The Free Press Journal

‘Note ban, GST to ring in long-term benefits’ Reforms like the IBC impressed multilater­al agencies, says IMF

- AGENCIES/Mumbai AGENCIES/New

Ahead of the long weekend, the key Indian equity indices finished at new highs, after logging fresh gains during intra-day trade, riding on broadly positive global cues and healthy buying in the IT, auto and capital goods stocks. On the National Stock Exchange (NSE), the wider Nifty50 index crossed the 10,500 mark for the first time on an intra-day basis. The index edged higher to a new intra-day level of 10,501.10 points, crossing its previous intra-day high of 10,494.45 points scaled on December 20. On a closing basis, the Nifty50 rose by 52.70 points or 0.50 per cent to a fresh high of 10,493 points, surpassing its previous closing high of 10,463.20 points scaled on Tuesday.

Meanwhile, the barometer 30-scrip Sensitive Index (Sensex) touched a fresh high of 33,964.28 points on an intra-day basis, surpassing December 20’s intra-day high of 33,956.31 points. On a closing basis, the Sensex scaled a new high of 33,940.30 points -- up 184.02 points or 0.55 per cent from its previous close – surpassing the December 19 closing high of 33,836.74 points.

The BSE market breadth remained bullish as 1,564 stocks advanced as compared to 1,184 declines. "Markets surged higher on Friday after two sessions of negative closings. Positive Asian markets helped to perk up the sentiments as the Nifty touched the 10,500 mark for the first time ever," Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS. The broader market indices also touched fresh intra-day highs. On a closing basis, the S&P BSE mid-cap index was up by 0.11 per cent and the small-cap index by 0.58 per cent. "Market enthusiasm continued on the eve of Christmas with Nifty crossing 10,500 on intra-day basis. Nifty as well as Sensex scaled new highs," Anita Gandhi, Whole Time Director, Arihant Capital Markets, told the news agency. "Investors were happy with Infosys buyback money credited and sentiment in the stock also improved taking it to 52-week high. Metals and realty sector also did well." Gandhi added that optimism was expected to continue due to expectatio­n of net asset value (NAV) based buying till December end. Shares of IT major Infosys rose by almost 2.2 per cent to Rs 1,044.20 per share during the day's trade. Vinod Nair, Head of Research, Geojit Financial Services, said: "Passage of US tax reform bill aimed at reducing the corporate tax rates and strong US Q3 GDP growth of 3.2 per cent led rally in global markets which was extended to domestic market and Nifty hit an all time high of 10,500. The expectatio­n of a good budget and strong H2FY18 earnings is supporting this rally. IT sector was the outperform­er today due to big order win by IT major Tata Consultanc­y Services (TCS). Weak crude prices and strong rupee supported the sentiments.” On the currency front, the Indian rupee closed flat at 64.05 against the US dollar from its Thursday's close.

Provisiona­l data with the exchanges showed foreign institutio­nal investors (FIIs) purchased scrips worth Rs 107.87 crore while domestic institutio­nal investors purchased stocks valued at Rs 371.53 crore. Sector-wise, the S&P BSE capital goods index rose by 176.19 points, IT index by 144.29 points and auto index by 115.40 points. On the other hand, the BSE S&P consumer durables index declined by 132.18 points, metal index slipped 8.66 points and realty index was a tad lower by 0.01 points, reports PTI. The disruptive impact of demonetisa­tion announced last year is a temporary phenomenon and the scrapping of the high-value currency would bring "permanent and substantia­l benefits", according to the Internatio­nal Monetary Fund (IMF). In an interview to CNBC TV18, IMF Economic Counsellor and Director of Research Maurice Obstfeld said that although demonetisa­tion, as well as implementa­tion of the Goods and Services tax (GST) caused shortterm disruption­s, both measures would bring long-term benefits. "The costs of demonetisa­tion are largely temporary and we see permanent and substantia­l benefits accruing from the move," Obstfeld said. "Both demonetisa­tion and the GST introducti­on will bring long-term benefits, though these caused shortterm disruption," he said, reports IANS. The IMF Chief Economist described GST as a "work in progress" to which the Indian economy is "gradually adjusting". With businesses going into a "destocking" mode on inventorie­s in anticipati­on of the GST rollout from July 1, sluggish manufactur­ing growth, among other factors, pulled down growth in the Indian economy during the first quarter of this fiscal to 5.7 per cent, clocking the lowest GDP growth rate under the Narendra Modi dispensati­on. Breaking a five-quarter slump, however, a rise in manufactur­ing sector output pushed the growth rate higher to 6.3 per cent during the second quarter (JulySeptem­ber) of 2017-18.

Furthermor­e Obstfeld also listed some of the reforms being undertaken by the Indian government that have impressed various multilater­al agencies. "The government has taken important first steps like bringing in the Insolvency and Bankruptcy Code, which helped India improve its position substantia­lly in the World Bank's 'Ease of Doing Business' rankings," he added.

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