Markets end higher on Friday; Nifty reclaims 11k mark

Indian equity benchmarks ended the Friday’s trade on an optimistic note with Nifty recapturing its crucial 11,000 mark, while Sensex end just shy of 36,500 mark. After making a cautious, markets gained traction and traded significantly throughout the day as traders took encouragement with industry body Ficci’s statement that despite short-term challenges, India’s economic growth story remains intact and the country’s Gross Domestic Product (GDP) is expected to grow around 7.5% in the current financial year. Domestic sentiments remained upbeat with India’s top envoy to the UN Syed Akbaruddin’s statement that India is pushing ahead on its national efforts to meet Sustainable Devolvement Goals by undertaking one of the highest rates of renewable energy expansion and building 11 million homes under the world’s largest affordable housing programme. Some support also came with a report that the proposed new industrial policy, to be released soon, would focus on areas such as promotion of digital ports and use of big data to boost India's exports and manufacturing sector.

Meanwhile, the no-confidence motion, a first in 15 years, is likely to be a non-event for the markets as they expect the Narendra Modi-led National Democratic Alliance government to sail through easily. Traders also took some encouragement with Asian Development Bank’s (ADB) new report stating that South Asia continues to be the fastest growing sub-region, led by India, whose economy is on track to meet fiscal year 2018 projected growth of 7.3% and further accelerating to 7.6% in 2019, as measures taken to strengthen the banking system and tax reform boost investment. Traders shrugged off ICRA’s report that India’s current account deficit (CAD) is set to widen and the first quarter print may come in at $16-17 billion or 2.5% of GDP and added that for the full year the gap may scale a six-year high of $67-72 billion.

Firm opening in European counters too aided sentiments. European markets were trading in green in early deals on Friday, as the European Union is preparing a new list of American goods to hit with protective measures if US President Donald Trump imposes ‘disastrous’ tariffs on automobiles ahead of next week's talks in Washington. Asian markets ended mostly in green, despite signs that China and the US were preparing to impose more tariffs on each other’s products.

Back home, investors also remained watchful ahead the Goods and Services Tax (GST) Council meeting to be held on July 21, where it will consider to cut tax rate on 30-40 items across multiple slabs. On the sectoral front, realty stocks remained in focus, as government discussed ways to boost real estate sector with stakeholders. Reduction of GST, some tax concessions and boosting investment were among the key demands raised by real estate developers at a meeting with the government. Power sector stocks ended lower with report stating that peak power deficit during April-June, 2018-19 was 0.70%, while overall electricity deficit stood at 0.60% during the quarter. 170.76GW electricity was supplied during peak hours against the demand of 171.97 GW during the quarter. Textile sector was in limelight after the central government hinted at taking proactive decisions in favour of the man-made fabric (MMF) sector in order to resolve the issues and problems under the GST latest by July 21.

Finally, the BSE Sensex surged 145.14 points or 0.40% to 36,496.37, while the CNX Nifty was up by 53.10 points or 0.48% to 11,010.20.

The BSE Sensex touched a high and a low of 36,567.34 and 36,335.61, respectively and there were 19 stocks advancing against 12 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index soared 0.73%, while Small cap index was up by 0.41%.

The top gaining sectoral indices on the BSE were IT up by 1.51%, TECK up by 1.38%, Healthcare up by 1.06%, Telecom up by 1.04% and Capital Goods was up by 0.94%, while Oil & Gas down by 0.65%, Metal down by 0.55%, Auto down by 0.40%, PSU down by 0.25% and Basic Materials was down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.72%, Infosys up by 2.42%, Reliance Industries up by 2.23%, ICICI Bank up by 1.84% and Axis Bank up by 1.36%. On the flip side, Bajaj Auto down by 8.73%, Vedanta down by 2.74%, Hero MotoCorp down by 2.22%, ONGC down by 2.20% and Kotak Mahindra Bank down by 1.24% were the top losers.

Meanwhile, Commerce Secretary Rita Teaotia has said that there is a real possibility that India may lose the battle with the US on trade disputes relating to export subsidy at the World Trade Organisation (WTO), as the country’s income levels had crossed the threshold for exports to be subsidised. However, she said that India has been responding very strongly to the US allegations. She also assured that while direct subsidy to exports cannot be given, the government can legitimately support regulatory compliances required in other countries.

Teaotia has stated that benefits to services exports will remain untouched, and GST refunds to exporters will continue as well. She also said that support for input subsidy is also legitimate. However, she noted that incentive only for exports is not eligible and there must be a cost incurred and then compensation. Besides, she indicated that the government has already set up an expert group to look at WTO-compliant support to exports, and a draft set of schemes will be announced for discussion. She added that the existing export subsidy schemes were continuing, as the dispute was yet to be resolved.

In March 2018, the U.S. dragged India into the WTO’s dispute settlement mechanism over export subsidies, saying that these incentives were harming American companies. The US challenged India's export subsidy programmes such as Merchandise Exports from India Scheme in the WTO, asserting that these initiatives harm its companies by creating an uneven playing field. US said that thousands of Indian companies are receiving benefits totalling over $7 billion annually under various export promotion programmes.

The CNX Nifty traded in a range of 11,030.25 and 10,946.20. There were 29 stocks in green as against 21 stocks in red on the index.

The top gainers on Nifty were Bajaj Finance up by 8.01%, Bajaj Finserv up by 5.77%, Sun Pharma up by 2.87%, Infosys up by 2.68% and Cipla up by 2.58%. On the flip side, Bajaj Auto down by 9.42%, HPCL down by 2.95%, Indian Oil Corporation down by 2.90%, Vedanta down by 2.50% and BPCL down by 2.41% were the top losers.

European markets were trading in green; UK’s FTSE 100 surged by 18.21 points or 0.24% to 7,702.18, France’s CAC rose 4.28 points or 0.08% to 5,421.35 and Germany’s DAX was up by 12.04 points or 0.09% to 12,698.33.

Asian equity markets ended mostly higher on Friday despite concerns that an escalation of trade tensions could harm global growth. Chinese shares finished sharply higher, after China's central bank lowered its yuan midpoint for the seventh straight trading day. Investors believe the yuan's slide will cushion the impact on exporters from the planned next round of US tariffs. However, Japanese shares ended a choppy session lower after China allowed its yuan currency to slide further to its lowest level in a year, stoking concerns that China could turn a trade war into a currency war. In economic news, Japan's consumer price inflation rose 0.7 percent year-on-year in June, the Ministry of Internal Affairs and Communications said. That was unchanged from the May reading, although it was shy of expectations for 0.8 percent.