Biggest weekly gains in seven weeks; no major triggers ahead apart from Q4FY17 earnings..
The stock markets posted their biggest
weekly gain in seven weeks, buoyed by hope of acceleration in economic reforms
after the ruling Bharatiya Janata Party's strong showing in state elections.
Weakening of the dollar against global
currencies, amid a dovish stance by the US Federal Reserve, also gave a boost,
with foreign investors pouring a little more than $1 billion during the
The benchmark Sensex and Nifty indices
closed the truncated trading week with 2.5 per cent gains, the highest since
the week ended January 27, ahead of the Union Budget. Shares of consumer goods
rallied after the Goods and Services Tax (GST) Council cleared five draft
Bills, paving the way for a new indirect tax regime. Interestingly, Sensex
remained over 350 points away from its all-time high of 30,025-mark, while
rupee appreciated against dollar to its multi-month high.
During the week ended March 17, the
S&P BSE Sensex added 2.4% or 702 points to settle at 29,649, while Nifty50
gained 2.5% or 225 points to close at 9,160. The Nifty index had reclaimed its
crucial 9,200-mark for the first time ever in intraday trade on Friday.
The Sensex index has gained 11 per
cent so far in 2017; India's is among the best-performing markets globally. The
rupee has risen 3.8 per cent against the dollar so far this year. The
Indian market now trades at nearly 20 times its one-year forward earnings
estimate. The market capitalisation of all domestic listed companies touched a
record 120 lakh crore, nearing nominal gross domestic product (at current
prices) of136 lakh crore for 2015-16.
Midcap and Smallcap stocks
outperformed the frontline indices to gain 4% and 3%, respectively.
The GST Council, headed by Finance
Minister Arun Jaitley and comprising representatives of all States, in its 12th
meeting on Thursday cleared the SGST and UTGST bills. With this, all five
legislations of the GST (CGST, SGST, IGST, UTGST and the compensation bill) now
stand formally approved by the Council.
The Council also cleared a proposal to
cap the cess on luxury cars and aerated drinks at 15% over the peak rate of
28%. The ceiling for the cess on “sin” goods would be much higher. However, the
actual cess would be much lower — equal to the current indirect taxes on these
goods, so that the authorities will have headroom to increase the cess in the
The four legislations (CGST, IGST,
UTGST, compensation bill) would be taken to the Cabinet expeditiously. Then,
these would be presented in Parliament. The SGST legislation will be presented
to the respective state cabinets and then to the various state assemblies.
Sectors and stocks
Sectorally, all indices ended in
BSE Realty index surged 5%, followed
by the BSE FMCG index (up 4.7%), and the BSE Consumer Durables index (up 4.4%).
The BSE Capital Goods index and BSE Power index gained 4.3% and 3.3%,
respectively, while, BSE Metal index rallied 3%.
Among individual stocks, Adani Ports,
Tata Steel, ITC and HDFC advanced 8%, 7.3% and 6.8% and 5.7%, respectively. Sun
Pharma gained 4.7%, while Maruti Suzuki, Larsen & Toubro and ICICI Bank
jumped 4% each.
Rally in sugar stocks
Sugar stocks gained by up to eight per
cent on Friday, in anticipation of a further increase in price in the coming
months, following a forecast of lower production and the government’s
reluctance on import.
The share price of Parrys Sugar jumped
by nearly eight per cent to close on Friday at Rs66.95, followed by a 6.8 per
cent increase in the stock of Oudh Sugar Mills to Rs140.30. The stocks of
Dwarikesh Sugar, Dhampur Sugar and Balrampur Chini rose by 4.6 per cent, 4.3
per cent and four per cent, respectively.
However, those of Bajaj Hindusthan and
Shree Renuka Sugars remained stable, rising 0.7 per cent and 0.3 per cent.
Sugar prices have been rising
intermittently since the beginning of the current season in October, over lower
output estimates. The benchmark price of the medium (M) variety has risen by
7.3 per cent to trade currently at Rs41.16 a kg at the wholesale (APMC) market
in Vashi, Navi Mumbai, a slight decline after a high of Rs41.55 a kg on
Indian Sugar Mills Association (ISMA)
expects total output at 20.3 million tonnes for the 2016-17 crushing season
(ending September 2017), a 19 per cent decline from the previous year’s figure
at 25.1 mt. The Union food minister has questioned this but the ministry is yet
to issue its authentic figure. The ministry of agriculture in its second
advance estimate forecast sugarcane output at almost 310 mt for 2016-17, from
348.5 mt the previous year, a decline of 11 per cent. There was drought in the
major producing states of Maharashtra, Tamil Nadu and Karnataka and the
rain-fed cane crop was hit.
So, many refineries in these areas
wanted import of raw sugar, rejected by the food ministry. Ram Vilas Paswan, the
minister, said: “We have enough sugar available and there is no need for
There was 7.5 mt of carryover stock
from season 2015-16 and sugar supply currently stands at 27.6 mt, substantially
higher than the annual consumption at around 24 mt.
Losers included Coal India (down
8.5%), Bharti Airtel (down 5%) and GAIL (down 0.8%). ONGC and TCS were
Federal Reserve Chair Janet Yellen, in a widely expected move, increased the
interest rates in US by 25 basis points to a range of 0.75% to 1% on Wednesday,
but appeared less hawkish than expected. This was the first increase in 2017
and third one in the last two years.
to lift the target overnight interest rate was taken on the back of steady
economic growth, strong job gains and confidence that inflation is rising to
the Fed’s target.
also stuck to its outlook for two additional rate increases this year and three
more in 2018, which is in line with its outlook from December.
believe markets would consolidate as there are no major triggers ahead. Market
participants’ eyes would be on developments on GST front and upcoming Q4FY17
and FY17 results. Investors may book profits in highly valued smallcaps and
midcaps running ahead of their fundamentals. We believe there is more value in
largecaps in terms of valuations as compared to smallcaps and midcaps. However,
selective midcaps in sunrise industry should be considered.