Indian benchmarks close at record highs; Nifty breaches 9600 mark

Indian equity indices carried forward their northbound journey for yet another session on Monday, and ended at fresh closing highs, while the midcap and smallcap indices snapped two-session long rally to finish lower. Most of the investors remained on the sidelines and refrained from any buying activity, keeping a close tab on the arrival of monsoon rains, which is expected to hit the southern Kerala coast by the end of the month. The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation. On the macro front, the government will announce data on Q4 March 2017 gross domestic product (GDP) on May 31, 2017.

Sentiments remained optimistic with the Employees Provident Fund Organisation (EPFO) approving hike in investment limit in exchange traded funds (ETFs) to 15%, from the existing 10%. The decision was taken during the meeting of the Central Board of Trustees (CBT) here on Saturday. Some support also came with the report that foreign investors have pumped in nearly $4 billion in the country’s capital market so far this month due to finalization of GST rates for bulk of the items and stable outlook for the rupee. According to latest depository data, FPIs invested a net Rs 9,007 crore in equities during May 2-26, while they poured Rs 15,769 crore in the debt markets during the period under review, translating into a net inflow of Rs 24,776 crore ($3.85 billion). Meanwhile, banking stocks came under pressure after Arun Jaitley said that poor performance by private investors and banks still remains a challenge for the Indian economy. He also said the banks have to recover their bad loans to boost private investment, as domestic private investment needs to pick up. Further, Healthcare index (BSE) witnessed a sharp drag, after Sun Pharmaceutical Industries fell as much as 13.2% to a near four-year low after the company on Friday reported a 14% fall in March-quarter profit. The company said its US sales may fall this year on lower drug prices.

On the global front, Asian markets ended mostly lower on Monday, after opinion polls showed a shrinking lead for British Prime Minister Theresa May in upcoming elections and North Korea test-fired another short-range ballistic missile early Monday. Investor sentiment was also dampened after leaders of the G7 group of rich nations failed to make progress on narrowing differences on climate change. Trading volumes remained thin across the region amid holidays in China, Britain and the United States. Meanwhile, European markets were trading mixed in early trade, as investors waited for key US economic indicators out this week, including employment data, to provide clues on how soon US interest rates might rise.

Back home, after trading in a tight range for most part of the session, the local benchmarks managed to end of trade in positive terrain. The NSE’s 50-share broadly followed index Nifty, added single digit gains to settle above the crucial 9,600 support level, while Bombay Stock Exchange’s Sensitive Index or Sensex gained around eighty one points and ended above the psychological 31,100 mark. However, the broader markets succumbed to the selling pressure and went home with large cuts of over a percent. On the BSE sectoral space, the FMCG counter remained the top gainer in the space with over one and half a percent gains followed by the Auto pocket, which gained close to half a percent. On the flipside, Realty counter languished at the bottom of the table with large cuts of over four percent while the Healthcare, IT and PSU sectors settled with cuts of over a percent.

The market breadth remained pessimistic, as there were 860 shares on the gaining side against 1798 shares on the losing side, while 193 shares remained unchanged.

Finally, the BSE Sensex gained 81.07 points or 0.26% to 31109.28, while the CNX Nifty was up by 9.80 points or 0.10% to 9,604.90. 

The BSE Sensex touched a high and a low of 31214.39 and 30869.90, respectively and there were 15 stocks on gainers side as against 15 stocks on the losers side on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.03%, while Small cap index was down by 1.53%.

The top gaining sectoral indices on the BSE were FMCG up by 1.55%, Auto up by 0.30%, Energy up by 0.20% and Consumer Durables up by 0.10%, while Realty down by 4.39%, Healthcare down by 2.75%, IT down by 1.27%, PSU down by 1.25% and Power down by 1.15% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 3.29%, Hindustan Unilever up by 3.07%, Power Grid up by 2.76%, Cipla up by 2.55% and ITC up by 2.38%. On the flip side, Sun Pharma down by 11.56%, Adani Ports & SEZ down by 5.38%, ICICI Bank down by 2.16%, SBI down by 1.40% and Infosys down by 1.09% were the top losers.

Meanwhile, Indian Credit Rating Agency (ICRA), domestic rating agency, in its latest report has said that the landmark goods and services tax (GST), scheduled to be implemented from July 1, is likely to have a positive impact on the way transportation and storage of goods happens across the country. It also said that the new tax regime is likely to improve the flow of goods on account of reduction in turnaround time as value-added tax or VAT related check posts will be removed. It added that post GST, a more efficient and organised logistics sector is expected to evolve gradually.

According to rating agency, the upcoming GST regime would have three major implications for the logistics sector such as consolidation of warehousing network and a shift towards a 'hub and spoke' model, higher degree of tax compliance and creation of level playing field between express and traditional transport services. ICRA also explained that as the additional 2 percent central sales tax (CST) levied on inter-state sale of goods cease to exist warehouse location would no longer be based on tax considerations and instead would be based on demand considerations this would also result in consolidation of warehouses.

ICRA expects that over time there will be a shift towards a 'hub and spoke' model in which fewer but bigger trucks will move between bigger warehouses. In addition, it also said that flow of goods is expected to improve with reduction in turnaround time as VAT related check posts will be removed and added that it may lead to 15-20 percent reduction in the truck stoppage time.

The CNX Nifty traded in a range of 9,637.75 and 9,547.70. There were 25 stocks in green as against 26 stocks in red on the index.

The top gainers on Nifty were Power Grid up by 3.83%, Cipla up by 3.49%, HDFC up by 3.16%, Hindustan Unilever up by 3.08% and ITC up by 2.02%. On the flip side, Sun Pharma down by 11.88%, Tech Mahindra down by 11.44%, Adani Ports & SEZ down by 5.80%, Aurobindo Pharma down by 4.04% and Bank of Baroda down by 3.46% were the top losers.

The European markets were trading mixed; Germany’s DAX increased 8.53 points or 0.07% to 12,610.71, while France’s CAC decreased 5.55 points or 0.1% to 5,331.09.

Asian equity markets ended mostly in red on Monday after leaders of the G7 group of rich nations failed to make progress on narrowing differences on climate change and North Korea fired another missile off its east coast, the latest in a fast-paced series of missile tests defying world pressure and threats of more sanctions. Investor sentiment was also dampened after opinion polls published since the Manchester attack showed British Prime Minister Theresa May's lead over the opposition Labour Party has narrowed ahead of a June 8 election. Trading volumes remained thin across the region amid holidays in China, Britain and the United States. Japanese shares ended flat in choppy trade as investors waited for key US economic indicators out this week, including employment data, to provide clues on how soon US interest rates might rise. Meanwhile, Hong Kong stocks ended up, on which China markets were closed, with mainland property shares aiding the rise on anticipation of strong home demand in smaller Chinese cities.