Post Session: Quick Review

Indian equity markets traded on a firm note throughout the day and ended in green for third straight session. The rally got extended in last hour of trade with Nifty surpassing above 10,300 mark and Nifty Midcap index ending at record closing high. The market breadth was slightly in favour of advances with one stock advancing against every declining one. Investors are awaiting Federal Reserve’s policy decision and exit poll on Gujarat assembly elections. The benchmarks made a gap-up opening and traded jubilantly in early deals as sentiments remained up-beat following report that companies in India are optimistic that the country’s economic growth will gain traction during the third quarter this fiscal. The CII Business Confidence index (BCI) has climbed up to the level of 59.7 during October-December 2017 compared to 58.3 in the previous quarter, reflecting an improvement in perception regarding overall economic conditions amidst indications of a normalization in business situation post the recent disruptions like GST. Separately, the Central Board of Direct Taxes highlighted that the provisional figures of Direct Tax collections up to November, 2017 show that net collections are at Rs 4.8 lakh crore, which is 14.4% higher than the net collections for the corresponding period of last year. The net direct tax collections represent 49% of the total Budget Estimates of direct taxes for 2017-18 (Rs 9.8 lakh crore). The gross collections (before adjusting for refunds) have increased by 10.7% to Rs 5.82 lakh crore during April-November, 2017.

Additionally, the street took note that Indian companies raised close to Rs 51,000 crore through private placement of corporate bonds in November, a surge of 32% from the year-ago level, for business expansion and propping up working capital needs. As per the latest data by markets regulator Securities and Exchange Board of India (SEBI), with the latest mobilization, the total fund-raising through private placement of debt securities reached Rs 4.2 lakh crore in the April-November period of 2017-18 fiscal. Investors took note of Union Finance Minister Arun Jaitley’s statement that Indian economy is set for a higher growth trajectory on the back of a slew of structural reforms. Demonetization and GST were carried out keeping in mind their long-term benefits to the economy. He said the NDA government would now focus on large-scale investment in the infrastructure sector and rural areas. Separately, prime minister’s economic advisory panel member Rathin Roy expressed hope that the forthcoming budget will not be a populist and will reflect the commitment of the government to improve quality of expenditure.

Meanwhile, auto sector stocks were buzzing in today’s trade after data released by the Society of Indian Automobile Manufacturers (SIAM) showed that domestic car sales were up 4.49 per cent to 1,81,395 units as against 1,73,607 units in November last year. Motorcycle sales last month rose 23.25 per cent to 9,59,122 units as against 7,78,173 units a year earlier. Telecom stocks showed mixed reaction on ICRA report which enlightened that the telecom industry could pare as much as Rs 90,000 crore debt if stake sale deals of mobile tower assets, currently being discussed, materialize. It predicted structural and material changes for the telecom tower industry in the medium term. The agency also anticipated some headwinds in the short term, as consolidation of telecom operators leads to rationalization of tenancies, but remained confident about the growth prospects in coming years.

On the global front, Asian markets closed mostly in green. China’s producer price inflation slowed to a four-month low in November as factory activity softened due to the government’s ongoing efforts to curb pollution, cooling demand from factories for raw materials. Producer prices rose 5.8% from a year earlier. Large Japanese manufacturers turned more optimistic about economic conditions in the October-December quarter, in another upbeat sign for an economy on a record run of growth. The Business Survey Index (BSI) of sentiment at large manufacturers stood at plus 9.7, up from plus 9.4 in July-September. The European markets were trading in green ahead of the meeting of European Union leaders on Thursday and Friday.

Back home, aviation stock closed in green on report that the outlook for the fastest growing Indian aviation market is very good but infrastructure and taxation issues could be detrimental for its growth. Exclusion of airport fee and charges levied on ticket from the transaction value for GST purpose are among the issues being flagged by the IATA.

The BSE Sensex ended at 33434.70, up by 184.40 points or 0.55% after trading in a range of 33313.17 and 33488.36. There were 19 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.33%, while Small cap index was up by 0.21%.  (Provisional)

The top gaining sectoral indices on the BSE were IT up by 0.93%, TECK up by 0.87%, Healthcare up by 0.69%, Telecom up by 0.67% and Auto up by 0.66%, while Realty down by 0.26%, Energy down by 0.19% and Oil & Gas down by 0.17% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 2.26%, Wipro up by 2.21%, Mahindra & Mahindra up by 2.16%, HDFC up by 2.07% and Lupin up by 2.06%.  (Provisional)

On the flip side, NTPC down by 0.97%, ONGC down by 0.67%, Reliance Industries down by 0.62%, Asian Paints down by 0.60% and Hindustan Unilever down by 0.34% were the top losers. (Provisional)

Meanwhile, making a strong case for elimination of tax exemptions, Prime Minister's Economic Advisory Council chairman Bibek Debroy has said that exemptions are restricting the tax-to-GDP ratio from rising and compliance costs to come down and if such exemptions are eliminated, the tax-to-GDP ratio of the country can increase to 22 per cent.

He further pointed that the total amount of revenue foregone (on account of tax exemptions) is a little over 5% the GDP. Further adding that there is a tendency to interpret tax avoidance as tax evasion, while tax evasion is illegal, tax avoidance is perfectly legitimate because it arrays of exemptions that are allowed.

Debroy blamed Indian industry for the inclusion of exemptions in the first place and expressed his hopes that that the government panel tasked with reviewing the Income Tax Act will look into the issue of exemptions. He also pointed that the Goods and Services Tax (GST) is not perfect as it has multiple tax rates structure and also includes exemptions, but stressed that the new tax reform is a step in the right direction. On the development front, Bibek Debroy said that there are a slew of areas where the changes in social infrastructure are visible like with financial inclusion and expressed need to focus on skills of country immediately.

The CNX Nifty ended at 10326.70, up by 61.05 points or 0.59% after trading in a range of 10282.05 and 10329.20. There were 33 stocks advancing against 17 stocks declining on the index. (Provisional)

The top gainers on Nifty were Aurobindo Pharma up by 2.74%, TCS up by 2.63%, UPL up by 2.47%, Lupin up by 2.16% and Mahindra & Mahindra up by 2.14%.  (Provisional)

On the flip side, NTPC down by 1.50%, Bharti Infratel down by 1.50%, Asian Paints down by 0.73%, ONGC down by 0.64% and Yes Bank down by 0.56% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 43.85 points or 0.59% to 7,437.81, Germany’s DAX increased 8.79 points or 0.07% to 13,162.49 and France’s CAC increased 1.48 points or 0.03% to 5,400.57.

Asian equity markets ended mostly in green on Monday after data showed that the US economy created more jobs than expected last month and the UK reached a divorce deal with the European Union, setting stage to move on to future trade talks post-Brexit. Regional gains remained somewhat muted outside China and Hong Kong as investors waited for cues from key policy meetings of the Federal Reserve, Bank of England, the European Central Bank and the Swiss National Bank due this week. Chinese stocks ended higher, led by consumer staple and healthcare companies, after media reports indicated the government is in no hurry to finalize its new asset management rules. Further, Japanese shares rose for a third straight session to hit a fresh 25-year high as the yen held weaker and a survey showed Japan's business survey index of large manufacturers strengthened again in the fourth quarter.