The Indian markets snapped their gaining streak in last session after manufacturing showed signs of demonetization impact. Traders were also concerned with rise in inflation due to surge in global oil prices. Today, the start is likely to remain soft-to-cautious. Traders will be eyeing the GST Council meet starting today, which after being called off last time due to differences between states and demonetization, has been rescheduled. The meeting has become significant in the light of the controversial comments made by West Bengal finance minister Amit Mitra that demonetization – making over 85% of old Rs 500 and Rs 1,000 currency notes illegal – will delay implementation of GST. Meanwhile, Finance Minister Arun Jaitley has said that goods and services tax (GST) and demonetisation will be ‘game changers’ for Indian economy. He added that this is because GST will ensure higher taxation as far as the Centre is concerned and also higher taxation for states. The gold and jewellary stocks will keep buzzing as the Finance Ministry has clarified that the entre has not introduced any specific provision in the recently introduced Taxation Laws Bill to cover “household jewellery”. It added that legitimate holding of jewellery up to any extent is fully protected. The telecom stocks will remain under pressure with Mukesh Ambani-owned Reliance Jio Infocomm extending its free voice and data offer for both new and existing subscribers till March 31, 2017, intensifying the brutal price war in telecom sector.
The US markets made a mixed closing in last session, while the Dow reached a new record closing high, the tech-heavy Nasdaq showed a notable decline. Traders reacted to the OPEC’s deal of reducing oil production and mixed set of economic data. The Asian markets have made mostly a weak start and some of the indices in the region are down by half to one percent. The Japanese market was down as yen extended its rebound against the greenback amid caution ahead of key American jobs data.
Back home, Indian benchmarks started the new month on a disturbing note as the benchmark equity indices failed to extend the four session northbound journey and settled with moderate cuts of over a quarter percent. It largely turned out to be a range bound session marred with high volatility as investors indulged in stock specific activities after country’s economy grew lower than expected in the September quarter at 7.3%, as compared to 7.6% registered during the same period last fiscal year. The data indicate that the economy may witness the heavy impact of demonetisation in the third quarter and even some part of the fourth quarter. Adding anxiety among market percipients, the private report indicated that Indian factory activity decelerated sharply last month after Prime Minister Narendra Modi’s currency crackdown led to a rationing of cash and cooled domestic consumption, new orders and production. The Nikkei/Markit Manufacturing Purchasing Managers’ Index fell to 52.3 in November from October’s 54.4, its biggest month-on-month decline since March 2013. Furthermore, West Bengal Finance Minister Amit Mitra dropped a bombshell, by saying that the Goods and Service Tax (GST) would be difficult to implement from April next year. He claimed that PM Modi’s surprise announcement on November 8 has slowed down the economy and states are losing more money sooner than planned. Amendments related to GST are still pending in the Parliament. Proceedings in the House have been stalled with the opposition demanding Prime Minister Narendra Modi’s presence during the debate on demonetisation. Investors failed to draw any sense of relief with the report that the combined index of eight core industries surged to its six months high at 6.6 percent compared to October 2015, led by steel, cement and petroleum refinery. Meanwhile, shares of pharmaceutical companies edged higher after the Delhi High Court set aside the Centre’s decision to ban 344 fixed dose combination (FDC) medicines, while Indian jewellery stocks gained traction after reports of excise duty getting scrapped on branded gold coins. Finally, the BSE Sensex declined by 92.89 points or 0.35% to 26559.92, while the CNX Nifty dropped 31.60 points or 0.38% to 8,192.90.
LIve Mint, 02 December 2016