Investors had a rollercoaster ride on equity markets on Friday with benchmark indices surging to record highs after the Indian government finalised rates under the upcoming Goods and Services Tax and fast moving consumer goods stocks jumped. But, the indices corrected sharply to close flat.
The BSE Sensex gained 30 points or 0.10 per cent to close at 30,464.92 and the wider NSE Nifty 50 ended at 9,427.90, down 1.6 points or 0.02 per cent.
Overall for the week, the Sensex and Nifty scaled new highs in four of the five sessions. The Sensex closed up 0.9 per cent for the week, while the Nifty 50 was up 0.3 per cent. The Sensex hit a life peak of 30,712.35, while the Nifty scaled 9,500, hitting 9,505.75 for the first time.
The government on Thursday set GST rates for more than 1,200 items, and it is largely positive for FMCG companies, which were the major gainers in Friday's trade. Colgate Palmolive rose 3.6 per cent, Tata Coffee was up 3.1 per cent, ITC rose near 3 per cent and Emami and Hindustan Unilever gained over 2 per cent.
Under the tax slabs announced under the upcoming GST, products like tooth paste, soaps and hair oils will be taxed at 18 per cent, 2-4 per cent lower than current rates of taxation.
“Current incidence of indirect tax on most FMCG items is in the range of 20-24 per cent and therefore the proposal to tax some of the commonly used products at 18 per cent is positive,” said Girish Pai, head of research at Nirmal Bang Institutional Equities.
Most consumer durables stocks ended lower with Crompton Greaves falling 4.3 per cent and Whirlpool, Symphony down 1-2 per cent. The new GST rate of 28 per cent would be marginally negative for the sector as the current indirect tax rate is around 25-26 per cent, Pai added.
State Bank of India was the other major gainer on Friday. The country's largest lender surged 1.7 per cent after its fourth quarter net profit more than doubled to Rs 2,815 crore.
Hardly any negative surprises on the domestic front, coupled with the strong inflows from domestic mutual funds, continue to drive markets, said Vinod Nair, head of research at Geojit Financial Services. But, he advises retail investors could book some profits at the current peak as there could be some consolidation ahead, particularly, if there are any global headwinds.
“We have been cautious on the Indian market for a month now, due to high valuations and remain cautious in the near term; some correction can't be ruled out, particularly if there are any global negative developments,” said Nair.
US stocks fell sharply on Wednesday, amid various scandals that have rocked the Donald Trump administration. While US market since recovered, analysts feel a similar fall going ahead, could also drag Indian stocks sharply, given the run up over the last few months.
So far in May, foreign portfolio investors have put in Rs 4,157 crore in India's equity markets, taking their total equity investment in the country since January to Rs 46,182 crore, according to regulatory data. Inflows into domestic mutual funds topped Rs 23,300 crore between January-April. Year-to-date, the Sensex has risen more than 14 per cent.