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Post Session: Quick Review
May-07-2024

The Tuesday’s trading session remained lackluster for Indian equity markets, with both Sensex and Nifty ending over half a percent lower, amid reports that interest rates were likely to remain unchanged in the near term. Geopolitical tensions also weighed on markets as Israel commenced its planned military offensive in Rafah hours after it rejected Hamas's proposal for a ceasefire in Gaza. After a positive start, markets soon turned negative, amid foreign fund outflows. Foreign Institutional Investors (FIIs) sold shares worth Rs 2,168.75 crore on May 6. Traders overlooked India Ratings and Research’s report in which it has revised upward the country’s Gross Domestic Product (GDP) growth estimate for FY25 to 7.1 per cent from 6.5 per cent earlier.

Bears held a tight grip over the Dalal Street till the end of the trading session, despite positive cues from European markets. Market participants 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, European markets were trading higher, as Germany's exports rebounded at a faster-than-expected pace in March, while the growth in imports slowed sharply. The, data from Destatis revealed that exports gained 0.9 percent on a monthly basis, reversing a 1.6 percent fall in February. Shipments were forecast to climb 0.4 percent. Asian markets ended 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, the airline industry stocks remained 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. Besides, sugar industry stocks remained in focus as sugar industry body Isma has urged the government to allow 20 lakh tonnes of sugar exports in the current marketing year ending September as shipments of surplus sweetener would boost liquidity of millers enabling them to make cane payments to farmers on time. 

The BSE Sensex ended at 73511.85, down by 383.69 points or 0.52% after trading in a range of 73259.26 and 74026.80. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell by 1.90%, while Small cap index was down by 1.65%. (Provisional)

The few gaining sectoral indices on the BSE were FMCG up by 1.80%, IT up by 0.55% and TECK up by 0.44%, while Realty down by 3.41%, Utilities down by 2.85%, PSU down by 2.37%, Power down by 2.26% and Metal down by 2.26% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hindustan Unilever up by 5.51%, Tech Mahindra up by 2.37%, Nestle up by 2.06%, TCS up by 1.36% and ITC up by 1.33%. On the flip side, Power Grid down by 3.62%, Indusind Bank down by 3.05%, Tata Motors down by 2.72%, JSW Steel down by 2.41% and NTPC down by 2.16% were the top losers. (Provisional)

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 ended at 22302.50, down by 140.20 points or 0.62% after trading in a range of 22232.05 and 22499.05. There were 15 stocks advancing against 35 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindustan Unilever up by 5.46%, Tech Mahindra up by 2.39%, Britannia up by 2.22%, Nestle up by 2.09% and TCS up by 1.48%. On the flip side, Bajaj Auto down by 4.14%, Power Grid down by 3.78%, ONGC down by 3.03%, Indusind Bank down by 3.00% and Hindalco down by 2.91% were the top losers. (Provisional)

European markets were trading higher; UK’s FTSE 100 increased 88.47 points or 1.08% to 8,301.96, France’s CAC rose 32.27 points or 0.4% to 8,028.91 and Germany’s DAX gained 127.8 points or 0.7% to 18,303.01.

Asian markets settled mostly higher on Tuesday, tracking Wall Street gains overnight amid solid first-quarter earnings reports and looming expectations that the US Federal Reserve will start cutting interest rates later this year. South Korea's Kospi rose as trading resumed after a long holiday weekend. Japanese markets marking a three-week closing high as the yen continued to weaken in spite of warnings from authorities that they would act in the event of volatility. Data showed Japanese service sector activity grew at the fastest pace in eight months in April. Meanwhile, China recorded high tourism figures during the Labour Day holiday, beating pre-pandemic levels and contributing major growth to consumption.

Asian Indices

Last Trade            

Change in Points

Change in %      

Shanghai Composite

3,147.74

7.02

0.22

Hang Seng

18,479.37

-98.93

-0.54

Jakarta Composite

7,123.61

-12.28

-0.17

KLSE Composite

1,605.68

8.29

0.52

Nikkei 225

38,835.10

599.03

1.54

Straits Times

3,300.04

-3.15

-0.10

KOSPI Composite

2,734.36

57.73

2.11

Taiwan Weighted

20,653.53

130.22

0.63
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