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Sensex Trades on a Positive Note; Realty and Metal Stocks Witness Buying
Thu, 11 Jul 12:30 pm | Monish Vora, TM Team

Share markets in India extended their gains and are presently trading on a positive note.

Sectoral indices are trading on a positive note with stocks in the realty sector and metal sector witnessing maximum buying interest.

The BSE Sensex is trading up by 231 points, while the NSE Nifty is trading up by 72 points. The BSE Mid Cap index is trading up by 0.3%, while the BSE Small Cap index is trading up by 0.1%.

The rupee is trading at Rs 68.36 against the US$.

Speaking of the current mood in Indian share markets, the post-budget reaction saw a negative reaction from the market participants.

There was also debate around the tax for the super-rich which was increased. Also, for the market, buybacks will now be taxable which was also a surprise.

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Before any for or against argument against the tax, it is important to understand how government earns its revenue.

Is this Budget A Step Towards India's March to the Rs 5 Trillion Mark?

Is this Budget A Step Towards India's March to the Rs 5 Trillion Mark?

As can be seen in the chart above, corporate taxes contribute the major chunk to India's revenues. This is followed by borrowings and GST.

Non-tax revenues currently contribute to 9% of overall revenues. Non-tax revenues include dividends that the government receives from PSUs or any other divestment that it does.

Girish Shetty shares some of his thoughts on this topic in the recent edition of The 5 Minute WrapUp. Here's an excerpt from what he wrote...

  • Focus on economic growth will mean revenue from corporate taxes will be an automatic by-product.

    The modi government has reduced corporate tax rates to 25% for firms with turnover up to Rs 4 billion.

    We believe many such measures are needed for India to become a Rs 5 trillion economy in the next 5 years.

In the news from realty sector, reports have suggested that the Indian real estate sector is yet to pick up steam.

A report by Anarock Property Consultants says that the housing absorption has declined by around 13% in Q2 of 2019 and stood at 68,600 units across the top 7 cities.

At the same time, the unsold inventory maintained its status quo at 6.65 lakh units.

According to the report, Hyderabad, Bangalore and Pune saw the maximum drop in the housing sales at 18%, 16% and 15%, respectively. MMR (Mumbai Metropolitan Region) and NCR saw a dip of 11% and 8%, respectively.

However, the reports also stated that there are indications that housing sales will pick up now since there is a stable government.

How this pans out in the coming time remains to be seen. We will keep you updated on all the developments from this space.

Speaking of the real estate sector, the sector has been facing a lot of obstacles lately.

In the below video, Sarvajeet Bodas talks about these obstacles and also about how Modi's push towards affordable housing can revive the real estate sector and accelerate the economic activity.

In the news from the airline space, InterGlobe Aviation Enterprises share price is witnessing selling pressure today. The stock of the carrier extended losses for the third straight session today amid reports that the issue between two promoters may drag the airline to NCLT.

Opinions are divided as to whether SEBI or NCLT is the right jurisdiction over issues such as articles of association and related-party aspects of the company.

So far, SEBI has asked the company to file its reply based on the complaint filed by Rahul Gangwal pertaining to issues governing to articles of association and related party aspects of the company.

Yesterday, shares of the airline crashed after one of the promoters Rakesh Gangwal approached markets regulator over alleged corporate governance issues at the airline.

As per an article in The Economic Times, Gangwal alleged that a shareholders' agreement gave Rahul Bhatia unusual controlling rights over the company. Gangwal held 36.7% stake in the airline as of the latest filing. Co-promoter Rahul Bhatia, on the other hand, owned 38% stake in the airline.

He suspected that the rights and a lack of diversity and paucity of independent directors may be at the root of why governance matters have taken a back seat at IndiGo.

Here's an excerpt from the article:

  • Gangwal has sought permission to hold an extraordinary general (EGM) meeting, alleging that the company has participated in objectionable related-party transactions (RPTs) and has not complied with corporate governance standards.

    In a 23-page letter to Ajay Tyagi, market regulator's chairman, Gangwal wrote besides questionable RPTs, fundamental governance norms and laws were not being adhered to and this would lead to "unfortunate outcomes" unless correctives were applied. Corporate governance regulations prescribed by regulator as well as those of the company's code of conduct for directors and the senior management have been violated.

Bhatia, on the other hand, has denied the charge, saying that the Companies Act gave the powers to the board of the company to decide its functioning.

Shares of the airline have hit their lowest levels since March on back of the above news.

We will keep you updated on all the developments from this space. Stay tuned.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary


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