Sensex slams a century to end at fresh 52-week closing high

Indian shares extended their winning streak for third straight session on Wednesday, led by gains in Capital Goods, banks and consumer durables companies, but major benchmarks ended off their day’s high as investors booked profits in metal and select information technology (IT) names. Sustained foreign fund inflows and persistent buying by domestic financial institutions as well as retail investors, supported the markets’ uptrend. Including Tuesday's inflows, FPIs have pumped in about Rs 40,100 crore in Indian equities so far this year, while DIIs have put in roughly Rs 10,600 crore. Sentiments remained buoyant with a Ficci survey that India's economy is likely to expand 7.8 percent during the current financial year on the back of good monsoon. The estimated median GVA (gross value added) growth for Q1 FY17 has been put at 7.6 percent. Also, raising confidence among investors Niti Aayog Vice-Chairman Arvind Panagariya said India's economy will accelerate to 8 per cent growth in the current financial year thanks to a good monsoon, policy reforms and PM Narendra Modi's focus on implementation at the grassroots level. However, there was some cautiousness due to Credit Suisse’s report that India along with Philippines, Indonesia and Malaysia are likely to continue to underperform in an Asia and emerging market context as these four countries are overvalued in terms of price to book vs return on equity valuations.  For India, every time the premium of price to book vs return on equity rises to above 50%, it has tended to underperform and MSCI India has underperformed so far this year by 5.8%.

Meanwhile, good buying was observed in select auto stocks as the Minister for Road Transport and Highways Nitin Gadkari said that the draft vehicle scrapping policy would offer a combined benefit of Rs 14,000 crore to the Centre and states and drive the auto industry growth by 22 percent. Also, hefty position build up was witnessed in infrastructure companies after the government approved new norms for the construction sector that will help in quicker resolution of disputes to kick-start stalled projects and make access to financing easier. Many stocks specific actions were seen during the session like UltraTech Cement hit a new high after the Reserve Bank of India (RBI) allowed foreign investors to invest up to 30% in the cement major. Zee Entertainment Enterprises rallied after the company announced that its board approved the sale of sports broadcasting business of the company to Sony for $385 million (approx. Rs 2,578 crore). Among others, the shares of private sector lender RBL, formerly known as Ratnakar Bank, debuted on the National Stock Exchange at Rs 274.2 per share, a 22% premium over the offer price.

On the global front, Asian markets ended mixed on Wednesday, with investors looking ahead to China PMI data this week and taking note of regional data in Japan. Growth in Japan’s industrial output ground to a halt in July after June’s gains, underscoring the fragility of factory activity and the continuing challenge to policymakers grappling with a stalling economy. Investors were also awaiting for US jobs numbers for further signs the Federal Reserve may raise rates as soon as September. Meanwhile, the European counterparts were trading in the positive territory though with marginal gains with France’s CAC being the top gainer in the space.

Back home, the local benchmark got off to a positive opening, in tandem with the cautiously optimistic sentiments prevailing in Asian markets. Thereafter, the indices kept oscillating in a narrow range through the morning session. However, the benchmarks slowly started gaining pace and by afternoon session surged to the high points of the day with BSE benchmark index, Sensex regaining 28500 mark and S&P CNX Nifty crossing 8800 mark. Though after wards profit booking started and markets pared gains and came off from the highs of the day. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by around half a percent to settle above the crucial 8,750 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated over hundred points and closed above the psychological 28,450 mark.

The market breadth remained in the favour of declines, as there were 1324 shares on the gaining side against 1349 shares on the losing side while 231 shares remain unchanged.

Finally, the BSE Sensex surged 109.16 points or 0.39% to 28452.17, while the CNX Nifty gained 41.85 points or 0.48% to 8,786.20. 

The BSE Sensex touched a high and a low 2433.38 and 2404.71, respectively. There were 14 stocks advancing against 16 stocks declining on the index. The broader indices ended in green; the BSE Mid cap index rose 0.37%, while Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.40%, Bankex up by 1.20%, Consumer Durables up by 0.71%, Auto up by 0.35% and FMCG up by 0.15%, while Metal down by 1.40%, Realty down by 0.81%, IT down by 0.39%, PSU down by 0.17% and TECK down by 0.14% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.71%, Hero MotoCorp up by 2.13%, HDFC Bank up by 1.83%, Tata Motors up by 1.73% and Asian Paints up by 1.09%. On the flip side, Tata Steel down by 1.95%, ONGC down by 1.92%, Lupin down by 1.71%, NTPC down by 1.58% and TCS down by 1.42% were the top losers.

Meanwhile, India Inc has suggested that the goods which are fully exempted from the levy of excise duty and VAT by all the states should be categorised as exempted goods in the GST regime as well. Following a meeting with the Empowered Committee of State Finance Ministers on the Goods and Services Tax, the Federation of Indian Chambers of Commerce and Industry (FICCI) also said that a minimum six month time should be permitted from the date of the adoption of the GST Law by the GST Council.

FICCI said that goods chargeable to nil rate of excise duty but charged to VAT in most states could be identified for levying a merit rate of GST. All other goods (except jewellery and demerit goods) could be subjected to the standard rate. As per current indications and reports, goods will be categorised as being subject to merit rate of 12%, standard rate of 18% and demerit rate of 40%.

The India Inc has said that any rate above 20 per cent would have an inflationary impact and would negate the likely benefits from GST. Therefore, it said that a reasonable standard tax rate of 18 per cent would not only deter inflation build-up, but would also protect the consumer's incomes and interests. It further recommended that valuation provisions under GST, which is a transaction based tax, should give primacy to actual transaction value. GST Law should provide for seamless movement of goods without any rigid administrative requirements that will delay transit and add to costs. There should be a foolproof mechanism of movement of goods between states and a single registration process, and industry should not be subjected to dual administration of assessment, audit, etc both by the Centre and states.

The CNX Nifty traded in a range of 8,819.20 and 8,754.05. There were 27 stocks advancing against 24 decliners on the index.

The top gainers on Nifty were Ultratech Cement up by 3.53%, Kotak Mahindra Bank up by 2.91%, Larsen & Toubro up by 2.46%, Ambuja Cements up by 2.42% and Tata Power Company up by 2.20%. On the flip side, Hindalco down by 2.30%, Tata Steel down by 2.03%, Bosch down by 1.98%, Lupin down by 1.77% and Reliance Industries down by 1.73% were the top losers.

The European markets were trading mostly in red; UK’s FTSE 100 decreased 2.38 points or 0.03% to 6,818.41, Germany’s DAX decreased 12.5 points or 0.12% to 10,645.14, while France’s CAC increased 26.91 points or 0.6% to 4,484.40.

Asian equity markets made a mixed closing on Wednesday, as oil prices slipped on a stronger dollar and Fed Vice Chair Stanley Fischer's upbeat assessment of the US economy made it clear that a rate hike would be possible at the Fed's next policy meeting in September. Traders turned their attention on the all-important US jobs data due Friday after a run of strong economic data and hawkish comments from several Federal Reserve officials. The Malaysian markets were closed for the National Day holiday. Meanwhile, Japanese shares ended higher as the yen weakened and disappointing industrial output data underscored the need for more stimulus measures.