Indian indices climb on F&O expiry, GST optimism

Indian equity indices showcased a strong performance, outclassing indices around the world by vivaciously rallying by over half a percent in the session and settling above the psychological 8,650 (Nifty) and 28,200 (Sensex) levels. Investors continued to build hefty positions across the board as sentiments got a boost on hopes that the long-awaited GST Bill may be passed in the ongoing monsoon session of Parliament after the Cabinet on Wednesday cleared changes in the Constitutional Amendment bill. By doing away with the 1 per cent inter-state tax over and above the GST rate, the government has met one of the three key demands over which Opposition Congress has been blocking the Bill in the Upper House. Investors’ morale also remained upbeat as the US Federal Reserve opted to keep interest rates at ultra-low level after the conclusion of a two-day monetary policy meeting. The ultra-loose monetary policy in the US has encouraged heavy investment in higher-yielding emerging markets like India. Besides, the strengthening rupee against the dollar and short-covering by participants with Thursday being the last trading session of the July series of derivative contracts also supported the up move.  Some support also came with global rating agency Crisil’s report that India’s GDP growth could rise to 7.9 per cent because of good monsoon so far, with agriculture expected to grow by 4 per cent and consumer price inflation likely to be restricted to 5 per cent in 2016-2017.

On the global front, shares in Japan dragged the Asian markets lower on Thursday as cautious indications from the U.S. Federal Reserve left the focus firmly on Japan's next round of money-printing measures. While policymakers at the US central bank voted to keep interest rates unchanged, they noted that ‘near-term risks’ to the world's biggest economy have diminished. In China, worries about a possible clampdown on wealth management products weighed on sentiment.  Meanwhile, European stocks slipped in early trade, weighed down by weak updates from companies including Dialog Semiconductor and oil major Royal Dutch Shell.

Back home, the benchmark got off to an optimistic opening, shrugging the sluggish sentiments prevailing in Asian markets as the Federal Reserve left the door open for a US interest rate hike this year. The frontline indices soon gathered momentum and traded with over 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. However, a mild selling in dying moments of trade ensured that the key benchmarks shut shops off the intraday highs. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by over half a percent to settle above the crucial 8,650 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over one hundred and eighty points and closed above the psychological 28,200 mark.  Moreover, the broader markets mirrored their larger peers as the BSE’s midcap index went home with 0.62% gains, while the smallcap index ended with 0.60% gains. On the BSE sectoral space, the Consumer Durables counter remained the top gainer in the space with over two percent gains followed by the defensive FMCG pocket which surged close to one and half percent. On the flipside, Capital Goods counter languished at the bottom of the table with large cuts of around a percent while the high beta Metal and Oil & Gas sectors settled with moderate cuts.

The market breadth remained optimistic as there were 1485 shares on the gaining side against 1166 shares on the losing side, while 227 shares remained unchanged.

Finally, the BSE Sensex surged by 184.29 points or 0.66% to 28208.62, while the CNX Nifty rose by 50.50 points or 0.59% to 8,666.30.

The BSE Sensex touched a high and a low 28240.20 and 28064.90, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.62%, while Small cap index was up by 0.60%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.30%, FMCG up by 1.50%, Realty up by 0.95%, Auto up by 0.81% and Power up by 0.56%, while Capital Goods down by 0.84%, Metal down by 0.74% and Oil & Gas down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 6.14%, Maruti Suzuki up by 4.47%, ITC up by 2.48%, Sun Pharma up by 1.99% and Power Grid Corpn. up by 1.71%. On the flip side, Tata Steel down by 3.47%, Larsen & Toubro down by 1.51%, Adani Ports &Special down by 1.38%, Axis Bank down by 0.98% and Dr. Reddys Lab down by 0.93% were the top losers.

Meanwhile, government has defended the decision to allow 100 per cent FDI through automatic route in defence and retail sectors, Commerce Minister Nirmala Sitharaman has said that “greater the investment, greater the opportunity for employment generation.”

Sitharaman said the new FDI policy does not compromise national security, nor does it affect employment opportunities. She said “When we say whether it is automatic or through the Government route, all processes for establishing the facts behind this investment and implications of security are duly done and diligences completed,”

She also added that government has brought simplification in the definition of technology by using the word modern, instead of phrases like state-of-the-art and cutting-edge. Further talking about the Cabinet Committee on Security (CCS) approval, she said that CCS approval will not be required any more in Defence as the process of approval itself will include the Defence Ministry and the Ministry of Home Affairs, both of whom will go into all the details which will have to be looked at from the point of view of the defence of the nation, internal security and every other matter which relates to the national security.

Last month, the government has allowed 100% FDI in defence sector. It was decided that in defence sector, the first 49 percent of investment will be through automatic route. Beyond that, up to 74 percent investment will need government approval. The new norms have done away with the condition of access to ‘state-of-art’ technology in the country for FDI more than 49%.

The CNX Nifty traded in a range of 8,674.70 and 8,625.25. There were 24 stocks on gainers side against 27 decliners on the index.

The top gainers on Nifty were Asian Paints up by 5.98%, Bharti Infratel up by 5.15%, Maruti Suzuki up by 4.41%, Eicher Motors up by 4.08% and Bosch up by 3.44%. On the flip side, Aurobindo Pharma down by 1.90%, Idea Cellular down by 1.41%, Adani Ports &Special down by 1.40%, Tata Steel down by 1.34% and Larsen & Toubro down by 1.26% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 10.32 points or 0.15% to 6,740.11, Germany’s DAX slipped 6.5 points or 0.06% to 10,313.05 and France’s CAC was down by 2.47 points or 0.06% to 4,444.49.

Asian equity markets ended on a mixed note on Thursday as the yen strengthened and oil prices hovered near three-month lows on growing concerns regarding oversupply. While the Federal Reserve's latest policy statement came along expected lines with no clues on the timing and pace of interest rate hikes, the risk of policy disappointment from the Bank of Japan kept investors somewhat cautious. Japanese shares led the regional losses as the yen strengthened and investors adopted a cautious stance ahead of the latest policy decision from the Bank of Japan, due Friday. Meanwhile, Chinese shares closed marginally higher as rises in auto stocks and industrials offset declines in financials resulting from news of a pending crackdown on stock investments by China's massive wealth management industry.