Benchmarks end at fresh record high levels; Nifty conquers 11,100 mark

Indian equity benchmarks ended at fresh record high levels on Monday, after a government report predicted growth would accelerate in the coming fiscal year. Markets started the session with a gap-up opening and traded firmly throughout the day as traders remained optimistic after the economic survey released earlier in the day projected economic growth would be 7.0-7.5% in the year starting in April, up from a projected 6.75% for the current fiscal year. But the survey also noted a pause in general government fiscal consolidation relative to 2016-17 cannot be ruled out, sending benchmark 10-year bond yields up 4 basis points to 7.52% from its previous close. It added that, gross value added is likely to grow at 6.1% in FY18 against 6.6% in FY17 and Industry growth is likely to be at 4.4% for the current fiscal year.

Traders also took some encouragement with the government expecting tax collections to improve in the coming months as measures to raise compliance have begun to show results. The total collections for December rose to Rs 86,703 crore, as on January 24. GST receipts had slipped to Rs 80,808 crore in November from more than Rs 83,000 crore in October and over Rs 92,000 crore in September. Some support also came with report that the share of Foreign Portfolio Investments (FPI) in domestic capital markets through participatory notes (P-notes) has jumped to a six-month high of over Rs 1.5 lakh crore at the end of December after declining in the month of November, despite stringent norms put in place by markets regulator Securities and Exchange Board of India (SEBI) to check their misuse. This is the highest level since June when the cumulative value of such investments stood at Rs 1.65 lakh crore. Separately, a private report enlightened that the government is expected to continue its fiscal consolidation at a slower pace in the ensuing budget with a fiscal deficit target of 3.2% of GDP for 2018-19. The street shrugged off the private report that India’s factory output growth in December 2017 is projected to come down to 5.5-6%, from a 17-month high of 8.4% in November last year.

On the global front, European markets were trading mostly in red after a business survey showed that uncertainty over Britain’s future trading relations with the European Union after Brexit is the most serious threat to London as the world’s top financial center. Asian markets closed mostly in green, amid upbeat corporate earnings and strong global economic growth. China’s senior official at the country’s top economic planner said that the economic growth will likely slow to 6.5-6.8 percent this year, while warning about the risks of Black Swan and Gray Rhino events.

Back home, investors took note that ahead of the Budget, the government has increased the incentive on more than a hundred products including traditional exports like leather, marine, yarn and wool. The benefit in form of higher duty drawback on 102 items is expected to boost exports and also ease the liquidity crunch faced by exporters after the rollout of the GST. On the sectoral front, telecom stocks Bharti Airtel, Idea Cellular and Reliance Communications ended in red after Reliance Jio announced the lowest rental plan of Rs 49 in which it will offer unlimited voice and data for 28 days for JioPhone subscribers, effective January 26. Meanwhile, Newgen Software Technologies made a decent listing on the BSE and went home with a gain of over 3%.

Finally, the BSE Sensex surged 232.81 points or 0.65% to 36283.25, while the CNX Nifty was up by 60.75 points or 0.55% to 11130.40.

The BSE Sensex touched a high and a low of 36,443.98 and 36,093.36, respectively and there were 17 stocks on gaining side as against 13 stocks on losing side, while one stock remained unchanged on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.73%, while Small cap index was down by 1.10%.

The top gaining sectoral indices on the BSE were Auto up by 1.60%, IT up by 1.16%, TECK up by 0.92%, Consumer Durables up by 0.60% and Consumer Discretionary Goods & Services up by 0.56%, while PSU down by 1.22%, Telecom down by 1.18%, Utilities down by 1.00%, Healthcare down by 0.92% and Oil & Gas was down by 0.85% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.85%, HDFC up by 2.66%, TCS up by 2.48%, Hero MotoCorp up by 2.23% and Kotak Mahindra Bank up by 2.06%. On the flip side, Dr. Reddy’s Lab down by 5.92%, Bharti Airtel down by 2.66%, ITC down by 1.85%, Yes Bank down by 1.64% and ONGC down by 1.58% were the top losers.

Meanwhile, in a massive relief to Indian exporters, the government has raised the all industry rates of duty drawback on 102 export items. Besides, the finance ministry noted that as a step towards more efficient input tax neutralisation on exports, after considering various representations from trade and industry, the government has enhanced the duty drawback rates.

The ministry has pointed out that the move will help address the concerns of these export sectors and make country’s exports more competitive in global market. It indicated that the export items that will now enjoy a higher duty drawback mainly include marine and seafood products, automobile tyres and bicycle tyres/tubes, leather and articles of leather, yarn and fabric of wool, glass handicrafts and bicycles. It added that the enhanced rates of duty drawback will be effective from January 25.

Commenting on the move, the Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai has said that it is a welcome move and this would provide some competitiveness to Indian exporters in global market. He also said that duty drawback by and large has been enhanced in most of the items except for chemical items where there is some reduction.

The CNX Nifty traded in a range of 11,171.55 and 11,075.95. There were 28 stocks in green as against 22 stocks in red on the index.

The top gainers on Nifty were Eicher Motors up by 3.89%, Maruti Suzuki up by 3.60%, HDFC up by 3.31%, UPL up by 2.61% and Eicher Motors up by 2.61%. On the flip side, Dr. Reddy’s Lab down by 5.89%, Lupin down by 4.21%, GAIL India down by 3.31%, Bharti Airtel down by 2.67% and HPCL down by 2.37% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 32.29 points or 0.24% to 13,307.88 and France’s CAC was down by 3.57 points or 0.06% to 5,525.58, while UK’s FTSE 100 was up by 6.54 points or 0.09% to 7,672.08.

Asian equity markets ended mostly in green on Monday as oil resumed its ascent, Intel reported record quarterly revenue and the US dollar steadied after recent weakness on concerns about trade spurred by President Trump's administration officials. Japanese shares ended almost flat in choppy trade, with gains in cyclicals such as memory chip makers offset by weakness in shares sensitive to domestic demand, notably railroad and construction companies. Meanwhile, Chinese stocks tumbled, with the blue-chip index posting its worst day in more than two months, led by a slump in consumer and healthcare firms as investors booked profits after a recent strong rally.