Post Session: Quick Review

Indian markets extending their jubilation surged on Thursday, making it their fifth straight day of gains, with Sensex surging past 27100 mark, while Nifty posted near three digit rally. There was broad based buying and some of the bluchips like, Reliance Industries and HDFC Bank witnessed brisk buying that helped markets end near high points of the day. Traders were encouraged with Finance Minister Arun Jaitley assurance to the global investors that efforts are being made to allay their concerns on expediting reform process, tax regime and policy stability by the Narendra Modi government. Jaitley has said that India’s 7.5 per cent economic growth rate is not its “best potential growth rate” and there is “restlessness” in the Narendra Modi-led government to boost economic growth.

On the global front, after a modestly higher close in US markets Asian markets showed a completely divergent trend and most of them ended in red, with Chinese market slumping by around four percent with some primary market activities after 11 companies launched IPOs, putting pressure on market liquidity. Later the European markets too made a soft start falling for a second day, as the region’s finance ministers meet amid growing concern over Greece’s ability to reach any deal. German Chancellor Angela Merkel, leader of the biggest contributor to Greek bailout funds, is seeking to restore calm after acrimonious exchanges.

Back home, apart from the jubilation of delay in the US rate hikes; traders were rejoicing the various announcements of the government. The Finance Ministry had set up two committees to suggest tax rates and look into IT preparedness for the new indirect tax regime. The government also announced a sharp increase in India's solar power capacity target under the Jawaharlal Nehru National Solar Mission (JNNSM) by five times, reaching 1,00,000 megawatts (MW) by 2022. The target will principally comprise of 40 GW Rooftop and 60 GW through Large and Medium Scale Grid Connected Solar Power Projects. Shares of housing finance companies traded higher after the cabinet approved the launch of a scheme to secure housing for all by 2022. The Union Cabinet chaired by Prime Minister Narendra Modi accepted the recommendations of an Inter-Ministerial Committee to increase interest subvention to 6.50 per cent on housing loans to beneficiaries belonging to economic weaker section (EWS) including slum-dwellers and low income groups (LIGs). Back on street, broader markets too posted good gains, while on sectoral front some weakness was seen in the realty and metal packs which went for profit booking after last session’s gains when government announced increase in the basic customs duty (BCD) on certain long and flat steel products by 2.5 percent.

The BSE Sensex ended at 27115.83, up by 283.17 points or 1.06% after trading in a range of 26910.26 and 27175.39. There were 21 stocks on advancing side against 8 stocks on the declining side on the index. (Provisional)

The broader indices too ended in green; the BSE Mid cap index was up by 0.80%, while Small cap index inched up by 1.07%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.63%, Consumer Durables up by 2.12%, Auto up by 1.17%, Capital Goods up by 0.87%, Bankex up by 0.84%, while Realty down by 0.21%, Metal down by 0.19% and INFRA down by 0.01% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 5.41%, ONGC up by 2.60%, Tata Motors up by 2.55%, Sun Pharma Inds up by 1.99% and Wipro up by 1.87%. On the flip side, Coal India down by 0.92%, Cipla down by 0.81%, NTPC down by 0.55%, Tata Steel down by 0.52% and GAIL India down by 0.22% were the top losers. (Provisional)

Meanwhile, in its bid to roll out GST from April 1, 2016, the Finance Ministry has set up two committees to suggest tax rates and look into IT preparedness for the new indirect tax regime. A committee headed by Chief Economic Adviser (CEA) Arvind Subramanian has been formed to come up with a revenue neutral rate or a rate at which there will be no revenue losses to states under the proposed GST regime, while a steering committee too has been formed under the co-chairmanship of additional secretary, department of revenue, and member secretary, Empowered Committee of State Finance Ministers.

The Finance Ministry in its statement said that the committee formed under the Finance Ministry's CEA would “recommend possible tax rates under GST that would be consistent with the present level of revenue collection of Centre and states”. While making recommendations, it would take into account expected levels of growth of economy, different levels of compliance and broadening of tax base under Goods and Services Tax (GST).

Steering Committee has members from Revenue Department, Central Board of Excise and Customs, Goods and Services Tax Network (GSTN) and representatives of state governments. It would monitor the progress of IT preparedness of GSTN/CBEC/Tax authorities, finalisation of reports of all the sub-committees on different aspects relating to the mechanics of GST and drafting of CGST, IGST and SGST laws/rules. The Committee would monitor the progress on consultations with various stakeholders like trade and industry and training of officers.

The Constitutional Amendment Bill for rolling out of GST has been referred to a Rajya Sabha Select Committee. GST will subsume most indirect taxes levied by the central and state governments such as excise duty, service tax, VAT and sales tax, the new regime proposes to facilitate a common market across the country, leading to economies of scale and reducing inflation through an efficient supply chain.

The CNX Nifty ended at 8174.60, up by 83.05 points or 1.03% after trading in a range of 8101.80 and 8186.90. There were 39 stocks on gainers side against 11 stocks on the decliners side on the index. (Provisional)

The top gainers on Nifty were Reliance Industries up by 5.13%, Lupin up by 3.65%, BPCL up by 2.88%, Tata Motors up by 2.71% and Asian Paints up by 2.58%. On the flip side, Tech Mahindra down by 1.45%, Bank Of Baroda down by 1.42%, Zee Entertainment down by 1.17%, Cipla down by 0.95% and Coal India down by 0.89% were the top losers. (Provisional)

European Markets were trading in red, Germany’s DAX declined by 66.97 points or 0.61% to 10,911.04, France’s CAC was down by 44.46 points or 0.93% to 4,746.16 and UK’s FTSE 100 lost 22.21 points or 0.33% to 6,658.34.

Asian markets closed mostly in red on Thursday, with investors’ risk appetites subdued on a possible Greek default. China state council stated that the government will step up effective investment in key sectors, including shantytown renovation and rural power infrastructure, to support growth, even as it saw more positive factors in the economy. China’s economic growth slowed to a six-year low to 7% in the first quarter as demand at home and abroad faltered, and recent data showed weakness persisted into the second quarter, putting more pressure on the government to step up policy stimulus. Growth in foreign investment in China slowed to 7.8% in May, but outward investment surged almost 50% in the first five months of the year. Foreign direct investment (FDI), which excludes financial sectors, increased to $9.33 billion last month, after a 10.5% year-on-year rise in April. Confidence at Japanese manufacturers in June rose for the second straight month and retailers were at their most optimistic in over a year, offering a welcome sign that consumers may have finally shaken off the effects of a sales tax hike.  The Reuters Tankan - which closely tracks the central bank’s quarterly tankan survey - gives credence to the Bank of Japan’s view that the economic recovery will strengthen over the next year. Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.2%, compared to the preceding month.