Post Session: Quick Review

Stock markets in India continued their solid run for the third consecutive day with key benchmark ‘Sensex’ scaling to an all-time high of 30,167.09. The solid run on the bourses can be attributed to strong global cues, strengthening rupee, healthy corporate earnings and FII inflows into the market. Easing geopolitical tensions too pushed stocks higher. Though there was sharp sell-off during the day but value buying by investors at lower levels pulled the market higher. The equity benchmarks made a positive start and traded in fine fettle in early deals taking support from NITI Aayog member Bibek Debroy’s statement who while making a case for widening the taxpayer base said that agricultural income should be taxed at the same threshold as personal income and farm income could be assessed for tax as a three-year average. Separately, stable farm output growth is expected in FY18. India expects its farm output growth to remain stable at 4% in the 2017-18 crop year, penciling in normal rains during the June-September monsoon season that helps irrigate farmlands across vast swathes of the country. Some support also came on survey noting that India continues to remain an economic bright spot despite some bold but disruptive reforms. The FICCI-PwC India Manufacturing Barometer (IMB) survey stated that about 63% of respondents were somewhat optimistic about the prospects of the Indian economy for the coming year.

Meanwhile, investors took note that the combined benefit of relative and absolute outperformance of the Indian market has pushed India’s contribution to the global market capitalization to a six-year high. India’s equity market contribution to the total market capitalization touched 2.71% on April 24, compared with the six-year average of 2.21%. Separately, Revenue Secretary Hasmukh Adhia assured that prices will not increase due to higher incidence of tax and instead, are likely to come down under the Goods and Services Tax (GST) regime. He said that though most services will be taxed at 18% under the GST regime, as against the current 15% service tax, a majority of these will get input tax credit on purchases and the overall tax incidence will remain the same. Finance Minister Arun Jaitley asserted that the government was giving top priority to addressing the issue of bad loans, while acknowledging that the problem of non-performing assets was adversely impacting the Indian banking system. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. April 2017 series to next month i.e. May 2017 series. The near month April 2017 derivatives contracts will expire on Thursday i.e. April 27, 2017.

On the global front, Asian markets closed in green, as expectations that President Donald Trump would unveil an ambitious tax cutting program supported sentiments, though investors said there was caution as the president has not yet tasted legislative success on his program. In a report, Japanese Ministry of Economy, Trade and Industry said that Japan’s All Industries Activity Index rose to a seasonally adjusted 0.7%, from -0.4% in the preceding month whose figure was revised down from 0.1%. European stocks were trading mostly lower as markets eyed a fresh batch of corporate earnings reports, although the first round of the French presidential election on Sunday lent some support.

The BSE Sensex ended at 30123.43, up by 180.19 points or 0.60% after trading in a range of 29968.57 and 30167.09. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.17%, while Small cap index was down by 0.66%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 2.01%, Auto up by 0.97%, Bankex up by 0.73%, Metal up by 0.51% and Consumer Discretionary up by 0.31%, while Realty down by 3.13%, Energy down by 1.21%, Oil & Gas down by 1.06%, IT down by 0.96% and TECK down by 0.85% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 3.71%, ITC up by 3.49%, HDFC up by 2.36%, Hindustan Unilever up by 2.16% and ICICI Bank up by 1.60%. (Provisional)

On the flip side, Adani Ports & Special Economic Zone down by 2.70%, Infosys down by 1.51%, Power Grid down by 1.42%, Reliance Industries down by 1.35% and Dr. Reddy’s Lab down by 1.20% were the top losers. (Provisional)

Meanwhile, India Manufacturing Barometer (IMB) Survey, a joint survey conducted by FICCI and PwC Strategy has stated that despite some bold but disruptive policy reforms like demonetization along with global uncertainty, India continues to be one of the fastest growing economies globally. The survey pointed that Indian companies are optimistic about the prospects of the Indian economy more than the global economy; about 63 per cent of the surveyed respondents expect that growth will be in the range of 7-8 per cent.

As per survey, the manufacturing industry has shown resilience and is confident about its growth prospects amidst challenges such as unavailability of adequate raw material, pressure for increased wages and muted demand. Besides, companies are looking to increase their competitiveness by focusing on innovation by launching new product and service offerings, boosting R&D spend and investing in newer technologies. As much as 86 per cent of the survey respondent expects investments in Industry 4.0 related initiatives to increase in the next 3-5 years and 45 per cent respondents expects to benefit both from revenue growth and cost reduction or efficiency improvements

The survey which covered companies in eight key sectors including automotive and auto components, cables and transformers, capital goods, cement, chemicals, downstream metals, packaging, and plastics and polymers, has found that Indian auto sector is expected to grow moderately with 6-8% growth in passenger vehicles, primarily driven by UVs, and 0-2% growth in commercial vehicles and the chemical industry grew only by 2.1% in 2016 due to low demand.

However, the survey also noted that 62 per cent respondents expressed uncertainty about the global economy, and it noted that the downstream metals industry is largely dominated by the steel industry and in recent years, the steel industry has been impacted by competition from cheaper imports.

The CNX Nifty ended at 9344.10, up by 37.50 points or 0.40% after trading in a range of 9301.35 and 9367.00. There were 22 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Mahindra & Mahindra up by 3.64%, ITC up by 3.48%, Hindalco up by 3.05%, Hindustan Unilever up by 2.00% and HDFC up by 1.79%. (Provisional)

On the flip side, Tech Mahindra down by 2.90%, Adani Ports & Special Economic Zone down by 2.63%, Bharti Infratel down by 2.49%, HCL Tech down by 2.43% and Infosys down by 1.63% were the top losers. (Provisional)

The European markets were trading mostly in red; UK’s FTSE 100 decreased 1.64 points or 0.02% to 7,274.00, Germany’s DAX decreased 3.83 points or 0.03% to 12,463.21, while France’s CAC increased 8.07 points or 0.15% to 5,285.95.

Asian equity markets ended in green on Wednesday, with Japanese shares rising after Wall Street hit new peaks overnight on the back of strong earnings and expectations that the Trump administration will unveil a new tax plan on Wednesday. The yen continued to weaken ahead of BOJ and ECB policy meetings and oil prices slipped on data showing a surprise build-up in inventories, while gold prices hovered near two-week lows after losing almost 1 percent in the previous session. Further, Chinese shares ended higher after China's politburo said the country will continue to adopt a proactive fiscal policy and prudent monetary policy.