The huge investments that flooded the Indian stock markets gave them the strength to overcome the hindrances like BREXIT, Demonetisation and led the indices to new heights. The combined value of these investments by FIIs (Rs 55,680 crore) and MFs (Rs 51,300 crore) in 2016-17 was more than Rs 1 lakh crore.
The BSE Sensex and NSE Nifty registered decent growth rates of 16.88% (an increase of 4,278.64 points) and 18.55% (an increase of 1,435.55 points) respectively in 2016-17. As on March 17, 2017, the first trading day after the landslide victory of BJP in UP, the BSE Sensex at 29,824.4 and NSE Nifty at 9,218.4 levels created the intraday records of the year. These bell weather Benchmarks, which had recorded 26.65% increase in 2014-15, actually suffered a 9% loss in 2015-16. In the just concluded fiscal year, they could achieve approximately 17% gain after absorbing the 9% loss in the previous year. While the BSE Small Cap Index outperformed all other indices with a 37% growth, the BSE Mid Cap, too, registered an attractive 33% rate.
The gains are more visible in the NSE, where the Nifty 500, Nifty Mid Cap and Small Caps gained 22% to 40%. All the indices achieved yearly highs. They exhibited star performance by recording six-year highs in 2016-17.
The individual Mid Cap and Small Cap shares outshined the key indices with 30% growth. The shares of 430 companies out of 862, almost fifty percent, achieved this feat. In the remaining 430 pack, stocks of nearly 100 companies emerged as multi-baggers, while 50 more achieved 200% gains.
There will be no trading on April 04, Sri Rama Navami holiday. The RBI will review the credit policy. The chances are almost nil for a rate cut this time. The official announcement on monsoons is due on April 20, which the markets follow closely. By May 19, the GST rates for different goods and services will get specified.
Two more issues are worth mentioned here. The GAAR (General Anti Avoidance Rules) will come into force. This regulation helps the government to get a clear picture of the investments entering the country and the taxes to be paid by the Foreign bodies on capital gains. This transparency to come will help the healthy growth of markets. The second one is about the levy of capital gains tax on off-market deals. if the shares of unlisted companies get transferred at less than the book value and those of the listed entities at less than market price, the difference would be treated as capital gain which is taxable. In the same way, the long-term capital gains on the shares that changed hands in the off-market deals after October 01, 2004 will attract income tax.
The reduced interest rates on various small savings schemes and the to be reduced bank deposit rates may move conventional savings to stock investments on which the long-term tax rates are zero and the short-term tax rates at low at 15%.
Since the implementation of BS-4 standards, vehicle makers sold inventories overnight at a time. In the March second week, nearly 6.71 lakhs vehicles have been sold. The sales reminded the Dussera and Diwali sales. All the two-wheeler companies are going to report attractive Q4 results. The future production of auto components should be as per BS-4 norms. This is a boon to auto parts companies. Already, there is a movement in the price of Jay Ushin. Another company Future Enterprises Ltd that successfully passed out in the ‘stress test’ by market operators is going to gain their confidence. The Q4 results of the Index heavyweight share RIL will be attractive. With the Jio income to be added from April 15, 2017, the next quarter (Q1 FY18) results, too, will boost the market sentiment. Optimism, thus, will prevail in the market.