GST hopes propel Nifty to 15-month closing high, Sensex ends above 28,000

MUMBAI: Investors shrugged off worries about bank bad loans and drove indices to new 2016 highs on hopes that Parliament will soon pass the longstalled goods & services tax Bill.

The Nifty ended at a 15-month high, above 8,600, while the Sensex closed at an 11-month high of above 28,000. Foreign investors bought for the twelfth successive day on Monday, taking their purchases in July to nearly Rs 8,000 crore — the most since April this year.

"The market is moving in conjunction with global liquidity after Brexit and more is expected. Stimulus from global central banks is almost a done deal, that is why markets are moving up," said Piyush Garg, chief investment officer at ICICI Securities.

The Nifty gained 94.45 points to end at 8,635.65 after scaling a high of 8,641.15. The Sensex gained 292.10 points to close at 28,095.34 after hitting an intraday high of 28,110.37.

Besides banks, oil & gas, real estate, consumer durables and information technology companies also advanced, with their sector indices gaining 1 per cent or more on the BSE. The BSE Midcap and Smallcap indices also gained 1 per cent each.


The BSE Bankex closed at its highest in nearly a year led by State Bank of India and other banks. Even Axis Bank, which fell 4 per cent initially on disappointing June numbers, recovered to end up 0.1 per cent at Rs 538.30.

The government is considering introducing the GST Bill in the Rajya Sabha either on Tuesday or next week, depending upon the progress of its talks with Congress. The most sweeping indirect tax reform has been stalled for more than a year but marketmen anticipate that it could be introduced and passed in the monsoon session, which ends in mid-August.

Domestic institutional investors, which largely include insurance firms and mutual funds, net sold Rs 67.89 crore of shares on Monday. So far in July, these investors have pumped in Rs 498 crore.

Auto maker Maruti Suzuki gained the most on the Sensex, rising 3.1 per cent to Rs 4,550.60. It was followed by State Bank of India, which gained 2.9 per cent to Rs 229.85, and Asian Paints, which rose 2.2 per cent to Rs 1,068.85.

Dr Reddy’s was the worst performer on the index ahead of its June quarter earnings on Tuesday, down 3.6 per cent at Rs 3,474.85. Other laggards were GAIL (India), which fell 1 per cent to Rs 390.95, and Bajaj Auto, which slipped 0.8 per cent to Rs 2,700.

Valuation concerns During the course of the week, the US Federal Reserve and Bank of Japan are scheduled to review monetary policies. On the domestic front, investor focus is on the announcement of the next RBI governor. Valuation concerns continue to linger and any disappointment on GST could lead to a fall.

"Even though earnings have disappointed till yet, we continue to trade at a higher multiple because of foreign flows, strength in the economy and strong demographics," said Sanjiv Bhasin, executive vice-president (market & corporate affairs), IIFL.

Garg of ICICI Securities said if it becomes apparent that GST will not be cleared in the monsoon session, the Nifty could witness a 300-400 point fall. Chandan Taparia, derivative analyst at Anand Rathi, said put writing at 8,600 should keep the market above 8,550.