Markets close at record highs amidst technical glitch at NSE

Monday turned out to be a fabulous day of trade for Indian equity markets, with bulls tightening their grip with frontline indices ending at all time closing highs. Sensex surpassed its crucial 31,700 level, while Nifty50 achieved 9,750 mark for the first time ever despite trading remained shut on NSE in cash and F&O segment for 3 hours in the morning trade due to a technical glitch. Markets traded jubilantly throughout the session on report that Associated Chambers of Commerce and Industry of India (Assocham) said that the Goods and Services Tax (GST) will boost the competitiveness of micro, small and medium enterprises (MSMEs). Traders also took some encouragement after Prime Minister Narendra Modi, noting that the GST, which was implemented last week, was the biggest tax reform in the last 70 years has said it would help businesses and create a unified market of 1.3 billion people. Modi also underlined support for free and open trade regime of World Trade Organization (WTO).

Adding to the optimism, 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. Some support also came with reports that Foreign Portfolio Investment (FPI) inflows during the period between January-June 2017 (H12017) stood at nearly $23 billion into the Indian capital markets, largely driven by several factors, including expectations from the government that it would speed up development and economic reforms.

Firm opening in European counters too aided sentiments with CAC, DAX and FTSE trading with a gain of around half a percent, as world leaders met over the weekend in Hamburg at the 12th G-20 talks wherein global issues such as trade, climate change and defence were discussed. Asian markets ended mixed, as crude oil prices rebounded after settling nearly 3 percent lower on Friday.

Back home, appreciation in Indian rupee too supported sentiments with rupee was trading strong at 64.53 against the dollar on fresh selling of the US currency by banks and exporters. Moreover, quarterly corporate earnings optimism gave domestic institutional and retail investors much hope to go in for fresh bets. On the sectoral front, Auto stocks travelled northward during the trade despite domestic passenger vehicle sales declined by 11.21 per cent to 198,399 units in June from 223,454 units in the same month last year. Stocks related to aviation sector flied higher, as the Finance Ministry exempted aircraft imported on lease from the 5 percent GST levy. Under the recently introduced GST regime, aircraft imported on lease basis attracted integrated GST (iGST) of 5 percent.

The NSE’s 50-share broadly followed index Nifty gained by over hundred points to end above its psychological 9,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex zoomed by over three hundred and fifty points to end near its crucial 31,700 mark. The broader markets too traded in green ended and the session with a gain of around half a percent. The market breadth remained in favour of advances, as there were 1,554 shares on the gaining side against 1,090 shares on the losing side, while 166 shares remain unchanged.

Finally, the BSE Sensex surged 355.01 points or 1.13% to 31,715.64, while the CNX Nifty was up by 105.25 points or 1.09% to 9,771.05. 

The BSE Sensex touched a high and a low of 31,768.39 and 31,471.41, respectively and there were 28 stocks on gainers side as against 3 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.67%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Telecom up by 3.88%, TECK up by 2.95%, IT up by 2.92%, PSU up by 1.74% and Metal up by 1.43%, while FMCG down by 0.01% was the lone losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 5.39%, TCS up by 4.66%, Wipro up by 4.64%, Coal India up by 3.25% and Lupin up by 2.96%. On the flip side, Mahindra & Mahindra down by 0.54%, ITC down by 0.25% and Hindustan Unilever down by 0.20% were the few losers.

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 traded in a range of 9,782.15 and 9,646.45. There were 46 stocks in green as against 5 stocks in red on the index.

The top gainers on Nifty were Bharti Airtel up by 5.13%, TCS up by 4.42%, Wipro up by 4.09%, Bank of Baroda up by 3.77% and Coal India up by 3.07%. On the flip side, Mahindra & Mahindra down by 0.62%, Zee Entertainment down by 0.32%, ITC down by 0.30%, Hindustan Unilever down by 0.13% and Maruti Suzuki down by 0.03% were the top losers.

The European markets were trading mostly in green; France’s CAC gained 17.69 points or 0.34% to 5,162.85, UK’s FTSE 100 increased 24.9 points or 0.34% to 7,375.82 and Germany’s DAX was up by 60.54 points or 0.49% to 12,449.22.

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.