Dalal Street cheers exit poll results; Nifty regains 10,300 mark

Jubilation continued on Dalal Street for second straight session and Indian equity benchmarks ended the session with a gain of over half a percent, recapturing their crucial 10,300 (Nifty) and 33,400 (Sensex) levels. Markets after a gap-up opening traded with traction with exit polls indicating both Himachal Pradesh and Gujarat going in favour of ruling BJP. Exit polls conducted by various polling agencies have predicted that BJP would retain Gujarat, the major battle ground despite a reduced margin of seats in the 182-member assembly. Some support also came with global rating agency Moody’s statement that it has a stable outlook for non-financial corporate in the country, except for telcos, on which it has a negative outlook for 2018. It said that stable outlook is underpinned by the expectation that GDP growth of around 7.6% will result in higher sales volumes. Traders also took some encouragement with Finance minister Arun Jaitley identifying infrastructure creation, resolution of non-performing assets and recapitalization of banks as the priority areas to push the country further on growth path.

Sentiments also remained up-beat as the International Monetary Fund (IMF), which is slated to come out with an update of its projections of India’s growth rate along with the rest of the world in January, sees benefits in the medium-term from the demonetisation exercise which India carried out about a year ago. Besides, traders took support with the private report stating that India’s economic growth has bottomed out and the GDP growth will recover further to 7% over the next few quarters but it is likely to take few years to return to 7.5% above levels. Though, markets ended off day highs, as traders opted for wait and watch approach, eyeing the winter session of Parliament. During a total of 14 sittings over a duration of 22 days, both the Houses, Lok Sabha and Rajya Sabha, will take up 25 Bills, including GST compensation to states, for consideration and passing.

On the global front, European markets were trading in red terrain in early deals, as fresh concerns over US tax reform plans dampened market sentiment and as investors were still digesting the European Central Bank's latest policy decision. Asian shares edged higher on Friday, on track for weekly gains, though sentiment was kept in check by Wall Street's weakness on concerns about the progress of US tax reform.

Back home, the Supreme Court on Thursday reserved its interim order for Friday on a batch of pleas seeking a stay on the government's decision of mandatory linking of Aadhaar with various welfare schemes, as the Centre extended the deadline up to March 31 next year. On the sectoral front, shares of metal companies remained on buyers’ radar with the Nifty Metal index gaining more than 2% on the National Stock Exchange (NSE) as higher base metals prices in global commodities markets. Meanwhile, shares of multi-specialty hospital chain Shalby, which recently concluded its Rs 504 crore initial public offering, listed with a discount of over three and half percent at Rs 239.25 on the BSE against the issue price of Rs 248.

Finally, the BSE Sensex surged 216.27 points or 0.65% to 33,462.97, while the CNX Nifty was up by 81.15 points or 0.79% to 10,333.25.

The BSE Sensex touched a high and a low of 33,621.96 and 33,405.82, respectively and there were 21 stocks on gaining side as against 9 stocks on losing side on the index, while 1 stock remained unchanged.

The broader indices ended in green; the BSE Mid cap index jumped 1.00%, while Small cap index was up by 1.38%.

The top gaining sectoral indices on the BSE were Metal up by 2.82%, Realty up by 1.96%, Consumer Durables up by 1.66%, Basic Materials up by 1.48% and Consumer Discretionary Goods & Services up by 1.43%, while Telecom down by 0.50% was the lone losing index on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.56%, Coal India up by 3.02%, Dr. Reddy’s Lab up by 2.52%, HDFC Bank up by 1.95% and Adani Ports & SEZ up by 1.75%. On the flip side, Cipla down by 2.53%, ONGC down by 0.87%, Asian Paints down by 0.45%, TCS down by 0.42% and SBI down by 0.41% were the top losers.

Meanwhile, the Goods and Services Tax (GST) Council member Sushil Kumar Modi, who is also the Deputy Chief Minister of Bihar has said that the Council will look into bringing electricity, petroleum products and some other items under the purview of new indirect tax regime in future. He also said that the inclusion of these items can be done without amending the Constitution, but it would be difficult to specify any timeline for this to happen. Besides, he pointed that if petroleum products are brought under the GST, it will attract the highest tax slab prevalent at that time and states would be at liberty to levy cess on it in order to protect their revenues. He added that at present, both states and the Centre earn 40 percent of their revenue from petroleum products.

Modi also hinted at the reduction of tax slabs going forward after tax collection stabilises. The current GST regime has five tax slabs - 0 percent, 5 percent, 12 percent, 18 percent and 28 percent. An additional GST cess is also levied on certain products. Though the final decision would be taken by the Council, he said that the possible scenario could be that the current highest tax slab of 28 percent could be brought down to 25 percent and two tax slabs of 12 percent and 18 percent could be merged into one.

Adding further, he said that the GST Network (GSTN) is the backbone of the GST regime. He also said that GSTN is robust and only 30 percent of its capacity has been utilised so far. He indicated that in the last four months, 3.20 lakh returns have been filed through the network, and noted that forms are being simplified with the objective to make the entire tax experience an easy affair. He also stated that at the same time work is also underway with regard to refund and input tax credit. He said that the GST will succeed like Value Added Tax and expressed hope that states will not seek compensation from the Centre after 2-3 years.

The CNX Nifty traded in a range of 10,373.10 and 10,319.65. There were 33 stocks in green as against 17 stocks in red on the index.

The top gainers on Nifty were Vedanta up by 5.03%, Yes Bank up by 4.00%, Mahindra & Mahindra up by 3.59%, Hindalco up by 3.19% and Coal India up by 3.18%. On the flip side, Tech Mahindra down by 3.50%, Cipla down by 2.58%, Bosch down by 0.98%, Bharti Infratel down by 0.67% and ONGC down by 0.65% were the top losers.

The European markets were trading in red; Germany’s DAX decreased 43.65 points or 0.33% to 13,024.43, France’s CAC declined 19.53 points or 0.36% to 5,337.61 and UK’s FTSE 100 was down by 2.41 points or 0.03% to 7,445.71.

Asian equity markets ended mostly in red on Friday as uncertainty over US tax reform legislation outweighed upbeat data from Japan. Japanese shares ended lower on Friday, with mobile firms extending a sell-off on concerns of increased competition after e-commerce group Rakuten said it aims to become the country’s fourth wireless carrier. Further, Chinese shares fell as investors responded to China’s hike in market interest rates by taking profits in sectors that have had robust gains this year.