Markets hit fresh all time highs; Sensex conquers 35K mark

Wednesday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges ending the session at their all time closing high levels, surpassing 35,000 (Sensex) and 10,750 (Nifty) levels for the first time ever. After a cautious start, markets gained traction and there appeared not even an iota of profit booking in the session afterwards with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Sentiments remained up-beat after the government said it will reduce its additional borrowing to Rs 200 billion from the bond markets in the financial year 2017-18, from Rs 500 billion announced last month. This is primarily because the Reserve Bank of India will pay a higher-than-anticipated surplus to the Centre, and the dividend target from state-owned companies will also be met. Also, traders took some encouragement with a private report stating that business optimism index for the January-March quarter 2018 touched three and half year high on improving demand conditions and expectation that government sops in the budget will revive consumption. It further said that the upcoming Union Budget and assembly elections during 2018 might have generated optimism about government sops that could push revival in consumption.

Markets accelerated northward journey after rating agency CRISIL enlightened that India will benefit from stronger global growth in the fiscal 2019 provided there are no more after effects from the implementation of the new Goods and Services Tax (GST) and the economy manages to tide over the asymmetry in monetary policy of advance economies together with higher crude oil prices. Some support also came with report that agricultural exports from India grew 18 per cent to $21 billion in the April-October 2017-18 period compared to just 5 per cent in 2016-17. Meanwhile, Commerce and Industries Minister Suresh Prabhu has said that India is expected to become a $5 trillion economy in the next 8-9 years with the manufacturing sector contributing 20 per cent to that. Prabhu said as commerce and industries minister, he is working on a strategy for international trade which will contribute $2 trillion to the economy where contribution can come from both manufacturing and services.

On the global front, European markets made sluggish start with CAC, DAX and FTSE trading red terrain in early deals, as investors were eyeing fresh batch of corporate earnings reports. Euro zone inflation eased in line with expectations in December. The European Union’s statistics office said the consumer price index rose at an annual rate of 1.4% in December, from 1.5% in November. Asian markets exhibited mixed trend on Wednesday.

Back home, shares of banking sectors remained on buyers’ radar on report that India has cut its additional market borrowing requirement by more than half for the fiscal year ending in March to Rs 20,000 crore. Realty sector stocks too remained in focus, as the GST Council is expected to consider a reduction in tax rates for some items. The Council is likely to discuss inclusion of real estate under GST and announce the rollout date for the same.

Finally, the BSE Sensex surged 310.77 points or 0.89% to 35,081.82, while the CNX Nifty was up by 88.10 points or 0.82% to 10,788.55.

The BSE Sensex touched a high and a low of 35,118.61 and 34,700.82, respectively and there were 21 stocks on gaining side as against 10 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.66%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.59%, Bankex up by 1.55%, PSU up by 1.41%, IT up by 1.28% and Healthcare was up by 1.16%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Axis Bank up by 4.65%, SBI up by 3.44%, ICICI Bank up by 2.68%, Infosys up by 2.61% and Yes Bank up by 2.58%. On the flip side, Wipro down by 1.85%, HDFC Bank down by 0.88%, Hero MotoCorp down by 0.80%, ONGC down by 0.74% and Hindustan Unilever down by 0.68% were the top losers.

Meanwhile, the World Gold Council (WGC) in its report titled 'Outlook 2018 Global economic trends and their impact on gold' has stated that gold demand will get a boost from government policies targeted at transparency and gross domestic product (GDP) growth. It believed that in India, the second largest gold market in the world, after their initial implementation shock, policies such as the demonetisation initiative and the new Goods and Service Tax (GST) will start to have a positive effect on the economy. It noted that these policies are designed to improve transparency, broaden the tax base, and draw the informal, cash-based economy into the formal sector.

According to the report, continued economic growth underpins gold demand. It also noted that as incomes rise, demand for gold jewellery and gold-containing technology, such as smart phones and tablets rises. It believes that income growth also spurs savings, helping increase demand for gold bars and coins. Meanwhile, it highlighted that global growth increased in 2017 and the market expects the trend to continue in 2018 as well. It pointed out that with the European and US economies expanding, coupled with decreasing unemployment in recent years, there has been a rise in wages yet inflation indices are low.

The report further said that households and businesses are rebuilding their finances and are optimistic about the future. Besides, it said that China's economy to continue growing, but the nature of growth is changing from investment-driven growth to a consumption-led model. It added that this could affect the economic growth rate, but even if the Chinese economy grows at a slower rate than in the past, they see a more balanced model, aided by further global integration through its One Belt One Road initiative supporting a sustainable growth trajectory.

The CNX Nifty traded in a range of 10,803.00 and 10,666.75. There were 38 stocks in green as against 12 stocks in red on the index.

The top gainers on Nifty were Axis Bank up by 4.37%, SBI up by 4.04%, ICICI Bank up by 2.77%, Aurobindo Pharma up by 2.48% and Adani Ports & SEZ up by 2.28%. On the flip side, Zee Entertainment down by 3.47%, Wipro down by 1.81%, ONGC down by 0.96%, M&M down by 0.68% and Tech Mahindra was down by 0.65% were the top losers.

European markets were trading in red; Germany’s DAX declined 54.94 points or 0.41% to 13,191.39, UK’s FTSE 100 decreased 22.87 points or 0.29% to 7,733.06 and France’s CAC was down by 18.13 points or 0.33% to 5,495.69.

Asian equity markets made a mixed closing on Wednesday as lower commodity prices and weak overnight cues from Wall Street on concerns over the possibility of a US government shutdown overshadowed upbeat regional economic data. A widespread sell-off in digital currencies on fears of impending crackdowns, apprehensions surrounding coalition talks in Germany and speculation that the European Central Bank (ECB) policymakers are preparing to reduce their vast monetary stimulus program also kept investors on their toes. Japanese shares lost ground as a firmer yen weighed on exporters and bitcoin-related stocks succumbed to selling pressure on fears of a regulatory crackdown. Though, Chinese shares closed slightly higher ahead of fourth-quarter GDP, December industrial production and retail sales data due Thursday.