Sensex Drops 2%, Tax Collection Surge

123jump.com Staff
19 Jun, 2008
New York City

Indian stocks fell on Thursday for the second day in a row on political concerns and weak Asian markets. The division in the ruling coalition on a deal with the U.S. for the nuclear energy continues to put parties on a collision course. The key meeting on the agreement was delayed two one more week again. Stocks declined on the worries that lack of stability in the ruling coalition may hurt the economic agenda. However, income tax collection for the first two months of this fiscal year surged.

[R]11:00AM New York, 8:30PM Mumbai – Political concerns and weakness in regional trading dragged stocks lower ahead of the inflation data tomorrow.[/R]

Indian market highlights

Indian stocks fell on Thursday for the second day in a row on political concerns and weak Asian markets.

The postponement of a key meeting between government and its communist allies on the proposed nuclear deal between India and US keeps the future of the deal uncertain. Talks were set to take place on Wednesday but communist party leaders say the meeting will now take place on 25 June 2008.

The delay comes as ruling party coalition voice their opposition to the agreement, saying it undermines India''s independent foreign policy and nuclear weapons program.

Market Sentiment

The 30-share BSE Sensex fell 2.2% or 334.32 at 15,087.99. On the National Stock Exchange the CNX Nifty declined 1.7% or 78.15 at 4504.25.

Of the BSE traded shares, 842 shares gained, 1,804 shares declined while 71 shares remained unchanged.

Trading statistics

Daily turnover on the BSE stood at 4,297 crore rupees and on the NSE was 9,342 crore rupees.

Anu''s Laboratories was the most active stock on the BSE with the highest trading turnover of 375.97 crore rupees followed by Niraj Cement Structurals, Ranbaxy Laboratories, Reliance Capital and Reliance Petroleum.

Debutant Niraj Cement Structurals led the most active stocks with a trading volume of 1.77 crore shares in the BSE trading followed by Chambal Fertilizers & Chemicals, Anu''s Laboratories, IFCI and Reliance Petroleum.

RBI acting timely to contain inflation

The first public comments from P Chidambaram after the unexpected increase in interest rate to 7% suggested that inflation has run to a record high and government wants to control the price hike. Inflation has touched 8.75% the highest level during the UPA regime, prompting RBI to tighten money supply.


Annual inflation has soared to 8.75% for the week ended May 31 and private economists it to rise to 9% in the data scheduled for a release tomorrow. The previous inflation index peak during the UPA regime was 8.33% for last week in August 2004.

Direct tax collections soars 71%

India''s direct tax collection continued to grow at a robust pace to 71.28% rise in the first two months of this fiscal year at 228.4 crore rupees, against 133.35 crore rupees in the corresponding two months of the previous fiscal.

The growth in personal income tax was the highest with 73.05% at 146.9 crore rupees, against 84.89 crore rupees, while the corporate tax collection was higher by 68% at 81.26 rupees against 48.35 crore rupees.

Direct tax collection has been witnessing a high growth due to better tax compliance by the taxpayers and an improved tax administration, according at a statement issued by the finance ministry.

In the fiscal 2007/08, direct tax collection was 3,144.68 crore rupees. This represents an increase of 36.62% from the previous fiscal, and 117.56% higher of the original budget estimates.

Gainers and losers

Banking shares witnessed selling pressure. Axis Bank fell 4.7% at 718.10 rupees, HDFC Bank declined 3.9% at 1,120.60 rupees and State Bank of India was down 3.7% at 1,301 rupees.

Bharat Heavy Electricals fell 5% at 1,423.15 rupees and Larsen & Toubro declined 4.8% at 2,617.30 rupees.

Realty stocks declined. Unitech fell 5.8% at 188.60 rupees and Indiabulls Real Estate lost 5.4% at 376.30 rupees. DLF declined 2.9% at 478.20 rupees.

Infosys Technologies fell 0.3% at 1,860 rupees and the company has a second highest weightage of 8.59% in BSE Sensex.

Ranbaxy Laboratories declined 7.7% at 552.25 rupees after the company agreed to keep generic versions of the Pfizer''s cholesterol pill Lipitor off the US market for extra 20 months.

As per the agreement, Ranbaxy will not sell a generic of Lipitor, the world''s best-selling drug, until November 2011.

Reliance companies update

Reliance Infrastructure lost 5.7% to 1,012.35 rupees following reports the company is planning to invest $7 billion in the next three years to expand its engineering and construction business in India and acquire assets overseas.

Reliance Industries with a weight of 15.7% in the Sensex index fell 1.7% at 2245 rupees.