Benchmarks gain around a percent on penultimate day of F&O expiry

Wednesday turned out to be a fabulous day of trade for the Indian equity benchmarks, with frontline gauges garnering gains of around a percent on account of increased buying in select stocks coupled with covering-up of pending short-positions ahead of August month F&O expiry tomorrow. Market participants accumulated quality stocks at reasonable valuations after yesterday’s drubbing. Sentiments remained optimistic since beginning, with key gauges making a gap-up opening and trading jubilantly through the session after concerns about North Korea’s firing of a missile over Japan ebbed. Traders took some encouragement with Finance Minister Arun Jaitley’s statement that goods and services tax (GST) collections have exceeded estimates in the first month of the landmark levy’s rollout, despite a significant number of assessees not having filed returns yet. Finance Minister said that GST mopup in July pegged at Rs 92,283 crore and could rise further. Some support also came with NITI Aayog’s statement that enhancing access to low-cost capital to businesses could serve as an important vehicle for improving the business environment, especially in poor states like Bihar.

Markets extended rally in afternoon deals with Finance Ministry expressing its confidence of meeting the 3.2% fiscal deficit target for the financial year 2017-18, despite the low dividends from the Reserve Bank of India (RBI) and muted proceeds from stake sales in public sector enterprises till now. However, markets trimmed some of their gains in last leg of trade to end off day’s highs, as anxiety spread among the investors with ICRA’s latest report stating that the profitability of India Inc got hurt with the margins contracting by as much as 1.80% to 15.7% on a year-on-year basis on account of introduction of new tax regime. Some concerns also came with a private report that India's economic growth is likely to remain soft and the GDP is expected to grow by 6 per cent in April-June, down from 6.1 per cent in the preceding quarter.

On the global front, European markets made a firm opening and were trading in fine fettle in early deals as North Korea jitters subsided. Meanwhile, UK consumer credit figures, euro zone sentiments and preliminary inflation data for Germany are all likely to be released during market trade. Asian markets ended mostly in green, though Chinese market ended in red after the state planning head said that the country may struggle to meet its investment and foreign investment goals.

Back home, stocks related to Infra sector edged higher, as the Prime Minister Narendra Modi said India could no longer afford to delay modernisation of its infrastructure if the country was to scale new heights. Auto and auto ancillary stocks ended higher on Wednesday even after the Cabinet cleared an ordinance to hike cess on luxury cars and sport-utility vehicles to 25% from 15% under the goods and services tax (GST) regime at present. The move came after the GST Council earlier this month approved increasing cess on SUVs, mid-sized, large and luxury cars that had become cheaper post GST rollout on 1 July.

The NSE’s 50-share broadly followed index Nifty gained around ninety points to reclaim its psychological 9,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex increased around two hundred and sixty points to end above its crucial 31,600 mark. The broader markets too traded with traction and ended the session with a gain of around one and a half percent. The market breadth was in the favour of advances, as there were 1,790 shares on the gaining side against 791 shares on the losing side, while 121 shares remain unchanged.

Finally, the BSE Sensex soared 258.07 points or 0.82% to 31,646.46, while the CNX Nifty was up by 88.35 points or 0.90% to 9,884.40.

The BSE Sensex touched a high and a low of 31,727.98 and 31,533.02, respectively and there were 24 stocks on gaining side as against 7 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index surged 1.49%, while Small cap index was up by 1.35%.

The top gaining sectoral indices on the BSE were Metal up by 2.64%, Oil & Gas up by 2.32%, Energy up by 2.26%, Basic Materials up by 1.91% and Realty up by 1.66%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Reliance Industries up by 2.12%, Adani Ports up by 1.94%, HDFC up by 1.83%, Coal India up by 1.39% and Tata Steel up by 1.35%. On the flip side, Mahindra & Mahindra down by 1.28%, Power Grid Corporation down by 0.35%, NTPC down by 0.30%, Cipla down by 0.19% and Dr. Reddys Lab down by 0.16% were the top losers.

Meanwhile, the Finance Ministry has expressed its confidence of meeting the 3.2% fiscal deficit target for the financial year 2017-18, despite the low dividends from the Reserve Bank of India (RBI) and muted proceeds from stake sales in public sector enterprises till now. The RBI paid just Rs 30,659 crore to the government as dividend for 2016-17, which was much below the estimated Rs 58,000 crore.

Finance Ministry is upbeat about its revenue projections and believes that gains from demonetisation and curbs on black money will boost direct tax collections in the latter half of the year. Similarly, while it has not made fresh estimates for collections under GST, the Finance Ministry is hopeful that these too will be robust. Also, though just Rs 9,302.31 crore have been raised from disinvestment till now as against a target of Rs 72,500 crore, the government expects higher proceeds in the second half of the fiscal, from stake sales in PSU insurers as well as exchange traded funds.

The Centre has targeted a fiscal deficit of 3.2 per cent of the gross domestic product in 2017-18. With the advancement of the Budget, the government managed to frontload its expenditure and start spending from April that led its fiscal deficit rising to Rs 4,41,685 crore or 80.8 per cent of the full year target by June 30.The CNX Nifty traded in a range of 9,909.45 and 9,850.80. There were 38 stocks in green as against 11 stocks in red, while 2 stocks remained unchanged on the index.

The top gainers on Nifty were Bosch up by 6.02%, Hindalco up by 4.00%, Indian Oil Corporation up by 3.68%, BPCL up by 3.35% and Vedanta up by 2.21%. On the flip side, Tech Mahindra down by 1.38%, Mahindra & Mahindra down by 1.23%, Dr. Reddy's down by 0.44%, NTPC down by 0.36% and Lupin down by 0.33% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 16.35 points or 0.22% to 7,353.78, France’s CAC increased 18.94 points or 0.38% to 5,050.86 and Germany’s DAX was up by 54.69 points or 0.46% to 12,000.57.

Asian equity markets ended mostly higher on Wednesday as the concerns triggered by North Korea's missile firing eased somewhat. North Korea said the launch of an intermediate-range ballistic missile over Japan was to counter US and South Korean military drills. While US President Donald Trump offered a surprisingly subdued response to the missile launch, the UN Security Council has condemned the missile provocation, but stopped short of imposing new sanctions or other specific measures to rein in Pyongyang. Gains in exporters on the back of a weaker yen and solid retail sales data helped Japanese shares recover all of the previous session's losses. Meanwhile, China stocks ended flat as strong gains in airline operators and resources firms were offset by weakness in banking stocks with investors awaiting first-half results for some of the country’s biggest banks.