Bulls tighten grip on Dalal Street; Sensex reclaims 35,900 mark

Monday turned out to be a fabulous day of trade for Indian equity benchmarks, with frontline gauges recapturing their crucial 10,850 (Nifty) and 35,900 (Sensex) levels amid firm global cues. Markets made a gap-up opening and traded with traction in early deals with traders taking encouragement from industry body Assocham’s statement that the government’s decision to hike the minimum support price (MSP) for 14 khariff crops would boost farmers’ income, resulting in a huge rural demand push to the Indian economy. Key indices gained momentum 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 upbeat with a report by the World Trade Organization (WTO) showing that India has initiated far more number of measures widely considered to be trade restricting since last year, when the US and China began locking horns on a global trade war spanning hundreds of billions of dollars.

Some support came in with Chief Executive Office and Managing Director of BSE Ashishkumar Chauhan’s statement that India will hit double-digit growth rates soon with growing GDP, legislative reforms such as GST and IBC, bolstered trading sentiments. Economic Affairs Secretary Subhash Chandra Garg’s statement that India's macroeconomic story is quite good too aided sentiments. He also noted that the risks to the macro story and stability are far more manageable than ever. Adding to the optimism, foreign investors have pumped in over Rs 3,000 crore in the Indian capital markets in the last five trading sessions after pulling out hefty funds during April-June. The recent infusion comes following a net outflow of more than Rs 61,000 crore in the last three months. Prior to that, they had poured in Rs 2,662 crore in March. Meanwhile, Union Finance Minister Piyush Goyal has lauded the Goods and Service Tax council for working as a responsive organisation and successfully implementing GST bill in the country in just a year.

On the global front, European markets were trading in green in early deals on Monday, as a wave of optimism about the resilience of the global economy spread across markets despite the escalation of the US-China trade dispute and a new Brexit crisis within the British government. Asian markets ended in green, as favourable US jobs data whetted risk appetites, while sterling slipped after two members of the British government resigned over Brexit and put the future of Prime Minister Theresa May in doubt.

Back home, investors looked forward to the key macroeconomic data such as CPI inflation and industrial production and also to the June quarterly results of heavyweights such as TCS, Infosys and IndusInd Bank, that will be announced later this week. On the sectoral front, stocks related to steel sector edged higher with a report that India’s crude steel output grew six per cent to 26 million tonne (MT) in the first quarter of the ongoing financial year. The country had produced 24.5 MT of crude steel during April-June, 2017-18. Banking stocks remained in focus on report that Public sector banks are planning to tap the markets to raise more than Rs 50,000 crore this fiscal to shore up their capital base for business growth and meeting regulatory global risk norms.

Finally, the BSE Sensex surged 276.86 points or 0.78% to 35,934.72, while the CNX Nifty was up by 80.25 points or 0.74% to 10,852.90.

The BSE Sensex touched a high and a low of 35,977.37 and 35,779.72, respectively and there were 25 stocks advancing against 6 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index gained 1.23%, while Small cap index was up by 1.58%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.46%, Energy up by 1.46%, Industrials up by 1.43%, Utilities up by 1.42% and Power was up by 1.32%, while there were no losers on the BSE sectoral front. 

The top gainers on the Sensex were Vedanta up by 3.14%, Asian Paints up by 3.11%, Yes Bank up by 2.70%, Sun Pharma up by 1.97% and Reliance Industries up by 1.96%. On the flip side, TCS down by 1.34%, HDFC down by 0.32%, Bharti Airtel down by 0.22%, Indusind Bank down by 0.22% and Coal India down by 0.11% were the top losers.

Meanwhile, finance secretary Hasmukh Adhia has said that the all-powerful Goods and Service Tax (GST) Council will consider bringing petroleum products within the purview of GST regime and it could happen in phases. He noted that at present, the petroleum products such as petrol, diesel and aviation turbine fuel are beyond the scope of GST and added that this gives states the right to impose a value-added tax on these items.

Talking on the issue of automation of refund, Adhia said that it was meant to be automated right from day one but unfortunately people made so many mistakes in filing return that the income-tax department had to get into manual mode at the last moment. He said ‘we are again trying to make it completely automatic, the entire refund process. This is the next thing. In terms of simplification of rates, slabs, we do understand need for it, but we did what was best in the given scenario’. He also said ‘we could not have done anything other than this because we had to take care of revenue, we had to take care of concern of the poor. Certainly, we must move in that direction of something better than that’.

The GST currently has four slabs -- 5 percent, 12 percent, 18 percent and 28 percent. The GST Council, in November, had reduced the tax rate on 178 items from 28 percent to 18 percent.

The CNX Nifty traded in a range of 10,860.35 and 10,807.15. There were 38 stocks in green as against 12 stocks in red on the index.

The top gainers on Nifty were Asian Paints up by 3.00%, Yes Bank up by 2.91%, Vedanta up by 2.69%, Dr. Reddy’s Lab up by 2.69% and HCL Tech up by 2.02%. On the flip side, Ultratech Cement down by 1.57%, TCS down by 1.50%, Titan Co down by 1.16%, HDFC down by 0.60% and Hero MotoCorp down by 0.55% were the top losers.

European markets were trading in green; Germany’s DAX increased 16.34 points or 0.13% to 12,512.51, UK’s FTSE 100 added 29.44 points or 0.38% to 7,647.14 and France’s CAC was up by 25.91 points or 0.48% to 5,401.68.

Asian equity markets ended higher on Monday as strong US jobs growth data helped investors shrug off renewed concerns over an escalating US-China trade dispute. US job growth increased more than expected in June but slowing wage increases helped reduce the probability of another Fed rate hike for September. Japanese shares hit a one-week high as the yen turned broadly lower in reaction to the strong US jobs data released on Friday. Meanwhile, China’s share market bounced despite heightened trade tensions between Washington and Beijing after each imposed major tariffs on the other’s goods last week and investors nervously watched for more policy action.