Indian benchmarks display spirited performance post GST launch

Indian equity indices showcased a courageous performance and went on to outclass indices around the world by vivaciously rallying by close to a percent in the session and settled above the psychological 9,600 (Nifty) and 31,200 (Sensex) levels. Sentiments got a boost with report that the government has ramped up capital spending by nearly 60% in the first two months of the current financial year, in a bid to perk up investment sentiment and crowd in private investment. Early passage of the budget in March has allowed the government start spending from the beginning of the new financial year in April. In April-May, the government spent Rs 52,536 crore, 58% more than the year earlier period.

Adding optimism among investors, Moody’s said GST will be credit positive for India. Implementation of the goods and services tax (GST) will be positive for India's rating as it would lead to higher GDP growth and increased tax revenues. Some support also came with IMD report indicating that the first month of monsoon has been heartening with India recording a 4% surplus in rainfall combined with a well-distributed pattern, except in the eastern regions. The average rainfall in June was 170.2mm, 7mm higher than the usual 163.6mm. Traders paid no heed to the report stating that manufacturing activity in India fell to a four-month low in June amid softer rise in factory new orders. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance-slipped to 50.9 in the month of June as against 51.6 in the month of May.

On the global front, Asian equity markets ended mostly higher on Monday as investors digested cheering economic news out of China and Japan. The survey of Chinese manufacturing from Caixin found output at a three-month high in June, while Japan's official ‘tankan’ snapshot of business sentiment showed levels of cheer at their highest for more than three years. Meanwhile, investors awaited cues from this week's G20 summit, the Wednesday release of Fed minutes and the US nonfarm payrolls report to be released on Friday.  Meanwhile, European shares began the new quarter with solid gains, while the dollar lifted from nine-month lows as US Treasury yields hit their highest since mid-May.

Back home, Fertiliser stocks rallied after the GST Council lowered the rate on fertiliser from 12% to 5% and on tractor parts from 28% to 18%. Finance Minister Arun Jaitley said the decision to reduce the tax rate on fertiliser was taken because of apprehensions that price of the crop nutrient may go up. Besides, consumer goods makers such as ITC surged on hopes the newly implemented GST would reduce retail prices and boost sales. In scrip specific development, Carmaker Maruti Suzuki India gained after posting a 7.6% jump in June vehicle sales on Saturday, while commercial vehicles maker Ashok Leyland climbed to its highest in a year after reporting an 11% rise in June total sales.

The market breadth remained optimistic, as there were 1788 shares on the gaining side against 871 shares on the losing side, while 175 shares remained unchanged.

Finally, the BSE Sensex gained 300.01 points or 0.97% to 31221.62, while the CNX Nifty was up by 94.10 points or 0.99% to 9,615.00. 

The BSE Sensex touched a high and a low of 31258.33 and 31017.11, respectively and there were 23 stocks on gainers side as against 8 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained 1.13%, while Small cap index was up by 1.05%.

The top gaining sectoral indices on the BSE were FMCG up by 3.40%, Telecom up by 1.86%, Metal up by 1.85%, Basic Materials up by 1.83% and Realty up by 1.48%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were ITC up by 5.70%, Hero MotoCorp up by 2.17%, Maruti Suzuki up by 1.96%, Coal India up by 1.95% and Infosys up by 1.68%. On the flip side, NTPC down by 1.17%, Kotak Mahindra Bank down by 0.72%, Cipla down by 0.60%, Sun Pharma down by 0.54% and Lupin down by 0.50% were the top losers.

Meanwhile, Union Cabinet is likely to approve the policy for reviving 40 hydro power projects of 11,639 MW which will entail a total investment of Rs 16,709 crore, in the month of July. Under this, all large and small hydro projects will be treated as renewable energy. Once policy approved, the distinction between large and small hydro plants would go, which would enable India to achieve clean power capacity of 225 GW by 2022.

Presently, a hydro power project of up to 25 MW is classified under renewable energy and is entitled to various incentives provided by the government. Projects beyond this capacity are not in this category and hence not entitled to the benefits. Out of the 30 GW installed power generation capacity, 44.59 GW comes from large hydro projects (above 25 MW) and 57.26 GW from other renewable power generation capacities. The Government has set a target of 175 GW renewable power installed capacity by the end of 2022. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power.

Under the policy, the government will provide interest subvention of 4 percent during construction for up to 7 years and for 3 years after the start of commercial operation to all hydro power projects above 25 MW. Funding for the policy will come from coal cess or national clean energy fund or non- lapsable central pool of resources for northeastern states for eight years till 2024-25. A Hydro Power Fund would be created under the power ministry for providing funds to the projects under the policy. The policy also provides for Hydro Purchase Obligation (HPO) for hydro projects of over 25 MW capacity. Under this, the discoms would be mandated to buy a proportion of power from these plants.

The CNX Nifty traded in a range of 9,624.00 and 9,543.55. There were 36 stocks in green as against 14 stocks in red on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Bharti Infratel up by 6.26%, ITC up by 5.92%, Hindalco up by 3.14%, Eicher Motors up by 2.55% and Vedanta up by 2.11%. On the flip side, HCL Tech down by 1.30%, NTPC down by 1.23%, Sun Pharma down by 0.85%, Tata Motors down by 0.68% and Lupin down by 0.65% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 32.04 points or 0.44% to 7,344.76, Germany’s DAX increased 85.1 points or 0.69% to 12,410.22 and France’s CAC increased 52.32 points or 1.02% to 5,173.00.

Asian equity markets ended mostly in green on Monday as investors digested cheering economic news out of China and Japan. The survey of Chinese manufacturing from Caixin found output at a three-month high in June, while Japan's official 'tankan' snapshot of business sentiment showed levels of cheer at their highest for more than three years. Meanwhile, investors awaited cues from this week's G20 summit, the Wednesday release of Fed minutes and the US nonfarm payrolls report to be released on Friday. Japanese shares closed marginally higher as upbeat business sentiment figures helped offset the Liberal Democratic Party's disastrous defeat in the Tokyo metropolitan assembly election. Also, the yen erased gains after surging higher earlier in the day.