Sen­sex holds 32K

Money Times - - Market Review - By Deven­dra A Singh

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.

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