Bulls take control on Dalal Street; Nifty conquers 11K mark

Indian equity benchmarks ended the Tuesday’s trade at record high levels with frontline gauges conquering fresh highs for fifth straight day, settling above their crucial 36,100 (Sensex) and 11,050 (Nifty) levels for the first ever time. Sentiments remained up-beat on report that the International Monetary Fund (IMF) has revised its forecast for world economic growth in 2018 and 2019, saying sweeping US tax cuts were likely to boost investment in the world’s largest economy and help its main trading partners. Traders took encouragement from report that International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) has projected that India will grow at 7.4% in 2018 as against China’s 6.8%, making it the fastest growing country among emerging economies following last year’s slowdown due to demonetization and the implementation of the Goods and Services Tax (GST).

Markets continued to extend gains on the back of report that India has moved up on a global index of talent competitiveness to the 81st position, but remains a laggard among the BRICS nations. Some support also came after the United Nations Conference on Trade and Development (UNCTAD), in its latest ‘Investment Trends Monitor’ report has stated that India has been ranked at the tenth position among the top host economies for Foreign Direct Investment (FDI) inflows in 2017, backed by inflow of $45 billion overseas investment, while US, China and Hong Kong secured top three places in the list. Investors took note that India’s oil ministry is pushing for a cut in excise duty on petrol and diesel in the upcoming 2018-19 budget to cushion the impact of rising oil prices on its vast consumer base. Prime Minister Narendra Modi, who faces elections in key states later this year, and a nationwide election in early 2019, has faced pressure over a rise in retail prices of petrol and diesel to a record level.

Global cues too remained supportive with European markets trading in green in early deals, as sentiment was boosted by news a deal to temporarily end the US government shutdown was made and following upbeat quarterly reports from companies in the region. Asian markets ended in green after the three-day US government shutdown ended and the Bank of Japan maintained its massive monetary stimulus program.

Back home, realty stocks ended on firm note on private report that residential property markets across India’s top 30 cities have shrugged off the impact of de-monetization and absorbed the short-term blow of several regulatory changes aimed at formalizing the real-estate sector. The report added that in the quarter-ended September, these property markets, including tier I and II cities, started showing initial signs of returning to normalcy as sales registered the best performance in five quarter. Banking stocks edged higher despite report that India’s banking sector will be saddled with gross non-performing assets (GNPAs) worth a staggering Rs 9.5 lakh crore by March-end, up from Rs 8 lakh crore in the year-ago period. The high level of stressed assets in the banking system however provide enormous opportunity for asset reconstruction companies (ARCs) which are important stakeholders in the NPA resolution process.

Finally, the BSE Sensex surged 341.97 points or 0.96% to 36,139.98, while the CNX Nifty was up by 117.50 points or 1.07% to 11,083.70.

The BSE Sensex touched a high and a low of 36,170.83 and 35,863.98, 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 1.13%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were Metal up by 4.29%, PSU up by 2.15%, Oil & Gas up by 1.93%, Bankex up by 1.63% and Energy was up by 1.51%, while Consumer Durables down by 0.33% was the lone losing index on BSE.

The top gainers on the Sensex were SBI up by 3.84%, Tata Steel up by 3.72%, ONGC up by 3.60%, ICICI Bank up by 3.06% and Coal India up by 3.04%. On the flip side, Wipro down by 1.78%, Tata Motors down by 0.83%, Asian Paints down by 0.76%, HDFC Bank down by 0.64% and Tata Motors - DVR down by 0.33% were the top losers.

Meanwhile, the State Bank of India (SBI) in its report titled ‘Union Budget: If wishes were horses!’ has stated that there is a need to increase the income tax exemption limit by Rs 50,000 to Rs 3,00,000, as the implementation of 7th Pay Commission has increased the personal disposable income. It noted that due to such move, around 75 lakh tax payers will be exempted from income tax. Besides, it pointed out that if the exemption limit of interest payments under housing loan is increased to Rs 2,50,000 for existing home loan buyers, from Rs 2,00,000 now, it will benefit 75 lakh home loan buyers and cost the government just about Rs 7,500 crore.

The report also pitched for incentivising savings through bank deposits. In an effort to incentivise savings, it said that the government can exempt interest of savings bank deposits. It also pointed out that the exemption limit on TDS on interest on term deposits with banks may be raised from the present limit of Rs 10,000 per annum. Also, it said that the lock-in period for tax savings term deposits needs to be reduced to 3 years from the present 5 years and these deposits should be brought under EEE (exempt, exempt, exempt) tax regime.

The SBI report further said that budget should give more priority to agriculture, MSME, infrastructure and affordable housing. It indicated that agriculture reforms should aim at re-examination of legally created structures whose provisions are restrictive and create barriers to free trade. Talking on the investment revival, the report said that capital subsidy in case of delayed projects equal to cost overrun may be provided. It added that cost overrun may be funded at concessional interest rate by the government in such cases.

The CNX Nifty traded in a range of 11,092.90 and 10,994.55. There were 35 stocks in green as against 15 stocks in red on the index.

The top gainers on Nifty were Vedanta up by 5.21%, GAIL up by 4.50%, SBI up by 3.93%, Hindalco up by 3.88% and Tata Steel up by 3.73%. On the flip side, Eicher Motors down by 2.26%, Ambuja Cement down by 2.18%, Zee Entertainment down by 1.93%, Wipro down by 1.60% and Infratel down by 1.37% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 5.14 points or 0.07% to 7,720.58 and Germany’s DAX was up by 62 points or 0.46% to 13,525.69, while France’s CAC was down by 6.87 points or 0.12% to 5,535.12.

Asian equity markets ended in green on Tuesday after the three-day US government shutdown ended and the Bank of Japan maintained its massive monetary stimulus program. The US House and the Senate voted Monday to end the government shutdown and subsequently passed a bill to fund the government for about three weeks after Senate majority leader Mitch McConnell promised to address the fate of young immigrant 'Dreamers'. Regional markets shrugged off news that the US will impose steep tariffs on imported washing machines and solar panels. Chinese shares ended higher as investors turned more optimistic about growth in 2018. Further, Japanese shares rallied as the Bank of Japan kept the monetary policy unchanged and offered a more upbeat view on inflation expectations, helping ease jitters that it might shift toward a tighter policy.