Markets hit fresh all time highs; Sensex surpasses 32,200 mark

Bulls tightened their grip on Dalal Street and frontline gauges ended the Monday’s trade at fresh all time closing high levels, with Sensex and Nifty surpassing their crucial 32,200 and 9,950 marks respectively. Traders remained optimistic since morning with markets making a positive opening on report that retaining its growth forecast of 7.2% for India for the current fiscal year, the International Monetary Fund (IMF), in its latest update report ‘World Economic Outlook, July 2017’ said that the country would grow at 7.7% in 2018-19, keeping growth rates forecast in line with the April 2017 forecast. Traders also took some encouragement with India Meteorological Department’s (IMD) statement that the cumulative rainfall received till Sunday across the country was 103% of the benchmark long period average (LPA). Both the north-west and central parts of the country have received ‘excess’ rainfall with 116% and 113% of LPA, respectively.

Markets extended their northward journey and hit all time highs in noon deals, as some support came with Union minister Nitin Gadkari’s statement that the Goods and Services Tax (GST) will accelerate the growth and ease of doing business and help in nation building. Besides, as per Reserve Bank of India (RBI) data, the country’s foreign exchange reserves rose by $2.681 billion to touch a new life-time high of $389.059 billion in the week to July 14, helped by increase in foreign currency assets (FCAs). Meanwhile, NITI Aayog Vice Chairman Arvind Panagariya, despite acknowledging creation of “good jobs” in India remains a big challenge, has said that India’s economic growth rate is likely to be 7.5% for the current financial year.

Firm trade in Asian counters too aided sentiments with most of the regional peers ended in green on Monday. However, European counters were trading lower in early deals, as the weakness of the US dollar continued to affect global markets. Investors kept an eye on oil prices ahead of the joint OPEC and non-OPEC ministerial meeting later in the day to discuss the issue of rising output in Nigeria and Libya.

Back home, impressive quarterly showings by Reliance Industries on Friday and HDFC Bank on Monday have boosted investor sentiments. On the sectoral front, banking stocks remained on buyers’ radar, as RBI Deputy Governor Viral Acharya said the cleaning of banks’ balance sheet is the ‘number one priority’ for the central bank. Aviation stocks flied higher on reports that domestic air traffic were up 20% in June. Domestic airlines flew 95.86 lakh passengers in June, registering a growth of 20% over the 79.75 lakh passengers flown during the same month in the previous year.

Select stocks from Port and Shipping edged higher, as the Major Port Authorities Bill, introduced in Parliament, seeks to convert 11 of the 12 ports owned by the Centre from trusts into authorities, as part of a compromise plan drafted by the Nitin Gadkari-led Shipping Ministry.

The NSE’s 50-share broadly followed index Nifty gained by over fifty points to end above its psychological 9,950 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex zoomed by around two hundred and twenty points to end above its crucial 32,200 mark. The broader markets too traded with traction and ended the session with a gain of over quarter a percent. The market breadth was evenly divided, as there were 1,317 shares on the gaining side against 1,385 shares on the losing side, while 207 shares remain unchanged.

Finally, the BSE Sensex surged 216.98 points or 0.68% to 32,245.87, while the CNX Nifty was up by 51.15 points or 0.52% to 9,966.40.

The BSE Sensex touched a high and a low of 32,320.86 and 32,058.33, respectively and there were 19 stocks on gaining side as against 12 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index was up by 0.27%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Telecom up by 1.39%, TECK up by 1.05%, IT up by 1.05%, FMCG up by 0.95% and Energy was up by 0.80%, while Metal down by 0.58%, Healthcare down by 0.42%, Realty down by 0.19% and Basic Materials was down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.20%, Wipro up by 1.89%, Reliance Industries up by 1.89%, HDFC Bank up by 1.83% and TCS up by 1.68%. On the flip side, Dr. Reddy’s Lab down by 2.44%, Axis Bank down by 1.09%, Tata Steel down by 0.93%, Sun Pharma down by 0.92% and ONGC down by 0.82% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has said that the demonetisation of high value currency notes in November last year and the implementation of goods and service Tax (GST) regime from  July 1would make cash dealings a lot more difficult and certainly lead to greater compliance and digitization of the economy. He also observed that the first signs of both these landmark policy moves are already visible in the expansion of the base of direct and indirect taxes.

The minister has stated that the government has come out with laws to contain overseas black money as well as those dealing with domestic black money and cracking down on shell companies. He also said that the country had reconciled to an Indian normal – large-scale tax non-compliance and a large amount of transaction which took place outside the system. He said “there was almost a helplessness in trying to deal with the situation. Every year through the Finance Bill we would announce some changes which at best had a marginal impact. I think the lasting impact of those marginal changes was not very significant.”

Therefore, he further said that steps had to be taken in order to make a very significant impact and added that seen in totality, the steps taken by the government will have a great long term impact and a substantial ethical rationale behind it. Meanwhile, the GST, which rolled out on July 1, is the biggest taxation reform since Independence and is expected to boost GDP growth and help reduce tax evasion as every transaction in the value chain gets recorded digitally. The demonetisation of 500 and 1000 rupee announced on November 8, 2016, has sucked out over Rs 15 lakh crore worth old currencies from the system and move was aimed at cracking down on black money holders.

The CNX Nifty traded in a range of 9,982.05 and 9,919.60. There were 29 stocks in green as against 22 stocks in red on the index.

The top gainers on Nifty were Bharti Airtel up by 2.13%, Wipro up by 1.92%, Reliance Industries up by 1.91%, HDFC Bank up by 1.88% and Indiabulls Housing Finance up by 1.74%. On the flip side, Dr. Reddy’s Lab down by 2.39%, Vedanta down by 1.40%, Axis Bank down by 1.11%, Sun Pharma down by 0.89% and Tata Steel down by 0.86% were the top losers.

The European markets were trading in red; Germany’s DAX declined 69.05 points or 0.56% to 12,171.01, UK’s FTSE 100 decreased 66.7 points or 0.89% to 7,386.21 and France’s CAC was down by 5 points or 0.1% to 5,112.66.

Asian equity markets ended mostly in green on Monday as investors awaited the outcome of US Federal Reserve's monetary policy meeting on Tuesday and Wednesday for more clues on interest rate hikes this year. Oil prices were slightly higher in Asian deals ahead of the joint OPEC and non-OPEC ministerial meeting later in the day to discuss the issue of rising output in Nigeria and Libya. Chinese shares ended higher after the International Monetary Fund kept its growth forecasts for the world economy unchanged for this year and next, but slightly revised up growth expectations for the eurozone and China. Meanwhile, Hong Kong shares ended higher on expectations that China will increase fiscal spending to boost GDP growth in the second half. However, Japanese shares hit over two-week lows as a strong yen dragged on exporters and financials also lost ground after the Bank of Japan reduced its purchases of 5-10 year bonds at its regular operation.