Trading for the week ended on a buoyant note as key benchmark indices settled with strong gains as firmness in global stocks boosted sentiment on the domestic bourses. The barometer index, the S&P BSE Sensex rose 361.89 points or 1.31% at 28,076.26, as per the provisional closing data. The gains for the Nifty 50 index were higher than those for the Sensex in percentage terms. The Nifty gained 132.05 points or 1.54% at 8,683.15, as per the provisional closing data. The Sensex provisionally settled above the psychologically important 28,000 level after alternately moving above and below that mark earlier during the day after crossing that mark in mid-morning trade. Global credit rating agency, Moody's Investors Service's statement that Rajya Sabha's approval of the Goods and Service Tax (GST) constitutional amendment bill is a credit positive for India's sovereign and non-financial corporates also lifted sentiment. Key indices gained for the second day in a row today, 5 August 2016.
After opening higher, key indices remained in positive terrain throughout the session and extended gains in late trade to hit fresh intraday high. The Sensex jumped 396 points or 1.42% at the day's high of 28,110.37 in late trade, its highest level since 2 August 2016. The barometer index rose 81.37 points or 0.29% at the day's low of 27,795.74 in early trade. The Nifty rose 138.30 points or 1.61% at the day's high of 8,689.40 in late trade, its highest level since 1 August 2016. The index rose 39.05 points or 0.45% at the day's low of 8,590.15 in early trade.
In overseas stock markets, European and Asian stocks edged higher driven by the Bank of England's aggressive stimulus measures, but with traders keeping a wary eye on US jobs data due later in the global trading day. In UK, the FTSE 100 index was currently up 0.32%. The Bank of England yesterday, 4 August 2016 cut its benchmark interest rate by 25 basis points to 0.25% from 0.5%, the lowest in its 322-year history. It expects to cut the rate further in the months ahead. The central bank also revived a UK government bond-buying program, also known as quantitative easing, that has been on pause since 2012, and said it would begin buying corporate bonds.
US stocks closed marginally higher yesterday, 4 August 2016 as investors kept to the sidelines ahead of US payrolls report for July. The monthly hiring data due later in the global day will help investors gauge the health of the economy and possibly offer insight as to when the Federal Reserve will raise interest rates again.
Closer home, the broad market depicted strength. There were almost two gainers against every loser on BSE. 1,817 shares rose and 917 shares fell. A total of 172 shares were unchanged. The BSE Mid-Cap index provisionally rose 1.69%. The BSE Small-Cap index provisionally gained 1.47%. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 3673 crore, higher than turnover of Rs 3167.03 crore registered during the previous trading session.
Auto stocks extended previous sessions' gains on expectations that auto manufacturers may benefit from the Goods and Services Tax constitutional amendment bill passed by the Rajya Sabha on 3 August 2016. Bajaj Auto (up 4.93%), Hero MotoCorp (up 5.23%), Ashok Leyland (up 1.97%), Mahindra & Mahindra (M&M) (up 3.57%), Maruti Suzuki (India) (up 1.17%), TVS Motor Company (up 1.31%) and Eicher Motors (up 3.62%) edged higher. According to reports, on-road price of vehicles could drop by 8% once a nationwide GST kicks off. Lower prices can be construed as indirect stimulus to boost auto sales volumes.
Meanwhile, Moody's said that the automotive industry is likely to be a chief beneficiary of the GST regime as lower GST rates will further support strong demand for the industry by reducing product pricing and stimulating consumer demand.
Tata Motors rose 3.23% after the company's luxury car making unit, Jaguar Land Rover reported its best ever July retail sales, posting a growth of 34% to 44,486 vehicles in July 2016 over July 2015. The month's record performance has been driven by strong sales of the Land Rover Discovery Sport, the Jaguar XE and the F-PACE. In July, Jaguar Land Rover has delivered a particularly solid performance in China and North America with retail sales increasing by 64% and 51% respectively compared to the previous year. Retail sales were up year-on-year across all other regions: 38% in the UK, 24% in Europe and 2% in other overseas markets. Land Rover strengthened its position as a world-leading manufacturer of all-terrain SUVs, with record July sales of 31,288 vehicles, up 19% over July 2015. Jaguar recorded its best July ever, delivering 13,198 vehicles, up 91% over July 2015. The announcement was made during market hours today, 5 August 2016.
