After witnessing a bout of volatility in early trade, key benchmark indices moved in narrow range in positive zone in morning trade. The barometer index, the S&P BSE Sensex, was currently up 57.40 points or 0.21% at 27,429.24. The market breadth indicating the overall health of the market was strong. The government on Friday, 19 December 2014, introduced the Constitution Amendment Bill on Goods and Services Tax (GST) in Lok Sabha.
Meanwhile on the political front, exit polls released after the conclusion of five-phased polling in assembly elections in Jharkhand on Saturday, 20 December 2014, predicted the formation of a BJP government in Jharkhand. In Jammu and Kashmir, exit polls have predicted a hung assembly, with People's Democratic Party (PDP) likely to emerge as the single largest party.
Shares of public sector oil marketing companies (PSU OMCs) fell as global crude oil prices edged higher. Shares of oil exploration and production firms rose as global crude oil prices edged higher.
Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 668.85 crore during the previous trading session on Friday, 19 December 2014, as per provisional data.
In overseas markets, Asian stocks edged higher, tracking gains in the US stocks on Friday, 19 December 2014. US stocks registered modest gains on Friday, 19 December 2014, extending a rally triggered by Federal Reserve's reassurance at the conclusion of a two-day monetary policy meeting on 17 December 2014 that future interest rate increases would be methodical and the central bank will be patient on the timing of the initial hike in rates.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade.
Brent crude oil futures extended gains after a sharp rebound during the previous trading session on Friday, 19 December 2014.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from December 2014 series to January 2015 series. The near month December 2014 derivatives contracts expire on Wednesday, 24 December 20014. The stock market remains closed on Thursday, 25 December 2014, on account of Christmas.
At 10:16 IST, the S&P BSE Sensex was up 57.40 points or 0.21% at 27,429.24. The index jumped 137.75 points at the day's high of 27,509.59 at the onset of the trading session, its highest level since 12 December 2014. The index gained 19.56 points at the day's low of 27,391.40 in early trade.
The CNX Nifty was up 14 points or 0.17% at 8,239.20. The index hit a high of 8,260.85 in intraday trade. The index hit a low of 8,229.50 in intraday trade.
The BSE Mid-Cap index was up 71.23 points or 0.71% at 10,071.64. The BSE Small-Cap index was up 62.43 points or 0.57% at 10,984.64. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,167 shares rose and 697 shares fell. A total of 61 shares were unchanged.
Shares of public sector oil marketing companies (PSU OMCs) fell as global crude oil prices edged higher. BPCL (down 0.74%), HPCL (down 0.31%) and Indian Oil Corporation (down 0.03%), edged lower. Increase in global crude oil prices will raise under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already freed pricing of petrol and diesel.
Meanwhile, the government has brought petroleum and petroleum products under the purview of the proposed Goods and Services Tax (GST). The government on Friday, 19 December 2014, introduced the Constitution Amendment Bill on Goods and Services Tax (GST) in Lok Sabha. Although petroleum and petroleum products have been brought under the purview of GST, it has been decided that petroleum and petroleum products will not be subject to the levy of GST till notified at a future date on the recommendation of the GST Council. The present taxes levied by the States and the Centre on petroleum and petroleum products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the interim period.
Shares of oil exploration and production firms rose as global crude oil prices edged higher. Increase in crude oil prices would result in higher realizations from crude sales for oil exploration firms. Cairn India (up 2.12%), ONGC (up 1.35%) and Oil India (up 0.90%), edged higher. Reliance Industries, however, fell 0.61%.
Videocon Industries rose 5.2%. Videocon Industries announced before trading hours today, 22 December 2014, that it has decided to issue 15.7 million Global Depository Receipts amounting to $45.21 million, representing 15.7 million equity shares at a price of $2.88 per GDR, equivalent to approximately Rs 181.61 per equity share, to LLIC S.a.r.l., on a private placement basis. Application will be made for the GDRs to be listed on the Luxembourg Stock Exchange, Videocon Industries said.
