Indian benchmarks settle with modest gain

Monday's trading session was clearly of consolidation as the Indian benchmark indices appeared a bit fatigued and remained in tight range for most part of the day. Sentiments got some support after the government last week finalized rates for the upcoming goods and services tax (GST). The government on Friday unveiled four bands of rates under the GST for services in line with those applying to goods, a big departure from the current single rate of 15% applied on most services. Adding the optimism of investors, Revenue Secretary Hasmukh Adhia said Inflation will fall by 2% on implementation of the GST and create buoyancy in the economy. With the stage set for the biggest overhaul of India's tax system since Independence, the government will launch a massive awareness campaign to educate consumers about GST so that they are not fleeced by traders in the name of new tax. Some support also came after Maharashtra Assembly passed the GST Bill in today's session of its lower house. GST, which will come in force from July 1, will unify the country's economy into a common market and eliminate a string of central and state levies. The act is significant as the BMC gets a considerable share of its revenue through octroi, which will now be scrapped with the introduction of the GST regime.  Meanwhile, Foreign Direct Investment (FDI) inflows into the country touched a new high of $60.08 billion in 2016-17. FDI Inflows grew by 8% over the previous high of $55.6 billion posted in 2015-16. Increased FDI inflows in the country are largely attributed to intense and bold policy reforms the government undertook to bring pragmatism in the FDI regime.

On the global front, Asian markets ended mostly higher on Monday as the Japanese yen weakened and US crude futures climbed back above $50 per barrel on expectations that major oil producing nations might extend their production cuts beyond an agreed-on June deadline when they meet on May 25. Investors shrugged off a weekend missile test by North Korea that raised further concerns on its ability to deliver a nuclear warhead as far as the US states of Hawaii and Alaska. Chinese shares ended lower as worries over slowing economic growth and tighter regulations continued to haunt investors.

Back home, after getting a firm start, the local benchmarks traded in a tight range, above the neutral line, for most part of the session and ended the day with marginal gains.  The NSE's 50-share broadly followed index - Nifty settled with modest gains of ten points above the psychological 9,400 levels, while Bombay Stock Exchange's Sensitive Index - Sensex gained over quarter percent and closed above the psychological 30,500 mark. However, the broader markets failed to show any kind of fervor and closed with losses of over a percent. The market breadth remained pessimistic, as there were 877 shares on the gaining side against 1844 shares on the losing side, while 190 shares remained unchanged.

Finally, the BSE Sensex gained 106.05 points or 0.35% to 30570.97, while the CNX Nifty was up by 10.35 points or 0.11% to 9,438.25. 

The BSE Sensex touched a high and a low of 30712.15 and 30516.87, respectively and there were 11 stocks on gainers side as against 19 stocks on the losers side on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.21%, while Small cap index was down by 1.14%.

The top gaining sectoral indices on the BSE were FMCG up by 3.09%, Consumer Durables up by 0.61%, Capital Goods up by 0.50%, TECK up by 0.34% and IT up by 0.34%, while PSU down by 2.15%, Healthcare down by 1.64%, Basic Materials down by 1.43%, Utilities down by 1.33% and Realty down by 1.29% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 6.21%, Larsen & Toubro up by 1.61%, Adani Ports & SEZ up by 1.36%, Tata Motors up by 1.23% and Hindustan Unilever up by 1.07%. On the flip side, SBI down by 4.46%, Lupin down by 3.95%, GAIL India down by 2.48%, Bajaj Auto down by 1.98% and Mahindra & Mahindra down by 1.95% were the top losers.

Meanwhile, a joint survey carried out by the Confederation of Indian Industries (CII) and Indian Bank’s Association (IBA), has stated that the country’s economy is set to witness improvement in the overall conditions during the first quarter (Q1) of the current financial year due to improvement in the funding liquidity index, economic activity index and external financial linkages index. However, the survey has anticipated that the cost of funds will rise due to tightening of liquidity in the near future.

Showing a healthy improvement, the CII-IBA Financial Conditions Index moved up to 56.9 for the first quarter of current financial year 2017-18 from 48 in the fourth quarter of financial year 2016-17. The survey further said that the expectation of banks and financial institutions have both improved, brushing up the Economic Activity Index. Besides, the Funding Liquidity and External Financial Linkages Indices have also improved.

The CII-IBA joint survey which is based on participation of 31 leading banks and financial institutions, has also reported that the implementation of Goods and Services Tax (GST) is expected to transform the economy by enabling greater transparency, accountability and widening of the tax net. Besides, it noted that the economy has successfully remonetised itself post demonetization and has moved towards a less cash trajectory along with increase in tax compliance.

Moreover, the report has said that in the current quarter, majority of the respondents expect improvement in mobilisation of funds from money market, corporate bond market, equity market and Reserve Bank of India’s management of the liquidity through liquidity adjustment facility. However, the survey has pointed that the Marginal Cost of Funds based Lending rate (MCLR) rates have witnessed minimal reduction across banks even though there is surplus liquidity in the market and rate cuts on deposits.

The CNX Nifty traded in a range of 9,498.65 and 9,427.90. There were 19 stocks in green as against 32 stocks in red on the index.

The top gainers on Nifty were ITC up by 5.87%, Bharti Infratel up by 2.44%, HCL Technology up by 1.69%, Larsen & Toubro up by 1.65% and Tata Motors up by 1.32%. On the flip side, SBI down by 4.42%, Lupin down by 4.42%, Aurobindo Pharma down by 3.49%, Gail down by 3.04% and Ambuja Cement down by 3% were the top losers.

The European markets were trading mostly in red; Germany’s DAX decreased 41.23 points or 0.33% to 12,597.46, France’s CAC decreased 1.02 points or 0.02% to 5,323.38, while UK’s FTSE 100 increased 25.5 points or 0.34% to 7,496.21.

Asian equity markets ended mostly in green on Monday as the Japanese yen weakened and US crude futures climbed back above $50 per barrel on expectations that major oil producing nations might extend their production cuts beyond an agreed-on June deadline when they meet on May 25. Investors shrugged off news that North Korea fired another ballistic missile on Sunday. Japanese shares ended higher in thin trading after official data showed the country's exports expanded for a fifth consecutive month in April, aided by higher shipments of semiconductors and steel. However, Chinese shares ended lower as worries over slowing economic growth and tighter regulations continued to haunt investors.