Late hour recovery help benchmarks to end near day’s high; Nifty reclaims 8,600 mark

Indian benchmarks showcased an enthusiastic performance in final hours on Monday, by surging around half a percent. After making a cautious start markets traded near neutral lines for most part of the day’s trade, but buying activity which took place during last leg of trade helped the frontline indices not only end the session near intraday high levels but also recapture their crucial 8,600 (Nifty) and 27,900 (Sensex) bastions, as investors took to hefty across the board buying. Initially, traders remained cautious after the US Federal Reserve, post its meeting over the weekend indicated increase in interest rate hike during the current calendar year. Depreciation in Indian rupee too dampened sentiments. The rupee depreciated by twelve paise to trade at 67.18 against the US dollar at the time of equity markets closing due to fresh buying of the American currency by banks and importers.

However, sentiments turned up-beat after federation of Indian Chambers of Commerce and Industry (FICCI) in its latest quarterly report on, manufacturing outlook for the second quarter stated that India's manufacturing sector may witness higher growth during the July-September quarter due to improvement in export prospects and domestic demand. Traders also took some encouragement with reports that in order to ensure that GST is rolled out by April 1, 2017, the government is trying hard to get the winter session of Parliament advanced by a fortnight to pass the bill. Winter Session of Parliament is normally convened in the third or fourth week of November.

On the global front, European markets were trading in red terrain in early deals, giving back gains seen of the previous session, while a holiday closure of UK markets is expected to keep activity low. Most of the Asian equity benchmarks tumbled on Monday after Federal Reserve Chair Janet Yellen indicated a US interest rate increase remains on the cards for this year.

Back home, markets extended the rally in final hour of trade with the Economic Affairs Secretary Shaktikanta Das’s statement that India is expected to clock a GDP growth of nearly 8 percent this fiscal on the back of good monsoon rains. He said that Agriculture production is expected to be much better than previous two years and definitely agriculture will contribute significantly to the GDP.

On the sectoral front, stocks related to banking and financial counters edged higher with Union Minister Nirmala Sitharaman defending her demand for 2 per cent cut in interest rates by RBI, saying it is essential to boost SMEs and create jobs. Shares of tyre manufacturing companies too remained on buyers’ radar after natural rubber prices hit nearly three-month low on August 26, 2016.

The NSE’s 50-share broadly followed index -- Nifty -- rose by over thirty points to end above the psychological 8,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- surged by over one hundred and twenty points to finish above the psychological 27,900 mark. Broader markets too traded with traction and ended the session in green. The market breadth remained in the favour of advances, as there were 1,216 shares on the gaining side against 1,465 shares on the losing side while 206 shares remain unchanged.

Finally, the BSE Sensex surged 120.41 points or 0.43% to 27,902.66, while the CNX Nifty gained 34.90 points or 0.41% to 8,607.45. 

The BSE Sensex touched a high and a low 27,952.85 and 27,698.71, respectively. There were 19 stocks advancing against 11 stocks declining on the index.The broader indices ended in green; the BSE Mid cap index rose 0.49%, while Small cap index was up by 0.09%.

The top gaining sectoral indices on the BSE were Auto up by 1.44%, Industrials up by 1.44%, Energy up by 1.36%, Capital Goods up by 1.17% and Metal up by 1.07%, while IT down by 0.89%, Telecom down by 0.81%, Realty down by 0.81%, TECK down by 0.59% and Healthcare down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 4.18%, Reliance Industries up by 2.85%, Hero MotoCorp up by 2.81%, ICICI Bank up by 2.10% and Larsen & Toubro up by 1.99%. On the flip side, Wipro down by 2.33%, Lupin down by 2.15%, HDFC Bank down by 1.55%, Bharti Airtel down by 1.38% and TCS down by 1.09% were the top losers.

Meanwhile, competing against time to meet the April 1, 2017 target to roll out the landmark Goods and Services Tax (GST), the government is considering an early Winter Session of Parliament advanced by a fortnight to pass GST Bills, leaving adequate time for execution of the new indirect tax regime. Winter Session of Parliament is usually in the third or fourth week of November but this year the government is looking at beginning the month-long session quickly after the end of festive season.

The government also has to pass the supporting legislations for the Central Goods and Services Tax (CGST) and Integrated Goods and Services Tax (IGST) legislations that will pave way for the GST, to be approved within November or latest by early December. This two laws are designed to prop up the new tax regime after the Constitutional (122nd Amendment) Bill, which was passed in the Monsoon Session.

The GST bill which was passed in the monsoon session needs the nod of atleast 50 per cent of the states. Already the constitution amendment bill has been ratified by eight state assemblies including Assam, Bihar, Chhattisgarh, Jharkhand, Himachal Pradesh, Gujarat, Delhi and Madhya Pradesh. The government is of the view that once half of the state legislatures approve the new national sales tax regime, the GST Council - comprising Union finance minister and state finance ministers, can immediately sit down to approve the tax rate, slabs and exemptions for it to be incorporated in the CGST.

Parliament nod to the legislations in the Winter Session would give enough time to prepare for the rollout of GST from April 1, 2017. Government is of the view that an early Winter Session will also be beneficial as the Budget Session is planned to be convened in the last week of January.

The CNX Nifty traded in a range of 8,622.00 and 8,543.75. There were 30 stocks advancing against 21 decliners on the index.

The top gainers on Nifty were Zee Entertainment up by 4.76%, Tata Motors up by 4.28%, Hero MotoCorp up by 3.24%, Reliance Industries up by 2.87% and Tata Motors - DVR up by 2.55%. On the flip side, HCL Tech down by 3.04%, Bharti Infratel down by 2.54%, Wipro down by 2.29%, Tech Mahindra down by 2.26% and Lupin down by 2.13% were the top losers.

The European markets were trading in red, Germany’s DAX decreased 85.5 points or 0.81% to 10,502.27 and France’s CAC was down by 46.79 points or 1.05% to 4,395.08.

Asian equity markets ended mostly lower on Monday after Federal Reserve Chair Janet Yellen hinted in her speech at the annual Jackson Hole conference that a rise in interest rates could be on the cards soon in the midst of an improving US economy. While Yellen's remarks raised the odds of a rate increase at the September FOMC meeting, many market participants now look ahead to this week's US jobs report for clues on the pace and timing of future rate hikes. Chinese shares ended on a flat note, as gains in industrial stocks offset weakness in the banking sector as a slew of interim corporate results showed tentative signs of bottoming-out in struggling sectors such as coal and steel. However, Japanese shares bucked the trend and hit a 1-1/2 week high, as the yen weakened against the resurgent dollar after comments from BOJ Governor Haruhiko Kuroda that the central bank will not hesitate to expand stimulus if needed at the Jackson Hole Symposium over the weekend.