Post Session: Quick Review

Markets rebounded sharply on Friday after two consecutive sessions of fall, which lifted both Sensex and Nifty above psychologically crucial 37,500 and 11,350 levels respectively, with hefty gains of around a percent.  Heavy buying activity which was witnessed in last hour of trade mainly helped markets to end the session at intraday high levels. Sentiments remained upbeat right from the start of trade as traders took encouragement with a private report that India’s economic growth momentum is likely to pick up further in the April-June period and the country is expected to clock GDP growth of 7.5% in this financial year. Sentiments remained sanguine with report that India’s services sector activity remained in the growth territory for the second consecutive month in July, as business activity witnessed the strongest growth since October 2016 amid improved demand conditions. The seasonally adjusted Nikkei India Services Business Activity Index rose from 52.6 in June to 54.2 in July.

Key indices added some gains in last leg of trade, as local sentiments got buttressed with India meteorological department (IMD) stating that India is set to receive average rainfall during the last two months of the crucial monsoon season that stretches between June and September. It also added that the rainfall for the country as a whole during the second half of the season is likely to be 95 percent of a long period average. Local investors also cheered with GST Council member, Sushil Modi stating that the reduction in GST tax rates might lead to in ‘better revenues’ in the long term but might lead to revenue shortfall in the next three-four months. Investors paid no heed towards International Monetary Fund’s latest report where it stated that Real interest rates in India may drop by more than 150 basis points over the next decade. It also said that a decline in the India’s dependent youth (those from ages 0-15 years) between 2020 and 2030 is expected to result in a reduction of long-term interest rates in the country.

On the global front, Asian markets ended mixed, as fears of an all-out trade war between China and the United States keep investors on edge. European markets were trading in green in early deals on Friday, as investors digested further corporate earnings and news that Apple's valuation hit $1 trillion. Back home, agri stocks were in limelight, after Agriculture Minister Radha Mohan Singh asked MPs to urge states to promote location specific Integrated Farming System (IFS) for achieving the goal of doubling farmers’ income by 2022. Also, energy sector were in focus after the commerce and industry ministry said Invest India has joined hands with energy companies to offer its three-month programme for startups in the sector.

The BSE Sensex ended at 37569.78, up by 404.62 points or 1.09% after trading in a range of 37319.61 and 37582.02. There were 24 stocks advancing against 7 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.91%, while Small cap index was up by 1.13%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.78%, Metal up by 1.65%, Bankex up by 1.65%, Healthcare up by 1.13% and Utilities up by 1.01%, while there were no losers on the BSE sectoral front. (Provisional)

The top gainers on the Sensex were Axis Bank up by 5.21%, Vedanta up by 4.23%, Yes Bank up by 3.03%, Kotak Mahindra Bank up by 2.26% and HDFC up by 2.26%. (Provisional)

On the flip side, Tata Motors - DVR down by 0.80%, Tata Motors down by 0.79%, Hero MotoCorp down by 0.79%, Wipro down by 0.57% and Asian Paints down by 0.53% were the top losers. (Provisional)

Meanwhile, the Goods and Services Tax (GST) Implementation Committee’s Chairman Sushil Modi has said that the recent reduction in indirect tax rates on several items may lead to revenue shortfall in the next three-four months. Thought, he also said that in the long-run revenue collections will increase due to improvement in tax compliance.

Modi said the way GST is being implemented successfully, no States would require to be paid any compensation after three years.  He added that the revenue shortfall of manufacturing States was lower than the consuming ones despite GST being a destination-based tax. He also noted that small manufacturers, traders and service providers have been facing difficulty due to the new system.

Expressing hope of being able to achieve the monthly revenue target of Rs 1 lakh crore in the ‘not so distant future’, the Chairman said the GST Council could think of bringing the petroleum products under GST once the target is achieved. However, he added that there was ‘no guarantee’ that the prices of petroleum products would come down if these items were brought under the GST.

The GST Council had recently lowered rates on over 80-odd items, including footwear, refrigerator, washing machine and small screen TV; and had also rationalised rates on some services. In all, the rates on close to 450-odd items have been brought down in the last few months.

The CNX Nifty ended at 11364.20, up by 119.50 points or 1.06% after trading in a range of 11294.55 and 11368.00. There were 37 stocks advancing against 11 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indiabulls Housing Finance up by 6.13%, Axis Bank up by 5.05%, Vedanta up by 4.27%, Yes Bank up by 3.22% and GAIL India up by 3.10%. (Provisional)

On the flip side, Tech Mahindra down by 0.98%, Grasim Industries down by 0.87%, Tata Motors down by 0.82%, Hero MotoCorp down by 0.63% and Wipro down by 0.57% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 rose by 42.06 points or 0.55% to 7,617.99, France’s CAC was up by 18.94 points or 0.35% to 5,479.92 and Germany’s DAX surged by 75.51 points or 0.60% to 12,621.84.

Asian equity markets ended mixed on Friday, as caution prevailed amid renewed trade worries and ahead of the release of the US jobs data for July later in the day. US employment is expected to increase by 190,000 jobs in July, while the unemployment rate is expected to edge down to 3.9 percent. Chinese shares dropped after a survey from Caixin showed earlier today that China's services sector continued to expand in July, albeit at a slower pace. The PMI stood at 52.8, down from 53.9 in the previous month as new orders expanded at their weakest rate in more than two and a half years. Meanwhile, Japanese shares closed on a flat note as trade war jitters and caution ahead of key US jobs data kept investors on the sidelines.