Markets continue to trade higher on positive macro data

Indian equity benchmarks continued to trade higher on positive macro data released by the government on Friday. The wholesale price index (WPI) for the month of April eased to a four-month low of 3.85% after the government revised the base year for the indices in the new series to 2011-12, against the earlier 2004-05. The consumer price index (CPI) inflation also softened to 2.99% in the first month of the new financial year compared with 3.89% in March and 5.47% in the year earlier. Some support also came with the Reserve bank of India’s latest report that the introduction of GST will have economy-wide ramifications and holds the best bet for state governments to improve their finances without cutting productive expenditure. Traders took some encouragement with Union minister Arjun Ram Meghwal’s statement that the country has rapidly moved towards digitisation which has helped keep a check on the shadow economy. He also explained that the move will result in growth of consumption, investments and export and as a result Indian economy will also grow.

On sectoral front, some of steel sector stocks were trading higher with the Steel Ministry report that overtaking imports, India's steel exports jumped 142% in April to 0.747 million tonnes (MT) as compared to 0.308 MT in the same month last year. Steel imports were down by 23% to 0.504 MT in the last month from 0.654 MT imported in the corresponding month of the last financial year. However, some of the IT shares witnessed selling pressures, tracking rupee strength. The Indian rupee strengthened against the US dollar, fuelled by positive economic data. The rupee was trading at 64.11, 20 paise stronger from its previous close of 64.31 on Friday.

On the global front, European markets were trading in green, as investors look beyond global cybersecurity threats and the latest North Korean missile test. Asian markets were also trading in green. Back home, in scrip specific development, Fortune Financial Services (India) edged higher after the company acquired 49,00,000 equity shares of Rs 10 each fully paid of ITI Gilts (earlier known as Crest Debt Capital Markets). The Company was already holding 51% of the paid up capital of ITI Gilts and now on acquisition of these 49,00,000 equity shares, ITI Gilts has become a wholly owned subsidiary of the company.

The BSE Sensex is currently trading at 30326.36, up by 138.21 points or 0.46% after trading in a range of 30273.62 and 30357.96. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.98%, while Small cap index was up by 0.70%.

The top gaining sectoral indices on the BSE were Metal up by 2.05%, Basic Materials up by 1.47%, Healthcare up by 1.16%, Realty up by 1.15% and Oil & Gas up by 0.89%, while Telecom down by 1.09%, Consumer Durables down by 0.67%, TECK down by 0.67% and IT down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 4.00%, Dr. Reddy’s Lab up by 3.63%, Lupin up by 2.30%, ICICI Bank up by 1.92% and ITC up by 1.44%. On the flip side, Infosys down by 1.30%, Hero MotoCorp down by 0.54%, Adani Ports & SEZ down by 0.52%, TCS down by 0.51% and Axis Bank down by 0.32% were the top losers.

Meanwhile, expressing optimism that Goods and Services Tax (GST) is the best bet for state governments, the Reserve Bank of India in its report on state finance has said that GST is expected to bolster states’ revenue and anchor fiscal consolidation without compromising on expenditure quality. It has further said that the new tax regime is also likely to strengthen cooperative federalism and would have far-reaching implications for growth, inflation, public finances and external competitiveness in the Indian economy.

The report titled ‘State Finances: A Study of Budgets of 2016-17’ analyzing the fiscal position of state governments, has noted that thorny issues on implementation of GST should be addressed through a robust dispute resolution mechanism and it expects that GSTN would provide the necessary IT infrastructure to all stakeholders. The Central Bank has further stated that from a medium term perspective, debt sustainability of states is likely to be the key factor in shaping the evolving contours of state finances.

The report has also stated that the macroeconomic impact of introduction of the GST could turn out to be significant in the years ahead, given the dominance of the services sector in India. Besides giving a major boost to tax revenue, the larger impact on the fiscal health would be from reduction in the administrative compliance cost. It has added that GST implementation is likely to boost the small and medium scale enterprises (SME) sector by improving their ease of doing business, lowering logistical costs, extending outreach beyond state borders and aiding SMEs dealing in sales and services.

The CNX Nifty is currently trading at 9441.25, up by 40.35 points or 0.43% after trading in a range of 9423.10 and 9448.10. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.97%, Hindalco up by 3.87%, Dr. Reddy’s Lab up by 3.83%, Kotak Mahindra Bank up by 2.45% and Lupin up by 2.45%. On the flip side, Aurobindo Pharma down by 1.55%, Adani Ports & SEZ down by 1.47%, Infosys down by 1.43%, Yes Bank down by 1.22% and Bharti Infratel down by 0.99% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 4.63 points or 0.2% to 2,290.65, Shanghai Composite increased 6.72 points or 0.22% to 3,090.23, Taiwan Weighted increased 50 points or 0.5% to 10,036.82 and Hang Seng increased 215.25 points or 0.86% to 25,371.59. On the flip side, Jakarta Composite decreased 14.07 points or 0.25% to 5,661.14, Nikkei 225 decreased 14.05 points or 0.07% to 19,869.85 and FTSE Bursa Malaysia KLCI decreased 0.34 points or 0.02% to 1,775.53.

European markets were trading mostly in green; Germany’s DAX increased 2.66 points or 0.02% to 12,773.07 and UK’s FTSE 100 increased 8.16 points or 0.11% to 7,443.55. On the flip side, France’s CAC decreased 9.06 points or 0.17% to 5,396.36.