Listless Gains for Indian Indices

Thu, 15 Sep 11:30 am

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After opening the day marginally higher, the Indian indices have continued to trade near the dotted line. Sectoral indices are trading on a mixed note with stocks from the metal and banking sector witnessing maximum selling pressure. FMCG and healthcare stocks are, however, trading in the green.

The BSE Sensex is trading up 8 points (up 0.03%) and the NSE Nifty is trading flat. The BSE Mid Cap index is trading down 0.3%, while the BSE Small Cap index is trading up by 0.3%. The rupee is trading at 67.02 to the US$.

Prime Minister Narendra Modi on Wednesday reviewed preparations for roll out of the new Goods and Services Tax (GST) regime, possibly from April 1 next year. This came as Finance Minister Arun Jaitley and his team presented various milestones achieved on the GST front and its road ahead.

It was noted that the GST implementation is running ahead of schedule so far, with more than projected number of states ratifying the Constitutional amendment within the 30-day timeline set by the Centre. During the review, the Prime Minister was briefed about the demand for keeping GST rate at 18-19%. The presentation also stated expectations of states from the new regime and the impact of different tax slabs on the Centre in terms of compensation it has to pay states for loss of revenue.

One must note that the government is keen to implement the GST regime from 01 April 2017. This is in order to ensure a smooth rollover to the changed tax structure from the beginning of the new fiscal and avoid mid-year alterations.

The above review came within days of the Union Cabinet approving setting up of GST Council. Early this week, the Union Finance Ministry notified the provisions of the Constitution Amendment Act that allows for setting up the Goods and Services Tax (GST) Council. A ministry notification stated that the Central Government appointed the 12th day of September, 2016 as the date on which the provisions of section 12 of the said Act shall come into force.

The formation of GST Council marks as a step forward in the implementation process of GST after President Pranab Mukherjee gave his assent to the Constitution Amendment Bill on Goods and Services Tax (GST). This, along with the bill ratified by more than 50% of the state assemblies, has made GST a law. To know more about GST, please read Vivek Kaul's report - GST & You: What the Media DID NOT TELL YOU About the GST.

As for market participants, the question is: Will the landmark GST Bill make you go out there and buy stocks in large numbers? One of the editions of The 5 Minute WrapUp titled 'GST Approved: Time to Buy Stocks by the Fistful?' answers this question.

Moving on to the news from commodity space... Crude oil is witnessing selling pressure this week. Oil futures settled at a nearly two-week low on Wednesday. Most of the losses were seen after the International Energy Agency (IEA) cut its crude-demand forecasts. The agency warned that supply of crude oil will continue to outpace demand well into 2017. The forecast sparked concerns for a global supply glut and weighed on crude oil prices.

The above losses are followed by gains seen during the last week. Crude oil registered gains last week after the release of inventory data from the American Petroleum Institute (API). The data showed a 12-million-barrel drop in the US crude oil supplies for the week of August 28. This was recorded as the largest drawdown in crude inventories since the 12.4-million-barrel drop reported in March 2013.

The only positive cue for crude oil is the higher growth anticipated for some major oil consuming economies. Higher growth will lead to higher oil consumption in the coming months, particularly with the onset of winter.

With these triggers, does it make sense to bet on oil? Are crude oil companies a good long-term investment? One of the editions of The 5 Minute WrapUp says This Could Be the Biggest Buying Opportunity Out There.

To keep a tab on the movements in crude oil and other commodities, you can read weekly market commentary from the Daily Profit Hunter team. Their weekly commentary tracks the developments in the global economy as well as stock, currency and commodity markets.