Indian benchmarks kickoff the week on a sanguine note; Sensex reclaims 29000 mark

Indian markets have kicked off the week on a confident note, with the NSE index moving close to breaching a key psychological level of 9,000, while Sensex reclaimed 29,000-mark on Monday. Sentiments got a boost with the GST council moving a step closer towards implementing the goods and services tax (GST) from 1 July, approving two crucial supporting legislations of central GST law (CGST) and the integrated GST (IGST) law for this ambitious tax reform. It will again meet on 16 March to clear the state GST law (SGST) and the union territory GST law (UTGST). Once all the bills are passed by the council, the Union government will collectively take the bills to the Union cabinet for its approval. Some support also came with the report that foreign investments in the services sector increased 77.6 percent to $7.55 billion in the first nine months of the current fiscal, helped by government steps to improve ease of doing business. However, gains remained capped on rising geopolitical tensions in East Asia, as North Korea fired four ballistic missiles early in the day, while a spat between China and South Korea over missile defence deepened. Meanwhile, Information technology (IT) stocks came under pressure on Monday, following the developments on H1-B visa front in the US. The United States announced that from April 3 it would temporarily suspend the ‘premium processing’ of H-1B visas that allowed some companies to jump the queue as part of its efforts to clear the backlog.

On the global front, Asian equity markets ended mostly higher on Monday,  despite the prospects of a likely interest rate hike by the US Federal Reserve later this month as well as slower Chinese economic growth this year. In a speech to the national legislature, Premier Li Keqiang, China's top economic official, trimmed the country's growth target to 6.5% and warned of dangers from global pressure for trade controls as Beijing tries to build a consumer-driven economy and reduce reliance on exports and investment. However, Japanese market declined in thin trade as global geopolitical tensions rose after North Korea fired four missiles, three of which landed in Japan's exclusive economic zone. Meanwhile, European markets fell in a broad decline, after capping their best weekly gain since December, as mining shares dropped with copper prices and Deutsche Bank AG helped drag lenders lower. 

Back home, after getting a firm start, the local benchmarks showed some strength in late morning trades, but profit booking tracking weak opening of European markets in noon session took the indices to lower levels, however the market regained its momentum in the final hour of trade and finished the day near intraday highs. Finally, the NSE’s 50-share broadly followed index Nifty, got buttressed by over half a percent to settle above the crucial 8,950 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over two hundred points and closed above the psychological 29,000 mark. Moreover, the broader markets underperformed their larger peers by a small margin as the BSE’s midcap index went home with gains of 0.57%, while the smallcap index climbed 0.37%. The market breadth remained optimistic, as there were 1511 shares on the gaining side against 1371 shares on the losing side, while 213 shares remained unchanged.

Finally, the BSE Sensex surged 215.74 points or 0.75% to 29048.19, while the CNX Nifty was up by 65.90 points or 0.74% to 8,963.45.

The BSE Sensex touched a high and a low of 29070.20 and 28856.12, respectively and there were 23 stocks on gainers side as against 7 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index surged 0.57%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were Energy up by 2.01%, Oil & Gas up by 1.32%, Auto up by 1.24%, Power up by 1.16% and Utilities up by 1.10%, while IT down by 0.19% and Consumer Durables down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 3.69%, Adani Ports & SEZ up by 2.48%, Tata Motors up by 2.30%, Bharti Airtel up by 1.81% and SBI up by 1.79%. On the flip side, TCS down by 0.87%, Hindustan Unilever down by 0.70%, Dr. Reddy’s Lab down by 0.60%, HDFC down by 0.44% and Tata Steel down by 0.41% were the top losers.

Meanwhile, supported by government’s various initiatives to improve ease of doing business,  Foreign Direct Investment (FDI) into the country’s services sector increased by 77.6 percent to $7.55 billion during April- December 2016-17, as compared to $ 4.25 billion in the same period last year. Moreover, the overall foreign inflows in the country increased by 22 per cent to $35.84 billion during April-December 2016-17.

Indian services sector, which includes banking, insurance, R&D, outsourcing, courier and technology testing, represents over 60 per cent share in the country’s GDP and accounts for 17 per cent of total foreign investment inflows. The Commerce and Industry Ministry is also considering relaxing FDI norms in certain sectors including retail to further boost inflows. The other sectors where inflows recorded growth during the nine-month period of 2016-17 were telecom, which saw an inflow of $5.54 billion, trading $2 billion, computer software and hardware $1.81 billion and automobile at $1.45 billion.

FDI is considered crucial for economic development of a country and to attract maximum FDI into the country, the government has been relaxing the foreign investment norms in various sectors. At present, the Commerce and Industry Ministry is also considering relaxing FDI norms in certain sectors including retail to further boost inflows. Meanwhile, India needs around $1 trillion to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

The CNX Nifty traded in a range of 8,967.80 and 8,914.00. There were 37 stocks in green as against 14 stocks in red on the index.

The top gainers on Nifty were Reliance Industries up by 3.93%, Adani Ports & SEZ up by 2.58%, Tata Motors up by 2.24%, SBI up by 1.94% and BHEL up by 1.87%. On the flip side, Grasim Industries down by 1.62%, Aurobindo Pharma down by 1.16%, Idea Cellular down by 0.95%, Tech Mahindra down by 0.73% and TCS down by 0.67% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 27.06 points or 0.37% to 7,347.20, Germany’s DAX decreased 69 points or 0.57% to 11,958.36 and France’s CAC decreased 24.73 points or 0.5% to 4,970.40.

Asian equity markets ended mostly higher on Monday, despite prospects of Fed rate hike this month. On Friday, Fed chair Janet Yellen said the central bank is set to raise rates at the next meeting on March 14-15 if jobs and inflation remains firm. Chinese stocks ended higher as technology shares jumped after Premier Li Keqiang identified innovation as a key part of the economy's restructuring at the opening of the annual meeting of the country's parliament. A flood of news from the opening of the National People's Congress (NPC) meeting over the weekend was interpreted by investors as positive, despite a cut in China's economic growth target this year to around 6.5 percent, from a range of 6.5-7 percent in 2016. Meanwhile, Japanese shares fell in thin trade as the yen firmed up and as global geopolitical tensions rose after North Korea fired four missiles, three of which landed in Japan's exclusive economic zone.