Indian equity indices end at record highs; Nifty breaches 9650 mark

Indian benchmark equity indices staged a wonderful performance on the last day of the week by gaining close to half percent in the session and conquering their psychological levels. The indices ended at record highs on Friday, tracking upbeat trend in global markets, while hopes of good southwest monsoon rains also lifted sentiment. Market participants took some encouragement with the Moody's Investors Service stating that India's key reforms, including the impending goods and services tax and resolution of sticky loans may improve the country's credit profile.  Some support also came with NITI Aayog Vice Chairman Arvind Panagariya's statement that India will regain the crown of the fastest growing major economy, overtaking China, as early as the first quarter of 2017-18. He said that India, on an annual basis, is ahead of China and will regain the growth momentum soon on the back of host of reforms initiated by the Modi government in the last three years.  Besides, the appreciation in rupee value against the dollar added to the optimistic sentiments. Rising for the third straight day, Indian rupee strengthened by 14 paise to 64.34 against the US dollar in early trade on sustained selling of the American currency by banks and exporters. However, broader gains were capped due to caution ahead of the Reserve Bank of India's policy meeting next week. The central bank is expected to keep rates on hold on June 7, though it could soften its hawkish tone after data showed easing inflation.

On the global front, Asian equity markets ended higher on Friday, as a set of upbeat economic data from the US and Europe helped investors shrug off US President Donald Trump's decision to withdraw from the Paris climate agreement. US factory activity ticked up in May after slowing for two straight months and private employers stepped up hiring, suggesting the economy is regaining speed after struggling at the start of the year. While Chinese stocks ended little changed as investors fretted over tighter liquidity and slowing economic growth, Japan's Nikkei share average broke through the 20,000-point barrier for the first time since December 2015. Meanwhile, all the major European counterparts were trading in the green where major indices like CAC and DAX were trading with a gain of over half a percent at this point of time.

Back home, after getting a firm start, the local benchmarks maintained most of their gains throughout the session and ended the trading day with strong gains. The NSE's 50-share broadly followed index Nifty got buttressed by over quarter percent to settle above the crucial 9,650 support level, while Bombay Stock Exchange's Sensitive Index-Sensex accumulated over hundred and thirty points and closed above the psychological 31,200 mark. Further, the broader markets managed a touch better than the larger peers today as the BSE's midcap and smallcap indices settled with gains of 0.72% and 0.50% respectively. The market breadth remained optimistic, as there were 1461 shares on the gaining side against 1224 shares on the losing side, while 165 shares remained unchanged.

Finally, the BSE Sensex gained 135.70 points or 0.44% to 31273.29, while the CNX Nifty was up by 37.40 points or 0.39% to 9,653.50. 

The BSE Sensex touched a high and a low of 31332.56 and 31190.40, respectively and there were 19 stocks on gainers side as against 11 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.72%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Realty up by 1.22%, Healthcare up by 1.12%, Consumer Durables up by 1.10%, Telecom up by 0.98% and Power up by 0.73%, while Oil & Gas down by 0.41%, Metal down by 0.23%, Energy down by 0.23% and Capital Goods down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.82%, Cipla up by 2.63%, Adani Ports & SEZ up by 2.13%, Wipro up by 1.88% and HDFC up by 1.74%. On the flip side, GAIL India down by 1.47%, Tata Steel down by 1.27%, Power Grid down by 0.77%, ICICI Bank down by 0.62% and Hindustan Unilever down by 0.50% were the top losers.

Meanwhile, expressing its optimism about India’s move to implement key reforms and bring structural changes, the global credit rating agency, Moody's Investors Service in its latest report has said that a number of wide-ranging reforms initiated by the government would gradually ease the country's high debt burden, if implemented successfully. Further, the agency has noted that demonetization & financial inclusion efforts will help broaden the tax base, while expenditure reforms will enhance spending efficiency and the Aadhaar identification system can help reduce fiscal leakage.

The report titled ‘Government of India: Effective Implementation of Key Fiscal and Banking Sector Reforms Would Address Core Credit Challenges’ focuses on the potential credit impact of three key pending reforms of India- the Goods and Services Tax (GST), the Fiscal Responsibility and Budget Management (FRBM) framework and bad loans resolution measures. Besides, it has said that the GST implementation will have a muted short-term impact, but expects higher productivity growth in long term.

Moody's Investors Service has further stated that implementation of medium-term fiscal framework would help guide lowering government debt, adding that the FRBM framework offers an opportunity to anchor fiscal consolidation by setting a medium-term target for the debt burden. On the problem of rising bad loans, the rating agency has said that the government’s recent measures to tackle nonperforming assets (NPAs) along with the promulgation of the Insolvency and Bankruptcy Code 2016 are credit positive for the sovereign. However, it pointed that high stressed assets in the banking sector pose contingent liability risks and limit private investment recovery.

The CNX Nifty traded in a range of 9,673.50 and 9,637.45. There were 26 stocks in green as against 25 stocks in red on the index.

The top gainers on Nifty were Hero MotoCorp up by 3.12%, Cipla up by 3.05%, Yes Bank up by 2.31%, Adani Ports & SEZ up by 2.23% and Aurobindo Pharma up by 2.21%. On the flip side, GAIL India down by 2.13%, BPCL down by 2.10%, Indiabulls Housing Finance down by 1.31%, Vedanta down by 1.06% and Tata Steel down by 1.04% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 22.85 points or 0.3% to 7,566.62, Germany’s DAX increased 168.27 points or 1.33% to 12,833.19 and France’s CAC increased 44.65 points or 0.84% to 5,363.32.

Asian equity markets ended in green on Friday as a set of upbeat economic data from the US and Europe helped investors shrug off US President Donald Trump's decision to withdraw from the Paris climate agreement. The focus remained on the all-important US jobs report due out later in the day as it could have a significant impact on the outlook for interest rates. US employment is expected to increase by 185,000 jobs in May after an increase of 211,000 jobs in April. The unemployment rate is expected to hold at 4.4 percent. Japanese shares led regional gains as strong US private hiring data helped lift the dollar to a one-week high against the yen. Meanwhile, Chinese stocks ended little changed as investors fretted over tighter liquidity and slowing economic growth.