Markets to extend gains on strong global cues

The Indian markets surged in last session on the back of global cues after aggressive stimulus measures were unveiled by the Bank of England, and on hopes of timely GST implementation. Today, the start of the new week is likely to be in green and the markets will be extending the gains on jubilant global cues. Today, the Lok Sabha will give the final parliamentary seal of approval to the enabling of the Constitution amendment bill for GST that the Rajya Sabha cleared last week. Prime Minister Narendra Modi has said that the Goods and Service Tax Bill will take India closer to achieving financial equality, adding that the Bill is an important legislation for 'ek bharat shreshth bharat (One India Excellent India)' initiative. Meanwhile, Finance Minister Arun Jaitley has said that Indian economy has defied global slowdown and geo-political tensions and is now poised to seize the opportunity to grow faster. Traders will also be getting some support with a joint study by Confederation of Indian Industry (CII) and the Indian Banks' Association (IBA) stating that the overall financial conditions index in India rose 28 per cent sequentially to 61.1 in the first quarter of 2016-17 from 47.8 in the previous quarter of 2015-16, indicating healthy improvement. There will be some buzz in the oil & gas sector stocks, on reports that government may cut gas price for producers by 20% in October. The gas price was last cut on April 1 from $ 3.82 per mmBtu to $3.06 per mmBtu. If it happens, it will be the fourth consecutive reduction since the implementation of the domestic gas pricing formula. There will be lots scrip specific actions based on earnings announcements.

The US markets posted good gains in the last session, rejoiced by good jobs data. Though, the stronger than expected job growth pointed to strength in the labor market, the investors assumed that Federal Reserve remains unlikely to raise interest rates next month. The Asian markets have made a strong start and some of the indices are up by over a percent following the rally on Wall Street. Japanese shares led the rally as the US dollar extended its advance against the yen.

Back home, Indian benchmark indices staged a blockbuster performance on the last day of the week by strongly rallying over a percent in the session and re-conquering their psychological levels. Investors continued to build hefty positions across the board, as sentiments got a boost after Union Finance Minister Arun Jaitley said that the government is working on a roadmap to roll out GST from April 1, 2017. GST can make the indirect tax system very efficient and will benefit all stakeholders including manufacturers, sellers, the ultimate consumers and the tax collecting governments apart from giving a substantial boost to GDP growth. According to Moody’s investors Service, GST implementation will be positive for the country’s economic growth without any significant impact on inflation. Investors’ morale also remained upbeat after the Bank of England announced an interest rate cut and fresh stimulus package to counter the fallout from Britain’s vote to quit the European Union. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 559.49 crore on August 04, 2016. Meanwhile, metal stocks gained traction after the government extended its floor price regime on steel imports for a further two months, as the world’s third-biggest producer seeks to insulate domestic mills from a global glut. Besides, Auto counter extended their gains for another session as the sector is likely to benefit the most from the implementation of the GST Bill as the effective tax rate is likely to be lower than the current tax of nearly. On the other hand, mild selling was witnessed in selected Textiles stocks on reports that India's handloom export declined by 30% within a year after a gradual rise for several years. On the global front, Asian equity markets edged higher on Friday, while European shares gained in early trade. Back home, the local benchmarks got off to a rollicking opening as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the frontline indices slowly but steadily started gathering steam and surged by around a percent by late morning trades. Finally, the BSE Sensex surged by 363.98 points or 1.31% to 28078.35, while the CNX Nifty rose by 132.05 points or 1.54% to 8,683.15.