Post Session: Quick Review

Indian markets continued their unabated bull run on Friday when the regional peer Chinese market lost substantially and Greek woes continued. The benchmarks not only breached their crucial psychological levels of 27400 (Sensex) and 8250 (Nifty) intraday but kept the momentum going throughout the day. The domestic markets were encouraged by a top Indian Meteorological Department (IMD) official’s statement that Monsoon is expected to be normal in June boosting sowing of kharif crops, though he raised concerns about pick up in rainfall in the next month. Marketmen hopes that inflation will remain in control, subsequently helping the Reserve Bank of India to go for more rate cuts. RBI Governor Raghuram Rajan had said in his June 2 monetary policy announcement that any further cuts would depend on data, among the most crucial of these being the monsoon.

On the global front, while most of the Asian markets ended in green following the overnight rally in the US markets, the Chinese market suffered sharp sell-off  for the second straight session as $1 trillion worth of cash is being drained through IPOs and banks too were seen conserving funds ahead of the second-quarter end. On the other hand European stocks climbed, trimming a weekly drop even though Greece lurched closer to an exit from the euro as a meeting of finance officials to reach a deal over aid ended in frustration, forcing leaders to call for an emergency summit for Monday. 

Back home, markets lost some of the intraday gains in the final hours, as traders booked profit ahead of the weekend and dragged the markets from high points of the day, otherwise it was another day of rally and broad based buying was seen. Traders were hopeful of more fund inflow to the country with Finance Minister assuring the global investors that the Narendra Modi government is making efforts to allay their concerns over expediting reforms, the tax regime and policy stability. Finance minister Arun Jaitley has said that the next 2 to 3 years will be 'very critical' as the government plans to implement a series of reforms that will help India reach its “destination targets” of growth higher than the current 7-7.5 per cent rates. The good going in rupee, which continued its uptrend for the third straight session, too supported the markets, after the Federal Reserve refrained from providing any specific time for raising interest rates. On the sectoral front, oil & gas was the top gainer supported by the continued surge in the index heavyweight Reliance Industries, which has gained around 11 per cent in last 6 days and was above its 200 day moving average by the close. The other prominent gaining sectors were banks, PSU and FMCG.

The BSE Sensex ended at 27320.24, up by 204.41 points or 0.75% after trading in a range of 27202.38 and 27404.60. There were 22 stocks on advancing side against 8 stocks on the declining side on the index.(Provisional)

The broader indices despite giving up gains managed a green close; the BSE Mid cap index was up by 0.62%, while Small cap index ended higher by 0.31%.(Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.22%, Bankex up by 1.06%, PSU up by 0.88%, FMCG up by 0.83%, Metal up by 0.71% while, Realty down by 0.61%, Power down by 0.18%, Consumer Durables down by 0.09% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 4.58%, Maruti Suzuki up by 2.59%, ONGC up by 2.06%, Reliance Industries up by 1.94% and HDFC up by 1.88%. On the flip side, Tata Motors down by 2.85%, GAIL India down by 1.52%, Tata Power down by 1.16%, Sun Pharma Industries down by 1.15% and Infosys down by 0.66% were the top losers.(Provisional)

Meanwhile, Finance Minister Arun Jaitley, who is on a10-day trip to the US, assuring the tax reforms of the government, both direct and indirect has said the business community there that a Parliamentary panel will in the second week of July submit its report on the Goods and Services Tax (GST) Bill. He added that once the Select Committee gives its report, the Upper House will take up for the passage in the ensuing Monsoon session of Parliament the Constitutional Amendment Bill for rollout of GST in place of all indirect taxes. The government proposes to implement the GST from April 1, 2016, he said, adding 'what we have on the table is the consensus proposal.'

With regard to direct taxes, Jaitley said that the government would start the process of reducing corporate tax rate from 30 per cent to 25 per cent from the next fiscal. He said that “Our taxation structure needs to be streamlined and in the last one year we have laid down a clear raodmap. On direct tax side, our corporate tax is going to be brought down to 25 per cent that process begins next year and every year over a period of four years for 30 per cent plus some surcharge we bring it down to 25 per cent almost globally competitive”.

FM added that legal complications have been removed. Our Companies Act was little complicated...We have done one round of amendment hopefully we have to do some more. Numbers of permission are required to be significantly cut down many of them are going to be online. He said that the government is working on easing the process of doing business and added that alternative investment trust model is in place.

The CNX Nifty ended at 8233.25, up by 58.65 points or 0.72% after trading in a range of 8195.65 and 8250.80. There were 39 stocks advancing against 11 stocks declining on the index.(Provisional)

The top gainers on Nifty were Mahindra & Mahindra up by 3.84%, Bank Of Baroda up by 2.63%, Maruti Suzuki up by 2.25%, NMDC up by 2.25% and ONGC up by 2.17%. On the flip side, Tata Motors down by 2.64%, Zee Entertainment down by 1.89%, Tata Power down by 1.23%, Sun Pharma Inds. down by 1.14% and Power Grid Corpn. down by 1.06% were the top losers.(Provisional)

European Markets were trading in green, UK’s FTSE 100 gained 48.3 points or 0.72% to 6,756.18, France’s CAC was up by 57.89 points or 1.21% to 4,861.37 and Germany’s DAX surged by 122.47 points or 1.1% to 11,222.77.

Asian markets closed mostly in green on Friday, while Taiwan Stock Exchange was closed on account of ‘Make-Up’ holiday. China’s Shanghai Composite plunged extending the weekly drop to 13% - the biggest sell-off in seven years, as tight market liquidity caused by new share issues triggered a large sell-off. The market loss was the worst since May 28. China’s market regulator last week tightened some rules for margin trading, through which investors borrow funds to trade stocks, and prohibited dealers from raising funds outside of the margin trading channel to trade stocks. Besides, a total of 11 companies issued new shares for investor subscription, which usually drains funds away from the existing market. The regulator approved 24 initial public offerings earlier this month. Bank of Indonesia kept its benchmark interest rate steady at 7.50% at a policy meeting, as a falling rupiah and accelerating inflation continue to weigh on the economy.

The Bank of Japan held policy steady as expected in an 8 to 1 vote that saw Takahide Kiuchi again propose cutting the pace of government bond buying by nearly half. The BoJ is now buying government bonds at a pace of 80 trillion yen, with Kiuchi suggesting that be dropped to 45 trillion yen. The board did conclude that the economy continues to recover moderately and that private consumption has been resilient, while exports have improved. Japan’s index of leading economic indicators rose less-than-expected last month. The index of leading economic indicators rose to a seasonally adjusted 106.4, from 107.2 in the preceding month. Japan’s All Industries Activity Index rose to a seasonally adjusted 0.1%, from -1.4% in the preceding month whose figure was revised down from -1.3%.