Post Session: Quick Review

Indian equity markets traded on a firm note throughout the day and ended the session with gain of around one percent. Optimism over quarterly corporate earnings coupled with covering-up of short positions lifted the index. Stock market investors’ wealth today touched the $2 trillion mark, helped by a rally in the BSE benchmark Sensex, which soared to an all-time high. Trading activities resumed at the National Stock Exchange (NSE) in the afternoon today after the system faced technical glitches in the morning that led to trade disruptions. The Department of Economic Affairs has asked the NSE to submit a report on the technical glitch. The equity benchmarks opened higher in early deals, with both Sensex and Nifty touched their all-time high at open tracking positive cues from Asian stocks. Traders took support after the Associated Chambers of Commerce and Industry of India (ASSOCHAM), citing its report on the unified pan-India indirect tax regime said that the Goods and Services Tax (GST) will boost the competitiveness of micro, small and medium enterprises (MSMEs). The industry body in the report has said that the GST is set to impart better competitiveness to micro, small and medium enterprises and provide them a level-playing field with large firms owing to factors like an easier process of availing input credit and simpler tax regime. Separately, Foreign Investors have pumped in nearly $23 billion into the Indian capital markets in January-June 2017 on several factors, including expectations of accelerated pace of reforms. In comparison, FPIs had invested about $1.2 billion (Rs 7,600 crore) in the first half of 2016. The most prominent reason for FPIs’ net inflow is the expectation from the government that it would speed up development and economic reforms in their last two years in office before going for elections in 2019. Traders also took encouragement with Prime Minister Narendra Modi’s statement that GST would help businesses and create a unified market of 1.3 billion people. He also said that the GDP growth this year is likely to be more than 7 percent and India’s reform agenda is continuously making progressing. Meanwhile, Union minister Mukhtar Abbas Naqvi said that the new tax regime would prove to be a game changer for the country’s economy, terming the GST a revolutionary reform taken in the interest of common people and small traders. The introduction of the new tax system by the Narendra Modi Government was the biggest economic reform since the Independence.

On the global front, Asian markets closed mixed. China’s producer price inflation was unchanged in June and remained well off highs seen earlier this year, amid lingering oversupply issues in the steel sector and as signs of economic weakness weighed on the outlook for prices. The Bank of Japan offered its most optimistic view of the country’s regional economies in more than a decade on solid exports and private consumption, underscoring its conviction a steady recovery is gathering momentum. The European markets were trading in green. A Sentix poll showed that investors expect euro zone bonds to be pummeled in the coming months as the European Central Bank starts turning off the money taps after years of unprecedented largesse.

Back home, there was some buzz in aviation sector stocks after the Finance Ministry exempted aircraft imported on lease from the 5 percent Goods and Service Tax (GST) levy. Under the recently introduced GST regime, aircraft imported on lease basis attracted integrated GST (iGST) of 5 percent. AU Small Finance Bank closed on firm note after making a decent debut on BSE, as the scrip got listed at a premium to the issue price of Rs 358 apiece. The Rs 1,912 crore IPO, which was sold between June 28 and June 30, was subscribed 53.60 times.

The BSE Sensex ended at 31668.13, up by 307.50 points or 0.98% after trading in a range of 31471.41 and 31768.39. There were 26 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.65%, while Small cap index was up by 0.43%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 3.58%, IT up by 2.86%, TECK up by 2.84%, PSU up by 1.65% and Metal up by 1.35%, while FMCG down by 0.03% was the sole loser on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 5.29%, TCS up by 4.75%, Wipro up by 4.66%, Coal India up by 3.05% and Lupin up by 2.99%. (Provisional)

On the flip side, Mahindra & Mahindra down by 0.59%, ITC down by 0.45%, Kotak Mahindra Bank down by 0.29%, Reliance Industries down by 0.15% and Hindustan Unilever down by 0.08% were the top losers. (Provisional)

Meanwhile, furthering its restrictions on participatory notes or Offshore Derivative Instruments (ODIs), markets regulator Securities and Exchange Board of India (SEBI) has banned foreign portfolio investors (FPIs) from issuing such instruments where the underlying assets are derivatives.

In its latest circular ‘Guidelines for issuance of ODIs, with derivative as underlying, by the ODI issuing FPIs’, the SEBI said that P-Note issuances on derivatives can be issued only for the purpose of hedging with respect to the equity shares held. Besides, it said that in cases where the underlying derivatives position are not for purpose of hedging the equity shares, the issuing FPI has to liquidate such ODIs latest by the date of maturity or by December 31, 2020, whichever is earlier.

The circular further said that a certificate has to be issued by the compliance officer (or equivalent) of the ODI-issuing FPI in the case of issuance of fresh ODIs with derivatives as underlying and it should be certified that the derivatives position, on which the ODI is being issued, is only for hedging the equity shares held by it, on a one-to-one basis. Besides, SEBI also asked to submit the monthly ODI reports along with this certificate.

The CNX Nifty ended at 9762.30, up by 96.50 points or 1.00% after trading in a range of 9646.45 and 9782.15. There were 44 stocks advancing against 7 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 4.95%, TCS up by 4.42%, Wipro up by 4.19%, Bank of Baroda up by 3.77% and Lupin up by 2.93%. (Provisional)

On the flip side, Mahindra & Mahindra down by 0.66%, Zee Entertainment down by 0.46%, ITC down by 0.39%, Kotak Mahindra Bank down by 0.21% and Hindustan Unilever down by 0.15% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 16.3 points or 0.22% to 7,367.22, Germany’s DAX increased 53.08 points or 0.43% to 12,441.76 and France’s CAC increased 8.29 points or 0.16% to 5,153.45.

Asian stocks closed mixed on Monday as crude oil prices rebounded after settling nearly 3 percent lower on Friday and the US dollar extended gains made after much stronger than expected June employment data. The report said US non-farm payroll employment jumped by 222,000 jobs in June following an upwardly revised increase of 152,000 jobs in May. Despite the stronger than expected job growth, the unemployment rate inched up to 4.4 percent from 4.3 percent in May. Meanwhile, Chinese shares inched lower as investors awaited a raft of data due out next week. Japanese shares closed higher as a weaker yen helped lifted exporters, helping offset weak current account and core machine orders data. While Japan’s current account surplus fell in May for the first time in four months, core machinery orders unexpectedly tumbled in May due to persistent weakness in the services sector, separate reports showed.