Sensex holds 32K
The Sensex advanced 8.14 points to settle at 32028.89 while the Nifty closed at 9915.25 rising 28.90 points for the week ending Friday, 21 July 2017.
On the macro-economic front, India’s wholesale prices fell 1.25% to 0.9% in June 2017 compared to a 0.15% rise a month ago. India’s annual retail inflation eased to 1.54% in June 2017 to its slowest pace in more than five years thus building pressure on the central bank to cut interest rates in its forthcoming policy review on 2 August 2017. On the monsoon front, the seasonal monsoon rains have covered most of India and the amount of precipitation so far is in line with expectations thus raising hopes of higher farm output. Cumulative monsoon rains have been 2% below average since the beginning of the rainy season in June until 9 July 2017, the IMD said. However, recent rains have been heavier in the week to 5 July 2017, as the seasonal showers were 21% above average. The monsoon delivers about 70 % of India’s annual rainfall critical for the farm sector that accounts for about 15% of India’s $2 trillion economy and employs more than half of the country’s 1.3 billion people. Indian farmers depend on the monsoon since half their lands lack irrigation. The area planted with the rice crop has grown by 8% this season while that of soybean is up 10.3%, data from the Ministry of Agriculture showed last week. On the GST front, Fitch Ratings said in its new release that the new indirect tax regime of GST will be beneficial for the auto, cement and organised retail sectors but will have a negative impact on oil & gas and SME sectors. “In contrast, the impact would be broadly neutral for property, pharmaceutical, electricity, telecom and fertiliser sectors”, it said.
“A number of near-term challenges for the larger corporates are likely to persist until all trading counter parties are on the system and familiar with the different tax rates that will apply to their goods and services”, Fitch said. “Under the Indian GST regime, a corporate will only be able to apply GST input tax credits after its supplier of goods or services has first settled its GST payment with the government. This means that the burden of non-compliance by the supplier will rest with the purchaser and not the government”, the US-based agency said. “Accordingly, GST tax truancy by financially weak and non-compliant companies lower down the supply chain could limit the amount of input tax credits available for the larger and financially strong corporates”, Fitch added.
Further, Asian Development Bank (ADB) Outlook 2017 said that India is expected to achieve the projected growth rate of 7.4% in 2017 and 7.6% next year on strong consumption demand with South Asia leading the growth chart in Asia and the Pacific.
According to the report, South Asia will be the fastest growing of all sub-regions in Asia and the Pacific, with growth on track to meet original projections of 7% in 2017 and 7.2% in 2018.
“The growth prospects in developing Asia for 2017 have improved on the back of stronger than expected export demand in the first quarter of this year”, it said.
In the supplement, ADB has upgraded its growth outlook in the Asian region to 5.9% in 2017 from 5.7% and to 5.8% for 2018 from 5.7%.
ADB chief economist, Yasuyuki Sawada, said that “Developing Asia is off to a good start this year with improved exports pushing growth prospects for the rest of 2017. Despite lingering uncertainties surrounding the strength of the global recovery, we feel that the region's economies are well placed to face potential shocks to the outlook”. Key index advanced on Monday, 17 July 2017, on buying. The Sensex was up 54.03 points (+0.17%) to settle at 32074.78.
Key index corrected on Tuesday, 18 July 2017, on global cues. The Sensex fell 363.79 points (-1.13%) to settle at 31710.99.
Key index ended higher on Wednesday, 19 July 2017, on fresh buying of equities. The Sensex gained 244.36 points (+0.77%) to close at 31955.35.
Key index dipped on Thursday, 20 July 2017, on sell-off by traders. The Sensex fell 50.95 points (-0.16%) to close at 31904.40.
Key index surged on Friday, 21 July 2017, on buying of stocks. The Sensex was up 124.49 points (+0.39%) to settle at 32028.89.
National and global macro-economic figures will surely dictate global markets movements and influence investor sentiment in the near future.
The near month July 2017 derivatives contract expire on Thursday, 27 July 2017.
On the global front, Japan’s and USA’s Manufacturing PMI data for July 2017 will be unveiled on Monday, 24 July 2017. The US Federal is scheduled to announce its interest rate decision on Wednesday, 26 July 2017.