Indian benchmarks start FY18 on optimistic note; Sensex ends above 29900 mark

After snapping the last quarter of FY17 with over eleven percent gains, Indian equity markets have started the FY18 on an optimistic note thanks to the supportive global as well as local tidings. Sentiments got some support with the report that the health of India's manufacturing sector rose to a five-month in March 2017. The Nikkei India Manufacturing Purchasing Managers' Index (PMI) rose to 52.5 in March from 50.7 in February. The survey said that incoming new orders expanded at a stronger pace, thereby leading to quicker increases in production and input purchasing. Moreover, firms hired additional employees to cope with greater workloads. Investors got some comfort with the report that the India's GDP growth is expected to pick up again to 7.6 per cent next year thanks to improving consumption, timely rains, higher public sector spending and better export growth. According to the report, the ongoing reforms will strengthen the productivity part of growth and the country's GDP will benefit from India's favourable working age population growth.  Some support also came with Union Minister of State for Finance Arjun Ram Meghwal's assurance that the historic tax reform Goods and Services Tax (GST) will see 100 percent implementation from July 1, 2017.  He also said that the Centre is already working on ironing out any road-block and even States are co-operating. However, gains remained capped with the report that Core sector growth slowed to a 15-month low in February, led by a drop in cement output. Growth, as measured by the index of eight core industries, eased to 1 percent in February from 3.4 percent in January and 9.4 per cent a year earlier.

On the global front, Asian markets ended higher on Monday as traders eye news ahead of Chinese President Xi Jinping's visit to the U.S. Japanese shares edged higher in spite of yen strength after the latest BOJ Tankan survey of manufacturing and service companies showed an improvement in corporate sentiment in the first quarter of 2017. Further, while a private survey on China's manufacturing on Saturday came in below market expectations it still showed a healthy expansion after a similar survey by the government on Friday pointed to strong growth in the sector. The main focus for markets this week centers on U.S. payrolls figures due on Friday. Meanwhile, gains in commodity producers pushed European stocks higher after the region's equities completed a third straight quarterly advance.

Back home, the local indices got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the benchmarks slowly but steadily started gathering more steam and surged by over half a percent by noon trades. The bourses further capitalized on the momentum and spurted in late afternoon trades on the back of broad based buying in frontline blue-chip stocks. Finally, the NSE's 50-share broadly followed index Nifty, got buttressed by over half percent to settle above the crucial 9,200 support level, while Bombay Stock Exchange's Sensitive Index-Sensex accumulated around three hundred points and closed above the psychological 29,900 mark. On the BSE sectoral space, buying was evident across the board and investors piled up hefty positions in Capital Goods counter, which rocketed by over three percent, while the Industrials, Energy and Healthcare pockets too gained from strength to strength and climbed by over a percent each. However, IT, Teck and Telecom indices closed with moderate losses. The market breadth remained optimistic, as there were 2080 shares on the gaining side against 793 shares on the losing side, while 161 shares remained unchanged.

Finally, the BSE Sensex surged 289.72 points or 0.98% to 29910.22, while the CNX Nifty was up by 64.10 points or 0.70% to 9,237.85.

The BSE Sensex touched a high and a low of 29926.94 and 29705.72, respectively and there were 19 stocks on gainers side as against 11 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained by 0.66%, while Small cap index was up by 1.29%.

The top gaining sectoral indices on the BSE were Capital Goods up by 3.47%, Industrials up by 2.17%, Energy up by 1.73%, Healthcare up by 1.05% and Oil & Gas up by 0.77%, while TECK down by 0.93%, IT down by 0.86% and Telecom down by 0.86% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 5.26%, Dr. Reddy’s Lab up by 4.32%, Reliance Industries up by 3.94%, ICICI Bank up by 3.48% and GAIL India up by 2.28%. On the flip side, Bharti Airtel down by 2.37%, Wipro down by 1.60%, Infosys down by 1.11%, Bajaj Auto down by 0.84% and TCS down by 0.73% were the top losers.

Meanwhile, Union Minister of State for Finance Arjun Ram Meghwal has expressed his confidence that the historic tax reform Goods and Services Tax (GST) will see 100 percent implementation from July 1, 2017. He also said that the Centre is already working on ironing out any road-block and even States are co-operating. 

The Minister has stated that they have also initiated discussions with the various State governments to ensure that their IT systems are aligned with the GST regime. He said that the Centre has also asked State governments and trade and industry bodies to take up the issue of GST roll out with various stakeholders and participants. He further said that states are been told to strengthen their IT infrastructure and focus on manpower training. He also said that the government will open guidance centers including in the villages where internet is available to support the trade in getting registered with GST. He added that the government will resolve the problems of the trade and if GST begins from July 1, there will be no loss to trade and industry.

Pointing out the GST impact on 'ease of doing business’, Meghwal has said  that it can lead to faster movement of goods within the country without trucks being stopped at check-posts for various tax collections and will bring down both travel time and costs. He also explained that a truck will take almost half the time to travel to deliver once GST is implemented and free movement of such vehicles allowed. He added that the other benefit would be improved ‘ease of doing business’ and one of the many economic reforms that have been planned for.

The CNX Nifty traded in a range of 9,245.35 and 9,192.40. There were 26 stocks in green as against 25 stocks in red on the index.

The top gainers on Nifty were Larsen & Toubro up by 5.63%, Dr. Reddy’s Lab up by 4.04%, Reliance Industries up by 3.96%, ICICI Bank up by 3.54% and HDFC up by 2.32%. On the flip side, Bharti Airtel down by 2.30%, Wipro down by 1.68%, IOC down by 1.56%, BPCL down by 1.53% and IndusInd Bank down by 1.32% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 7.2 points or 0.1% to 7,330.12, Germany’s DAX increased 42.79 points or 0.35% to 12,355.66, while France’s CAC decreased 2.97 points or 0.06% to 5,119.54.

Asian equity markets ended in green on Monday, although regional gains remained capped somewhat amid the release of regional manufacturing surveys and ahead of Chinese President Xi Jinping's visit to the US. US President Donald Trump will meet with Xi for the first time on April 6 and 7 at Florida resort amid heightened tensions in Asia. Trump said that the US is prepared to act along if China does not take a tougher stand against North Korea's nuclear program. Japanese shares ended higher in spite of yen strength after the latest BOJ Tankan survey of manufacturing and service companies showed an improvement in corporate sentiment in the first quarter of 2017. While, the manufacturing sector in Japan continued to expand in March, although at a slower pace, the latest survey from Nikkei showed with a manufacturing PMI score of 52.4, down from 53.3 in February. Further, Hong Kong shares ended higher after a private survey showed China's manufacturing activity expanded at a slower pace in March. Markets in China and Taiwan markets were closed for public holidays.