Govt package to boost economy take benchmarks to record highs

Wednesday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges hitting record highs and ending above their crucial 33,000 (Sensex) and 10,250 (Nifty) levels for the first time ever after the Union Cabinet on Tuesday announced various measures to boost economy. Markets made a firm start and traded jubilantly throughout the session, as sentiments remained up-beat with Union Cabinet approving a massive recapitalisation plan for public sector banks (PSBs) worth Rs 2.11 lakh crore. Of this amount, Rs 1.55 lakh crore would be raised through recapitalisation bonds. Another Rs 76,000 crore would be available from budgetary support and raised through market borrowings. The whopping Rs 14 lakh crore package announced by the Union Cabinet apart from the massive recapitalisation plan for public sector banks, also include investments in key development sectors such as Rural Roads, Housing, Railways, Power, Highways and Digital Infrastructure. Traders also took some encouragement with Union Finance Minister Arun Jaitley’s statement that the Indian economy was on a strong wicket with sound macro-economic fundamentals.

Some support also came on report that the government has collected Rs 92,150 crore as Goods and Services Tax (GST) in September from 42.91 lakh business. The finance ministry said that of this, Rs 14,042 crore is on account of central GST, while state GST is to the tune of Rs 21,172 crore. Integrated GST collections stood at Rs 48,948 crore, of which Rs 23,951 crore was on account of imports. Adding to the optimism, Finance Minister Arun Jaitley said that Indian economy is on a strong wicket with sound macro-economic fundamentals. He added that In dia has been the fastest growing major economy for the last three years and the attempt is to maintain high growth rate in coming years.

Positive trade in European counters too aided sentiments, as investors reacted to new earnings reports and monitored fresh economic data. Britain’s economy unexpectedly picked up speed in the three months to September, putting the Bank of England firmly on track to raise interest rates next week for the first time a decade. Asian markets ended mixed on Wednesday. Japan’s government may be able to declare that the economy has made a sustained exit from deflation before it implements a scheduled sales tax hike in October 2019.

Back home, Economic Affairs Secretary Subhash Garg said that GST has been the biggest tax reform, along with other ones like demonetization and the battle against black money. The secretary added that the current economic slowdown is bottoming out. Fiscal deficit is under control and that the government is unlikely to overshoot its target of 3.2 percent fiscal deficit at the end of the current fiscal year. On the sectoral front, IT sector stocks remained on buyers’ radar reacting to the Infosys numbers, which reported a net profit of Rs 3,726 crore for the quarter ended September 30, 2017, up 7 per cent sequentially and 3.4 per cent year-on-year. But, the Nasdaq-listed company has cut its full-year revenue guidance, forecasting slower-than-industry growth. Infosys said FY18 revenue would grow at 5.5-6.5% in constant currency.

Finally, the BSE Sensex surged 435.16 points or 1.33% to 33,042.50, while the CNX Nifty was up by 87.65 points or 0.86% to 10,295.35.

The BSE Sensex touched a high and a low of 33,117.33 and 32,804.60, respectively and there were 19 stocks on gaining side as against 12 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index was up by 0.42%, while Small cap index was down by 0.19%.

The top gaining sectoral indices on the BSE were PSU up by 8.07%, Bankex up by 4.71%, Capital Goods up by 3.33%, Industrials up by 2.00% and Telecom up by 1.18%, while Consumer Durables down by 1.31%, Healthcare down by 1.11%, Realty down by 0.35% and Consumer Discretionary Goods & Services was down by 0.07% were the few losing indices on BSE.

The top gainers on the Sensex were SBI up by 27.58%, ICICI Bank up by 14.69%, Larsen & Toubro up by 5.65%, Axis Bank up by 4.61% and Bharti Airtel up by 2.76%. On the flip side, Kotak Mahindra Bank down by 5.43%, HDFC Bank down by 3.79%, HDFC down by 2.60%, Lupin down by 2.22% and Sun Pharma down by 2.10% were the top losers.

Meanwhile, in order to give a major push to India’s infrastructure and create more jobs, the Union cabinet chaired by Prime Minister Narendra Modi has given its nod for the biggest ever highway project worth around Rs 7 lakh crore for development of over 80,000 km of highways including the ambitious Bharatmala project in the next five years. Bharatmala is the biggest ever road building programme after National Highways Development Project (NHDP) that saw development of about 50,000 km, and aims at improving connectivity in border and other areas.

Under Bharatmala scheme, 34,800 km of highways would be constructed at the cost of Rs 5.35 lakh crore. It involves building 9,000 km of economic corridors to unlock full economic potential, 6,000 km of inter-corridor and feeder routes, 5,000 km of national corridors efficiency improvement. To boost border roads and international connectivity, the government also approved construction of 2,000 km of roads along the eastern and western borders of the country.

For funding of Bharatmala project, Rs 2.09 lakh crore will be raised as debt from the market, Rs 1.06 lakh crore from private investments and Rs 2.19 lakh crore from sources like Central Road Fund, toll etc. In addition to 34,800 km under Bharatmala, balance works of 48,877 km of highway projects under other current schemes will be implemented in parallel by NHAI/MoRTH with an outlay of Rs 1.57 lakh crore.  This will be financed by providing Rs 0.97 lakh crore from CRF and Rs 0.59 lakh crore as gross budgetary support. 

The CNX Nifty traded in a range of 10,340.55 and 10,240.90. There were 24 stocks in green as against 26 stocks in red on the index.

The top gainers on Nifty were SBI up by 26.92%, ICICI Bank up by 14.56%, Ultratech Cement up by 5.75%, Larsen & Toubro up by 5.33% and Axis Bank up by 4.88%. On the flip side, Indiabulls Housing Finance down by 5.49%, Bajaj Finance down by 5.16%, Yes Bank down by 4.89%, Kotak Mahindra Bank down by 4.66% and HDFC Bank down by 3.85% were the top losers.

European markets were trading mostly in green; Germany’s DAX increased 11.63 points or 0.09% to 13,024.82 and France’s CAC was up by 15.94 points or 0.3% to 5,410.74, while UK’s FTSE 100 decreased 11.81 points or 0.16% to 7,514.73.

Asian equity markets ended mostly higher on Wednesday after solid earnings reports from heavyweights Caterpillar and 3M as well as promises of tax reform from the Trump administration helped the Dow Jones Industrial Average post its biggest gain in more than a month overnight. Chinese shares ended higher as investors awaited the announcement by Chinese President Xi Jinping later in the day of new members of the Politburo Standing Committee, the country's supreme political body. Meanwhile, Japanese shares snapped a 16-day winning streak as investors cashed in on recent gains, although higher US yields supported financial stocks.