Chai over GST passage boosts equity markets
Mumbai, Nov 28: Political brinkmanship to get a key economic legislation passed in the ongoing winter session of parliament buoyed the Indian equity markets during the just concluded weekly trade session.
Though short-coverings triggered by derivatives expiry and increased chances of a stimulus in European Union (EU) played a part in boosting the equity markets, it was the ongoing political soap opera that had investors’ hooked.
The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), gained 259.71 points or 1.00 percent to 26,128.20 points from its previous weekly close at 25,868.49 points.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) rose during the weekly trade ended November 27. It ended higher by 86.15 points or 1.09 percent to 7,942.70 points.
“Hopes of likely passing of the goods and services tax (GST) bill in the winter session of parliament and a rally in commodity prices boosted the sentiment of the street,” Gaurav Jain, director with Hem Securities, told IANS.
The government needs to pass the GST bill in this session to meet the April 1, 2016, roll-out deadline, as just parliamentary approval is not sufficient enough for the pan-India indirect tax regime.
The bill has cleared the Lok Sabha and is now with the Rajya Sabha, where the Congress and other parties have demanded a series of amendments.
If that happens, the bill will go back to the Lok Sabha and will then have to be ratified by at least half of the 29 state legislatures before being sent to the president for his assent.
“However, a break-down of Chinese market due to poor economic numbers and weakening of Indian rupee against the US dollar capped the gains in the truncated week gone by,” Jain said.
On a weekly basis, the rupee weakened by 57 paise to 66.76 to a US dollar (November 27) from its previous close of 66.19 (November 20).
The value of the Indian rupee has been dented due to selling spree in the Indian debt and equity markets by foreign funds ahead of the US Fed’s imminent rate hike decision slated for December.
“Global action and rhetoric against terror formed a backdrop, while improved chances of US Fed pushing rates higher in December, weighed on FPIs (Foreign Portfolio Investors),” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
The National Securities Depository Limited (NSDL) data, showed that the FPIs sold Rs.1,538.66 crore or $232.44 million in equity and debt markets from November 23 to 27.
The data with stock exchanges showed that the FPIs sold stocks worth Rs.1,492.84 crore in the period under review ended November 27.
The FPIs have taken out Rs.23,352 crore during the period August-September. Till date in November, the foreign investors have off-loaded stocks worth over Rs.6,000 crore.
However, increased expectations of European Central Bank (ECB) announcing a stimulus package during its next monetary policy meet slated for December 3 and rising European stocks gave a positive cue to Indian markets.
“Sentiments turned mildly positive, helped by strong European markets, which were buoyed by expectations of ECB stimulus packages,” James added.
The markets expects stimulus measures from ECB after latest data showed that Ge’many’s GDP (Gross Domestic Product) growth slowed to 0.3 percent from 0.4 percent on QoQ (quarter-on-quarter) basis due to weak exports and investments.
Furthermore, a healthy rollover rate during the derivatives expiry despite the reduction in lot size in futures and options (F&O) segment by the Securities and Exchange Board of India (SEBI) has restored confidence of the investors.
“The positive outcome of the F&O expiry gave a healthy momentum to the market. There was some bit of buying which emerged after the expiry,” Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.
Indian benchmark indices terminated the November F&O series on a strong note with gains of around 0.7 percent.