Indian markets convalesce; Sensex ends above 29300 mark

A session after witnessing a distressing performance, Indian equity indices have managed to pull through an amazing performance by gaining over half a percent on Thursday, thanks to firm global cues. Sentiments got a boost with Finance Minister Arun Jaitley’s statement that India’s GDP can grow by 7-8 percent if the global economy picks up. He also said the government is hopeful of implementing from July 1 the Goods and Service Tax (GST) to help check tax evasion. The Government is likely to table four GST supplementary legislations in Parliament today. The four Bills are the Central Goods and Services Tax Bill 2017, the Integrated Goods and Services Tax Bill 2017, the Union Territory Goods and Services Tax Bill 2017 and the Goods and Services Tax (Compensation to the States) Bill 2017. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 356.64 crore on March 22, 2017. Further, terror attack in UK, which is said to have taken five lives and left at least 40 injured has limited impact on Indian financial markets. On the domestic front, Investors turned cautious after Reserve Bank of India raised concerns over farm loan waiver as it undermines credit discipline. This observation comes in the context of the likelihood of the newly elected BJP-government in Uttar Pradesh making good its election promise of waiving farm loans and the Opposition in Maharashtra piling pressures on the BJP-Sena government to waive farm loans. According to a recent SBI report, the total outstanding credit (2016) for agriculture sector was Rs 86,241.20 crore in Uttar Pradesh with average ticket size of Rs. 1.34 lakh. Meanwhile, Realty stocks gained traction as the government announced a credit-linked interest subsidy (CLSS) scheme for home loans, leading to savings of more than Rs 2 lakh, or up to Rs 2,000 on EMIs.

On the global front, Asian equity markets ended mostly higher on Thursday as investors continued to monitor developments surrounding U.S. President Donald Trump's pro-growth agenda. Expectations of a big economic stimulus in the world's largest economy have helped fuel a global rally in equity markets. Japanese market edged higher as a weaker yen helped offset news that the head of a Japanese school at the heart of a political scandal received a donation of one million yen from Prime Minister Shinzo Abe's wife in 2015. Further, Chinese markets ended higher, despite investor worries over tight liquidity in the interbank market and increased regulatory scrutiny weighing heavily on B shares.

Back home, after getting a positive start, the local indices soon gathered momentum and traded with around half a percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying moments.  Finally, the NSE’s 50-share broadly followed index Nifty, got buttressed by over half a percent to settle above the crucial 9,050 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over one hundred and fifty points and closed above the psychological 29,300 mark. Moreover, the broader markets too participated in the rally and closed with gains of around a percent. The market breadth remained optimistic, as there were 1687 shares on the gaining side against 1112 shares on the losing side, while 204 shares remained unchanged.

Finally, the BSE Sensex surged 164.48 points or 0.56% to 29332.16, while the CNX Nifty was up by 55.85 points or 0.62% to 9,086.30.

The BSE Sensex touched a high and a low of 29561.93 and 29356.05, respectively and there were 25 stocks on gainers side as against 5 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained by 0.96%, while Small cap index was up by 0.91%.

The top gaining sectoral indices on the BSE were Utilities up by 1.27%, Industrials up by 1.23%, Oil & Gas up by 1.21%, Energy up by 1.21% and Power up by 1.20%, while FMCG down by 0.10% was the sole losing index on BSE.

The top gainers on the Sensex were Tata Motors up by 2.59%, GAIL India up by 2.39%, NTPC up by 2.27%, Wipro up by 1.60% and Lupin up by 1.58%. On the flip side, TCS down by 0.81%, ITC down by 0.66%, Bharti Airtel down by 0.35%, Hindustan Unilever down by 0.32% and HDFC Bank down by 0.04% were the top losers.

Meanwhile, Cabinet Committee on Economic Affairs (CCEA), headed by the Prime Minister Narendra Modi, has approved a new policy for grant of extension to the Production Sharing Contracts (PSC) signed by Government of India awarding Pre-NELP Exploration Blocks to enable and facilitate investment to extract the remaining reserves. Based on the new policy, the Government share of Profit Petroleum during the extended period of contract would be 10% higher for these fields, thus bringing additional revenues to Government.

During the extension period, contractors are expected to make an additional investment of more than $ 5430 million. This policy will enable the contractors to extract not only the remaining reserves but also plan to extract additional reserves by implementing new technologies. The policy will give boost to accelerate and supplement indigenous production of hydrocarbon from existing blocks and act as a progressive step towards achieving the target of 10% reduction in import of crude oil by 2022.

Moreover, the policy brings out detailed guidelines regarding grant of extension, criterion for evaluation of request, time frame for consideration of request, duration of extension etc. The extension of these contracts is likely to bring extra investments in the fields and would generate both direct and indirect employment.

In certain fields, additional recovery of hydrocarbons can be obtained through Enhanced Oil Recovery / Improved Oil Recovery (EOR/IOR) Projects and as such the production would extend beyond the current duration of PSC. In the year 2016-17, the production from these oil & gas blocks, allotted in Pre- NELP regime, is around 55 million barrel of oil and 965 MMSCM of natural gas. The recoverable reserve from these blocks is estimated to be more than 426 million barrel of oil equivalent.

The CNX Nifty traded in a range of 9,099.05 and 9,048.60. There were 40 stocks in green as against 11 stocks in red on the index.

The top gainers on Nifty were Yes Bank up by 3.27%, Tata Motors up by 2.47%, NTPC up by 2.33%, GAIL India up by 2.10% and Wipro up by 2.10%. On the flip side, TCS down by 0.85%, Eicher Motors down by 0.82%, ITC down by 0.71%, Bosch down by 0.52% and Hindustan Unilever down by 0.51% were the top losers.

The European markets were trading mostly in red; UK’s FTSE 100 decreased 15.61 points or 0.21% to 7,309.11, France’s CAC decreased 11.33 points or 0.23% to 4,983.37, while Germany’s DAX increased 11.87 points or 0.1% to 11,915.99.

Asian equity markets ended mostly in green on Thursday as investors monitored oil prices and kept an eye on Capitol Hill to see whether US President Donald Trump can close the deal on the Republican health care bill. The latest reports suggest that House Republicans may not have the votes to pass their healthcare plan. The Republican plan faces an even tougher uphill climb in the Senate, raising concerns about what the GOP can accomplish even with a unified government. If the healthcare bill fails, it could imperil Trump's other policies such as tax reform and increased infrastructure spending. Meanwhile, markets in the region largely shrugged off news of a suspected terrorist attack on Wednesday in London that left 5 people dead and about 40 injured. Japanese shares recovered earlier losses to end a tad higher as a weaker yen helped offset news that the head of a Japanese school at the heart of a political scandal received a donation of one million yen from Prime Minister Shinzo Abe's wife in 2015. Further, Chinese shares ended higher despite investor worries over tight liquidity in the interbank market and increased regulatory scrutiny weighing heavily on B shares.