NMDC rose 0.2%. The company announced in its monthly revision in prices of iron ores that it has kept price of lump iron ore unchanged at Rs 1700 per wet metric tonne (WMT) and also kept price of fine iron ore unchanged at Rs 1460 per WMT with effect from 4 August 2016 compared with their prices fixed for the last month. The announcement was made during market hours today, 5 August 2016.
Suzlon Energy rose 4.91% after chairman Tulsi Tanti was quoted as saying yesterday, 4 August 2016, that the company will exit corporate debt restructuring program offered by its lenders before 31 March 2017. Suzlon acquired German wind energy firm RePower, now renamed Senvion, for 1.4 billion euros ($1.56 billion) in 2007. The debt funding to purchase Senvion badly hurt Suzlon, leading it to post default in foreign currency convertible debt in 2012. It also forced Suzlon to enter CDR in 2013.
Meanwhile, as per report the government formally implemented its central inflation target of 4%, an important confirmation of the inflation-fighting policies championed by Reserve Bank of India (RBI) Governor Raghuram Rajan, who steps down next month. Junior finance minister Arjun Ram Meghwal tabled a notification in parliament's upper house that confirmed the target at 4%, plus or minus 2%, in line with the goal the government originally agreed with Rajan.
Meanwhile, Revenue Secretary, Ministry of Finance in its presentation on next steps required for the implementation of Goods and Service Tax (GST) constitutional amendment bill after the Rajya Sabha passed the GST bill said yesterday, 4 August 2016 that the target date of GST roll out is 1 April 2017. As per reports, the GST amendment bill will be tabled in the Lok Sabha on 8 August 2016. The bill requires ratification by 50% states after its passage by the Parliament, followed by the Presidential assent of Constitution Amendment and notification in the official Gazette. Cabinet will approve formation of GST Council which will make recommendation of model GST laws. Cabinet will approve the CGST and IGST laws by Centre and SGST laws by all states which have to be passed by the Centre and by all states respectively, which should happen by winter session this year. GST rules will be notified later.
Meanwhile, global credit rating agency, Moody's Investors Service said today, 5 August 2016 that the upper house's approval of the GST bill paves the way for its implementation, a credit positive for the country's sovereign and non-financial corporates. The GST will have a positive impact on growth and tax revenues over the medium term, supporting the sovereign's credit profile. Specifically, it will remove a key hurdle to the smooth movement of goods and services, and by reducing the tax administration costs of the government and corporate sector, it will improve compliance and raise tax receipts. However, its implications over the short term will be limited, given that effective implementation will take some time, and the recommended GST rates are intended to be revenue neutral, it added.
The GST will have a significant impact on relative prices since the effective total tax rates on some goods will fall as taxes are removed and replaced by a lower-rate GST, while other goods and some services will be subject to a higher effective tax rate, says the report. However, the GST will have a negligible impact on overall inflation, in line with the revenue-neutral objective. Over time, Moody believes the impact of the GST will be positive for most corporate sectors across the value chain, spanning procurement of raw materials, manufacturing of goods, sales and distribution of finished goods and services, logistics, and warehousing of goods from manufacturing locations to end-customers.
The India Meteorological Department in its weekly update on rainfall said yesterday, 4 August 2016 that during the week from 28 July to 3 August 2016, rainfall was above long period average (LPA) by 6% over the country as a whole. For the country as a whole, cumulative rainfall during this year's monsoon for July 2016 was 7% above LPA. For the country as a whole, cumulative rainfall during this year's monsoon has so far upto 3 August been 1% above LPA.
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