Post Session: Quick Review

Indian equity benchmarks traded on a firm note throughout the day and closed with gain of around four tenth of a percent. The sentiments remained upbeat as consumer inflation in April eased to its lowest in at least five years, reviving a debate on whether the central bank should cut interest rates. The equity benchmarks made a gap-up opening and traded in fine fettle in early deals as traders took support from Consumer Price Index (CPI) inflation easing 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. Also, the inflation based on the Wholesale Price Index (WPI) slipped to a four-month low of 3.85% in April as both food articles and manufactured items showed cooling in prices. Meanwhile, pitching for speedy movement towards digitisation of the economy, Union minister of state for finance and corporate affairs Arjun Ram Meghwal said that digital initiative undertaken by the government was essential to curb the black market. Noting post-demonetisation of high-value currency notes, he said 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.

Some support also came on private report which indicated that trustees of retirement fund body EPFO are likely to raise the investment limit in exchange traded funds (ETFs) to 15% of the investible deposits, from 10% at present, in the current fiscal. The higher limit would help the Employees’ Provident Fund Organisation’s (EPFO) park around Rs 15,000 crore in stock markets in 2017-18, as its investible deposits are close to Rs 1 lakh crore annually. Private equity investments saw a significant upturn in April with deals worth $3.16 billion, up 69% from a year ago, due to big ticket transactions. From a 32-month low recorded in February this year, the deal tally in April represents a significant bounce back both in terms of number of deals as well as value. 

On the global front, Asian markets closed mostly in green, despite headwinds from a weekend missile test by North Korea and concerns over further spread of ransomware cyber attacks globally. China’s factory output and fixed asset investment growth cooled more than expected in April, adding to signs that momentum in the world’s second-biggest economy is slowing from a strong start in the first quarter. European shares were trading mostly in red, while climbing commodity prices propelled London’s FTSE 100 to hit all-time high as shares in energy producers and natural resource stocks rallied.

The BSE Sensex ended at 30304.60, up by 116.45 points or 0.39% after trading in a range of 30273.62 and 30357.96. There were 20 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.25%, while Small cap index was up by 0.80%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.32%, Basic Materials up by 1.54%, Healthcare up by 1.07%, Utilities up by 0.94% and Realty up by 0.80%, while Telecom down by 0.95%, TECK down by 0.50%, IT down by 0.44% and Consumer Durables down by 0.02% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 4.42%, Dr. Reddy’s Lab up by 3.30%, Lupin up by 2.42%, ICICI Bank up by 1.67% and Asian Paints up by 1.42%. (Provisional)

On the flip side, Infosys down by 1.23%, Reliance Industries down by 0.51%, Hero MotoCorp down by 0.45%, Axis Bank down by 0.44% and Sun Pharma down by 0.34% were the top losers. (Provisional)

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 ended at 9445.85, up by 44.95 points or 0.48% after trading in a range of 9423.10 and 9449.25. There were 32 stocks advancing against 19 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 4.52%, Hindalco up by 4.00%, Dr. Reddy’s Lab up by 3.36%, Bosch up by 2.76% and Lupin up by 2.48%. (Provisional)

On the flip side, Aurobindo Pharma down by 1.56%, Infosys down by 1.14%, Bharti Infratel down by 0.72%, Eicher Motors down by 0.70% and Hero MotoCorp down by 0.66% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX decreased 23.44 points or 0.18% to 12,746.97, France’s CAC decreased 14.01 points or 0.26% to 5,391.41, while UK’s FTSE 100 increased 9.52 points or 0.13% to 7,444.91.

Asian equity markets ended mostly in green on Monday as oil prices jumped and weak US data raised a question mark over the extent of Fed tightening. Meanwhile, investors took weak Chinese data, geopolitical worries and the WannaCry ransomware cyberattack in their stride. Chinese shares ended higher as concerns over regulatory tightening ebbed and upbeat talk on trade and infrastructure investment at a top-level conference in China helped investors shrug off disappointing macro data.  China's industrial production growth eased at a faster-than-expected pace in April, official data from the National Bureau of Statistics showed. Output climbed an annual 6.5 percent, slower than the 7.6 percent rise in March, while retail sales surged 10.7 percent in the month, just below the 10.9 percent spike in the prior month.  The country's fixed asset investment also grew at a slightly slower pace of 8.9 percent in April, but property investment growth accelerated to 9.3 percent in the first four months of 2017 from 9.1 percent in the first quarter. However, Japanese shares closed marginally lower, pressured by a stronger yen, a widespread cyber attack and North Korea's missile test over the weekend.