Key benchmark indices ended with minor gains in a volatile trading session. The barometer index, the S&P BSE Sensex rose 16.86 points or 0.06% at 27,714.37. The Nifty 50 index gained 6.25 points or 0.07% at 8,551.10. The passage of Goods and Services Tax (GST) Constitutional Amendment Bill by the Rajya Sabha yesterday, 3 August 2016, underpinned sentiment. Firmness in global stocks also supported gains on the bourses. Shares reversed trend after reporting intraday losses. The Sensex had hit more than two-week low while the Nifty hit more than one-week low in late trade.
The Rajya Sabha yesterday, 3 August 2016 passed the Goods and Services Tax (GST) constitutional amendment bill which the Lok Sabha had already approved last year. With the Rajya Sabha clearing the constitution amendment bill for introduction of the GST, the amended GST bill once again will have to be ratified by the Lok Sabha. Once amendments to the bill are passed in the Lok Sabha it will later go to the state assemblies for clearance. Atleast 50% of the states must approve the legislation.
A key task for the proposed GST Council now will be determining the rate of taxation. A decision on the tax rate will have to be ratified by a three-fourth majority of the centre and the states. As per the proposed legislation, the centre will have one-third weightage on its vote and states will have two-third weightage. In its report submitted to the government last December, a panel headed by Chief Economic Adviser Arvind Subramanian had recommended a revenue-neutral rate (RNR) of GST of 15-15.5%, with a standard rate of 17-18% that is to be levied on most goods and all services.
The main objective of the GST is to eliminate excessive taxation. GST is a uniform indirect tax levied on goods and services across a country. The measure would harmonize 11 state and central levies into a national sales tax, reducing business transaction costs.
The market breadth indicating the overall health of the market turned positive from negative in late trade. The BSE Mid-Cap index rose 0.38%. The BSE Small-Cap index gained 0.39%. Both these indices outperformed the Sensex.
Among the sectoral indices on BSE, the S&P BSE Realty index (up 2.25%), the S&P BSE Metal index (up 1.53%), the S&P BSE Auto index (up 1.35%), the S&P BSE Telecom index (up 1%), the S&P BSE Industrials index (up 0.99%), the S&P BSE Basic Materials index (up 0.95%), the S&P BSE Utilities index (up 0.73%), the S&P BSE Power index (up 0.71%), the S&P BSE Healthcare index (up 0.45%) and the S&P BSE Consumer Discretionary Goods & Services index (up 0.10%), outperformed the Sensex. The S&P BSE Capital Goods index (up 0.06%), matching Sensex's gain in percentage terms. The S&P BSE Finance index (up 0.04%), the S&P BSE Energy index (down 0.06%), the S&P BSE Oil & Gas index (down 0.09%), the S&P BSE FMCG index (down 0.12%), the S&P BSE Bankex (down 0.17%), the S&P BSE Teck index (down 0.31%), the S&P BSE IT index (down 0.53%) and the S&P BSE Consumer Durables index (down 0.82%), outperformed the Sensex.
In the foreign exchange market, the rupee was almost unchanged against the dollar. The partially convertible rupee was hovering at 66.9575, compared with its close of 66.995 during the previous trading session.
The yield on 10-year benchmark federal paper, 7.59% GS 2026, declined 2 basis points to 7.18% at 15:32 IST, compared with 7.20% at close in the previous trading session. The total trading volume on the central bank's gilts trading platform stood at Rs 63105 crore. The weighted average rate in the overnight call money market eased slightly to 6.38% at 15:32 IST, compared with 6.39% in the previous session.
In overseas stock markets, European rose as investors wait for what could be the Bank of England's first interest-rate cut since the global financial crisis. The Bank of England is expected to cut benchmark interest rates after a monetary policy meet later in the global day today, 4 August 2016 in reaction to a string of data pointing to a sharp economic downturn following the UK's vote to leave the European Union. Earlier, Asian stocks edged higher as crude oil held onto its recovery and high-yielding currencies climbed. US stocks rose yesterday, 3 August 2016, as energy companies climbed with the price of oil. A survey showed that hiring by private companies continued at a solid but uninspiring clip in July. US private employers added a better-than-expected 179,000 jobs last month, a report by a payrolls processor showed yesterday, 3 August 2016. The private employment figures came ahead of the US Labor Department's more comprehensive monthly non-farm payrolls report tomorrow, 5 August 2016, which includes both public- and private-sector employment.
In the global commodities markets, Brent for October settlement was down 33 cents at $42.77 a barrel. The contract had risen $1.30 a barrel or 3.11% to settle at $43.10 a barrel during the previous trading session.
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