Boisterous benchmarks stage a remarkable rally; Nifty ends above 8200 mark

After witnessing a wonderful recovery in previous session, Indian benchmark indices took a step forward and rallied over a percent on Wednesday, on account of fresh round of value-buying by funds and retail investors in the frontline bluechip sectors. Sentiments got a boost with Finance Minister Arun Jaitley’s statement after a meeting of Empowered Committee of state FMs on the long awaited indirect tax reform that every state has either supported or accepted the idea of the pan-India Goods and Services Tax (GST) except Tamil Nadu. GST Empowered Committee Chairman Amit Mitra too said that there was “general consensus” on the issue of dual control over taxation structure between the Centre and states. Market participants also got some confidence with NITI Aayog Vice-Chairman Arvind Panagariya’s statement that India's economic growth will cross the 8 per cent-mark this fiscal on the back of good monsoon and pick up in manufacturing. He said the growth in the last quarter of the previous fiscal touched 7.9 per cent because of uptick in manufacturing activity and improved performance of agriculture sector. Besides, appreciation in the rupee against dollar too supported sentiments. Indian rupee strengthened 14 paise to 67.11 against the US dollar at the time of equity markets closing on fresh selling of the American unit by exporters. Meanwhile, shares of all three listed airlines companies - Jet Airways (India), SpiceJet and InterGlobe Aviation (IndiGo) - gained after the Union Cabinet cleared Civil Aviation Policy, while public sector oil marketing companies (OMCs) gained, after the global crude prices fell to their three weeks low. Moreover, shares of State Bank of India’s subsidiaries surged up to 20 per cent on Cabinet’s approval to the proposed merger of SBI’s five subsidiaries and Bharatiya Mahila Bank (BMB) with the parent bank

On the global front, Asian market ended mostly higher on Wednesday, snapping the biggest four-day decline since February that was spurred by concerns over the U.K. leaving the European Union. The likelihood that the U.S. Federal Reserve would keep interest rates unchanged on Wednesday helped to support stock markets, as lower rates reduce investors' returns on bonds and their appeal compared to stocks. Further, a rally in miners and retailers lifted European stocks out of a five-day rout. However, investors remained nervous after global stock benchmark provider MSCI put off including mainland Chinese stocks in its widely followed Emerging Markets Index. It said China needs to make its market more accessible and closer to international standards. Inclusion of China's domestic stocks, known as 'A-shares,' could have attracted more foreign investment as fund managers rebalanced portfolios to reflect the changes.

Back home, the benchmark got off to a positive start in the morning as investors sentiments got buoyed on the expectation that the goods & services tax (GST), which aims to bring the country under a unified tax regime, can finally become a reality as the Finance Minister has managed to get the support of virtually all states, except Tamil Nadu.  Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour on the back of broad based bottom fishing in undervalued stocks. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off intraday highs.  Eventually the NSE’s 50-share broadly followed index Nifty, got buttressed by over a percent to settle above the crucial 8,200 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over three hundred points and closed above the psychological 26,700 mark. On the BSE sectoral space, buying was evident across the board and investors piled up hefty positions in the high beta Capital Goods counter which rocketed by over two percent, while the Power, PSU and Banking pockets too gained from strength to strength and climbed by about a percent each. The market breadth remained optimistic as there were 1674 shares on the gaining side against 954 shares on the losing side while 176 shares remained unchanged.

Finally, the BSE Sensex surged 330.63 points or 1.27% to 26726.34, while the CNX Nifty rose 97.75 points or 1.21% to 8,206.60.

The BSE Sensex touched a high and a low 26752.59 and 26446.59, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.58%, while Small cap index up by 0.80%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.26%, Power up by 1.99%, PSU up by 1.63%, Bankex up by 1.38% and Oil & Gas up by 1.14%, while there were no losing sectoral indices on BSE.

The top gainers on the Sensex were SBI up by 3.90%, NTPC up by 3.88%, Larsen & Toubro up by 3.38%, Bharti Airtel up by 2.82% and Maruti Suzuki up by 2.50%. On the flip side, Dr. Reddys Lab down by 0.51%, Axis Bank down by 0.35%, Adani Ports &Special down by 0.22%, Sun Pharma Inds. down by 0.14% and Mahindra & Mahindra down by 0.06% were the top losers.

Meanwhile, worried over rising food inflation, Finance Minister Arun Jaitley has called a special meeting of food, agriculture ministers and other senior officials to discuss prices of essential commodities like pulses and tomato, and also to chalk out an immediate plan to insulate poor people from increasing prices of food items.

Urban Development Minister Venkaiah Naidu, Transport Minister Nitin Gadkari, Food Minister Ram Vilas Paswan, Agriculture Minister Radha Mohan Singh and Commerce Minister Nirmala Sitharaman, The Cabinet secretary, the chief economic advisor and secretaries of the departments concerned, including  finance, food and consumer affairs are slated to attend the meeting.

The price of vegetables is a major concern for the government, with the Wholesale Price Index or WPI data for may showing that vegetable inflation rose sharply from 2.21 per cent in April to 12.94 per cent. The ministers will review the food price situation and discuss steps to keep in check prices of essential commodities, including pulses. The government has procured 1.15 lakh tonnes pulses directly from farmers as of now for creating a buffer stock of 1.5 lakh tonnes this year. It is also importing pulses through state-owned trading agencies like MMTC. So far, 38,500 tonnes of lentils have been contracted for import.

The meeting will take stock of the progress made in pulse imports, discuss creation of buffer stock and lifting of the stock by state governments for retail distribution at subsidised rates also discuss the import and export duty on sugar, wheat and edible oils.

The CNX Nifty traded in a range of 8,213.20 and 8,123.15. There were 42 stocks advancing against 9 decliners on the index.

The top gainers on Nifty were SBI up by 4.02%, NTPC up by 3.98%, Larsen & Toubro up by 3.65%, Bharti Airtel up by 2.70% and Maruti Suzuki up by 2.56%. On the flip side, Bharti Infratel down by 4.12%, Aurobindo Pharma down by 1.27%, Adani Ports &Special down by 0.77%, Eicher Motors down by 0.62% and Dr. Reddys Lab down by 0.34% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 61.92 points or 1.05% to 5,985.45, France’s CAC surged 63.7 points or 1.54% to 4,194.03 and Germany’s DAX was up by 119.67 points or 1.26% to 9,638.87.

Asian equity markets ended mostly higher on Wednesday even as underlying sentiment remained cautious ahead of the Fed decision on interest rates due tonight and the Bank of Japan's policy decision slated for Thursday. The Federal Reserve is widely expected to leave interest rates unchanged, but investors will keep a close eye on the accompanying statement and Fed Chair Janet Yellen's subsequent press conference for clues on the health of the world's largest economy and the trajectory of rate hikes. On the other hand, the Bank of Japan is likely to weigh the potential impact of Brexit on the broader economy before announcing further easing on Thursday. Also, investors ignored the MSCI decision delaying the inclusion of mainland-listed Chinese A-shares in its emerging market index for another year, citing concerns about market access and capital mobility. Chinese shares led regional gains after China's securities market regulator said a global stock index without A-shares trading in Shenzhen and Shanghai is incomplete and the MSCI's decision won't impact the reform and opening process of the country's capital markets. Japanese shares rose on short-covering as the yen slightly weakened against its rivals ahead of monetary-policy decisions by the Federal Reserve and the Bank of Japan.