Markets Taking Cues From Parliament Session And Earning Numbers

As most of the flowing rivers across country swell with rainwater, we look for shower of gains for India Inc. with high expectations of GST securing a smooth passage in Parliament. The much-awaited session started with the productive debate on Goods and Service Tax (TAX) reform. It’s a big breakthrough for the central government as parties in opposition have more or less agreed on the proposal of GST reform. GST implementation will give boost of 1 to 2 per cent to the GDP of the country. Sectors like logistics, e-commerce, automobile and FMCG will benefit in long run after implementation of GST.

FY17 first quarter results are banging the doors of the streets. During July 5  and July 19, 2016, 72 companies have announced their first quarter results of current fiscal year. Many companies like Aro Granite, Ultratech Cement, Exide, Reliance Industries, Gruh Finance etc have posted marvellous numbers. Around 36 companies posted rise in topline while others have struggled to maintain it.

On global front; US Indices, European Indices and Asian Indices as well are at their peak on an encouraging note. Last fortnight- Dow Jones Ind, S&P 500 and NASDAQ surged up by 3.88, 3.75 and 4.85 per cent. London’s FTSE 100 rose by 2.29 per cent. On European front, DAX and CAC 40 increased by 5.57 and 4.67 per cent. Banks of America’s solid numbers gave boost to Wall Streets while Bank of England surprised many investors by leaving interest rate unchanged on London streets. Besides this, Theresa May was appointed as new Prime Minister of UK. The UK stock market cheered this appointment.

In last 15 days, Asian markets topped the race. Hang Seng and Nikkei rise up by 5.07 and 5.29 per cent. Nikkei's rise was seen on account of last week’s victory of Japanese Prime Minister Shinzo Abe for his ruling coalition. He also called for fresh round of stimulus in economy. Back at home, Indian market also outperformed in last fifteen days. Markets are expected to sustain the rally on the basis of earnings performance. Metal, bankex and auto sector are up by 5.96, 5.11 and 4.11 per cent respectively in last fortnight. Sensex is on the way towards 28,000.

Inflation data was also released for the month of June. The Consumer Price Index (CPI) accelerated marginally to 5.77 per cent from 5.76 per cent a month ago. The inflation is continuing to remain high on account of higher food prices. The high inflation dampens the chances of rate cut by Reserve Bank of India (RBI) in coming monetary policy in August.

Indian rupee vs dollar (67.14 per dollar) looks much stable as compare to other currencies though it is depreciating. Still it is a matter of concern as it will not only make imports costlier but also can outweigh the benefits of increased exports. Yellow metal saw correction as  many investors were hitting on yellow metal as safe haven asset in the wake of failed military coup in Turkey. 

We strongly believe that we are moving towards a development path and government is taking steps towards the developmental goals. However, we remain alert on the political issues of the nature seen in Turkey. We believe economic goals and political stability goes hand in hand. We believe India enjoys political stability and sound fundamentals and the markets will continue their upward movement, more prominently on upcoming corporate earnings.