Benchmarks end F&O expiry session on optimistic note

F&O expiry session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over half a percentage point to recapture their crucial 27,700 (Sensex) and 8,400 (Nifty) bastions. Markets traded in green throughout the session as sentiments remained up-beat with reports suggesting that the Union Cabinet has approved amendments to the GST bill to compensate states for revenue loss for five years on introduction of the uniform nationwide indirect tax regime, as has been suggested by Rajya Sabha Select Committee. Some support also came with a statement of World Bank official that India has the potential to become a multi-trillion dollar economy with a per capita income of about $40,000 by 2050 if it manages to grow at seven percent annually for the next 30-35 years.

Marketmen also got some encouragement with global rating agency, Moody’s latest report stating that India’s true potential of GDP growth rate lies somewhere near 10%. It added that green shoots are slowly emerging, but the government's failure to deliver promised reforms is the major impediment. It also cautioned that GDP growth is not likely to rise above 7.5% if the government continues to overpromise and not deliver. However, investors book some of their profits in second half of trade ahead of the expiry of July derivative contracts.

On the global front, European counters Investors were trading in green in early deals on Thursday after the US Federal Reserve kept interest rates unchanged in its Federal Open Market Committee (FOMC) meeting last night. Asian markets ended mostly in red, though the Japanese market ended with a gain of over a percent after the dollar strengthened against yen.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Buying in infrastructure counter too aided the sentiments after the Union Cabinet approved creation of a Rs 20,000-crore National Investment and Infrastructure Fund (NIIF), a sort of sovereign fund, for development of infrastructure projects, including the stalled ones. The fund could also consider funding nationally important projects in the manufacturing sector. Additionally, logistics companies remained in limelight on the bourses after the Union Cabinet cleared important changes to the government's constitutional amendment Bill on the proposed national GST.

The NSE’s 50-share broadly followed index Nifty rose by over forty points to end above the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over one hundred and forty points to finish above the psychological 27,700 mark. Broader markets too traded with traction throughout the trade and ended the session with a gain of around a percentage point. The market breadth remained in favor of advances, as there were 1,746 shares on the gaining side against 1,117 shares on the losing side while 107 shares remain unchanged.

Finally, the BSE Sensex surged by 141.92 points or 0.51% to 27705.35, while the CNX Nifty gained 46.75 points or 0.56% to 8421.80.

The BSE Sensex touched a high and a low 27854.46 and 27649.97, respectively. The BSE Mid cap index was up by 0.89%, while Small cap index was up by 0.83%.

The top gaining sectoral indices on the BSE were Realty up by 3.48%, FMCG up by 2.74%, Power up by 1.14%, PSU up by 0.86% and Healthcare up by 0.77%, while IT down by 0.77%, TECK down by 0.54%, Capital Goods down by 0.24% and Metal down by 0.19% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 5.23%, Cipla up by 4.79%, ITC up by 3.90%, Hindustan Unilever up by 2.32% and HDFC up by 1.96%. On the flip side, Sun Pharma down by 1.89%, Hindalco down by 1.60%, Infosys down by 1.48%, TCS down by 1.08% and Tata Steel down by 0.92% were the top losers.

Meanwhile, there is likely to be some cheer among the policy makers, with a top World Bank official stating that India has the potential to become a multi-trillion dollar economy with a per capita income of about $ 40,000 by 2050 as against the current $ 2,000, but to achieve that it will have to grow at seven percent annually for the next 30-35 years.

Subhash Chandra Garg the World Bank Executive Director for Bangladesh, Bhutan, India and Sri Lanka has said that “If we can manage to grow at seven percent for next 35 years, we will not only be the second largest economy in the world at that time but we will be prosperous and people will be rich enough.” Though, he cautioned that achieving and sustaining a seven percent growth rate for 35 years is “very difficult” and “would require a lot of transformation in the way we manage our economy”. He also said that a 'big challenge' will be to get people out of agriculture and use them in the manufacturing and services sectors, while also ensuring that agricultural production in the country increases.

He added that about 55 percent of India's population is already working in the services sector but the country has to aim to bring this to 80-85 percent of the population and noted that there is need to transform the young Indian population into extremely productive. Garg noted that the World Bank is working very closely with the Indian government and contributing to making its vision of a strong and prosperous nation a reality. The CNX Nifty touched a high and low 8458.90 and 8408.30 respectively.

The top gainers on Nifty were PNB up by 9.73%, Bank of Baroda up by 9.27%, Dr. Reddys Lab up by 5.86%, Cipla up by 5.05% and ITC up by 4.44%. On the flip side, NMDC down by 2.11%, Sun Pharma down by 1.84%, Hindalco down by 1.55%, TCS down by 1.35% and Kotak Mahindra Bank down by 1.10% were the top losers.

European Markets were trading in the green; UK's FTSE was up by 0.71%, France’s CAC was up by 0.68% and Germany’s DAX was up by 0.77%.

Asian markets closed mostly in red on Thursday despite another rally on Wall Street, as the Federal Reserve remained upbeat on the US economy. Bank of Japan board member Koji Ishida stated that it was unproductive to focus too much on the specific timing for achieving the central bank’s inflation target. He added that BOJ’s inflation target is a flexible one and people should become more convinced that inflation will reach around 2 percent and stabilize there. The BOJ has repeatedly pushed back the timing for hitting its inflation target as price growth stalled due to the effect of last year’s oil rout and weak consumption. It now expects the target to be met by around September next year. Japan’s industrial production rose to a seasonally adjusted 0.8%, from -2.1% in the preceding month. The outstanding amount of China’s dollar-denominated Qualified Foreign Institutional Investor (QFII) programme rose to $76.6 billion by July 29, from $75.54 billion at the end of June. The QFII scheme was created by China to allow foreigners to invest in Chinese capital markets.