Post Session: Quick Review

Indian equity benchmarks extended previous session’s rally to end the Monday’s trade at fresh record closing high levels, with Nifty settling above crucial 11,550 mark, while Sensex ending just shy of 38,300 mark. Markets made an optimistic start and traded at all-time high levels, as traders took encouragement with former chief economic advisor Arvind Virmani’s statement that India’s economic growth seems to be back on a recovery path and the country will be on a firm 7.5% plus growth track this fiscal. He also said the US-China tariff war provides an opportunity to increase India’s exports to the US. Sentiments on the street also remained optimistic with the Central Board of Direct Taxes’ (CBDT) statement that income Tax collection in the country stood at a record Rs 10.03 lakh crore during 2017-18. It also said during 2017-18, a record number of 6.92 crore I-T returns were filed, which was 1.31 crore more than 5.61 crore returns filed in 2016-17. Besides, positive global cues and a fresh rise in the Indian rupee against the US dollar too influenced the sentiment.

Buying, which intensified in final hours of trade, took markets at their intraday highs, as the street remained buoyed with Fitch Ratings in its latest report stating that the impact of currency weakness on India’s sovereign credit profile is likely to be limited on the back of relatively strong external finances, especially the low level of external debt. It also said currency depreciation could nevertheless add to existing pressures in the corporate and banking sectors. Market participants took note of International Labour Organisation’s India Wage Report which said India needs strong wage policies to promote inclusive growth as inequality, informality and gender wage gap still persists in India. Traders shrugged off report that India’s current account deficit (CAD) will widen to 2.5 per cent of the GDP in the current fiscal due to higher oil prices that has been accentuated by rupee depreciation.

On the global front, Asian markets ended mostly in green, following advances on Wall Street after reports that the U.S. and China are drawing a road map to resolve their trade dispute that may culminate in a meeting between President Donald Trump and President Xi Jinping in November. European markets were trading in green in early deals on Monday.

Back home, aviation related stocks ended higher with the Airports Council International in its latest study released this month showing that India led the Asia Pacific region in posting the highest growth in air passenger traffic in May at 13.3%. Insurance sector stocks were in focus with report that public sector general insurance firms are losing market share because of delayed merger plans and appointments.

The BSE Sensex ended at 38296.23, up by 348.35 points or 0.92% after trading in a range of 38050.69 and 38340.69. There were 23 stocks advancing against 7 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 1.08%, while Small cap index was up by 0.08%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 3.74%, Industrials up by 2.60%, Metal up by 2.57%, Energy up by 2.20% and Oil & Gas up by 1.31%, while IT down by 1.13%, TECK down by 0.85% and Consumer Durables down by 0.66% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Larsen & Toubro up by 6.82%, Tata Motors - DVR up by 5.88%, Tata Motors up by 4.68%, ONGC up by 3.62% and Tata Steel up by 3.39%. (Provisional)

On the flip side, Infosys down by 2.97%, Maruti Suzuki down by 0.78%, Hindustan Unilever down by 0.55%, Axis Bank down by 0.43% and ICICI Bank down by 0.34% were the top losers. (Provisional)

Meanwhile, expressing optimism on the growth of India, former chief economic advisor Arvind Virmani has said that the country’s economic growth seems to be back on a recovery path and India will be on a firm 7.5 percent plus growth track this fiscal. He also said the US-China tariff war provides an opportunity to increase the country’s exports to the US.

Virmani stated that economic growth, which has been subject to many ups and downs over the past seven years, seems to be back on a recovery path. He elaborated that domestically, the main risk to macro stability is politically driven government consumption spending at the cost of investment and fiscal prudence. If this temptation is resisted, the country will be back on a firm 7.5 percent plus growth track this year (fiscal). However, he noted that the rise in oil prices due to geopolitical factors like sanctions on Iran by the US is a concern.

Talking about the US-China tariff war, former chief economic advisor said it will have some short term disruptive effects on the global economy. He projected that the country will become a great economic power by 2035. He said that historically every government pushes up what are referred to as populist expenditure in the year leading up to the election and added that the test is if they keep it modest and don’t disturb the trend in fiscal responsibility. Therefore, he said there is always a risk of fiscal slippage.

The CNX Nifty ended at 11554.30, up by 83.55 points or 0.73% after trading in a range of 11499.65 and 11565.30. There were 29 stocks advancing against 21 stocks declining on the index. (Provisional)

The top gainers on Nifty were Larsen & Toubro up by 6.82%, Tata Motors up by 4.55%, ONGC up by 3.71%, Tata Steel up by 3.59% and Vedanta up by 3.28%. (Provisional)

On the flip side, Infosys down by 2.88%, GAIL India down by 2.24%, Titan Co down by 1.99%, HCL Tech. down by 1.56% and Lupin down by 1.28% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 surged 44.46 points or 0.58% to 7,603.05, France’s CAC rose 37.16 points or 0.69% to 5,382.09 and Germany’s DAX added 114.47 points or 0.93% to 12,325.02.

Asian equity markets ended mostly in green on Monday as news of the US-China trade talks raised hopes for de-escalation in trade tensions. China and the United States will hold lower-level trade talks this week, just before new US tariffs on $16 billion of Chinese goods take effect. Chinese shares recovered from a 2-1/2-year low to close higher after a report that China’s securities regulators summoned brokerage analysts for views on the market improved investors’ sentiments. Though, Japanese shares ended lower as investors awaited developments from trade talks expected between the United States and China this week.