Benchmarks extend winning streak for the second straight session

Indian benchmarks carried forward their northbound journey for yet another session on Wednesday, on account of buying in frontline blue chip counters amid firm European cues. Sentiments remained buoyant with Finance Minister Arun Jaitley urging the Rajya Sabha to pass the GST bill expeditiously to enable states get a share of the Service Tax which is not shared under the provisions of 14th Finance Commission. GST, which aims to simplify indirect tax regime, will be a ‘game-changer’ for the country and its implementation is likely to take place from April next year.  Some support also came with Union Minister Nitin Gadkari’s statement that US companies consider India their next FDI frontier and are keen to pump in billions of dollars into the country's infrastructure and transportation sector. Acknowledging that India's infrastructure sector is lagging behind and it has a long way to go to match the international standards, Gadkari said that the modernization and upgradation of the transport infrastructure has the potential to become driver of the country's growth.

However, the upside remained capped with the report that International Monetary Fund trimmed India’s growth forecast for the current and next financial years by 0.1 percentage points as it pared global growth by an identical amount. Weak trend in Asian stocks coupled with depreciation in rupee value against the US dollar too weighed down sentiments. Indian rupee was at 67.15 per dollar at the time of equity markets closing as compared to 67.11 per dollar level on Tuesday on sustained demand for the American currency from importers.

Meanwhile,  telecom stocks like Bharti Airtel and Idea Cellular edged lower after the DoT began sending out notices to the country’s top six mobile operators, who have been charged by the Comptroller and Auditor General of under-reporting their adjusted gross revenue by Rs 46,045.75 crore for the period 2006-07 to 2009-10. Some information technology (IT) counters also remained under pressure as after TCS and Infosys, Wipro too disappointed in the June quarter (Q1). Its constant currency dollar revenues stood at $1,932 million (up two per cent), just in line with estimates, while profitability and forecast fell short of expectations. On the other hand, Realty stocks came into the limelight after Union Government wrote to the states asking them to reduce stamp duty on registration of houses for poor as it aims to push affordable housing projects across the country. Further, Cement companies edged higher on expectation of healthy growth in earnings for the quarter ended June 30, 2016 (Q1FY17).

On the global front, Asian markets ended in red on Wednesday as investors reassessed the global economy following the International Monetary Bank's global growth cut. According to IMF report, Britain’s decision to leave the European Union will reduce global economic growth this year and next. IMF lowered its estimate for worldwide growth to 3.1 percent this year, 0.1 percentage point lower than its previous forecast. The downward growth revision added to a gloomy outlook amid questions about whether recent stock market rallies were sustainable. Further, Japanese shares snapped a six-day winning streak as the yen fluctuated after touching a one-month low versus the dollar overnight, while Chinese shares drifted lower as investors pondered the possibility of further policy stimulus in light of mixed readings on the economic front. However, European markets made a strong start with CAC and DAX trading with gain of around one and a half percent in early deals.

Back home, the benchmark got off to an optimistic start, shrugging the sluggish sentiments prevailing in Asian markets. The frontline indices soon gathered momentum and traded with around quarter percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by around half a percent to settle above the crucial 8,550 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over one hundred and twenty points and closed above the psychological 27,900 mark. The broader markets outperformed their larger peers as the BSE’s midcap index gained 0.90% and smallcap index jumped 0.99%. On the BSE sectoral space, Realty counter remained the top gainer in the space with around two and half a percent gains followed by the Oil & Gas and Power indices which ended with gains of around one and half percent. On the flipside, Consumer Durables counter languished at the bottom of the table with cuts of around quarter percent.

The market breadth remained optimistic as there were 1671 shares on the gaining side against 1026 shares on the losing side, while 177 shares remained unchanged.

Finally, the BSE Sensex surged by 128.27 points or 0.44% to 27915.89, while the CNX Nifty rose by 35.25 points or 0.41% to 8,563.80.

The BSE Sensex touched a high and a low 27924.92 and 27759.71, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.90%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Realty up by 2.41%, Oil & Gas up by 1.55%, Power up by 1.50%, PSU up by 1.25% and FMCG up by 0.76%, while Consumer Durables down by 0.24% was the sole losing index on BSE.

The top gainers on the Sensex were Coal India up by 3.23%, Dr. Reddys Lab up by 2.74%, GAIL India up by 2.48%, Cipla up by 2.39% and Sun Pharma up by 1.89%. On the flip side, Wipro down by 1.97%, Axis Bank down by 0.98%, Tata Motors down by 0.87%, ICICI Bank down by 0.58% and Maruti Suzuki down by 0.50% were the top losers.

Meanwhile, expressing his hopes for the passage of the GST bill in the parliament, Finance Minister Arun Jaitley has said that the GST bill should be passed in the Rajya Sabha as early as possible. He said, the earlier the GST is passed, the better it is for states so that they get a share in the Service Tax” which is not included in the provisions of 14th Finance Commission.

As per the 14th Finance Commission, service tax is not shared with states. The Finance Minister added that the 14th Finance Commission heard out states and on the basis of their financial health, decided the criteria based on the demographic profile, population and income inequality, with a new criteria of forest cover being added this time. On some schemes where some states have suffered, the Centre had constituted a committee of chief ministers who recommended that some schemes should be fully sponsored by the Centre and some others be adopted by the states.

Jaitley is counting on support of regional parties for passage for the Constitutional Amendment Bill on GST, is meeting visiting various states to get their support.  The government has agreed to a five hour debate on the GST bill in the Rajya Sabha and is keen to get the law passed during the current Monsoon Session of Parliament that ends on August 12. The GST Bill, which will help create a single national sales tax to replace several state and central levies, has already been approved by the Lok Sabha and is pending in the Upper House. Once the Parliament approves the constitutional amendment to allow GST, it needs to be ratified by more than half of the states. Then, Parliament must pass another Bill to implement GST.

The CNX Nifty traded in a range of 8,569.10 and 8,512.55. There were 31 stocks advancing against 20 decliners on the index.

The top gainers on Nifty were Aurobindo Pharma up by 5.07%, Coal India up by 3.35%, BHEL up by 3.15%, Dr. Reddys Lab up by 2.69% and Tata Power up by 2.56%. On the flip side, Wipro down by 2.15%, Hindalco down by 1.63%, Tata Motors down by 1.17%, Idea Cellular down by 0.94% and Axis Bank down by 0.88% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 27.55 points or 0.41% to 6,724.92, France’s CAC surged 57.83 points or 1.34% to 4,387.96 and Germany’s DAX was up by 138.37 points or 1.39% to 10,119.61.

Asian equity markets ended mixed on Wednesday as another fall in oil prices overnight and the IMF's modest downgrade of its forecasts for global growth kept investors on edge. The IMF downgraded its forecasts for global growth this year and next by just 0.1 percentage point, but warned that more negative outcomes are a distinct possibility as the Brexit vote's impacts play out over time. Chinese shares drifted lower as investors pondered the possibility of further policy stimulus in light of mixed readings on the economic front. Japanese shares snapped a six-day winning streak as the yen fluctuated after touching a one-month low versus the dollar overnight. However, Hong Kong shares finished firmer on Wednesday, as investors were eyeing dovish signals from central banks in recent weeks continued to bid up stocks.