Sensex hits new high, Nifty settles at 11,085 on GST cuts and trust vote

The benchmark Sensex on Monday touched a record high, while the Nifty 50 index fell 47 points from a new high as goods and services tax (GST) cuts and defeat of a no-confidence vote in Parliament by the centre boosted sentiment. 

Positive start to the earnings season also supported momentum and helped defy subdued global cues.

The Sensex rose 0.6 per cent, or 222 points to end at 36,718.6 points, and the Nifty rose 0.7 per cent, or 74.55 points, to end at 11,085.

Consumer focused stocks, including ITC, Hindustan Unilever and Maruti Suzuki, led the gains after the Centre slashed the GST rate on more than 50 products. Defeat of the no-confidence motion helped allay fears that the Bharatiya Janata Party (BJP) is losing its mojo ahead of next year’s general elections.

Barring the BSE Energy index, all 19 sectoral indices of the BSE ended with gains, with BSE FMCG and BSE Telecom indices leading the race. The broader market also participated in the rally with mid- and small-cap-focused indices gaining around one per cent.

“Reducing GST rates and positive cues from ongoing result season supported the market. The consumption segment inched higher on expectations of an improvement in margins and volume growth on account of lower taxes,” said Vinod Nair, head of research, Geojit Financial Services. “Global markets remained volatile but appreciation in rupee and favourable domestic macros countered the headwinds,” he added.

Both foreign as well as domestic institutional investors (FIIs and DIIs) remained net buyers on Monday. Overseas players bought shares worth Rs 2.6 billion, while DIIs were net buyers to the tune of Rs 1.25 billion.

The benchmark indices have gained over four per cent in the last one month led by sharp gains in index heavyweights such as Reliance Industries, TCS and Infosys.

“The Indian equity markets have had a phenomenal run in the last few weeks. With the Sensex scaling new highs and the Nifty within striking distance of the same, the price action clearly exhibits India’s outperformance versus the rest of the world,” said Gautam Shah, technical analyst, JM Financial Services. 

“Having weathered a barrage of adverse news flow in the form of FII outflows, rising oil and dollar as well as the mid-cap carnage, the market has only come out stronger.”

The Indian market is the best-performing major market globally in 2018 with the benchmark Sensex gaining 7.8 per cent. The broader markets, however, underperformed with the mid- and small-cap indices falling sharply on a year-to-date basis.

Shah expects Nifty to trade in the band between 11,300 and 11,400 in the near term and “potentially run into 12,000 by the end of the year.”