Benchmarks end near day’s high on Wednesday

Indian equity benchmarks ended near day’s high point on Wednesday, led by strong gains in Auto, Consumer Discretionary and FMCG stocks amid positive opening in European stock markets.  After the initial uptick, the benchmarks gradually inched higher as the session progressed and settled around the day’s high as foreign funds turning net buyers of domestic equities after a long gap. FIIs turned net buyers after remaining net sellers in the capital market for past many days, as they bought shares worth Rs 1,295.84 crore on Tuesday. Traders also took some solace with Tarun Bajaj, Revenue Secretary, Ministry of Finance, stating that simplification of Goods and Services Tax (GST) law, rationalisation of rates, and removal of tax inversion are among the priority for the government of India. He also said the government is looking forward to having lower rates on fewer products, with indirect taxes contributing 35-40 per cent of the tax revenue.

Key gauges extended gains in second half of trading session, taking support from a private report stating that the Centre's production-linked incentive (PLI) scheme has the potential to add nearly 4 per cent to GDP in terms of incremental revenues. The PLI scheme aims to provide nearly Rs 2.4 lakh crore worth of incentives over the next five years, with the lion's share going to electronics, auto components, and pharma. Additional support also came with report stated that a rise in public investment in the production-linked incentive schemes (PLI) has resulted in a growth in hiring intent for July-September as 61 percent of companies surveyed said they are keen to hire more. Traders overlooked the Centre for Monitoring Indian Economy (CMIE) data showed the rate of unemployment in India rose to 7.8 per cent in June due to a sharp jump in unemployment in rural areas. 

On the global front, European markets were trading higher as an end to strike by Norwegian oil and gas workers eased worries of energy supply crunch. Investors also cheered upbeat regional data. German new industrial orders grew 0.1 percent month-on-month in May, reversing the trend after a third consecutive monthly drop. Asian markets ended lower on Wednesday as the surge in COVID-19 infections in China hurt market sentiment as it reignited worries about potential lockdowns. Traders looked ahead to the release of the minutes of the U.S. Federal Reserve's latest monetary policy meeting later today for cues on the state of the economy.

Back home, gold related industry stocks were in watch with a private report that volume of India’s gold import almost trebled in June from a year before to 49 tonne, albeit on a low base, as jewellers continued to stock up after good sales during the Akshaya Tritiya, considered auspicious for buying the precious metal. Fertilizer industry stocks were in focus as Union Minister for Chemicals and Fertilisers Mansukh Mandaviya said India will not need to import urea by 2025-end as the domestic production of conventional urea and nano liquid urea is expected to be sufficient to meet the country’s annual demand.

Finally, the BSE Sensex rose 616.62 points or 1.16% to 53,750.97 and the CNX Nifty was up by 178.95 points or 1.13% to 15,989.80.

The BSE Sensex touched high and low of 53,819.31 and 53,143.28, respectively. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.76%, while Small cap index was up by 0.94%.

The top gaining sectoral indices on the BSE were Auto up by 2.73%, Consumer Discretionary up by 2.47%, FMCG up by 2.45%, Consumer Durables up by 2.42% and Realty up by 2.39%, while Energy down by 0.27% and Metal down by 0.25% were the few losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 4.54%, Bajaj Finance up by 4.51%, Hindustan Unilever up by 4.01%, Maruti Suzuki up by 3.48% and Asian Paints up by 3.45%. On the flip side, Power Grid Corporation down by 1.63%, NTPC down by 1.03%, Reliance Industries down by 0.87%, Larsen & Toubro down by 0.50% and Tata Steel down by 0.22% were the top losers.

Meanwhile, pitching for the simplification of Goods and Services Tax (GST) structure, the Confederation of Indian Industry’s (CII’s) President Sanjiv Bajaj has suggested that electricity as well as fuel should be brought under the GST ambit as that will help make the industry more competitive. He also suggested that the number of tax slabs under the GST should be brought down to three. Further, he said there is justification for keeping sin and luxury goods in the highest slab.

The president of the industry body said ‘we believe there is (scope for) simplification to probably three slabs. Now that five years have gone and there is experience over there, is what makes sense and that is something that should be deliberated upon’. Besides the exempted category, GST is levied at 5 per cent, 12 per cent, 18 per cent and 28 per cent. There are separate tax rates for gold and precious and semi-precious stones.

On rupee movement against the US dollar, Bajaj said strong forex reserves helped the Reserve Bank of India (RBI) to intervene when required to at least check volatility. He said ‘we believe that eventually the rupee must find its own level and that is a reflection of our own competitiveness but the volatility is what needs to be moderated as RBI has been trying to do’. About high inflation, he said the government has already taken a number of actions to reduce inflation on the ground. He also exuded confidence that the country would witness ‘solid growth’ gradually coming back.

The CNX Nifty traded in a range of 16,011.35 and 15,800.90. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 4.75%, Bajaj Finserv up by 4.72%, Britannia Industries up by 4.69%, Hindustan Unilever up by 4.31% and Eicher Motors up by 3.86%. On the flip side, ONGC down by 4.83%, Power Grid Corporation down by 1.24%, Hindalco down by 1.01%, HDFC Life Insurance down by 1.00% and NTPC down by 0.82% were the top losers.

European markets were trading higher;  UK’s FTSE 100 increased 127.94 points or 1.82% to 7,153.41, France’s CAC increased 101.68 points or 1.75% to 5,896.64 and Germany’s DAX increased 202.78 points or 1.64% to 12,603.98.

Asian markets ended lower on Wednesday as recession worries deepened, while investors awaited an update from the FOMC meeting minutes due later in the day. Chinese shares declined as another wave of Covid infections across Shanghai rekindled fears of further lockdowns in the world’s second-largest economy. Seoul shares hit a 20-month low as bleak data from Europe fueled recession worries globally.