Bears hold tight grip over Dalal Street

Bears were holding a tight grip over the Dalal Street in early afternoon deals, with both Sensex and Nifty witnessing a sharp fall, amid heavy selling at all sectors except FMCG, despite positive cues from other Asian markets. Traders remained anxious amid a private report stating that beyond geopolitical situations, the growing global concern surrounding environmental issues and clean energy pose certain threats to Indian companies planning to invest abroad. The street took a note of the Reserve Bank of India’s (RBI) Governor Shaktikanta Das’ statement that India is working on making the e-rupee or central bank digital currency (CBDC) transferable in the offline mode along with introducing the programmability feature to help its financial inclusion goals.

On the global front, Asian markets were trading mostly in green, after Indonesia's economy grew more than expected in the first quarter on robust government spending. The official data revealed that gross domestic product posted an annual growth of 5.11 percent in the first quarter after rising 5.04 percent in the fourth quarter of 2023. GDP was expected to grow 5.0 percent. Quarter-on-quarter, GDP dropped 0.83 percent in the first quarter compared to street’s forecast of 0.89 percent fall.

Back home, airline stocks were in watch, as credit ratings agency CRISIL in its latest report has said that as much as half of the country’s international air passenger traffic is expected to be catered by Indian airlines by financial year 2027-28. It said the share of Indian airlines in international passenger traffic, including originating or terminating as well as the traffic transitioning through the country, is seen surging 700 basis points to around 50 per cent by 2027-28, from 43 per cent in the previous fiscal.

The BSE Sensex is currently trading at 73359.81, down by 535.73 points or 0.72% after trading in a range of 73259.26 and 74026.80. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined by 2.23%, while Small cap index was down by 1.85%.

The only gaining sectoral index on the BSE was FMCG up by 1.91%, while Realty down by 3.75%, Utilities down by 2.87%, Metal down by 2.79%, PSU down by 2.61% and Power down by 2.35% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 5.04%, Nestle up by 2.27%, ITC up by 1.39%, Kotak Mahindra Bank up by 0.63% and Bajaj Finance up by 0.61%. On the flip side, Power Grid down by 3.86%, JSW Steel down by 3.17%, Tata Steel down by 2.74%, Indusind Bank down by 2.68% and Tata Motors down by 2.34% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said that the government has adopted ‘a pro-poor approach’ while implementing Goods and Services Tax (GST), and despite lower taxes rates the revenues as a percentage of GDP have reached the pre-GST level. She said without GST, states' revenue from subsumed taxes from FY 2018-19 to 2023-24 would have been Rs 37.5 lakh crore. With GST, states' actual revenue amounted to Rs 46.56 lakh crore. 

Despite the GST rate being less than the prescribed Revenue Neutral Rate and COVID-19 affecting the revenues, GST collections (as a percentage of GDP) have now reached the levels they were before GST (both net and gross). This demonstrates that the Centre & States, collectively, through better tax administration, are able to collect the same revenue with a lower burden on taxpayers. GST, which was rolled out on July 1, 2017, had subsumed 17 taxes and 13 cesses into a 5-tier structure, thereby simplifying the tax regime. The turnover threshold for registration rose to Rs 40 lakh for goods and Rs 20 lakh for services (from Rs 5 lakh on average under VAT). GST also reduced 495 different submissions (challan, forms, declarations, etc) across states to just 12. 

The minister said GST has improved tax buoyancy from 0.72 (pre-GST) to 1.22 (2018-23). Despite compensation ending, state revenues remain buoyant at 1.15. Reflecting a pro-poor approach, the effective weighted average GST rate has consistently fallen since 2017. The Revenue Neutral Rate was suggested to be 15.3 per cent but was lower at 14.4 per cent in 2017, and it has come down to 11.6 per cent in 2019.

The CNX Nifty is currently trading at 22260.45, down by 182.25 points or 0.81% after trading in a range of 22232.05 and 22499.05. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 5.07%, Britannia up by 2.79%, Nestle up by 2.32%, ITC up by 1.52% and Kotak Mahindra Bank up by 0.66%. On the flip side, Hindalco down by 3.80%, Bajaj Auto down by 3.73%, Power Grid down by 3.72%, JSW Steel down by 3.15% and Shriram Finance down by 3.10% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted added 130.22 points or 0.63% to 20,653.53, Straits Times rose 0.03 points or 0% to 3,303.22, Shanghai Composite strengthened 8.07 points or 0.26% to 3,148.79, KOSPI increased 57.73 points or 2.11% to 2,734.36 and Nikkei 225 surged 599.03 points or 1.54% to 38,835.10, while Hang Seng declined 96.12 points or 0.52% to 18,482.18 and Jakarta Composite plunged 10.43 points or 0.15% to 7,125.46.