Bulls go brisk on Dalal Street; Sensex conquers 35,500 level

Friday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls tightened their grip on Dalal Street, with Sensex conquering its crucial 35,500 level, Nifty end just shy of 10,900 mark for the first time ever. Despite some initial hiccups, domestic bourses gained momentum and traded in green terrain for most part of the day, but rally in last leg of trade mainly helped markets to end at fresh record high levels. Sentiments remained up-beat, as traders took some encouragement with India Ratings and Research’s projection that the country’s economic growth will improve to 7.1 percent in the next fiscal year 2018-19 from 6.5 percent in the current year 2017-18. It said that the growth will be supported by robust consumption demand and low commodity prices. Traders also reacted positively on report that GST Council decided to cut tax rates on 29 products and 53 services, in what is seen as the biggest overhaul since the launch of GST. Finance Minister Arun Jaitley also said that the panel at its next meeting may also consider bringing under the Goods and Services Tax (GST) purview items like petroleum and real estate which are currently outside the new regime.

At one point of time it looked like markets will end up near neutral lines, but rally which emerged in final hour of trade mainly pulled markets higher to end at their fresh all time high levels. Sentiments remained optimistic with Union Minister Suresh Prabhu’s statement that the commerce ministry is working on a strategy to diversify India's export basket in a bid to boost shipments. Some support also came with Vice-President M Venkaiah Naidu’s statement that various decisions of the central government, including demonetisation and GST, are likely to have a positive impact in the coming years.

Firm opening in European markets too aided sentiments, as investors watch out for developments in US politics, new earnings and fresh data. Retail sales in the UK declined much more than expected in December, dampening optimism over the British economy. Asian markets ended mostly in green, supported by stronger-than-expected Chinese GDP data and expectations for strong corporate earnings.

Back home, to make REITs and InvITs more attractive, markets regulator Securities and Exchange Board of India (SEBI) has allowed strategic investors like registered NBFCs and international multilateral financial institutions to invest up to 25% of the total offer size of such trusts. On the sectoral front, stocks related to power sector edged higher after Power Minister R.K. Singh said that the central government will set up a $350 million fund to finance solar power projects, as it steps up efforts to achieve its ambitious goal of to increasing renewable power capacity to 175 gigawatts (GW) by the year 2022.

Finally, the BSE Sensex surged 251.29 points or 0.71% to 35,511.58, while the CNX Nifty was up by 77.70 points or 0.72% to 10,894.70.

The BSE Sensex touched a high and a low of 35,542.17 and 35,221.16, respectively and there were 24 stocks on gaining side as against 7 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.77%, while Small cap index was up by 0.88%.

The top gaining sectoral indices on the BSE were Bankex up by 1.52%, Realty up by 1.26%, Industrials up by 1.10%, PSU up by 1.06% and Energy was up by 0.94%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Adani Ports & SEZ up by 4.68%, Yes Bank up by 2.37%, ICICI Bank up by 2.15%, SBI up by 2.08% and TCS up by 1.53%. On the flip side, Infosys down by 0.82%, Sun Pharma down by 0.74%, Power Grid Corporation down by 0.61%, Maruti Suzuki down by 0.40% and ONGC down by 0.23% were the top losers.

Meanwhile, days ahead of the Union Budget for 2018-19, the all-powerful Goods and Services Tax (GST) Council, at its 25th meeting, has decided to cut tax rate on 29 items and 54 categories of services with effect from 25 January. It also decided to divide Rs 35,000 crore IGST collections between centre and states, in order to help tide over the revenue shortfalls being faced by most states. However, the council has not yet made any decision regarding simplifying the process of GST filing. At its next meeting, it may also consider the issue of bringing items like crude oil, natural gas, petrol, diesel, ATF and real estate within the ambit of new tax regime.

The Council, headed by finance minister Arun Jaitley and comprising representatives of all states, cut GST rate on second-hand medium and large cars and SUVs from 28 percent to 18 percent and on other old and used motor vehicles to 12 percent. Besides, tax on diamonds and precious stones was slashed to 0.25 percent from current 3 percent. While tax rate for bio-diesel was slashed to 12 percent from 18 percent, that for public transport buses run on environment-friendly bio-fuels has been reduced to 18 percent from 28 percent previously. Moreover, the rate on sugar-boiled confectionery, drinking water packed in 20 litre bottles, fertiliser-grade phosphoric acid, bio-diesel and drip irrigation system has been reduced from 18 to 12 percent. The rate on tamarind kernel powder, mehendi paste in cones and domestic LPG supplied by private distributors has been reduced to 5 percent from 18 percent. Services relating to admission or conduct of examinations provided to all educational institutions, entrance fees for entrance examination and for transportation of students up to higher secondary schools will also be exempt from taxation.

In a bid to ease compliance burden, finance minister Arun Jaitley has said that the Council veered around to the idea of registered entities continuing to file the return in GSTR 3B Form while moving to a system where supplier invoice captures details of the transaction. He also stated that the GST provision requiring transporters to carry an e-way bill, when moving goods of over Rs 50,000 in value between states, will be implemented from February 1 to check rampant tax evasion. The minister further indicated that as many as 15 states have decided to implement the provision for intra-state movements as well. Besides, he said that after GST rollout from July 1, the requirement of carrying e-way bill was postponed pending IT network readiness. He pointed out that once the e-way bill system is implemented, tax avoidance will become extremely difficult as the government will have details of all goods above the value of Rs 50,000 moved and can spot the mismatch if either the supplier or the purchaser does not file tax returns.

The CNX Nifty traded in a range of 10,906.85 and 10,793.90. There were 39 stocks in green as against 9 stocks in red, while 2 stocks remained unchanged on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 4.79%, Adani Ports & SEZ up by 4.20%, Bajaj Finance up by 2.73%, IOC up by 2.31% and ICICI Bank up by 2.31%. On the flip side, Ambuja Cement down by 2.68%, Ultratech Cement down by 2.35%, Sun Pharma down by 0.77%, Power Grid down by 0.71% and Infosys down by 0.59% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 gained 15.96 points or 0.21% to 7,716.92, France’s CAC increased 27.1 points or 0.49% to 5,521.93 and Germany’s DAX was up by 118.48 points or 0.89% to 13,399.91.

Asian equity markets ended in green on Friday as stronger-than-expected Chinese GDP data and expectations for strong corporate earnings helped investors shrug off concerns about a potential US government shutdown. The US House of Representatives passed a stop-gap funding measure late Thursday to avert a government shutdown. But prospects appear gloomy in the Senate, where Democrats say they have the vote to block the spending bill in a bid to negotiate on budget and immigration deals. Chinese stocks ended at fresh two-year highs on Friday, with the Shanghai index posting its fifth straight week of gains, as banks extended their rally and after the country posted its first acceleration in full-year growth in seven years. Growth for the 2017 full-year picked up to 6.9 percent, the first annual acceleration for the economy since 2010. The annual growth easily beat the government’s 2017 target of around 6.5 percent and quickened from 6.7 percent in 2016, the weakest pace in 26 years. Further, Japanese shares ended higher with financial stocks leading the gains after US yields rose, while GMO Internet soared after an activist fund called on the company to change its governance structure.