Bulls tighten grip on Dalal Street; Sensex hit all-time closing highs

Bulls tightened grip on Dalal Street on Monday with Sensex hitting fresh closing high, while Nifty ending near its crucial 11,100 mark. Markets started the session on a cautious note and traded with modest gain in a very tight range in first half, as traders reacted positively to the outcome of the no-confidence motion as the day progresses. The Narendra Modi government comfortably defeated the no-confidence motion in the Lok Sabha on Friday. Though, traders remained cautious about a report that continuing their selling spree, foreign investors have pulled out over Rs 2,000 crore from the capital markets this month so far on higher crude oil prices and a depreciating rupee. The latest sell-off comes after foreign portfolio investors (FPIs) withdrew over Rs 61,000 crore from the capital markets in the last three months (April to June).

Buying, which emerged in second half of the session, took markets near intraday highs as traders got support with a private report that the 10 major economies of Asia, including India, are expected to see robust growth and amount to over $28 trillion in real GDP terms on aggregate, more than the US by 2030. Some support also came with retirement fund body EPFO’s payroll data suggesting that as many as 4,474,859 jobs created during September 2017 to May this year. Meanwhile, the GST Council announced the reduction of rates on a list of 100 items, including sanitary pads, small TVs and footwear. Investors continued to take support from a report stating that ASEAN-India trade is likely to touch $100 billion by 2020 calling for greater cooperation between the two sides in economic sector. The street remained buoyed with industry chamber CII’s statement that the decision of the GST Council to cut rates and simplification of return filing process will increase the compliance rate and add to revenue buoyancy.

On the global front, European markets were trading in red, as concerns over trade tensions returned to the forefront, with G-20 finance ministers and central bankers warning about increased risks to global economic growth. Asian markets exhibited mixed trend on Monday, as Trump talked of more tariffs on China and continued his attack on the Federal Reserve for raising interest rates, saying tightening penalizes the US for doing well.

Back home, steel sector stocks edged higher despite the Joint Plant Committee’s latest report stating that India’s export of finished steel slumped by 33.7% to 1.351 million tonnes (MT) during the first quarter of the current fiscal. The country had exported 2.037 MT finished steel during the same quarter a year ago. Auto stocks remained in focus, amid data from SIAM and CMIE showed that the combined net profit of top 23 four-wheeler automobile manufacturers in India stood at Rs 9,966.3 crore in 2016-17, which was just 2.79% of their total gross turnover. Meanwhile, footwear stocks such as Bata India, Khadim India and Mirza International ended with decent gains, after the GST Council lowered GST rates on footwear below Rs 1,000 to Rs 5% from 18% earlier.

Finally, the BSE Sensex surged 222.23 points or 0.61% to 36,718.60, while the CNX Nifty was up by 74.55 points or 0.68% to 11,084.75.

The BSE Sensex touched a high and a low of 36,749.69 and 36,491.83, respectively and there were 22 stocks advancing against 9 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index soared 1.29%, while Small cap index was up by 0.93%.

The top gaining sectoral indices on the BSE were Telecom up by 2.47%, FMCG up by 2.29%, Basic Materials up by 2.16%, Realty up by 1.90% and Metal was up by 1.62%, while Energy down by 0.38% was the lone losing index on BSE.

The top gainers on the Sensex were Vedanta up by 4.42%, Adani Ports & SEZ up by 3.83%, ITC up by 3.80%, Bharti Airtel up by 3.49% and ICICI Bank up by 3.33%. On the flip side, Hero MotoCorp down by 6.20%, Bajaj Auto down by 5.35%, Wipro down by 2.47%, HDFC Bank down by 1.48% and ONGC down by 0.86% were the top losers.

Meanwhile, giving major relief to the common man, the Goods and Services Tax (GST) at its 28th meeting, has reduced tax rates on several products including refrigerators, washing machines and small televisions, which would now be taxed at 18 percent, down from the current 28 percent. Apart from this, it also decided to exempt GST on sanitary napkins, rakhis, fortified milk and idols of deities made of stone, marble and wood. The new tax rates will be enforced from July 27.

The highest tax bracket of 28 percent has been rationalised further with rates on daily-use items like perfumes, cosmetics, toiletries, hair dryers, shavers, mixer grinder, vacuum cleaners, lithium ion batteries, being lowered to 18 percent. Refrigerators, small televisions, of up to 25 inches, lithium ion batteries, vacuum cleaners, domestic electrical appliances, such as food grinders, mixers....storage water heaters, immersion heaters, hair dryers, hand driers, electric smoothing irons, among others have been brought to the 18 percent slab.

Footwear costing up to Rs 1,000 will now attract 5 percent GST. So far, footwear up to Rs 500 attracted 5 percent GST, and those having retail sale price of over Rs 500 attracted 18 percent rate. Tax rate on ethanol has been slashed to 5 percent from 18 percent at present. Besides, tax rates on worked up Kota stone, sand stone and similar quality of local stones were cut from 18 to 12 percent, with the purpose of avoiding classification disputes. Beside, tax rate on handicraft items such as handbags, pouches and purses, jewellery box, wooden frames of paintings and photographs among others have been brought under the 12 percent slab, from 18 percent.

GST on handmade carpets and handmade textile floor coverings has been reduced from 12 percent to 5 percent. The tax rate on supply of e-books has been cut to 5 percent from 18 percent. The hotel industry too has been given major relief as tax rate would be based on the room tariff paid and not the published tariff. Earlier, there was a lack of clarity on the issue causing a lot of trouble for consumers booking hotels with 'declared tariffs' of Rs 7,500 and above which incurred 28 percent GST. While hotels with tariff below Rs 1,000 are exempted from GST, those with tariff between Rs 1,000-2,500 are taxed at 12 percent, those between Rs 2,500-7,500 at 18 percent, and above Rs 7,500 at 28 percent.

The CNX Nifty traded in a range of 11,093.40 and 11,010.95. There were 34 stocks in green as against 16 stocks in red on the index.

The top gainers on Nifty were UPL up by 15.52%, Vedanta up by 4.10%, Bajaj Finserv up by 3.84%, Adani Port & SEZ up by 3.63% and ITC up by 3.63%. On the flip side, Hero MotoCorp down by 6.58%, Bajaj Auto down by 5.34%, Wipro down by 2.49%, HDFC Bank down by 1.80% and Grasim Industries down by 1.71% were the top losers.

European markets were trading in red; UK’s FTSE 100 dipped by 34.05 points or 0.45% to 7,644.74, France’s CAC shed 39.20 points or 0.73% to 5,359.12 and Germany’s DAX was down by 55.19 points or 0.44% to 12,506.23.

Asian equity markets ended mixed on Monday after US President Donald Trump threatened to slap punitive tariffs on all Chinese imports and the Group of G20 finance ministers warned of increased risks to global economic growth. Trump's remarks criticizing the Federal Reserve for raising interest rates and accusations that the European Union and China are manipulating their currencies to gain on edge in global trade also weighed on markets. Japanese shares ended lower as the yen surged against the dollar on speculation the Bank of Japan (BoJ) might announce changes to its ultra-loose monetary policy. Meanwhile, Chinese shares ended higher as banking and industry sectors climbed, but a slump in healthcare shares amid a vaccine scandal capped the gains.