After hitting their highest level in almost three weeks, the barometer index, the S&P BSE Sensex, and the Nifty 50 index pared gains in afternoon trade. At 13:18 IST, the Sensex was up 217.04 points or 0.85% at 25,870.27. The Nifty was currently up 63.35 points or 0.81% at 7,924.10. The market sentiment was positive with exit polls predicting a historic win for the BJP led National Democratic Alliance (NDA) in assembly election in Assam. The NDA rules the central government after an emphatic victory in the 2014 Lok Sabha election. Gains in global stocks aided the upmove on the domestic bourses.
The Sensex jumped 246.95 points or 0.96% at the day's high of 25,900.18 in afternoon trade, its highest level since 28 April 2016. The barometer index rose 87.96 points or 0.34% at the day's low of 25,741.19 in morning trade. The Nifty jumped 72.85 points or 0.92% at the day's high of 7,933.60 in afternoon trade, its highest level since 28 April 2016. The index rose 28.45 points or 0.36% at the day's low of 7,889.20 in mid-morning trade.
On the political front, exit polls for the assembly elections showed the Dravida Munnetra Kazhagam (DMK)-Congress alliance heading to victory in Tamil Nadu, West Bengal Chief Minister Mamata Banerjee retaining power in that state, a victory for Communist Party of India-Marxist (CPM)-led Left Democratic Front government in Kerala and a historic win for the BJP led National Democratic Alliance (NDA) in Assam. The Congress-DMK alliance looks set to form government in the Union territory of Puducherry, the post-poll surveys indicated. The counting of votes for assembly elections held in these four states and the Union territory of Puducherry takes place on Thursday, 19 May 2016.
A win for the BJP led NDA in Assam will put BJP in the right shape for the 2017 assembly election in Uttar Pradesh (UP). The UP assembly has 403 seats. The number of seats in Rajya Sabha, or the upper house of parliament, depends on representation in states. A lack of a majority for the NDA in the Rajya Sabha has delayed passage of a key tax reform bill viz. the Goods and Services Tax (GST) bill in the upper house. Finance Minister Arun Jaitley said in an interview to All India Radio recently that the GST Bill will be put to vote in the monsoon session of Parliament if Congress continues to oppose the Legislation. The GST bill, which has been approved by the Lok Sabha, is pending in the Rajya Sabha because of stiff resistance by the Congress. For the GST bill to become a law, the GST bill also needs to be approved by half the state assemblies.
In overseas stock markets, European stocks edged higher pulled up by the miners amid a rally in oil prices. Energy stocks led gains in Asian equities as crude oil prices rose. US stocks closed higher yesterday, 16 May 2016, as a surge in oil prices and a rally in tech stocks overshadowed weaker-than-expected manufacturing data from the New York region. The Empire State general business-conditions index, which measures activity in the New York area, nosedived to a reading of negative 9 in early May, from positive 9.6 in April.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,398 shares rose and 987 shares fell. A total of 162 shares were unchanged. The BSE Mid-Cap index was currently up 0.63%. The BSE Small-Cap index was currently up 0.5%. Both these indices underperformed the Sensex.
Cement stocks were mixed. ACC (down 0.59%), Shree Cement (down 0.14%), and Ambuja Cements (down 0.44%) declined. UltraTech Cement rose 1.28%.
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Grasim Industries rose 0.67%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
Most auto stocks gained. Mahindra & Mahindra (M&M) (up 2.31%), Maruti Suzuki India (up 1.7%), Hero MotoCorp (up 1.55%), Tata Motors (up 0.17%) and TVS Motor Company (up 0.01%) gained. Ashok Leyland (down 0.14%), Eicher Motors (down 0.68%), and Bajaj Auto (down 0.07%) declined.
TCS gained 0.64% after the company and Siemens PLM Software announced that they will leverage a long-standing partnership to expand and enhance the delivery of product performance intelligence through big data analytics to the global manufacturing industry. The announcement was made after market hours yesterday, 16 May 2016.
Separately, TCS announced during market hours today, 17 May 2016, that its client National Employment Savings Trust (NEST) in the UK signed 1 lakh employers to its auto enrolment pension scheme after partnering with the company.
Meanwhile, with a view to aid the development of corporate bond market, the Reserve Bank of India in consultation with the Ministry of Finance has decided to allow investment by foreign portfolio investors (FPIs) in unlisted debt securities and securitised debt instruments subject to certain restrictions. In a draft circular issued yesterday, 16 May 2016, the RBI said that FPIs can invest in the primary issues of non-convertible debentures/bonds by a public company issued in demat form, provided that the issuing company does not use the borrowing proceeds for real estate activities, purchase of land, investing in capital market or on-lending to other entities. FPIs can also invest in securitised debt instruments issued by a special purpose vehicle (SPV) set up for securitisation of assets where banks, FIs or NBFCs are originators. FPIs can also invest in securitised debt instruments issued and listed in terms of the Securities and Exchange Board of India Regulations on Public Offer and Listing of Securitised Debt Instruments, 2008. The RBI has invited public comments on draft circular by 25 May 2016.
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