Post Session: Quick Review

Indian equity markets which made a gap-up opening in early deals traded on a firm note throughout the day, closing around highest point of the day. The sentiments got support with the government setting a target of April 1, 2017 for rollout of the Goods and Services Tax and unveiling a detailed roadmap for its implementation. Finance Minister Arun Jaitley has said that tax rate will be ‘optimum’ even as there were indications that it may be higher than 18 percent. The government expects at least half the states to ratify the constitution amendment Bill on Goods and Services Tax within the next 30 days. Foreign portfolio investors (FPIs) bought shares worth a net Rs 559.49 crore yesterday, as per provisional data released by the stock exchanges, providing further upside support. Meanwhile, investors took note of the India Meteorological Department’s weekly update on rainfall which stated that during the week from 28 July to 3 August 2016, rainfall was above long period average (LPA) by 6% over the country as a whole. For the country as a whole, cumulative rainfall during this year’s monsoon for July 2016 was 7% above LPA.

On the global front, Asian shares closed mostly in green, driven by the Bank of England’s aggressive stimulus measures and an overnight rally in crude oil prices, but traders kept cautious eye on US jobs data due later in the global trading day. European equities which were boosted after the Bank of England cut interest rates to a record-low of 0.25% came under mild pressure after data out of UK pointed to a worsening of the economy.

Back home, benchmarks added gains taking cues from European markets. Hectic buying activity was witnessed in steel sector stocks as the government had decided to extend the Minimum Import Price (MIP) regime on 66 items for a period of two months. Following this, the MIP regime introduced for a six-month period in February 2016 and was due to end on August 5, will now be applicable on these items till October 4, 2016.  Telecom stocks displayed mixed reaction to the telecom regulator’s move to review charges carriers pay to each other for calls made from one network to another, fearing it may lead to a further reduction in those fees, hurting the bigger players, while benefiting newer and smaller operators. The Telecom Regulatory Authority of India is likely to float a consultation paper shortly to review these fees, known as inter-connect charges (IUC), taking into account the current cost structures.

The BSE Sensex ended at 28082.41, up by 368.04 points or 1.33% after trading in a range of 27795.74 and 28110.37. There were 23 stocks advancing against 6 stocks declining on the index, while one stock remained unchanged. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.63%, while Small cap index was up by 1.37%. (Provisional)

The gaining sectoral indices on the BSE were Auto up by 3.29%, Oil & Gas up by 2.81%, Metal up by 2.49%, PSU up by 2.13% and Capital Goods up by 2.09% while, IT down by 0.28% and TECK down by 0.19% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hero MotoCorp up by 5.23%, Bajaj Auto up by 4.95%, Mahindra & Mahindra up by 3.47%, Tata Motors up by 3.39% and Axis Bank up by 3.29%. (Provisional)

On the flip side, Bharti Airtel down by 0.79%, Power Grid Corporation down by 0.73%, Sun Pharma down by 0.68%, Infosys down by 0.66% and Wipro down by 0.38% were the top losers. (Provisional)

Meanwhile, the Exporters’ body Federation of Indian Export Organisations (FIEO) has welcomed the passing of the Constitutional Amendment Bill and said that under the Goods and Services Tax (GST) regime, exemption on final export products should continue to promote overseas shipments.

FIEO President, S C Ralhan said that exemption on the final export products should continue, else it will lead to problem of working capital particularly for Micro, Small & Medium Enterprises (MSME) units. The Draft GST Model Law has few concerns for the export sector which has already been flagged for their remedial action.
Ralhan further said that GST will not only add to the GDP of the country but will also lessen the incidence of tax thereby increasing the demand and propelling manufacturing. The GST bill and other related bills will be passed soon and he expected that GST will be introduced as early as from April, 2017. He also expressed the hope that GST will provide rebate of other State taxes in addition to Value Added Tax (VAT) which is presently covered under the refund mechanism by the States.

The CNX Nifty ended at 8679.30, up by 128.20 points or 1.50% after trading in a range of 8590.15 and 8689.40. There were 42 stocks advancing against 9 stocks declining on the index. (Provisional)

The top gainers on Nifty were Grasim Industries up by 5.29%, Hero MotoCorp up by 5.27%, Hindalco up by 5.03%, Bajaj Auto up by 4.92% and Ambuja Cement up by 4.16%. (Provisional)

On the flip side, Bharti Infratel down by 0.90%, Power Grid Corporation down by 0.84%, Bharti Airtel down by 0.75%, Tech Mahindra down by 0.73% and Sun Pharma down by 0.72% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 18.13 points or 0.27% to 6,758.29, Germany’s DAX increased 14.88 points or 0.15% to 10,242.74, while France’s CAC increased 20.84 points or 0.48% to 4,366.47.

Asian equity markets ended mostly higher on Friday, as aggressive moves by the Bank of England to cushion the Brexit blow and its dovish outlook for policy encouraged traders to pile into riskier assets. A two-day short-covering rally in oil prices also boosted investor sentiment. Chinese stocks closed a tad lower as worries about the economy and regulators' crackdown on speculation kept many investors on the sidelines. Japanese shares gave up early gains to end flat in cautious trade with investors looking ahead to the US jobs report later in the session, which could provide important insights into US economic outlook and the path of monetary policy. The Labor Department's non-farm payrolls report is expected to show an increase of about 185,000 jobs in July after employment jumped by 287,000 jobs in June. The unemployment rate is expected to edge down to 4.8 percent from 4.9 percent.