FPIs get tax surcharge relief, but experts wary of concrete benefits on derivatives. In line with the demands of market players, the finance minister announced late on Friday that the additional surcharge will not be applicable on any form of capital gains. That should be a relief for FPIs. However, tax experts are of the view that since only capital gains are exempt, FPI income from derivative (being business income) will still be liable to higher surcharge, limiting the benefits. Futures and options constitute a major chunk of FPI daily volumes and without relief on F&O, the surcharge cut may be meaningless.
Indian Gold ETFs get a big boost to AUMs in the April – July period. Gold ETF AUM in India has risen nearly 10% between April and July this year to Rs.5079 crore. This trend is visible even globally with the total global assets under gold ETFs rising from 1425 tonnes to 2425 tonnes in the last five year. With the rising uncertainty in world equity and bond markets, investors prefer the safety and security of the yellow metal over paper investments. Even in India, investors are increasingly discovering the merits of holding gold ETFs at a time when equity and debt are being rocked by uncertainty.
Despite the sharp bounce on Friday, the week ended with negative returns. Seven out of top ten companies on NSE lose Rs.86,878 crore in market capitalization. In a week when the market capitalization of TCS and Infosys zoomed by nearly Rs.42,000 crore on the back of a weak rupee, the price damage on other stocks was quite sharp. According to a report in the business standard, banks and autos took the biggest hit with ITC taking the single biggest knock in the market on serious consumption slowdown fears and sectoral challenges. But for IT stocks, the damage could have been sharper.
The beleaguered auto companies finally got the much-needed government boost, but GST stayed at 28%. The finance minister pushed for a demand boost to the auto sector. The depreciation on auto inventory was hiked from 15% to 30% till 2020 and government also promised easier funding from NBFCs. The government also announced plans to lift the ban on new cars for state departments to boost demand for cars. However, reduction of GST from 28% to 18% did not happen. The auto industry had been lobbying hard for reducing the GST rate to a more rational market-driven level.
Trade war took a turn for the worse on Friday. After the US imposed additional tariffs on $550 billion of Chinese imports, China reacted on Friday by imposing higher tariffs on $75 billion of Chinese imports from the US. This sparked a major retaliation war with Trump even asking all US companies operating out of China to wind up their China operations and shift elsewhere. Apart from global equities, oil prices turned weak in response. Oil reacted to trade war worries even as OPEC continued to see its market share dip to 30%. Brent Crude fell almost 100 bps on Friday on global slowdown fears surfacing. After hovering around the $60/bbl mark for the whole of last week, the price of Brent Crude fell decisively below the $60 mark after fears of global slowdown surfaced ahead of the all important G-7 summit.
Former finance minister, Arun Jaitley, breathed his last on Saturday and was cremated with state honours on Sunday. One of the most visible faces of the BJP and for long its eloquent spokespersons, Arun Jaitley, passed away at the AIIMS on Saturday after a prolonged illness. Apart from being a successful lawyer, Jaitley was also the finance minister in the NDA government when critical bills like the GST Bill and IBC Bill were piloted through both houses and also implemented across India. Jaitley’s demise follows less than a month after the death of another BJP stalwart, Sushma Swaraj.
