Stock markets in India are trading lower today post the 25-bps rate hiked by the Reserve Bank of India (RBI) on Wednesday. Losses are largely seen in realty stocks and automobile stocks.
The BSE Sensex is trading down by 200 points and the NSE Nifty is trading down by 58 points. Meanwhile, the BSE Mid Cap index is trading up by 0.6% while, the BSE Small Cap index is trading up by 0.2%. The rupee is trading at 68.61 to the US$.
In news from the automobiles sector. As per an article in a leading financial daily, Tata Motors has registered an impressive growth of 21% in its domestic sales at 51,896 units in July 2018, as against 42,775 units over last year.
The growth came on the back of continued strong sales performance of its Commercial and Passenger Vehicles Businesses in the domestic market.
Tata Motors' Commercial Vehicles domestic sales in July 2018 were at 34,817 units, an increase of 25%. The M&HCV truck segment continued its significant growth momentum with 10,233 units, an increase of 18% over last year.
Tata Motors' Passenger Vehicles domestic sales in July 2018 were at 17,079 units a growth of 14%, over last year. The company's sales from exports (from CV and PV) in July 2018 stood at 4,971 units as against 3,441 units, registering a growth of 44% over last year.
At the time of writing, Tata Motors' share price was trading flat.
In the news from the economy. Revenue collection under the Goods and Services Tax (GST) during the month of July 2018 increased to Rs 964.8 billion, as compared to previous month's revenue collection of Rs 956.1 billion, on the back of improved compliance of the e-way bill, which has been made mandatory for moving goods worth over Rs 50,000 from one State to another.
According to the Finance Ministry data, out of the Rs 964.8 billion, Central GST (CGST) was Rs 158.8 billion, State GST (SGST) Rs 222.9 billion, Integrated GST (IGST) Rs 499.5 billion (including Rs 248.5 billion collected on imports) and cess Rs 83.6 billion.
It added that this is broadly on expected lines. It also noted that as many as 66 lakh businesses filed returns in the month of July, making it the highest number of monthly GSTR-3B filed since the rollout of GST in July last year.
The Ministry has stated that despite a rise in revenue collection in July, the mop-up is still lower than the government's monthly target of Rs 1 trillion. The 2018-19 budgeted estimate for GST collection is Rs 12 trillion.
Note that GST implementation is spurring on a wave of formalization of the economy.
Since the launch of Goods and Services Tax (GST), there were 9.8 million unique GST registrants, an increase of 50% compared to the previous tax regime. There has also been a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises wanting to avail themselves of input tax credits.
A Large Increase in Registered Indirect and Direct Taxpayers
Similarly, after November 2016, 10.1 million tax filers were added compared to an average of 6.2 million in the preceding six years. Further analysis suggests that new filers reported an average income, in many cases, close to the income tax threshold of Rs. 2.5 lakh, limiting the early revenue impact. As income growth pushes many of the new tax filers in time over the threshold, the revenue dividends should increase robustly.
These changes can have profound effects on the Indian economy. With the increasing tax base, the government will have a significant amount of resources to spend on infrastructure, health and education, While the fiscal deficit will be stable.
As organized players gain market share, it will begin to reflect in corporate earnings and stock prices too.
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This article was originally published in English at www.equitymaster.com
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