Benchmarks log fresh record highs; Nifty surpasses 11,150 mark

Boisterous benchmarks once again logged new record highs with frontline indices surpassing their crucial 11,150 (Nifty) and 36,900 (Sensex) bastions on Thursday. The markets, on the July F&O expiry day, remained remarkably steady with Sensex confining itself to a range of around 100 points. Though, huge volatility was witnessed in last leg of trade but frontline gauges managed to log their new all-time closing highs. Overall, sentiments remained up-beat with Commerce and Industry Minister Suresh Prabhu’s statement that India’s exports would register healthy growth rates in the coming months and are expected to touch $350 billion in 2018-19. He also said that services sector is set to become a dominant driver of the Indian economy and will contribute $3 trillion to the GDP by 2025. Traders also took some encouragement with Housing and Urban Affairs Minister Hardeep Singh Puri’s statement that India’s economy will breach the $5 trillion mark by 2025. Some also support came in with the global rating agency Moody’s Investor Service’s statement that the fund infusion in five weak public sector banks will be credit positive and strengthen their capitalization.

Sudden selloff witnessed in last leg of trade which dragged markets into red terrain ahead of F&O expiry amid report that as many as 59 mega central sector infrastructure projects, worth at least Rs 1,000 crore each, have reported cost overrun of Rs 1.36 lakh crore. But, the selloff proved short-lived and markets soon recovered to clock fresh record highs as traders took some support with a private report stating that India will remain the fastest-growing major economy this year supported by increased government spending ahead of next year's general election. Meanwhile, the Securities and Exchange Board of India (SEBI) said that the mutual fund industry, which is witnessing record growth, needs a good governance system.

Firm opening in European counters too aided sentiments with all the indices trading in green ahead of the ECB’s monetary policy meeting later today, although no immediate changes to policy are expected. Asian markets ended mostly in green, taking comfort from gains on Wall Street after US President Donald Trump and European Commission President Jean-Claude Juncker agreed to work toward eliminating trade barriers on industrial goods.

Back home, steel sector remained in focus after a recent study by ratings agency India Ratings and Research stating that prices of steel-making raw materials are likely to move in a narrow range during the financial year 2018-19 due to increased supply pressure from major producing countries. Besides, shares of public sector banks have rallied by up to 5% on the National Stock Exchange (NSE), after Canara Bank reported a net profit of Rs 2.81 billion in June quarter (Q1FY19) on the back of higher net interest income (NII). Cement stocks edged higher, aided by credit rating agency ICRA’s latest report stating that cement demand is likely to grow by around six per cent in 2018-19, on the back of a pick-up in the affordable and rural housing segments and infrastructure, primarily in road and irrigation projects.

Finally, the BSE Sensex surged 126.41 points or 0.34% to 36,984.64, while the CNX Nifty was up by 35.30 points or 0.32% to 11167.30.

The BSE Sensex touched a high and a low of 37,061.62 and 36,852.53, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.76%, while Small cap index was up by 0.31%.

The top gaining sectoral indices on the BSE were PSU up by 2.01%, Utilities up by 1.66%, Power up by 1.44%, Bankex up by 1.43% and Telecom was up by 0.98%, while Metal down by 0.68%, IT down by 0.68%, TECK down by 0.56%, Consumer Disc down by 0.46% and Capital Goods was down by 0.43% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 5.62%, ICICI Bank up by 4.08%, Power Grid Corporation up by 4.04%, ONGC up by 1.98% and Axis Bank up by 1.84%. On the flip side, Maruti Suzuki down by 3.70%, Yes Bank down by 3.61%, Asian Paints down by 1.08%, Larsen & Toubro down by 1.06% and TCS down by 0.81% were the top losers.

Meanwhile, outgoing Chief Economic Adviser (CEA) Arvind Subramanian has expressed confidence that the highest, 28 percent, tax slab under the Goods and Services Tax (GST) may become virtually a hollow shell over the next year or so. Over the last one year, the GST Council, chaired by Union Finance Minister and comprising state ministers, has pruned the 28 percent slab by cutting tax rates on 191 goods, leaving just 35 items, including AC, digital camera, video recorders, dishwashing machine and automobiles, in the highest tax bracket. 

Subramanian has said that when the 28 percent tax rate was imposed on certain items under GST, there was a political reaction against it, and the GST Council responded by ‘really whittling down...quite substantially’ the number of products in that slab. He also said that a lot of effort and time was devoted to the simplifying the burden on small and medium enterprises.

CEA stressed on the need to get talent from everywhere outside the government or outside the country as well. He said ‘You need specific expertise. I think the lateral entry is a good thing. Government needs more talent than silicon valley’.

The CNX Nifty traded in a range of 11,185.85 and 11,125.70. There were 26 stocks in green as against 24 stocks in red on the index.

The top gainers on Nifty were SBI up by 6.40%, Eicher Motors up by 3.71%, Power Grid Corporation up by 3.67%, Grasim Industries up by 3.62% and ICICI Bank up by 3.51%. On the flip side, Yes Bank down by 4.03%, Maruti Suzuki down by 3.78%, Indian Oil Corporation down by 2.21%, HPCL down by 1.79% and BPCL down by 1.76% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 0.59 points or 0.01% to 7,658.85, Germany’s DAX surged 147.78 points or 1.16% to 12,727.11 and France’s CAC was up by 22.38 points or 0.41% to 5,448.79.

Asian equity markets ended mostly higher on Thursday as US President Donald Trump and European Commission president Jean-Claude Juncker agreeing to work towards eliminating trade barriers on industrial goods. The US and the EU have agreed to work for zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto goods. They also agreed to increase trade in services and agriculture, including greater US soybean exports to the EU. Though, Chinese shares ended lower as months of see-sawing US-Sino trade friction stoked uncertainties over the country’s economic growth, prompting investors to take a cautious stance. Japanese shares ended slightly lower as the yen gained ground on speculation the Bank of Japan could scale back its stimulus program next week.