Bulls tighten grip on Dalal Street; Nifty surpasses 10,550 mark

Friday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls tightened their grip on Dalal Street, with Nifty and Sensex hitting fresh record highs and ending above their crucial 10,550 and 34,150 levels, respectively for the first time ever. The markets’ mood remained up-beat throughout the day and benchmarks fervently gained from strength to strength, as investors continued hunt for fundamentally strong stocks. Sentiments remained up-beat throughout the session with NITI Aayog’s expectation that the first strategic disinvestment of Central Public Sector Enterprises will be conducted within the current financial year. It said that the process of divestment is being carried out by Department of Investment and Public Asset Management (DIPAM) and the first transactions are expected in the current financial year after a long gap of 14 years. Some support also came with the Union Cabinet approving the revised model concession agreement for public private partnership projects in major ports. The amendments were made in the MCA to attract more investments in the port sector and are expected to clear the hurdles created by some of the provisions in the current model concession agreement.

Some support also came with Finance Minister Arun Jaitley’s assurance that the positive impact of the government’s reform measures would get reflected in the medium to long term and noted that India is the only economy which could maintain a growth rate of 7-8 percent amid challenges like the country’s weak public sector banks (PSBs) and initial disturbance of demonetisation, Goods and Services Tax (GST). Meanwhile, traders’ focus shifts to third quarter earnings with Tata Consultancy Services (TCS) and Infosys scheduled to report their Q3 numbers next week, amid signs the economy is recovering after the withdrawal of high-denomination currency bills in late 2016 and the introduction of the GST last year.

Firm opening in European counters too aided sentiments with the British and Swiss benchmarks hitting records, propelled by optimism for a strengthening regional economy. Asian markets ended mostly in green, as US jobs data pointed to firm economic growth although the greenback was soft as the specter of benign inflation capped domestic bond yields. Japanese Economy Minister Toshimitsu Motegi said that the government had put policies in place needed for companies to raise wages.

Back home, the infra stocks remained on buyers’ radar after the government approved Rs 12,178 crore worth of infrastructure projects and an AIIMS in Bilaspur in Himachal Pradesh to be constructed at a cost of Rs 1,351crore. Shares of liquor companies rallied on BSE after GM Breweries reported a strong results for the third quarter ended December 2017 of current fiscal (Q3FY18). IT stocks exhibited mixed trend on report that the US is considering new regulations to prevent the extension of H-1B visas as part of president Donald Trump's 'Buy American, Hire American' initiative, a move which could hit tech firms and hundreds of thousands of Indian IT professionals.

Finally, the BSE Sensex surged 184.21 points or 0.54% to 34,153.85, while the CNX Nifty was up by 54.05 points or 0.51% to 10,558.85.

The BSE Sensex touched a high and a low of 34,188.85 and 34,020.84, respectively and there were 23 stocks on gaining side as against 8 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.69%, while Small cap index was up by 0.97%.

The top gaining sectoral indices on the BSE were Telecom up by 2.75%, Consumer Durables up by 1.25%, Consumer Discretionary Goods & Services up by 0.96%, TECK up by 0.89% and Basic Materials was up by 0.83%, while Oil & Gas down by 0.39%, PSU down by 0.24% and Energy was down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.03%, Adani Ports & SEZ up by 3.71%, Bharti Airtel up by 3.36%, Indusind Bank up by 3.26% and Dr. Reddy’s Lab up by 2.40%. On the flip side, ONGC down by 0.83%, Tata Motors - DVR down by 0.77%, ICICI Bank down by 0.70%, SBI down by 0.60% and Wipro down by 0.56% were the top losers.

Meanwhile, the Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to lower the corporate tax from 30 percent to 28 percent in the upcoming Union Budget 2018-19. It believed that such a move would help the Indian industry in meeting the challenges emanating from tax cuts by the Trump administration in the US and its outcome in other developing countries.

The Industry body has clarified that bringing the tax rate to 28 percent will be a good start and noted that the corporate sector would start becoming unproductive in the absence of the rate cut. It also said that in Budget 2016-17, Finance Minister Arun Jaitley had promised to reduce the corporate tax to 25 percent over the next four years. However, he has not been able to cut the rates. Besides, it stated that in December 2017, Senate Republicans passed a sweeping overhaul of the US tax code in more than 30 years. It also said that the Senate approved the $1.5 trillion tax bill, which includes permanent tax breaks for corporations and temporary tax cuts for individuals, by a final vote of 51-48.

Regarding the prospects of economic growth, the chamber expects that India's economic growth will accelerate to 7.5 percent in the fiscal year 2018-19. Meanwhile, the government is scheduled to come out with the Budget for 2018-19 on February 1, which will also be the last regular Budget of the current government.

The CNX Nifty traded in a range of 10,566.10 and 10,520.10. There were 31 stocks in green as against 19 stocks in red on the index.

The top gainers on Nifty were Yes Bank up by 4.98%, Bajaj Finance up by 3.65%, Adani Ports & SEZ up by 3.37%, Indusind Bank up by 3.24% and Bharti Airtel up by 3.23%. On the flip side, Bharti Infratel down by 1.75%, Hindalco down by 1.30%, UPL down by 0.97%, HPCL down by 0.92% and Indian Oil Corporation down by 0.83% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 22.94 points or 0.3% to 7,718.82, France’s CAC surged 46.37 points or 0.86% to 5,460.06 and Germany’s DAX was up by 139.87 points or 1.06% to 13,307.76.

Asian equity markets ended mostly in green on Friday even as regional gains remained modest ahead of the release of the closely-watched US jobs report for December, due later in the day. The jobs report is expected to show an increase of about 190,000 jobs in December after an addition of 228,000 jobs in November. The unemployment rate is expected to hold at 4.1 percent. Japanese shares extended gains from the previous session to probe 26-year highs as the yen held broadly lower on improved risk appetite. Further, Chinese shares ended higher on growth optimism. China’s services sector activity expanded in December on solid growth in new business, with the outlook improving to a six-month high, a private sector survey showed on Thursday. Another private business survey showed growth in China’s manufacturing sector unexpectedly rose to a four-month high in December thanks to a surge in new orders.