Benchmarks resume northward journey; Sensex reclaims 27,000 mark

Resuming their northward journey, Indian equity benchmarks ended the Friday’s trade with a gain of around a percent with frontline gauges recapturing their crucial 8,150 (Nifty) and 27,000 (Sensex) levels, tracking firm global cues. Sentiments remained up-beat with Central Board of Excise and Customs statement that GST can be implemented anytime during a year and not only the beginning of a financial year. GST, once rolled out, will subsume various levies like excise, service tax, sales tax, octroi, etc. Some support also came with International Monetary Fund chief Christine Lagarde’s statement that the global lender may push ahead with interim steps to give emerging markets a bigger say, despite a stalemate in the US Congress over approval of broader governance reforms.

However, investors booked some of their profit at higher levels in noon deals as some cautiousness crept in, as the India Ratings has said that as the base effect wanes, CPI inflation will go up and WPI deflation will come down from the current levels in September. But markets picked up pace in last leg of trade as investors opted to buy fundamentally strong stocks ahead of the earnings season next week.

Buying got intensified after European markets made a positive opening and are trading with a gain of over one percent in early deals, as oil prices rose to their highest in three months, ahead of key data of balance of trade from UK and industrial production data for August from Greece. All the Asian markets ended in green after Federal Reserve meeting minutes raised expectations the US central bank will not hike rates any time soon.   

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 64.75 per dollar at the time of equity market closing against the Thursday’s close of 65.05 on the Interbank Foreign Exchange on fresh selling of the US currency by exporters and banks.

Buying in Auto space too aided sentiments after data released by Society of Indian Automobile Manufacturers (SIAM) said that domestic passenger car sales rose 9.48 per cent to 1,69,590 units in September from 1,54,898 units in the same month a year ago. Though, total two-wheeler sales in September declined 1.06 per cent to 15,37,137 units and sales of commercial vehicles were up 12.07 per cent at 62,845 units in September. Realty stocks too remained on buyers’ radar, as the Reserve Bank of India (RBI) has said that banks can provide home loans up to 90% for properties that cost up to Rs 30 lakh.

The NSE’s 50-share broadly followed index Nifty gained over sixty points to end near the psychological 8,200 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by over two hundred and thirty points to end above the psychological 27,000. Broader markets struggled to get any traction and ended the session mixed. The market breadth remained in favour of advances, as there were 1,471 shares on the gaining side against 1,304 shares on the losing side while 124 shares remain unchanged.

Finally, the BSE Sensex surged by 233.70 points or 0.87% to 27079.51, while the CNX Nifty gained 60.35 points or 0.74 % to 8189.70.

The BSE Sensex touched a high and a low 27200.44 and 26910.59, respectively. The BSE Mid cap index was down by 0.06%, while Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were IT up by 1.51%, TECK up by 1.29%, Metal up by 0.99%, Capital Goods up by 0.57% and Bankex up by 0.51%, while PSU down by 0.28%, Consumer Durables down by 0.18%, Power down by 0.10% and Oil & Gas down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 11.58%, Tata Steel up by 4.26%, Tata Motors up by 3.81%, Infosys up by 3.13% and ICICI Bank up by 2.75%. On the flip side, Coal India down by 3.05%, Maruti Suzuki down by 1.87%, Sun Pharma down by 1.00%, BHEL down by 0.88% and Mahindra & Mahindra down by 0.54% were the top losers.

Meanwhile, the International Monetary Fund (IMF), though has said that India remains one of the fastest growing economies in the world, it has marginally lowered India’s growth rate to 7.3 percent this year from the previous estimation of 7.5 percent in the July 2015 World Economic Outlook (WEO) Update, stating the reason of external environment. IMF elaborating further stated that the external demand has weakened hence Indian exports tends to suffer, which is the negative force pushing down the growth forecast for India.

However, Tax department has given an assurance that the Goods and Service Tax (GST) will be implemented anytime during a year once the bill is passed in Rajya Sabha. Central Board of Excise and Customs (CBEC) Member Service Tax V S Krishnan stated that 'Missing the April 1, 2016, deadline does not mean going to 1st April 2017'.

Krishnan reiterated that drafting of the GST law has already been done and it will be forwarded to the empowered committee for its inputs. Thereafter, it would be put in the public for their comments. In addition, the draft Place of Supply rules will also be made public for feedback.

Further, he added that Industry needs to identify challenges in the transitional provisions to the new GST legislation as well as suggest solutions to the problems. Besides, he said that the committee is already working on GST rate structure and is expected to submit its report soon and said the revenue neutral rate would not exceed 20 percent. In addition, the empowered committee is working with think-tank NIPFP on the revenue neutral rate based on a fresh set of data.Krishnan also said that there is a need to create a state-level GST secretariat in which senior officials from the Centre and states should come together for interactions in institutionalized arrangements. He further highlighted that lot of hand holding is required for successful implementation of GST.

The GST Constitution Amendment Bill is waiting nod of Rajya Sabha, where the ruling NDA does not have a majority and is relying on the support of regional parties for its passage, as it requires two-third majority to pass a constitution amendment bill. GST, once rolled out, will include various levies like excise, service tax, sales tax, octroi, etc, and ensure a single indirect tax regime for the entire country.

The CNX Nifty touched a high and low 8232.20 and 8139.65 respectively.

The top gainers on Nifty were Vedanta up by 12.65%, Tata Steel up by 4.28%, Tata Motors up by 4.15%, Infosys up by 3.15% and ICICI Bank up by 2.80%. On the flip side, Coal India down by 2.99%, Asian Paints down by 2.35%, Bank of Baroda down by 2.31%, Maruti Suzuki down by 1.92% and Sun Pharma down by 1.22% were the top losers.

European Markets were trading in the green; France’s CAC was up by 0.95%, Germany’s DAX was up by 1.13% and UK's FTSE was up by 0.89%.

The Asian equity markets ended in green on Friday, on improving risk appetite globally as minutes from Federal Reserve’s latest meeting further eroded expectations of a near-term US rate hike. South Korea and Taiwan Stock Exchange was closed today on account of holiday. Japan’s Economics Minister Akira Amari stated that the country’s economy remained in a recovery trend although weakness was observed in some areas. Amari added that he hoped discussions between the government and private sector kicking off later this month would spur corporate capital spending and help sustain a moderate economic recovery. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 47.5, from 49.3 in the preceding month. China’s retail sales growth slowed during the week-long National Day Holiday, adding to concerns about weakness in the world’s second largest economy. Revenues of retailers and catering firms grew 11% to 1.08 trillion yuan ($170.2 billion) during the October 1-7 ‘Golden Week’ holiday, a decline from the 12.1% growth in the same year-ago period. As China shifts to a new growth model, the International Monetary Fund chief Christine Lagarde has cautioned that this transformation of the world’s second largest economy is expected to be bumpy and not a smooth ride.