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Total Market Capitalisation of BSE listed companies touches all time high; GST passed in Rajya Sabha..

Domestic bourses performance

Helped by a strong stock market show, the total valuation of BSE-listed companies surged to an all-time high of Rs 109 lakh crore. At the close of trade, the total market capitalisation (m-cap) of BSE-listed companies rose to Rs 1,09,17,053 crore or USD 1.63 trillion. Investor wealth of BSE-listed firms, measured by market capitalisation, had seen a previous record high of Rs 1,08,03,154 crore on July 25, 2016. The BSE Sensex rallied 363.98 points or 1.31 per cent to settle at 28,078.35 on Friday.

TCS is the most valued Indian firm with a m-cap of Rs 5,21,946.66 crore followed by RIL (Rs 3,29,013.53 crore), HDFC Bank (Rs 3,17,052.47 crore), ITC (Rs 3,03,750.88 crore) and Infosys (Rs 2,45,175.87 crore). BSE is among the world's 10 largest exchanges in terms of market value while it is the biggest for number of firms listed on its platform.

Over 2,900 companies trade on BSE. On the exchange, 1,841 scrips advanced, while 894 declined and 171 remained unchanged.

Domestic bourses were flat during the week. Nifty and Sensex marginally up this week by 0.52% and 0.06% respectively.  In terms of sectors Metals, Automobiles and Cement were the winners of the week. Engineering, Finance and Media sectors were the notable losers this week.

Key developments

Reserve Bank of India Governor Raghuram Rajan on Friday met finance minister and is believed to have discussed the macroeconomic situation ahead of his last monetary policy review scheduled on Tuesday.  Rajanís meeting with Jaitley took place in the backdrop of the government on Friday notifying 4 per cent inflation target for the next five years, based on which the proposed Monetary Policy Committee would decide on policy rates going forward. This was one of the key reforms suggested by the RBI under Rajanís leadership.

The RBI also announced this month its plan to give bank licences on tap, a departure from the existing practice wherein licences were given after a gap of many years. Rajan will announce his last scheduled monetary policy review on August 9. He would be demitting office on September 4 after completing a three-year term. The RBI had maintained status quo on interest rate in its June monetary policy review. The Central bank has reduced interest rate by 150 basis points since January 2015 with an aim to boost economic growth, but Rajan has faced criticism for slow reduction in rates. The government is yet to announce Rajanís replacement.

 GST update

Lok Sabha is set to take up the GST Bill for passage on Monday during which Prime Minister Narendra Modi will intervene, even as the Centre today continued efforts for its early ratification by the state assemblies. Giving the information that Lok Sabha will take up the GST Bill on Monday, a senior Union minister said that the measure is likely to be passed the same day. "The Prime Minister will intervene during he debate on the GST Bill in Lok Sabha," the minister said. The opposition had attacked Modi for not intervening during the debate on the bill in Rajya Sabha on Wednesday. Congress leader Jairam Ramesh had said this was the first occasion in independent India that the Prime Minister was not present during the passage of a Constitution Amendment Bill. He had dubbed it as "PM-mukt Parliament". Meanwhile, BJP issued a whip to its members in the Lower House to remain present on August 8. Aiming for early implementation of Goods and Services Tax (GST), top central ministers have spoken with nine chief ministers of NDA-ruled states to ensure that the constitutional amendment is ratified by state assemblies at the earliest. Some chief ministers of BJP-ruled states have given an assurance to call special sessions of their respective assemblies to ratify the bill. The GST Bill has to be ratified by at least 16 states in 30 days after it is passed by Parliament.

On Wednesday, Rajya Sabha had approved the bill with an overwhelming majority. Six official amendments, including scrapping of one per cent additional tax, were moved by the government which were approved by an overwhelming majority in the Upper House. The bill was passed by Lok Sabha earlier. Now it has to go back to the Lower House for incorporating the amendments approved by Rajya Sabha. Once implemented, GST will subsume various taxes including excise, services tax, octroi and other levies and the proceeds will be shared between the Centre and the states. Instead of goods being taxed multiple times at different rates, under the new GST regime goods would be taxed at the point of consumption.

Global Markets

US stocks notched their best day in a month on Friday, with the S&P 500 and Nasdaq closing at record highs after a second straight month of robust labor market data boosted optimism that economic growth is accelerating.

The US Labor Department report showed that nonfarm payrolls rose by 255,000 in July, far outpacing expectations for a gain of 180,000. While the unemployment rate remained unchanged at 4.9 percent, it held below the 5 percent mark associated with full employment.

The S&P 500 ended at 2,182.87, its eighth closing high of the year, powered by a 1.9 percent gain in financials, which would be primed for a profit boost should the Federal Reserve raise interest rates.

Employment numbers were weak in April and May, and a surprisingly strong reading in June left investors unsure of the state of the economy. The June employment number was revised to 292,000 from 287,000.

The Fed may still wait for gross domestic product growth to improve and inflation to move closer to its 2 percent target before pulling the trigger on a rate hike. The probability of a hike doubled to 18 percent for September after the jobs report and rose to about 46 percent for December, according to CME Group's FedWatch tool.

The Dow Jones industrial average rose 191.21 points, or 1.04 percent, to 18,543.26, the S&P 500 gained 18.57 points, or 0.86 percent, to 2,182.82 and the Nasdaq Composite added 54.87 points, or 1.06 percent, to 5,221.12. The Nasdaq surpassed a record set in July 2015. For the week, the Dow rose 0.6 percent, the S&P 500 gained 0.4 percent and the Nasdaq advanced 1.1 percent. Bristol-Myers plunged 16 percent after its lung cancer drug failed in a late-stage study while Merck, which makes a rival drug, rose 10.4 percent. Bristol-Myers was the biggest drag on the S&P 500, while Merck gave the benchmark index its biggest boost. Advancing issues outnumbered declining ones on the NYSE by a 2.64-to-1 ratio; on Nasdaq, a 2.57-to-1 ratio favored advancers. The S&P 500 posted 29 new 52-week highs and no new lows; the Nasdaq Composite recorded 126 new highs and 21 new lows.

Week ahead and Ajconís view:

In the biggest tax reform since Independence, the national sales tax or GST Bill was on Wednesday approved by the Rajya Sabha to replace a raft of different state and local taxes with a single unified value added tax system to turn the country into world's biggest single market. The 66-year-old Constitution, which gives power to Centre to levy taxes like excise, and empowers states to collect retail sales taxes, was amended though the 122nd Constitution Amendment Bill. Prime Minister Narendra Modi said the GST will "also be the best example of cooperative federalism" and "Together we will take India to new heights of progress".Goods and services tax (GST) is now listed for passage as well as consideration in the Lok Sabha next week. Any defrement in passing of bill will put pressure on Benchmark indices. Earnings season has been a mixed bag so far especially in large caps. Monsoons have been above normal which has aided in domestic bourses moving up strongly.

Markets would take cue from RBI Monetary Policy on August 09, 2016. We advise investors to remain stock specific and look for Companies whose valuations provide Margin of safety.


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"Forum Views" Magazine Published by Brokers Forum of India. Global Business Connects Tour 2015

CA Ashok Ajmera -CMD, AGSLon
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