Amid expectations that the Goods and Services Tax (GST) constitutional amendment bill may be passed in parliament this week, the two key benchmark indices extended gains in mid-afternoon trade. At 14:15 IST, the barometer index, the S&P BSE Sensex, was up 256.23 points or 0.92% at 28,059.47. The Nifty 50 index was currently up 85.05 points or 1% at 8,626.25. The Sensex was currently trading above the psychologically important 28,000 level after crossing that mark in afternoon trade. The Sensex hit its highest level in more than 11 months. The Nifty hit its highest level in more than a year. Gains in global stocks also aided the upmove on the domestic bourses.
The Sensex jumped 283.63 points or 1.02% at the day's high of 28,086.87 in mid-afternoon trade, its highest level since 17 August 2015. The barometer index lost 66.73 points or 0.24% at the day's low of 27,736.51 at the onset of trading session. The Nifty rose 90 points or 1.05% at the day's high of 8,631.20 in mid-afternoon trade, its highest level since 23 July 2015. The index lost 24 points or 0.28% at the day's low of 8,517.20 at the onset of trading session.
The broad market depicted strength. There were more than two gainers against every loser on BSE. 1,734 shares rose and 846 shares declined. A total of 183 shares were unchanged. The BSE Mid-Cap index was currently up 0.98%. The BSE Small-Cap index was currently up 1.05%. Both these indices outperformed the Sensex.
The latest upmove on the domestic bourses materialized on expectations that the Goods and Services Tax (GST) constitutional amendment bill may be passed in parliament this week. According to media reports, the GST constitutional amendment bill has been listed for discussion in the Rajya Sabha in this week. The GST bill, which has been approved by the Lok Sabha is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The GST seeks to create a seamless national market in the country by replacing plethora of state taxes and central taxes by one tax. The month-long monsoon session of the parliament will conclude on 12 August 2016.
In overseas stock markets, Asian and European shares edged higher as worries over the impact of Britain's Brexit vote eased after policymakers from the Group of 20 countries agreed at the weekend to work to support global growth and better share the benefits of trade. Japanese shares ended near the flat line. Investors are hoping for a big stimulus announcement from the Bank of Japan (BOJ) at the conclusion of a two-day monetary policy review from the Japanese central bank on 28-29 July 2016.
US stocks eked out small gains during the previous trading session on Friday, 22 July 2016, after an upbeat manufacturing report. Markit's preliminary reading of its manufacturing purchasing managers index came in at 52.9 for July 2016 a final reading of 51.3 for June 2016, as production and employment strengthened. Payrolls rose at the fastest pace in a year.
The Federal Open Market Committee (FOMC) is widely expected to keep the benchmark fed funds rates unchanged after the conclusion of two-day monetary policy meeting on 26-27 July 2016. Market participant will scrutinize the Fed statement for clues on policy direction. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
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Pharma stocks were mixed. Sun Pharmaceutical Industries (up 1.21%), Lupin (up 0.83%), Divi's Laboratories (up 0.93%), Ipca Laboratories (up 0.88%), Wockhardt (up 0.06%), Strides Shasun (up 0.13%) and GlaxoSmithkline Pharmaceuticals (up 0.86%) rose. Alkem Laboratories (down 2.89%), Aurobindo Pharma (down 0.14%), Glenmark Pharmaceuticals (down 0.42%) and Cadila Healthcare (down 0.12%) edged lower.
Dr Reddy's Laboratories (DRL) edged lower on expectations of subdued Q1 results. The stock was off 3.12% at Rs 3,493. The company is scheduled to announce its Q1 June 2016 earnings tomorrow, 26 July 2016. According to reports, a domestic brokerage expects DRL to report flat revenue growth on year-on-year (YoY) basis in Q1 June 2016. The brokerage expects DRL to post a 20% decline in its profit after tax (PAT) in Q1 June 2016. The brokerage has reportedly stated in its earnings preview on DRL that DRL's US business is likely to remain flat, and Russia CIS region sales are expected to grow in single-digit due to currency devaluation. The brokerage expects DRL's India business to report decent 14% YoY growth in Q1.
Cipla was up 1.21% to Rs 526. Cipla announced after market hours on Friday, 22 July 2016, that the Supreme Court has asked the company to deposit Rs 175.07 crore within a period of six weeks with regard to cases pertaining to overcharging of certain drugs. Cipla said that the writ petitions filed in the Bombay High Court that were pending before the Supreme Court have been retransferred to the Bombay High Court for a final hearing. The Bombay High Court will now hear these matters on merits.
FMCG stocks edged higher on renewed buying. Tata Global Beverages (up 0.87%), Godrej Consumer Products (up 1.49%), Marico (up 0.99%), Colgate-Palmolive (India) (up 0.6%), Britannia Industries (up 0.22%), Bajaj Corp (up 0.43%), Procter & Gamble Hygiene and Health Care (up 0.47%), Jyothy Laboratories (up 0.4%), Nestle India (up 0.37%) and GlaxoSmithkline Consumer Healthcare (up 0.34%) rose. Dabur India (down 0.34%), Hindustan Unilever (down 0.11%) and Emami (down 0.71%) edged lower.
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