inflation and interest rates. However, markets witnessed some buying in late morning deals as traders took support with Commerce and Industry Minister Piyush Goyal’s statement that the Centre is committed to create a business-friendly environment for industry and innovation. The minister said such interactions are key for understanding the challenges faced by the industry and policy-making. Some support also came with the India Meteorological Department’s (IMD) statement that after an uneven run in June, the southwest monsoon is expected to become vigorous in July with all-India average rain across the country predicted at 106 per cent of the long-period average (LPA), which is above normal. 

Buying proved short-lived as key indices once again entered into red terrain in afternoon deals, as some pessimism remained among traders as the Indian government has raised the windfall tax on petroleum crude to 6,000 rupees per metric ton from 3,250 rupees, with effect from July 2. The Special Additional Excise Duty (SAED) on the export of diesel, petrol, and ATF is to continue at nil. But, markets managed to trim losses towards end, taking support from data showing that the gross Goods and Services Tax (GST) collection surged 8 per cent to Rs 1.74 lakh crore in June 2024 as compared to Rs 1.61 lakh crore mopped up in June 2023, reflecting a buoyant economy, with businesses demonstrating commendable self-compliance. Meanwhile, the commerce ministry has sought views of different departments on proposed measures to revive special economic zones and facilitate business transactions between SEZ and the domestic market. The ministry has suggested allowing the sale of products manufactured in Special Economic Zones (SEZs) in the domestic market on payment of duty foregone on inputs as that would help promote value addition.

On the global front, European markets were trading lower, tracking a rise in U.S. Treasury yields after the U.S. Supreme Court ruled that former President Donald Trump is entitled to immunity from federal prosecution for official actions he took while in office.  Asian markets exhibited mixed trend on Tuesday as investors pondered what the U.S. Supreme Court's immunity decision meant for former president Donald Trump. Back home, defence stocks were in watch as according to Foundation for Advancing Science and Technology (FAST India) in collaboration with IIFL Securities, Indian defence firms allocate only 1.2 per cent of their revenue to R&D, markedly lower than the global average of 3.4 per cent. This gap highlights a need for increased investment in innovation to keep pace with global standards. 

Finally, the BSE Sensex fell 34.74 points or 0.04% to 79,441.45, and the CNX Nifty was down by 18.10 points or 0.07% points to 24,123.85. 

The BSE Sensex touched high and low of 79,855.87 and 79,231.11 respectively. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.57%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were IT up by 1.09%, Realty up by 0.88%, Industrials up by 0.50%, Capital Goods up by 0.44% and TECK up by 0.44%, while Telecom down by 1.31%, Bankex down by 0.91%, Auto down by 0.74%, FMCG down by 0.67% and PSU down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.74%, Infosys up by 1.97%, HDFC Bank up by 1.51%, TCS up by 0.80% and HCL Technologies up by 0.70%. On the flip side, Bharti Airtel down by 2.38%, Kotak Mahindra Bank down by 2.16%, Tata Motors down by 2.07%, Indusind Bank down by 1.89% and SBI down by 1.87% were the top losers.

Meanwhile, the finance ministry said Goods and Services Tax (GST), which completed 7 years of implementation on Monday, has brought happiness and relief to every home through reduced taxes on household appliances and mobile phones. The ministry said the GST taxpayer base has increased to 1.46 crore in April 2024 from 1.05 crore as of April 2018. GST, which subsumed about 17 local tax and cesses, was rolled out on July 1, 2017.

It stated household goods like cosmetics, wrist watches, sanitary plastic ware, doors and windows, furniture and mattresses are taxed at a lower rate of 18 per cent in the GST regime, lower than 28 per cent in the erstwhile excise and VAT regime. It added mobile phones, TVs up to 32 inches, refrigerators, washing machines electrical appliances (other than air conditioners), geysers and fans which attracted 31.3 per cent taxes in the pre-GST era, are now in the 18 per cent tax slab in GST regime.

Further, it said the compliance burden was reduced for small taxpayers, and the GST Council has recommended to waive off annual return filing requirement for taxpayers with aggregate annual turnover of up to Rs 2 crore in fiscal 2023-24. Besides, it said The quarterly return filing and monthly payment of taxes (QRMP) scheme has reduced the number of returns filed in a year from 24 to 8, for more than 44 lakh small taxpayers, IFF (Invoice furnishing Facility) ensured seamless passage of ITC (Input Tax Credit).

The CNX Nifty traded in a range of 24,236.35 and 24,056.40. There were 21 stocks advancing against 28 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.73%, Wipro up by 2.09%, Infosys up by 1.84%, Tata Consumer Products up by 1.41% and HDFC Bank up by 1.34%. On the flip side, Shriram Finance down by 2.95%, Kotak Mahindra Bank down by 2.49%, Bharti Airtel down by 2.40%, Tata Motors down by 1.95% and Indusind Bank down by 1.78% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 28.32 points or 0.35% to 8,138.44, France’s CAC fell 62.15 points or 0.82% to 7,498.98 and Germany’s DAX lost 180.12 points or 0.98% to 18,110.54.

Asian markets exhibited mixed trend on Tuesday, as investors cautiously awaiting Fed Chair Jerome Powell's comments and the release of key US economic data for more clarity on the Fed's interest rate trajectory. Meanwhile, data showed US manufacturing sector contracted for a third straight month in June and prices paid by manufacturers dropped to a six-month low, that fuelled bets that the Federal Reserve will start reducing interest rates in September. Chinese and Hong Kong shares rose after data showed the downturn in China's residential real estate sector slowed further in June, following the government’s efforts to put a floor under the housing market in some of its biggest cities. Japanese shares gained as the Japanese yen hit a new 37-year low against the US dollar.