Thursday turned out to be a fabulous day of trade for Indian equity markets, where frontline gauges garnered a gain of over half a percent as US Federal Reserve Chair Janet Yellen made the well-anticipated move of increased rates by 25 bps in its effort to return monetary policy to a more normal footing. After making a gap-up opening, domestic bourses traded in tight band throughout the day’s trade as traders also took some encouragement with reports of India's exports exhibiting a double digit growth of 17.48 percent, valued at $ 24.5 billion in February compared to $ 20.84 billion during the same month last year on increase in shipments of non-petroleum, non gems and jewellery products.
Some support also came with report that the GST Council is likely to endorse supplementary legislations needed for implementation of the goods and service tax (GST) regime. It may also take up capping the cess to be levied on demerit goods like luxury cars and tobacco products for creation of a corpus that will be used for compensating states for any loss of revenue from GST implementation in the first five years. Also, the International Monetary Fund (IMF) enlightened that India’s economic growth is expected to pick up once the effects of cash shortages linked to the currency exchange initiative fade. IMF in its note highlighted that further subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST), are necessary to attain medium-term fiscal consolidation plans.
Positive global cues too aided sentiments with European counters making a firm start, hitting their highest level in 15 months in early deals. Asian markets rallied on Thursday after the Fed stuck to its outlook for two additional rate increases this year after lifting its overnight interest rate by 25 basis points on Wednesday as had been expected.
Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. On the sectoral front, banking shares remained on buyers’ radar as the Finance Minister Arun Jaitley said, the government would consider setting up multiple oversight committees under the Reserve Bank of India (RBI) to examine the cases of non-performing assets (NPAs) referred by banks. Stocks related to infrastructure space too edged higher with private report stating that India's transport infrastructure will grow at higher rates over the next five years on account of a string of measures, including increased spending on road and rail projects. It added that other factors that will propel growth rates include reform measures and new policies, encouraging private participation.
The NSE’s 50-share broadly followed index Nifty gained around seventy points to surpass the psychological 9,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around one hundred and ninety points to finish above its psychological 29,500 mark. Broader markets too traded jubilantly and garnered gains of over a percentage point. The market breadth remained in favor of advances, as there were 1,798 shares on the gaining side against 1,031 shares on the losing side, while 183 shares remain unchanged.
Finally, the BSE Sensex surged 187.74 points or 0.64% to 29,585.85, while the CNX Nifty was up by 68.90 points or 0.76% to 9153.70.
The BSE Sensex touched a high and a low of 29614.79 and 29482.83, respectively and there were 23 stocks on gainers side as against 7 stocks on the losers side on the index.
The broader indices ended in green; the BSE Mid cap index gained by 1.55%, while Small cap index was up by 1.07%.
The top gaining sectoral indices on the BSE were Metal up by 2.84%, Power up by 1.80%, Consumer Durables up by 1.68%, Basic Materials up by 1.68% and Industrials was up by 1.65%, while Telecom down by 0.04% was the lone losing index on BSE.
The top gainers on the Sensex were Adani Ports up by 4.73%, Tata Steel up by 4.30%, Bajaj Auto up by 2.31%, Asian Paints up by 2.23% and Infosys was up by 1.62%. On the flip side, Hero MotoCorp down by 1.32%, Bharti Airtel down by 0.80%, Reliance Industries down by 0.54%, Coal India down by 0.36% and ICICI Bank was down by 0.25% were the top losers.
Meanwhile, the International Monetary Fund (IMF), in its latest report ‘Global Prospects and Policy Challenges’ has said that India’s economic growth is likely to improve, once impact of the cash shortage linked to the currency exchange move fades. The report also expects the fiscal deficit to continue to shrink in the near-term.
In order to attain medium-term fiscal consolidation plans, the report has said that emphasis is needed on various measures such as subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST) to achieve these fiscal consolidation plans.
The report further noted that the steps has been taken by emerging economies like India to reduce excessive corporate leverage and improve bank's balance sheets or adoption of more prudent risk-management practices, including to reduce currency and maturity balance sheet mismatches, which will help reduce vulnerabilities to global financial conditions, possible capital outflows, and sharp currency movements.
The CNX Nifty traded in a range of 9,158.45 and 9,128.55. There were 42 stocks in green as against 9 stocks in red on the index.
The top gainers on Nifty were Adani Ports up by 4.96%, Tata Steel up by 4.30%, Hindalco up by 4.14%, Tata Motors - DVR up by 2.23% and Asian Paints was up by 2.21%. On the flip side, Hero MotoCorp down by 1.56%, Bharti Airtel down by 0.70%, Reliance Industries down by 0.56%, Coal India down by 0.26% and ICICI Bank was down by 0.23% were the top losers.
European markets were trading in green; France’s CAC increased 43.89 points or 0.88% to 5,029.37, UK’s FTSE 100 surged 71.34 points or 0.97% to 7,439.98 and Germany’s DAX was up by 118.46 points or 0.99% to 12,128.33.
Asian equity markets ended higher on Thursday after the US Federal Reserve lifted its benchmark short-term rate by 25 basis points, as expected, and stuck to its forecast of two more such increases this year and three in 2018, saying the economy is doing well. Investors who had feared much faster US hikes heaved a sigh of relief after the Fed emphasized further rate increases would only be ‘gradual’. A rebound in oil prices and Dutch Prime Minister Mark Rutte's victory over anti-Islam lawmaker Geert Wilders in a parliamentary election also supported underlying sentiment. Chinese shares ended higher after the country's central bank lifted interest rates by 10 basis points on both medium-term lending facility loans and reverse repurchase agreements in a bid to avoid downward pressure on the yuan and counter capital outflows. Further, Japanese shares ended marginally higher even as the dollar fell against the yen and the Bank of Japan kept its monetary stimulus unchanged, as widely expected, saying the economy is on a moderate recovery trend.
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