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Indian Indices Extend Downtrend
Wed, 10 Aug 11:30 am

After opening the day marginally lower, the Indian indices registered further losses and are trading well below the dotted line. Sectoral indices are trading on a negative note with stocks from the realty, banking, energy and consumer durables sector witnessing maximum selling pressure.

The BSE Sensex is trading down 217 points (down 0.8%) and the NSE Nifty is trading down 75 points (down 0.9%). The BSE Mid Cap index and the BSE Small Cap index are trading in the red, both down by 0.8%. The rupee is trading at 66.72 to the US$.

While the global economy continues to remain in a mess, there are lot of good things happening in India. Some of the recent happenings are the developments in the passage of GST Bill, talks regarding the formation of the monetary policy committee (MPC), and setting the inflation target at 4%, plus or minus 2%, that has to be maintained up until March 2021. And what can be music to ears for the Finance Minister Arun Jaitley, there's one more news to cheer for the Indian economy. As reported in a leading financial daily, tax collections have grown up at a robust pace in the first four months of the current fiscal.

Notably, India's direct tax collection for the June quarter of FY17 grew 24%, while indirect tax collection rose 30%.

This was seen as net direct taxes collections added up to Rs 1, 590 billion during April-July. Gross corporate tax and personal income tax collections were up 11.65% and 31.47%, respectively. After adjusting for refunds, the net growth in corporate tax collections stood at 2.84% while that for personal income tax stood at 46.55%.

On the indirect tax front, collections during April-July were pegged at Rs 2,710 billion, 29.9% more than the corresponding period last year. Central excise collections during the first four months totaled Rs 1, 230 billion. This recorded almost 51% growth over the same period last year. Service tax collections stood at Rs 766 billion against Rs 609 billion a year ago, a 25.8% increase. Total customs collections for the first four months stood at Rs 717 billion, 7.9% more than Rs 664 billion posted a year ago.

The development bodes well for the finance ministry's full-year revenue target. The only concern, we believe, is the utilisation of these funds by the government. The funds shall be spent towards productive areas and not on loss making public sector companies.

Moving on to the news from the commodities space, crude oil is witnessing selling pressure. The sell-off is seen on the back of many factors that has made market participants to reduce their exposure towards the commodity.

One is that the American Petroleum Institute (API) reported a significant increase in its weekly US crude inventory this week. Second is the shock that came from government forecasters as they raised their US domestic production outlook. Traders are also concerned that the Organization of the Petroleum Exporting Countries (OPEC) would consider production caps next month.

Amid these worries, the downtrend in crude oil extended after it was reported that imports in China - the world's second largest consumer of oil - waned as the country imported less oil in July. It was noted that oil imports declined as China shipped in just 7.35 million barrels a day last month, lower than what it had been importing in the previous six months.

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.

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Mar 21, 2018 12:47 PM