Comments by Finance Minister Arun Jaitley that the proposed Goods and Services Tax (GST) rate would be much less than 18% triggered further gains for key benchmark indices. At 12:16 IST, the barometer index, the S&P BSE Sensex, was up 222.32 points or 0.88% at 25,542.76. The 50-unit Nifty 50 index was currently up 67.20 points or 0.87% at 7,768.10. The Sensex and the Nifty, both, hit their highest level in more than a week. The Sensex rose 235.18 points or 0.93% at the day's high of 25,555.62 in early afternoon trade, its highest level since 7 December 2015. The Nifty rose 69.50 points or 0.90% at the day's high of 7,770.40 in early afternoon trade, its highest level since 8 December 2015.
Jaitley's comments on the GST rate come after a committee headed by Chief Economic Adviser Arvind Subramanian on possible tax rates under goods and services tax (GST) in its report submitted to the government early this month suggested standard GST rate at 17% to 18%. Typically, the majority of the goods and services will be taxed at the standard rate under the GST regime. The Finance Minister was also quoted as saying today, 16 December 2015, that the demand to scrap the 1 percent levy under the GST Bill is fair. The GST constitutional amendment bill has been stuck in the Rajya Sabha where the BJP-led NDA lacks a majority. A constitutional amendment bill requires a majority of two thirds in the house for its passage. The bill has been passed by the Lok Sabha. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country.
Gains in overseas stocks aided the upmove on the domestic bourses. Asian stocks edged higher after overnight gains for US stocks. Energy sector stocks led gains in US markets yesterday, 15 December 2015, as crude oil prices rose. Meanwhile, the US Federal Reserve is widely expected to raise the federal funds rate by 25 basis points after the conclusion of a two-day monetary policy meeting today, 16 December 2015. With markets having already priced in a 25 basis points rate hike this week, the focus has shifted to the likely pace and quantum of rate hikes once this first move is done. The US central bank has hinted that it intends to hike rates gradually.
The broad market depicted strength. There were more than two gainers against every loser on BSE. 1,579 shares rose and 773 shares fell. A total of 202 shares were unchanged. The BSE Mid-Cap index was currently up 0.96%, outperforming the Sensex. The BSE Small-Cap index was currently up 0.81%, underperforming the Sensex.
TCS was up 1.36% after the company announced during trading hours today, 16 December 2015, that it won a multi-year, multi-million deal from Deutsche Lufthansa AG, a leading global aviation group, to provide testing services and help improve the quality of services of existing technology operations. The deal is part of Lufthansa's IT-transformation initiative to accelerate speed to market, improve customer experience and enable innovation and continuous improvement.
Shares of public sector oil marketing companies (PSU OMCs) moved higher. HPCL (up 2.83%), BPCL (up 2.16%) and Indian Oil Corporation (up 2.27%) edged higher. PSU OMCs have reduced the price of petrol by 50 paise a litre and diesel price by 46 paise a litre in Delhi with corresponding price revision in other states with effect from the midnight of 15 December 2015. Meanwhile, the government today, 16 December 2015, reportedly raised excise duty on diesel by Rs 1.17 per litre and on petrol by 30 paise per litre. The hike seeks to take advantage of a slump in global crude oil prices to shore up government revenues without stoking inflation.
In the global commodities markets, Brent for January settlement was currently down 5 cents at $38.40 a barrel. The contract had risen 53 cents or 1.4% to settle at $38.45 a barrel during the previous trading session. Brent for February settlement was currently down 4 cents at $38.69 a barrel. The Brent January contract expires today, 16 December 2015.
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Stocks of diesel vehicle makers were mixed. Ashok Leyland (up 1.37%) and Tata Motors (up 0.84%), edged higher. Mahindra & Mahindra (M&M) was down 4.26%. The Supreme court today, 16 December 2015, reportedly imposed a ban on registration of diesel passenger vehicles of engine capacity of 2000cc or above in Delhi till 31 March 2016. The court reportedly clarified that no non-Delhi destined trucks can enter the city from National highways 1 and 8 and specified that no truck registered prior to 2005 can ply on the roads of Delhi.
The court was hearing petitions seeking to address Delhi's alarming pollution levels.
Thomas Cook (India) gained 1.2% after the company said it has received approval of the Competition Commission of India for its acquisition of Kuoni Travel (India). The company made announcement after market hours yesterday, 15 December 2015. It may be recalled that Thomas Cook (India) had in August 2015 signed a definitive agreement with Kuoni Group to acquire Kuoni's travel businesses across India and Hong Kong for Rs 535 crore.
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