An eventful week it was. BJP's landslide victory in Uttar Pradesh, US Federal Reserve's less hawkish tone and an update on Goods and Services Tax (GST) pushed the Nifty50 index to its fresh lifetime highs thrice in a holiday-truncated week. 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.
Midcap and Smallcap stocks outperformed the frontline indices to gain 4% and 3%, respectively.
“The under current in the market is strong as new money from both FIIs and DIIs continue to pour in spite of high valuation. Rupee has strengthened to a fresh 16 months high led by foreign inflows. Further, fall in crude prices and positive cues from GST council meeting added color to this rally,” said Vinod Nair, Head of Research, Geojit Financial Services.
Sectors and stocks
Sectorally, all indices ended in positive.
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.
Losers included Coal India (down 8.5%), Bharti Airtel (down 5%) and GAIL (down 0.8%). ONGC and TCS were marginally lower.
One Nation One Tax
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 future.
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.
"At the current pace, the government seems confident of rolling out the GST by 1 July 2017," said brokerage Motilal Oswal.
US Federal Reserve
The 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.
The move 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.
The Fed 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.
MARKET NEXT WEEK: In the absence of major domestic and global cues, the investors will track the developments on the GST Bill. “For the week ahead market will look for more cues on GST rates which is expected to see stock or sector specific actions,” said Nair of Geojit.
“Market may consolidate here for some time with no more near term trigger to play on and some profit booking is very likely at this level as technical indicator such as RSI reaching to an oversold zone,” said Abnish Kumar Sudhanshu, Director & Research Head at Amrapali Aadya Trading.