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Markets may see some recovery, GST rate specific actions to be in limelight

LKP Securities | 19 May, 2017  | Follow Author | Add to my Favourites 
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Domestic Market Overview

Markets may see some recovery, GST rate specific actions to be in limelight

The Indian markets reeling under global pressure slumped and major benchmarks dropped close to a percent in the last session. Today, the start is likely to be mildly in green and some recovery can be seen after the sharp fall of last trade. Traders will be cheering the GST Council finalising tax rates of goods and services under the four-slab structure with essential items of daily use being kept in the lowest bracket of 5 percent. The Council fixed the rates for over 1200 items under the Goods and Services tax. Lots of daily consumption items such as milk, fruit and vegetables, jaggery or gur, foodgrain and cereals have been exempted from tax, while others such as sugar, tea, coffee, edible oil, mithai, and newsprint have been placed in the lowest slab of 5 per cent.  Luxury cars will attract 28 per cent GST plus a cess of 15 per cent, while small petrol cars will face 28 per cent plus 1 per cent cess, and diesel small cars 28 per cent tax plus 3 per cent cess. Consumer durables, which now face a total tax of about 32 per cent, will be taxed in the 28 per cent slab.

The panel will discuss tax rates for gold and some other items today and could meet one more time if necessary to decide rates on remaining items. There will be sector specific buzz based on GST rates and steel stocks may see some uptrend as the GST rate on coal has been fixed at 5 percent. The move will bring down the input cost and would lead to stabilisation of prices. There will be some buzz in banking sector too, as the RBI has eased the norms of setting up bank branches and said branches manned by either bank’s staff or its business correspondents where services are provided for a minimum of four hours per day for at least five days a week will be called a banking outlet. There will be lots of important earnings announcements too to keep the markets in action.

Global Market Overview

Asian markets end mostly in red on Thursday

Asian equity markets ended mostly in red on Thursday as US political turmoil continued to keep investors nervous. Besieged from all sides, the Trump administration appointed former FBI Director Robert Mueller as a special counsel to oversee the federal investigation into Russia's involvement in the US presidential election last year. That followed a report from The New York Times that former FBI Director James Comey had composed a memorandum recording the President's request to drop an investigation of Michael Flynn, the former national security adviser. Chinese shares ended lower as data showed home price growth in China's biggest cities softened in April due to stricter restrictions on property purchases. Further, Japanese shares hit 2-1/2-week lows as the yen's recent strength on fading expectations for continuous Fed rate-hike actions through 2017 and the allegations surrounding Trump's Russian ties overshadowed strong GDP data.

US markets closed higher on strong economic data

The US markets closed higher on Thursday, as investors’ sentiment, battered by political uncertainty surrounding President Donald Trump, stabilized on a positive reading on jobless claims. The number of Americans on unemployment fell mid-May to the lowest level since 1988, underscoring the strongest labor market in years. So-called continuing claims, or the number of people collecting jobless benefits, fell by 22,000 to 1.9 million in early May. That’s the lowest level in 29 years. The US economy has been creating new jobs at a rapid clip for the past six years, knocking the unemployment rate below 5% and helping millions of Americans to recover from the worst recession in decades. Applications for unemployment benefits have registered less than 300,000 for 115 straight weeks, the longest run since the early 1970s. The more stable monthly average of jobless claims fell slightly to 240,750.

The Dow Jones Industrial Average gained 56.09 points or 0.27 percent to 20,663.02, Nasdaq added 43.89 points or 0.73 percent to 6,055.13, while S&P 500 edged higher by 8.69 points or 0.37 percent to 2,365.72.

Technical View

Nifty Spot (9429.45) Nifty finally had leg down and did some health correction and filled the Gap 9449. Going forwards has to now trade ab 9450 for a recovery towards 9470-9484-9504 levels. In yesterday correction all the sectors saw sideways to some profit booking mode except IT which was showing some strength and all the It stocks were moving in tan-dome which help curtail the Nifty fall. Selective Pharma stocks also made some good comeback from oversold zone. Over all if Nifty manages to close the Week blw 9449 then this will be early indication of the inevitable drop towards the lower support zone of 9372-9337. BankNifty lower support 22608-22450 and higher hurdle 22730-22900.


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About LKP Securities

What started as one of India’s first securities brokerage houses in 1948 is today one of the country’s largest multi dimensional financial services group. LKP Securities is a Non Banking Finance Company (NBFC) registered with Reserve Bank of India & a listed public limited company having a networth of Rs.142 crores as on FY10. They are India's first financial group to be awarded the prestigious ISO 9002 certified KPMG Quality Registrar, USA, for certain businesses.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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