Benchmarks manage to close in green outclassing global peers

After showing a feeble trade for most part of the morning session, domestic benchmarks managed to negotiate a close in the green terrain on Friday, as investors showed renewed buying interests in frontline blue chip counters. Sentiments got a boost after the reports suggested that the Goods and Services Tax (GST) constitutional amendment bill has been listed for discussion in the Rajya Sabha next week. The GST bill, touted as the single biggest indirect taxation reforms that will simplify and harmonise the indirect tax regime in the country, has been approved by the Lok Sabha and is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. Some support also came with report of a good monsoon season so far, raising hopes of a revival in farm output as well as income. Investors also got some comfort with a private poll stating that India's economy will hum along at a solid pace for the remainder of this fiscal year provided structural reforms are passed, while above-target inflation means the Reserve Bank of India will only cut rates once more this year. However, gains remained capped with the private report stating that India has ranked a low 110 out of 149 nations assessed on where they stand with regard to achieving the Sustainable Development Goals, according to a new index which is topped by Sweden and shows all countries face major challenges in achieving these ambitious goals. 

On the global front, selling was witnessed across the Asian markets with Japan’s index Nikkei 225 leading the losses after comments by Bank of Japan (BOJ) Governor Haruhiko Kuroda dashed hopes for so-called helicopter money or ultra-aggressive easing measures from the Japanese central bank. Further, The European Central Bank made no changes to its monetary policy on Thursday and ECB President Mario Draghi gave no hints of future action, disappointing investors hoping for more easing measures in September. Chinese shares retreated after Sheng Songcheng, director of the Survey and Statistics Department at the People's Bank of China, reportedly said that enterprises were caught in a liquidity trap and regulators should focus more on fiscal policy adjustments.  Meanwhile, European stocks were trading mixed in early trade, after some of the first economic data since the U.K’s Brexit vote came in unexpectedly strong for the eurozone, but worse than anticipated for Britain.

Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, as investors remained influenced by the daunting sentiments prevailing in Asian markets. After trading with moderate cuts through the morning session, the key indices gradually crawled into the green territory. Short covering intensified in late hours of trade which stoked the bourses to the highest point in the session. However, mild profit booking in the dying moments of trade led the bourses snap the session just below the session’s highs. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over a quarter percent settling once again above the crucial 8,500 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated ninety points and closed above the psychological 27,800 mark. Moreover, the broader markets managed a much better close than the larger peers today, as the BSE’s midcap and smallcap indices settled with gains of 0.98% and 0.81% respectively. On the BSE sectoral space, Power counter remained the top gainer in the space with around one and half percent gains, followed by the Metal, Capital Goods and Realty indices which ended with gains of around a percent. On the flipside, only the information technology (IT) index failed to keep its head above the water and dipped marginally.

The market breadth remained optimistic as there were 1486 shares on the gaining side against 1179 shares on the losing side, while 205 shares remained unchanged.

Finally, the BSE Sensex surged by 92.72 points or 0.33 % to 27803.24, while the CNX Nifty rose by 31.10 points or 0.37% to 8,541.20.

The BSE Sensex touched a high and a low 27832.45 and 27646.21, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.98%, while Small cap index was up by 0.81%.

The top gaining sectoral indices on the BSE were Power up by 1.41%, Metal up by 1.34%, Capital Goods up by 1.01%, Realty up by 0.81% and Auto up by 0.78%, while IT down by 0.26% was the sole losing index on BSE.

The top gainers on the Sensex were Tata Motors up by 3.21%, Power Grid up by 2.52%, HDFC up by 1.78%, Larsen & Toubro up by 1.14% and NTPC up by 1.10%. On the flip side, Bajaj Auto down by 1.60%, SBI down by 0.95%, Coal India down by 0.83%, Hindustan Unilever down by 0.80% and Wipro down by 0.78% were the top losers.

Meanwhile, praising the government's 'long game' handling of the economy to push up growth potential while giving attention to immediate issues as well, International credit rating agency Standard & Poor's (S&P) has forecasted that India’s economy can grow at about 8% in the next two years.

S&P Global Ratings further said, that the prediction of 8% growth is based on the steady, ongoing structural reform push, including GST passage, a good monsoon season this year and a wise choice to head the Reserve Bank of India. S&P appreciated the government's attempts to spur growth, saying that the authorities also clearly have their eye on the 'long game' with reforms to boost growth  potential getting at least as much attention as short-term stimulus.'

Pointing to inflationary pressures the report said that Inflation has been drifting higher with global commodity prices. It also noted that India does not face any fiscal or external sector concerns, pointing out that even Brexit did not have a meaningful impact on external variables. It added that the structural reform drive continues to gain traction. Consumer confidence looks quite high and investor confidence seems buoyant. Any China wobbles will affect India less than most countries in the region.

The S&P’s 8% growth rate is way above the forecasts done by other international agencies, including International Monetary Fund and Asian Development Bank. IMF has forecast 7.4% growth for this fiscal, while ADB expects India to grow 7.4% this year and 7.8% in 2017-18.

The CNX Nifty traded in a range of 8,548.95 and 8,489.80. There were 32 stocks advancing against 18 decliners on the index.

The top gainers on Nifty were Tata Motors - DVR up by 3.67%, Tata Motors up by 3.18%, Power Grid up by 3.11%, Zee Entertainment up by 2.54% and Bharti Infratel up by 2.35%. On the flip side, ACC down by 1.93%, Bajaj Auto down by 1.83%, SBI down by 0.97%, Bosch down by 0.93% and Wipro down by 0.90% were the top losers.

European markets were trading in green; Germany’s DAX increased 14.71 points or 0.14% to 10,170.92, France’s CAC gained 16.8 points or 0.38% to 4,393.05 and UK’s FTSE 100 was up by 17.4 points or 0.26% to 6,717.29.

Asian equity markets ended mostly lower on Friday, with the oil price downturn and fading BOJ stimulus expectations weighing on markets. The European Central Bank made no changes to its monetary policy on Thursday and ECB President Mario Draghi gave no hints of future action, disappointing investors hoping for more easing measures in September. Japanese shares led regional declines as Draghi's comments at ECB press conference and Kuroda's remarks tempered stimulus hopes. BOJ Governor Haruhiko Kuroda's remarks in a BBC Radio 4 interview quashed expectations that Japan might be preparing to take radical ‘helicopter money’ economic stimulus steps, under which the central bank would finance government budgets to fight deflation. Kuroda's comments sent the yen to six-week lows against major counterparts, and gave investors a reason to sell shares. Further, Chinese shares retreated after Sheng Songcheng, director of the Survey and Statistics Department at the People's Bank of China, reportedly said that enterprises were caught in a liquidity trap and regulators should focus more on fiscal policy adjustments.