Indian markets witnessed a fairly stable day of trade on Friday

After slipping into the negative territory on Thursday, Indian markets made a strong comeback on Friday, with the benchmark indices hitting fresh 52-week highs and raising weekly gains to over two and half percent.  Sentiments remained optimistic right from the start of trade as Odisha became the 16th state to ratify the constitutional amendment bill passed by Parliament to introduce the goods and services tax (GST), helping cross the important threshold of more than half the number of states needed for the proposed law to be sent for presidential assent. Also, investors got some peace of mind from chief economic advisor Arvind Subramanian’s statement that India has the potential to sustain 8 to 10 percent GDP growth rate during the next two to three years, despite April-June GDP growth coming in below expectations at 7.1 percent. Allaying fears that the roll out of the GST will not fuel inflationary pressure, Subramanian said the key objective of the tax reform was to shield the poorest sections from inflation.  Some support also came with International Monetary Fund’s (IMF’s) report praising the country by saying that India has recently taken important steps towards a national goods and services tax which, when fully implemented, promises to boost tax buoyancy and growth, including by enhancing the efficiency of the internal goods and services market. However, the sanguinity in local markets was under check by IMD’s report saying that the country’s cumulative rainfall during this year's monsoon so far (till 31 August 2016) was 3% below the long period average (LPA). Meanwhile, Sugar stocks came under pressure after the government imposed stock limits on sugar mills during the festival season till October-end. However, many infrastructure companies continued their uptrend for the third straight sessions after the Cabinet approved an array of measures to help quickly resolve disputes, pump in liquidity and deal with stressed assets. Good buying was also observed in selected auto stocks amid robust auto sales in August.

On the global front, Asian market ended mixed on Friday as investors avoided taking on risk before key U.S. payrolls data that may provide hints on the path of interest rates in the world’s largest economy. Strong employment report may put the Federal Reserve on track to raise short-term rates this year. Chinese markets posted modest gains as property developers rebounded from losses in the previous session, while the Japanese market ended in red as the yen moved higher for the day. Meanwhile, European markets held steady in early trade, as oil prices rebounded from overnight losses and survey data from Markit showed the downturn in U.K. construction activity eased considerably since July, following Britain's June 23 vote to leave the EU.

Back home, the local benchmarks got off to a positive opening, in tandem with the cautiously optimistic sentiments prevailing in Asian markets. Investors around the region remained cautious ahead of US non-farm payrolls report which could give clues on whether the Federal Reserve will raise interest rates as soon as this month. Thereafter, the indices traded in tight range near neutral line for most part of the session, but saw strong buying in late hours of trade, which stoked the bourses to the highest point in the session. However, some profit booking in the dying moments of trade led the bourses snap the session just below the session’s highs. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by around half a percent to settle above the crucial 8,800 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated over hundred points and closed above the psychological 28,500 mark. The broader markets largely mirrored their larger peers as the BSE’s midcap index went home with 0.49% gains, while the smallcap index could only manage 0.36%.

The market breadth remained in the favour of advances, as there were 1528 shares on the gaining side against 1198 shares on the losing side, while 169 shares remained unchanged.

Finally, the BSE Sensex surged 108.63 points or 0.38% to 28532.11, while the CNX Nifty gained 35 points or 0.40% to 8,809.65. 

The BSE Sensex touched a high and a low 28581.58 and 28427.63, 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 0.49%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Auto up by 1.01%, Realty up by 0.95%, Power up by 0.61%, Bankex up by 0.55% and PSU up by 0.34%, while Metal down by 0.29%, IT down by 0.21% and Capital Goods down by 0.10% were the few losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 3.55%, Bharti Airtel up by 2.66%, Maruti Suzuki up by 1.98%, Sun Pharma up by 1.50% and Mahindra & Mahindra up by 1.17%. On the flip side, Coal India down by 1.64%, Reliance Industries down by 1.58%, Hindustan Unilever down by 0.73%, Infosys down by 0.64% and Power Grid down by 0.49% were the top losers.

Meanwhile, to boost regional air connectivity, government is likely to finalize the ambitious Regional Connectivity Scheme (RCS) by this month. The scheme aims to connect remote areas by operationalising unserved and underserved airports. RCS refers to operation of an air transport service between any two airports, of which at least one has been declared by the central government as unserved or under- served.

Government also issued draft rules proposed to be part of the Aircraft Act with respect to RCS and has sought public comments on the draft rules under the amend the Aircraft Act, 1934 for incorporating provisions related to RCS. As per the draft rules, government may establish the Regional Air Connectivity Fund for the purpose of providing viability gap funding to aircraft operators to promote regional air connectivity. The fund would be administered and utilised in the manner as may be specified by the central government.

In order to fund the RCS Fund, the central government may impose a levy on scheduled flights being operated within India at such rates as the central government may notify having regard to the seating capacity of the aircraft used for the scheduled flights and the routes on which such flights are operated. Last week, the government notified excise duty of 2 per cent for jet fuel purchased from airports that come under RCS. Under the scheme, announced in the new civil aviation policy, the government has proposed capping fares at Rs 2,500 for one-hour flights on unserved and underserved routes besides various financial concessions for airlines. 

The CNX Nifty traded in a range of 8,824.10 and 8,768.20. There were 33 stocks advancing against 18 decliners on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 3.90%, Bank of Baroda up by 3.19%, Tata Motors - DVR up by 2.22%, Maruti Suzuki up by 2.06% and Bharti Airtel up by 2.06%. On the flip side, Coal India down by 1.76%, Reliance Industries down by 1.57%, ACC down by 1.22%, Infosys down by 0.73% and ZEEL down by 0.64% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 48.77 points or 0.72% to 6,794.74 and Germany’s DAX increased 18.33 points or 0.17% to 10,552.64, while France’s CAC increased 32.43 points or 0.73% to 4,472.10.

The Asian markets made a mixed closing on Friday waiting for the American jobs data, which could hint the timing of the next U.S. interest-rate hike. Strong employment report may put the Federal Reserve on track to raise short-term rates this year. South Korea’s central bank raised its estimate of second-quarter economic growth, supporting the currency and the markets. However, the Japanese market ended marginally in red as the yen moved higher for the day. On the other hand the Chinese markets posted modest gains as property developers rebounded from losses in the previous session.