United Spirits was up 0.52%. The government has kept alcoholic liquor for human consumption out of the purview of the proposed Goods and Services Tax (GST). The government on Friday, 19 December 2014, introduced the Constitution Amendment Bill on Goods and Services Tax (GST) in Lok Sabha.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 63.21, compared with its close of 63.30 during the previous trading session.
Brent crude oil futures extended gains after a sharp rebound during the previous trading session on Friday, 19 December 2014. Brent for February settlement was up $1.17 at $62.55 a barrel. The contract had risen $2.11 a barrel or 3.6% to settle at $61.38 a barrel during the previous session on Friday, 19 December 2014.
The Indian government on Friday, 19 December 2014, introduced the Constitution Amendment Bill on Goods and Services Tax (GST) in Lok Sabha. GST will simplify and harmonise the indirect tax regime in the country. GST will broaden the tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one state to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders. It is thus, expected that introduction of GST will foster a common and seamless Indian market and contribute significantly to the growth of the economy, the finance ministry said in a statement. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the State level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
All goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST. Petroleum and petroleum products have also been constitutionally brought under GST. However, it has also been provided that petroleum and petroleum products will not be subject to the levy of GST till notified at a future date on the recommendation of the GST Council. The present taxes levied by the States and the Centre on petroleum and petroleum products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the interim period.
Both Centre and States will simultaneously levy GST across the value chain. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States. GST is a destination-based tax. All SGST on the final product will ordinarily accrue to the consuming State. GST rates will be uniform across the country. However, to give some fiscal autonomy to the States and Centre, there will a provision of a narrow tax band over and above the floor rates of CGST and SGST.
There will be a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce. This tax will be for a period not exceeding 2 years, or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate, the finance ministry said.
A new Article 279A is proposed for the creation of a GST Council which will be a joint forum of the Centre and the States. This Council would function under the Chairmanship of the Union Finance Minister and will have Ministers in charge of Finance/Taxation or Minister nominated by each of the States & UTs with Legislatures, as members. The Council will make recommendations to the Union and the States on important issues like tax rates, exemptions, threshold limits, dispute resolution modalities etc.
The Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years. A provision in this regard has been made in the Amendment Bill. The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year.
On the political front, exit polls on Saturday, 20 December 2014, predicted a near complete victory for Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) and its alliance in Jharkhand and a hung Assembly with upper hand for the PDP in Jammu and Kashmir. Soon after polling concluded for the fifth and final phase with record turnouts, most private news channels published varied exit polls for both states that revealed a broad pattern of results that could be expected on Tuesday, 23 December 2014, the counting day.
Most Asian markets were trading higher in early trade today, 22 December 2014, tracking gains in the US market last week. Key benchmark indices in China, Hong Kong, and Singapore were up by 0.39% to 1.17%. Key benchmark indices in Japan and Indonesia were off 0.02% to 0.13%.
South Korea's Seoul Composite was up 0.34%. South Korea's government trimmed its growth forecast for next year but said domestic demand--long a weak spot for the country--would contribute more to economic activity. The 2015 gross domestic product growth forecast was lowered to 3.8% from a July projection of 4.0%, the Ministry of Strategy and Finance said Monday in its biannual economic outlook. The estimate for GDP growth this year was also revised down, to 3.4% from 3.7%. The economy grew 3% in 2013.
Taiwan's Taiwan Weighted index was up 0.83%. Taiwan's unemployment rate inched down last month due to a decrease in job seekers. The rate was 3.89% in November from 3.95% in October, the Directorate-General of Budget, Accounting and Statistics said. On a seasonally-adjusted basis, the rate was 3.87%, unchanged from October's 3.87%, it said.
Trading in US index futures indicated that the Dow could gain 8 points at the opening bell today, 22 December 2014. On Friday, 19 December 2014, US stocks ended higher and the S&P 500 came within a few points of its closing record high. The S&P 500 index had climbed over the previous two sessions, spurred by the US Federal Reserve's commitment to take a "patient" approach toward raising interest rates, while signaling it was on track to boost rates in 2015. That provided clarity and relief to investors over the policy outlook.
In Europe, worries emerged that the European Central Bank's money-printing plans could come with a number of restrictive strings attached, media reported.
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