Markets hit fresh record highs; Nifty surpasses 10,350 levels

Continuing their record run one after another, Indian equity benchmarks once again settled at new record closing high levels on Monday, surpassing their crucial 10,350 (Nifty) and 33,200 (Sensex) bastions. After an optimistic start, markets traded with traction but in particular range to end near all time high levels. Sentiments remained up-beat since beginning with traders taking encouragement with the private report that the government’s recapitalization plan for public sector banks is likely to propel credit growth by up to 700 basis points to 15% and as consequence push up GDP numbers to 7% in the next fiscal. The report highlighted that the industry is likely to see a 7% growth in 2018-19 from 5% in the current fiscal. Services are projected to grow at 7.3% in the current fiscal and rise to 7.5% in the succeeding year. Also, the street reacted positively to the meeting outcome of the ministerial panel working to make GST composition scheme more attractive, which suggested slashing tax rate to 1% for manufacturers and restaurants, while easier norms for traders opting for it. Meanwhile, FM Arun Jaitley has enlightened that individual tax base is growing with India having the lowest direct tax slab in the world, digital transactions are rising, and the new insolvency law will yield positive results. 

Some support also came with report that India expecting a big jump in the World Bank’s ease of doing business ranking that will be released soon, thanks to multiple reforms initiated by the government beginning to show results. Ranked at 130 in the last reckoning, the government has set itself a target of breaking into the top 50. Reports that Reserve Bank is likely to cut rates at its December 6 policy review meet as retail inflation remains muted and the October number is expected to be about 3.3 percent, too aided sentiments. Adding to the optimism, foreign investors have pumped in close to $3 billion in the Indian capital markets so far this month due to high nominal and real yields and stable macroeconomic conditions.

Positive opening in European counters too aided sentiments. The UK Net Lending rose to 3.85 billion, from 3.93 billion in the preceding month, which was revised down from 4.04 billion. The amount of lending is correlated to consumer confidence and spending. Asian markets exhibited mixed trend on Monday. Activity in China’s manufacturing sector likely grew at a slightly slower pace in October as the government began a major crackdown on air pollution.

Back home, Railways and Coal Minister Piyush Goyal has said that India will grow at over 8% consistently due to reforms.  Goyal added that the railways looking to invest over $150 billion over the next five years which would help create one million additional jobs. On the sectoral front, auto stocks remained in top gear, as the Union road transport ministry approved the timeline for the implementation of system which requires all cars manufactured after July 1, 2019, to be equipped with airbags, seat-belt reminders, alert systems for speeds beyond 80kmph, reverse parking alerts, as well as manual override over the central locking system for emergencies. Real estate stocks closed mostly in green on report that real estate investment in India’s six major cities doubled to $2.87 billion in the year ended June 2017 as Mumbai attracted maximum capital and was ranked 81st globally. These six cities were able to attract capital because of strong economic drivers, acceleration in reforms, high yields and rapidly modernizing business base.

Finally, the BSE Sensex surged 108.94 points or 0.33% to 33,266.16, while the CNX Nifty was up by 40.60 points or 0.39% to 10363.65.

The BSE Sensex touched a high and a low of 33,340.17 and 33,206.93, respectively and there were 17 stocks on gaining side as against 14 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 1.13%, while Small cap index was up by 1.25%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.39%, Realty up by 2.06%, Telecom up by 1.83%, Industrials up by 1.23% and Oil & Gas up by 1.10%, while FMCG down by 0.42% and Metal down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.67%, Tata Motors - DVR up by 2.65%, ONGC up by 1.69%, Bharti Airtel up by 1.59% and Dr. Reddy’s Lab up by 1.57%. On the flip side, Hindustan Unilever down by 1.68%, ITC down by 1.56%, Tata Steel down by 1.03%, Mahindra & Mahindra down by 0.83% and Wipro down by 0.78% were the top losers.

Meanwhile, terming tax-paying as a ‘patriotic duty’, Finance Minister Arun Jaitley has said that they cannot afford to be a place where the size of the shadow economy is much larger than the real economy. Admitting that there will be some noise and grievances due to the implementation of tax reforms like the goods and services tax (GST), he said that paying taxes is always a fundamental duty of every citizen.   

The minister further said that the note-ban and the hasty rollout of GST are the main reasons for the country’s’ sluggish growth, with the GDP growth falling for sixth straight quarters to 5.6 percent in the June quarter. He also asserted that tax rates in India are the lowest in the world and that will help the agenda of widening the tax base. On direct taxes side, he said that the government has reduced them in such a way where the lowest tax slab is 5 percent, while on the indirect tax side, it is as low as 1 percent.

Jaitley further said that the process of structural reforms has a long way to go and noted that government has grabbed a lot of low hanging fruits, like increasing FDI caps in multiple sectors. Terming the introduction of the Insolvency and Bankruptcy Code as a ‘belated reform’ he expected the measure to bear fruits going forward.
The CNX Nifty traded in a range of 10,384.50 and 10,344.30. There were 30 stocks in green as against 20 stocks in red on the index.

The top gainers on Nifty were Yes Bank up by 2.64%, Lupin up by 2.39%, Bharti Infratel up by 2.19%, Eicher Motors up by 1.94% and Tata Motors up by 1.79%. On the flip side, HCL Tech down by 1.89%, Hindustan Unilever down by 1.78%, ITC down by 1.54%, Wipro down by 1.33% and M&M down by 1.12% were the top losers.

European markets were trading mostly in green; France’s CAC rose 2.85 points or 0.05% to 5,496.98 and Germany’s DAX was up by 8.02 points or 0.06% to 13,225.56, while UK’s FTSE 100 was down by 8.64 points or 0.12% to 7,496.39.

Asian equity markets made a mixed closing on Thursday after US shares fell the most in seven weeks overnight in the wake of a string of disappointing earnings reports and rising bond yields. Investors also digested regional corporate earnings results and looked for direction from the European Central Bank policy meeting, due later in the day. Chinese shares ended higher after President Xi Jinping's vast ‘Belt and Road’ infrastructure project was included in the ruling Communist Party's constitution. Japanese shares eked out modest gains on earnings optimism and amid the prospect of further stimulus from the government.