Benchmarks hit fresh highs in early deals; Nifty just shy of 10,100 mark

Indian equity benchmarks have made a positive opening and are trading slightly in green in early deals with Nifty inching towards its crucial 10,100 level, ahead of RBI’s policy review meeting starting later in the day. Traders also took some encouragement with report that the collection of Integrated Goods and Services Tax from imports crossed Rs 20,000 crore in July - the first month of the roll out of the new indirect tax regime. Adding to the optimism, global rating agency Moody’s has reported that India's GDP growth will remain in the range of 6.5-7.5 percent over the next 12-18 months and GST will support the momentum for faster growth.

Positive trend in Asia counters too aided sentiments with most of the regional peers trading in green at this point of time supported by Chinese manufacturing and South Korean export data. The Japanese stock market too has rebounded, with the increase in commodity prices lifting resources stock. The US markets once again showed a lackluster trade and made another mixed closing in the last session.

Back home, gains remained capped as some cautiousness crept in the markets after the growth of eight core sectors slowed to 0.4% in June due to contraction in output of coal, refinery products, fertiliser and cement. The growth rate of eight infrastructure sectors was 7% in June last year. On the sectoral front, stocks of oil marketing companies remained on buyers' radar, as the government has asked oil marketing companies to raise the prices of subsidised cooking gas by Rs 4 per cylinder every month. Aviation stocks flying higher as Boeing is betting big on India saying that it is the highest growth market in world.

The BSE Sensex is currently trading at 32545.44, up by 30.50 points or 0.09% after trading in a range of 32500.77 and 32615.45. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.42%, while Small cap index was up by 0.20%.

The top gaining sectoral indices on the BSE were Auto up by 0.98%, Metal up by 0.93%, Healthcare up by 0.63%, Basic Materials up by 0.62% and Consumer Disc up by 0.57%, while Capital Goods down by 0.49%, Power down by 0.13%, Consumer Durables down by 0.05% and Realty was down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Wipro up by 2.21%, Hindustan Unilever up by 1.61%, Dr. Reddy’s Lab up by 1.53%, Mahindra & Mahindra up by 1.34% and Adani Ports & SEZ up by 1.20%. On the flip side, HDFC down by 1.23%, Larsen & Toubro down by 0.87%, ONGC down by 0.83%, Asian Paints down by 0.80% and Axis Bank down by 0.48% were the top losers.

Meanwhile, global rating agency Moody's Investors Service, citing its poll results of some of the largest investors, intermediaries and issuers in Asia Pacific, has stated that respondents are confident about India’s stable economic growth prospects. More than 60% of the respondents feel that India’s gross domestic product (GDP) growth will remain in the range of 6.5-7.5% over the next 12-18 months and GST will support the momentum for faster growth. The survey was conducted jointly with its Indian affiliate, ICRA, during their third annual India credit conference titled ‘Reforms, Sector Trends, Credit Risks & Opportunities’.

According to the estimates of the US-based agency, the economy will grow 7.5% in 2016-17 and 7.7% in 2017-18. It believes that economic growth will gradually accelerate to around 8% over the next 3-4 years. As per the survey, with the economic and institutional reforms in India, and further changes that could follow, India will likely grow faster than similarly rated peers over the next 12-18 months despite a short-term drag caused by demonetization.

Talking about impact of Goods and Services Tax (GST), Moody’s said that over the medium term, the GST will contribute to productivity gains and faster GDP growth by making it easier to do business, thereby unifying national markets and enhancing India's attractiveness as a foreign investment destination. It will also help facilitate government revenue generation by improving tax compliance and administration and with both factors positive for India's credit profile, which is constrained by a low revenue base.

The rating agency also said that the banks’ asset quality can deteriorate due to their exposures to certain sectors such as power, steel and infrastructure, the formation of new non-performing loans (NPLs) will be slower than in the past two to three years because of the banks' recognition of a large amount of NPLs. On the other hand, it maintained a stable outlook on India’s conventional power sector, reflecting improvements in domestic coal production, which moderate risks to fuel supply.

The CNX Nifty is currently trading at 10093.60, up by 16.50 points or 0.16% after trading in a range of 10080.00 and 10101.90. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 6.35%, Wipro up by 2.48%, Hindalco up by 2.21%, Aurobindo Pharma up by 2.07% and Dr. Reddy’s Lab up by 1.51%. On the flip side, HDFC down by 1.40%, Asian Paints down by 1.03%, Larsen & Toubro down by 1.03%, ONGC down by 0.97% and HCL Tech down by 0.81% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI gained 7.39 points or 0.42% to 1,767.42, Shanghai Composite increased 13.28 points or 0.41% to 3,286.31, KOSPI Index surged 22.51 points or 0.94% to 2,425.22, Taiwan Weighted advanced 29.04 points or 0.28% to 10,456.37, Nikkei 225 added 40.87 points or 0.21% to 19,966.05 and Hang Seng was up by 200.08 points or 0.73% to 27,524.07.

On the flip side, Jakarta Composite was down by 8.93 points or 0.15% to 5,832.00.