Post Session: Quick Review

Indian equity benchmarks traded on a lackluster note for most part of the day and ended the session on a positive note. The equity benchmarks made a gap-up opening in early deals as the Street cheered the rates for products under GST, but selling pressure took charge and market erased a huge chunk of the gains. Goods and Services Tax (GST) Council finalized tax rates of goods and services under the four-slab structure with essential items of daily use being kept in the lowest bracket of 5 percent. The Council fixed the rates for over 1200 items under the Goods and Services tax. Lots of daily consumption items such as milk, fruit and vegetables, jaggery or gur, foodgrain and cereals have been exempted from tax, while others such as sugar, tea, coffee, edible oil, mithai, and newsprint have been placed in the lowest slab of 5 percent. Meanwhile, Union Minister Arjun Ram Meghwal described 2017 as year of economic reforms for India, and said that the decision to implement Goods and Services Tax (GST) regime from this July 1 is one of the important economic reforms and would be a major milestone in the growth of the country. He further said that government’s Pradhan Mantri Mudra Yojana, start-up and stand-up programs will help to improve the economic level of the people and economic disparities between the poor & the rich in the country will be reduced by 2020.

On the global front, Asian markets closed mostly in green, amid political turmoil in Brazil. Indonesia’s central bank governor said its policy stance remained neutral and that it was monitoring global risks ranging from the big chance of a rate hike in the United States in June to tension in the Korean peninsula. At a policy meeting, Bank Indonesia kept its benchmark interest rate unchanged at 4.75 percent, saying its decision was consistent with its efforts to maintain stability at a time of recovery for Southeast Asia’s largest economy. European shares were trading in green recovering from heavy losses suffered this week after political turmoil fuelled worries over US President Donald Trump’s stimulus plans.

Back home, shares of microfinance companies displayed mixed reactions after India Ratings in its report highlighted that recovery of high cash based lending by micro-finance institutions is still a concern. Delinquencies in these loans rose sharply after the November 2016 high value note ban. The rating firm said that its delinquency index rose 24 times to 10.82% in February 2017 from 0.45% in October 2016.

The BSE Sensex ended at 30485.43, up by 50.64 points or 0.17% after trading in a range of 30338.52 and 30712.35. There were 16 stocks advancing against 14 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.65%, while Small cap index was down by 0.84%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 2.17%, Bankex up by 0.54%, Realty up by 0.30%, Telecom up by 0.22% and Power up by 0.22%, while Consumer Durables down by 1.28%, Consumer Disc down by 0.95%, IT down by 0.83%, Oil & Gas down by 0.74% and Auto down by 0.72% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were ITC up by 3.31%, Hindustan Unilever up by 2.29%, SBI up by 1.90%, Axis Bank up by 1.86% and Cipla up by 0.96%. (Provisional)

On the flip side, Asian Paints down by 1.84%, Mahindra & Mahindra down by 1.57%, TCS down by 1.54%, GAIL India down by 1.48% and Power Grid down by 1.23% were the top losers. (Provisional)

Meanwhile, modifying the rule of direct borrowings by the state government entities from external agencies, in view of huge funding requirements for major infrastructure projects, the government has allowed financially sound state government entities to seek loans directly from bilateral Official development Assistance (ODA) partners. The concerned State Government will furnish guarantee and the Government of India will provide counter guarantee to obtain the loan. State government entities will include any authority, public sector undertaking or organisation of the state.

As per new guidelines, state government entities having annual revenue of more than Rs 1,000 crore in the three previous years for infrastructure projects of over Rs 5,000 crore can obtain loan. Besides, the project should have regular revenue stream and the revenues to be generated from the project should be enough for repayment of principal amount and interest. The revenues from the project would be escrowed to the extent of payment of principal and interest from time to time.

Besides, the state entities can directly approach bilateral agencies and the funding would not fall under state FRBM target. The proposed move will help state government entities in implementing projects having huge financial requirements which otherwise would have been faced fund crunch despite being viable.

The CNX Nifty ended at 9434.00, up by 4.55 points or 0.05% after trading in a range of 9390.75 and 9505.75. There were 19 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were ITC up by 3.27%, Yes Bank up by 2.08%, Axis Bank up by 2.01%, SBI up by 1.98% and Hindustan Unilever up by 1.40%. (Provisional)

On the flip side, Asian Paints down by 1.77%, BPCL down by 1.59%, Eicher Motors down by 1.56%, Hindalco down by 1.29% and TCS down by 1.28% were the top losers. (Provisional)

The European markets were trading in green, UK’s FTSE 100 increased 33.51 points or 0.45% to 7,469.93, Germany’s DAX increased 49.92 points or 0.4% to 12,639.98 and France’s CAC increased 37.79 points or 0.71% to 5,327.52.

Asian equity markets ended mostly in green on Friday as better-than-expected US economic data and higher oil prices offset concerns surrounding deepening political turmoil in Washington and the Brazilian political crisis. Japanese shares closed higher even as the dollar edged lower after a modest recovery overnight. Further, Chinese shares were little changed, as soothing regulatory comments and the central bank's injection offset worries over tighter regulations and economic growth. Official data showed foreign direct investment into China decreased 4.3 percent from last year in April.