Benchmarks end at fresh all-time closing highs

Indian equity benchmarks ended the Monday’s trade at new all-time closing high levels, though key indices lost some sheen in the last hour of trade to end off day’s high. Markets started the session on an optimistic note with, as sentiments remained up-beat with the Confederation of Indian Industry’s (CII) statement that with the US imposing an additional 25% duty on imports worth $34 billion from China, certain Indian products may become more competitive. Traders also took note of Principal Economic Adviser to the Finance Ministry, Sanjeev Sanyal’s statement that the Goods and Services Tax (GST) slabs may come down to three in addition to the exempted category, in the long-term. He also said the three slabs could be a low of 5%, a central 15% (merging the 12% and 18% slabs that exist now) and a top rate of 25%. Sentiments on the street also remained optimistic with a report showing that foreign investors have poured in over Rs 2,300 crore in the Indian capital markets in July, after pulling out funds for three months in a row. Meanwhile, Central government suggested that there is a need to pause on rate cuts for the time being due to the shortfall of over Rs 40,000 crore in GST collection.

However, traders booked some of their gains in last leg of trade which pull market off from day’s high, as street got cautious, as the government said it will take action against over 2.25 lakh companies as they have not filed requisite financial statement for 2015-16 and 2016-17. Anxiety also spread with credit rating agency, Care Ratings’ latest report that the monsoon deficit is likely to lead to lower production. The report further noted that the country is still facing a rainfall deficit of 7%, on a cumulative basis and the overall sown area is 7.5% less than last year. Despite some profit booking, markets managed to end at record closing highs, as market participants reacted positively to a report that the GST Council headed by Finance Minister Piyush Goyal approved setting up of a group of ministers (GoM) to tackle taxation related issues faced by micro, small and medium enterprises (MSMEs).

Firm opening in European markets too aided sentiments, despite Euro area private sector growth easing in July, ceding most of the momentum gained in the prior survey month. The data from IHS Markit showed that the composite output index fell to 54.3 in July, in line with flash estimate, from 54.9 in June. Asian markets ended mostly in green, although the upside remained limited on renewed trade worries as China proposed retaliatory tariffs on $60 billion worth of goods across a range of sectors

Back home, banking sector’s stocks edged higher with Reserve Bank of India’s (RBI) report that bank credit grew by 12.44% to Rs 86131.64 billion in the fortnight to July 20. In the year-ago period, bank credit had stood at Rs 76598.98 billion. The report showed that during the reporting fortnight, deposits increased by 8.15% to Rs 114381.21 billion from Rs 105756.15 billion a year ago. Stocks related to textile sector remained in lime-light with a report that the government is likely to hike import duty on about 300 textile products to boost domestic manufacturing and create employment opportunities. Auto sector remained in top gear with report indicating that auto makers in India are set to spend up to Rs 58,000 crore in capital expenditure over the next two years-the highest in a decade-underscoring healthy demand prospects in the local market and impending safety and emission norms.

Finally, the BSE Sensex soared 135.73 points or 0.36% to 37,691.89, while the CNX Nifty was up by 26.30 points or 0.23% to 11,387.10.

The BSE Sensex touched a high and a low of 37,805.25 and 37,643.29, respectively and there were 14 stocks advancing against 17 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.26%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were Telecom up by 1.11%, Bankex up by 1.11%, Energy up by 0.98%, PSU up by 0.87% and Metal was up by 0.77%, while Realty down by 0.59%, Healthcare down by 0.42%, FMCG down by 0.34%, Utilities down by 0.28% and IT was down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.86%, ICICI Bank up by 3.36%, SBI up by 3.33%, Bharti Airtel up by 3.07% and Hero MotoCorp up by 1.72%. On the flip side, Kotak Mahindra Bank down by 1.70%, Hindustan Unilever down by 1.65%, Sun Pharma Industries down by 1.58%, Tata Motors down by 1.57% and Tata Motors - DVR down by 1.37% were the top losers.

Meanwhile, raising concerns over Indian monsoon rainfall trends, credit rating agency, Care Ratings in its latest report has said that the monsoon deficit is likely to lead to lower production. The report further noted that the country is still facing a rainfall deficit of 7%, on a cumulative basis and the overall sown area is 7.5% less than last year.

As per the study report, Rayalseema in Andhra Pradesh received the lowest rainfall, which was 43% below normal and north eastern regions continue to be affected by deficient rainfall, as the monsoon winds progress towards the north central belt. Besides, the rating agency pointed that this situation has result into lower cultivated area across almost all crop except sugarcane.

The report also showed that acreage for pulses is around 9% less than last year, while acreage for urad has reduced by 16%, on the back of deficient rainfall in Andhra Pradesh (Rayalseema). Moreover, sowing for oilseeds this year is lower by 1.2%, compared with last year. Care Ratings however underlined that farmers might have chosen to grow fewer pulses due to fall in prices in the last couple of years.

The CNX Nifty traded in a range of 11,427.65 and 11,370.60. There were 22 stocks in green as against 28 stocks in red on the index.

The top gainers on Nifty were Axis Bank up by 3.68%, SBI up by 3.22%, ICICI Bank up by 3.11%, Bharti Airtel up by 2.68% and UPL up by 2.35%. On the flip side, GAIL India down by 3.01%, Kotak Mahindra Bank down by 1.95%, Tata Motors down by 1.92%, Titan Company down by 1.87% and Hindustan Unilever down by 1.87% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose by 14.78 points or 0.19% to 7,673.88, France’s CAC surged 16.46 points or 0.30% to 5,495.44 and Germany’s DAX was up by 68.99 points or 0.54% to 12,684.75.

Asian equity markets ended mixed on Monday as investors digested a mixed US jobs report and kept an eye on intensifying trade tensions between the US and China. Chinese shares fell after Beijing's latest tariff threats escalated the tit-for-tat Sino-US trade war. The overseas edition of the ruling Communist Party's People's Daily newspaper said US President Donald Trump was ‘starring in his own carefully orchestrated street fighter-style deceitful drama’ in which diplomacy had been reduced to a ‘trading game in which everything should follow the rule of America first’. The yuan also weakened despite China's central bank late on Friday raising the reserve requirement on foreign exchange forward positions. Further, Japanese shares ended lower in cautious trade as investors looked forward to a raft of corporate earnings as well as this week's bilateral talks between Washington and Tokyo.