Resilient Indian equity markets are displaying optimistic trends in Monday afternoon trades as the benchmarks have regained the momentum lost in late morning session. Post hitting session's lows on the back of some profit booking in heavyweight stocks like RIL and ONGC, the benchmarks have managed to recuperate swiftly and are headed towards the psychological 17,750 (Sensex) and 5,400 (Nifty) levels. The recovery was led by bellwethers from high beat - Real Estate and Metal stocks. Besides, Upstream oil stocks like ONGC and GAIL are trending lower since reports suggested the government increased subsidy burden on the state-run oil refiners by asking them to compensate around 38% of revenue losses on fuel sales during April to December 2011. Meanwhile, global rating agency S&P's in its latest report has highlighted that India is facing some challenges on a few fronts, and the balance of risk factors for the sovereign credit rating may be shifting slightly toward the negative. On the Asian front, initial optimism has petered out and markets in the region are exhibiting mixed trends as the outcome was still elusive over the long awaited Greece debt negotiations as the country's political leaders and its private-sector creditors scrambled to complete twin negotiations on an aid package and mammoth debt deal. European stock futures slipped lower, indicating the markets there would fail to extend the gaining momentum as the deadline nears for Greece to accept the terms of a new bailout deal.
Moreover, the broader markets traded on strong note with around one and half a percent gains and comprehensively outperformed their larger peers. The bourses rose on good volumes of over Rs 0.50 lakh crore while market breadth on BSE was in favor of advances in the ratio of 1855:799 while 119 scrips remained unchanged.
The BSE Sensex is currently trading at 17,723.23 up by 118.27 points or 0.67% after trading as high as 17,829.72 and as low as 17,666.74. There were 23 stocks advancing against 7 declines on the index.
The broader indices were trading on a positive note; the BSE Mid cap index surged 1.63% and Small cap soared 1.75%.
On the BSE sectoral space, Realty up 4.27%, Metal up 2.14%, Capital Goods up 1.98%, PSU up 1.39% and Bankex up 1.25% were the major gainers while there were no losers in the space.
SBI up 2.99%, DLF up 2.87%, Hindalco up 2.85%, Sterlite up 2.65% and BHEL up 2.05% were the major gainers on the Sensex, while Tata Power down 2.71%, GAIL India down 0.64%, RIL down 0.38%, HDFC Bank down 0.28% and NTPC down 0.26% were the major losers in the index.
Meanwhile, in an attempt to increase revenues, the central government has decided to increase the number of services that fall under the gamut of service tax in the upcoming union budget. It is expected that the government will keep 22 services untaxed, technically called the negative list of service tax, and impose uniform 10% tax on all the other services. Services for the purpose will be defined as all kinds of economic activities, barring goods, money and immovable property.
This move has been motivated by the fact that though services sector contribute more than 60% of GDP, their contribution to the Central governments revenue is just 8.7%, as per the budget estimates for 2011-12. This is because service tax is a relatively new area in India and was imposed for the first time in 1994, when only 3 services were taxed. Then it contributed Rs 410 crore to the Centre's tax revenue. Since then the net has widened to include over 125 services, but it is still felt that this is too minuscule relative to the size of the service sector in the economy.
Hence, it is believed that a larger number of services now need to be taxed. Analysts believe that increasing the net of service tax for the next financial year will alone increase service tax collections by 20-25%, and lead to a contribution Rs 82,000 crore to the Centre's revenue.
A negative list based on service tax represents a change in the government's approach as so far it has taxed on the principle of the positive list. The negative list concept is practiced globally and is proposed to be introduced in India as part of the Goods and Services Tax (GST). The government is trying to introduce the new GST regime, which will subsume various levies like excise, service tax and states tax, like value-added tax, entry tax and purchase tax.
In its pre-Budget consultative meeting with the finance minister, industry too demanded that government should come out with negative list, while expanding the service tax base. However, the States are of the opinion that the Centre should prepare the list in such a way that areas under their domain were not taxed by the Centre. States do not impose services tax, but certain categories that qualify as services are taxed by them under different heads.
As such, businesses paying tax to states may not be subjected to service tax by the Centre. Areas that could fall under this category are construction, entertainment, restaurants, transport, toll, betting and gambling. States also proposed some services within the ambit of the Centre's residuary powers but critical for socio-economic reasons, such as social welfare and public utilities, agriculture, education and health, be kept in the negative list. The Centre may not be able to keep them in the negative list, but may decide to impose zero tax on them.
The S&P CNX Nifty is currently trading at 5,362.25, higher by 36.40 points or 0.68% after trading as high as 5,390.05 and as low as 5,344.35. There were 33 stocks advancing against 17 declines on the index.
The top gainers on the Nifty were Grasim up 4.54%, Siemens up 3.95%, Ambuja Cement up 3.83%, ACC up 3.68% and JP Associates up 3.54%.
Tata Power down 3.28%, Dr Reddy's down 1.25%, Sesa Goa down 0.93%, GAIL down 0.92% and Ranbaxy down 0.72% were the major losers on the index.
In the Asian space, Shanghai Composite eased 0.13%, Hang Seng declined 0.31%, Jakarta Composite slipped by 0.57% and Taiwan Weighted garnered 0.69%.
On the flipside, Nikkei 225 surged 1.10%, Straits Times ascended 0.98% and Seoul Composite rose 0.04%.
No comments:
Post a Comment