Buying in late trade takes Nifty above 9,900 mark; Sensex reclaims 31,700 level

Bulls which woke up in last leg of trade mainly helped benchmarks to end near intraday highs on the F&O series expiry day, recapturing their crucial 31,700 (Sensex) and 9,900 (Nifty) levels. Though, markets made a cautious start and extended their fall, as traders remained on sidelines ahead of Gross Domestic Product (GDP) figures to be announced later in the day. Investors also remained concerned with assessment of RBI in its annual report that fiscal consolidation may come under threat at the central and state levels due to the immediate effects of the goods and service tax (GST), loan waivers and pay revisions, putting pressure on the overall growth matrix. However, markets took U-turn and showed strength to enter into green terrain in afternoon deals with traders taking some encouragement with Finance Minister Arun Jaitley’s statement that the GST is bound to impact the direct tax collection as well due to the increased detection technology and greater compliance. The Finance Minister also said that even before GST was rolled out, the impact of demonetisation has expanded the number of assessees under the personal income tax.

Markets extended gains in last leg of trade to end near high point of the day, as some support came with Moody’s Investors Service’s statement that in the near term, the economy will continue to recover from the temporary liquidity shock from demonetization, while adjusting to the new GST. Moody’s further said that though the indicators like net new nonperforming loan (NPL) formation and problem loan ratios suggest a bottoming of the credit cycle, deteriorating asset quality in agriculture, and micro, small- and medium-sized enterprise (MSME) portfolios pose risks.

Firm opening in European markets too aided sentiments ahead of the release of euro zone inflation data due later in the trading session. Asian markets ended mixed on Thursday. Japanese market ended higher despite its industrial production slowing in July from June, as continued strong exports and a cheap yen indicated that the phase is temporary.

Back home, a global financial service major enlightened that India’s economic growth is likely to remain soft and the GDP is expected to grow by 6% in April-June, down from 6.1% in the preceding quarter. The report added that higher private consumption and government spending is likely to be dulled by weak investment and exports growth over the quarter. On the sectoral front, auto stocks remained buzzing with the Union Cabinet’s approval of promulgation of an Ordinance that would allow the GST Council to hike the maximum rate of compensation cess on large and luxury vehicles to 25% from the current cap of 15%. However, banking stocks ended in red despite global credit rating agency, Moody’s Investors Service said that its outlook on India’s banking system is stable, in line with the stable outlooks for 10 of the 15 banks which it has rated, reflecting stable view of operating environment.

The NSE’s 50-share broadly followed index Nifty gained over thirty points to reclaim its psychological 9,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex increased over eighty points to end above its crucial 31,700 mark. The broader markets too ended in green with a gain of around one third of a percent. The market breadth was in the favour of advances, as there were 1,509 shares on the gaining side against 1,064 shares on the losing side, while 135 shares remain unchanged.

Finally, the BSE Sensex gained 84.03 points or 0.27% to 31,730.49, while the CNX Nifty was up by 33.50 points or 0.34% to 9,917.90.

The BSE Sensex touched a high and a low of 31,757.18 and 31,551.85, respectively and there were 16 stocks on gaining side as against 15 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.22%, while Small cap index was up by 0.84%.

The top gaining sectoral indices on the BSE were Realty up by 1.11%, Energy up by 1.02%, Consumer Discretionary Goods & Services up by 0.86%, Power up by 0.76% and Utilities was up by 0.68%, while Healthcare down by 0.47%, Bankex down by 0.13%, Metal down by 0.07% and Telecom was down by 0.02% were the few losing indices on BSE.

The top gainers on the Sensex were Wipro up by 2.54%, Bajaj Auto up by 2.24%, Reliance Industries up by 1.88%, Maruti Suzuki up by 1.67% and Cipla up by 1.44%. On the flip side, Coal India down by 1.45%, Infosys down by 1.22%, Mahindra & Mahindra down by 1.13%, ONGC down by 1.01% and Dr. Reddy’s Lab down by 0.98% were the top losers.

Meanwhile, aviation regulator, the Directorate General of Civil Aviation (DGCA) has said that the regional air connectivity fund (RCF) levy will come into effect from September 1, 2017 and any amount already paid by airlines under this fund would be adjusted against their accounts. It also noted that the levy is used to subsidise operations under the government's ambitious regional connectivity scheme (RCS)-UDAN (Ude Desh ka Aam Naagrik).

DGCA, in its notification, has stated that the government had started charging a fee- ranging from Rs 7,500 to 8,500 per flight operated by all Indian airlines from December 2016 in order to cross-subsidise flights to tier-2 and tier-3 cities under the RCS. It added that the amount was revised to Rs 5,000 in May this year. In order to fund the RCS, the civil aviation ministry earlier said that it would collect a levy of up to Rs 5,000 per departure from airlines operating on major domestic routes.

In March, as many as 128 routes were awarded to five airlines in the first round of bidding for RCS. Through the RCS, the government aims to improve air connectivity to tier-2 and tier-3 cities. It offers airlines subsidy to fly on these routes and, in return, these carriers have to offer half of the total seats at discounted fares. 

The CNX Nifty traded in a range of 9,925.10 and 9,856.95. There were 30 stocks in green as against 21 stocks in red on the index.

The top gainers on Nifty were Wipro up by 2.28%, Maruti Suzuki up by 2.15%, Tata Power up by 2.06%, Reliance Industries up by 2.00% and Bajaj Auto up by 1.76%. On the flip side, Bosch down by 2.45%, Bharti Infratel down by 2.21%, Coal India down by 1.55%, Infosys down by 1.26% and Aurobindo Pharma down by 1.22% were the top losers.

European markets were trading in green; France’s CAC increased 41.35 points or 0.82% to 5,097.69, UK’s FTSE 100 jumped 46.87 points or 0.64% to 7,412.13 and Germany’s DAX was up by 85.86 points or 0.72% to 12,088.33.

Asian equity markets ended mixed on Thursday as renewed tensions between Washington and North Korea as well as weak commodity prices on the back of a firmer dollar overshadowed upbeat data from the US and China. Geopolitical tensions returned to the fore after US President Donald Trump declared ‘talking is not the answer’ to the tense standoff with North Korea. Chinese stocks ended slightly lower as investors paused for breath after a recent rally on the back of robust earnings from major Chinese companies. Activity in China's manufacturing sector continued to expand in August, and at a faster rate, the latest survey from the National Bureau of Statistics showed today with a PMI score of 51.7. That beat forecasts for 51.3 and was up from 51.4 in July. However, the official non-manufacturing PMI came in with a score of 53.4, down from 54.5 in the previous month. Moody's Investors Service raised China's growth forecast, citing stronger expansion in the first half of the year. The rating agency raised China's growth outlook for 2017 to 6.8 percent from 6.6 percent. Meanwhile, Japanese shares hit two-week highs as the yen weakened and US Treasury yields rose in response to upbeat US economic data, helping spur gains in exporters and financials. The Malaysian market was closed for the National Day holiday.