Domestic Market View
Markets to continue the momentum with a positive start
The Indian markets rallied in last session with benchmarks hitting new record highs on encouraging exports data and continued strength in rupee. Today, the start is likely to be in green and the markets will continue the momentum amid sanguine regional cues. Also, traders will be getting support with the Goods and Services Tax (GST) Council, finally giving its nod to all the five draft legislations needed for implementation of the unified indirect tax, paving the way for the model laws - central GST (CGST), state GST (SGST), integrated GST (IGST), Union Territory GST (UTGST) and Compensation Act - to be presented in the ongoing Budget session of Parliament after it is approved by the Union Cabinet. Meanwhile, global rating agency Crisil has blamed divergent growth dataprints for WPI-CPI variance. It said the main reason for the faster growth in manufacturing GDP is that growth in the value of inputs used for production has been slower than the value of the final output. The export oriented stocks will keep buzzing, as buoyed by last month's double-digit export growth, the Federation of Indian Export Organisations (FIEO) is looking at more export friendly measures to sustain the growth rate in a challenging global environment.
Domestic Market Overview
Benchmarks stage splendid performance; Nifty surpasses 9,150 mark
Thursday turned out to be a fabulous day of trade for Indian equity markets, where frontline gauges garnered a gain of over half a percent as US Federal Reserve Chair Janet Yellen made the wellanticipated move of increased rates by 25 bps in its effort to return monetary policy to a more normal footing. After making a gap-up opening, domestic bourses traded in tight band throughout the day’s trade as traders also took some encouragement with reports of India's exports exhibiting a double digit growth of 17.48 percent, valued at $ 24.5 billion in February compared to $ 20.84 billion during the same month last year on increase in shipments of non-petroleum, non gems and jewellery products.
Some support also came with report that the GST Council is likely to endorse supplementary legislations needed for implementation of the goods and service tax (GST) regime. It may also take up capping the cess to be levied on demerit goods like luxury cars and tobacco products for creation of a corpus that will be used for compensating states for any loss of revenue from GST implementation in the first five years. Also, the International Monetary Fund (IMF) enlightened that India’s economic growth is expected to pick up once the effects of cash shortages linked to the currency exchange initiative fade. IMF in its note highlighted that further subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST), are necessary to attain medium-term fiscal consolidation plans.
there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. On the sectoral front, banking shares remained on buyers’ radar as the Finance Minister Arun Jaitley said, the government would consider setting up multiple oversight committees under the Reserve Bank of India (RBI) to examine the cases of nonperforming assets (NPAs) referred by banks. Stocks related to infrastructure space too edged higher with private report stating that India's transport infrastructure will grow at higher rates over the next five years on account of a string of measures, including increased spending on road and rail projects. It added that other factors that will propel growth rates include reform measures and new policies, encouraging private participation.
Global Market Overview
Asian markets end higher on Thursday
Asian equity markets ended higher on Thursday after the US Federal Reserve lifted its benchmark short-term rate by 25 basis points, as expected, and stuck to its forecast of two more such increases this year and three in 2018, saying the economy is doing well. Investors who had feared much faster US hikes heaved a sigh of relief after the Fed emphasized further rate increases would only be ‘gradual’. A rebound in oil prices and Dutch Prime Minister Mark Rutte's victory over anti-Islam lawmaker Geert Wilders in a parliamentary election also supported underlying sentiment. Chinese shares ended higher after the country's central bank lifted interest rates by 10 basis points on both medium-term lending facility loans and reverse repurchase agreements in a bid to avoid downward pressure on the yuan and counter capital outflows. Further, Japanese shares ended marginally higher even as the dollar fell against the yen and the Bank of Japan kept its monetary stimulus unchanged, as widely expected, saying the economy is on a moderate recovery trend.
US markets closed mostly lower on Thursday
The US markets closed mostly lower on Thursday, giving back some of the previous day’s Federal Reserve-inspired gains as a fall for health-care and utilities stocks pushed the market into negative territory. Trading sentiment in Europe and the US was also buoyed by the preliminary result of the Dutch election. Federal Reserve Chair Janet Yellen stated that she sees a gradual increase in interest rates this year and pointed out that the economy is getting closer to the Federal Reserve’s objectives. The progress of the economy was the basis for the decision to increase rates by 0.25% to a 0.75-1% range but pointed out that three interest rates hikes in 2017 qualifies as gradual. Yellen reiterated that the US central bank would continue to provide accommodative monetary policy to support the US economy but warned against a prolonged period of lower rates in order to avoid a situation which forces the fed to raise rates rapidly.
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