Trading for the truncated trading week ended on an upbeat note as key benchmark indices surged on the back of a confluence of positive factors viz. forecast of good rains during the June-September 2016 southwest season, further easing of consumer price inflation raising hopes of further rate cut from the Reserve Bank of India, rebound in industrial production and gains in global stocks aided the latest rally on the domestic bourses. The barometer index, the S&P BSE Sensex, jumped 475.57 points or 1.89% at 25,621.16, as per the provisional closing data. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty gained 141.50 points or 1.84% at 7,850.45, as per the provisional closing data. The two key benchmark indices remained in green throughout the trading session after opening with upward gap.
The Sensex hit its highest level in more than fourteen weeks when it jumped 525.91 points or 2.09% at the day's high of 25,671.50 in late trade. The barometer index gained 212.83 points or 0.84% at the day's low of 25,358.42 in early trade. The Nifty, too, its highest level in more than fourteen weeks when it surged 155.85 points or 2.02% at the day's high of 7,864.80 in late trade. The index rose 63.25 points or 0.82% at the day's low of 7,772.20 in early trade.
The Sensex gained for the third day in a row and the Nifty edged higher for the fourth day in a row.
In overseas stock markets, Asian and European stocks edged higher after the latest data showed stronger-than-expected growth in China's exports. China is the world's second biggest economy after the United States. In mainland China, the Shanghai Composite settled 1.44% higher. In Hong Kong, the Hang Seng index closed 3.19% higher. China's exports rose 11.5% in March year-over-year in dollar terms. Imports declined 7.6%, compared with February's 13.8% drop. Japanese stocks rose as the yen weakened against the dollar. The Nikkei 225 Average settled 2.84% higher. The yen has weakened after hitting 17-month high against the dollar early this week. Strength in the local currency hurts the competitiveness of Japanese exporters.
US stocks gained yesterday, 12 April 2016, led by energy companies after news reports said Saudi Arabia and Russia were working toward an agreement to cut oil production. The world's major crude oil producers led by Russia and Saudi Arabia have convened a meeting on Sunday, 17 April 2016, in Doha, Qatar to discuss measures to stabilise prices, including a proposal to freeze output. Iran has ruled out freezing output until its production recovers to pre-sanction levels.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,566 shares rose and 1,120 shares fell. A total of 156 shares were unchanged. The BSE Mid-Cap index was provisionally up 0.91%. The BSE Small-Cap index was provisionally up 1.06%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 2630 crore, higher than turnover of Rs 2466.46 crore registered during the previous trading session.
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Auto stocks extended gains registered during the previous trading session on hopes that the Reserve Bank of India could ease interest rates further after the latest data showed that consumer price inflation eased to a six-month low in March. Eicher Motors (up 1.9%), and Tata Motors (up 3.32%) gained. Ashok Leyland declined 1.17%. Lower interest rates may help revive demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Shares of tractor manufacturer Mahindra & Mahindra (M&M) jumped 7.51% at Rs 1,334 after India Meteorological Department (IMD) in its initial forecast for the 2016 southwest monsoon season predicted good rains.
Shares of two-wheeler makers rose after the Indian weather department predicted good monsoon this year. TVS Motor Company (up 2.31%), Bajaj Auto (up 4.51%) and Hero MotoCorp (up 3.77%) edged higher. A good monsoon could boost rural incomes, which in turn could boost sales of two-wheeler makers in rural India.
Maruti Suzuki India extended gains registered during the previous trading session as the Japanese yen continued to weaken against the dollar. The stock gained 4.7%. The Maruti stock had tumbled recently after the yen strengthened against the dollar. A strong yen adversely impacts Maruti's operating profit margin.
Madhucon Projects rose 4.6% after the company announced the completion of the strategic sale of its majority stake in Madhucon Agra-Jaipur Expressway to Cube Highways and Infrastructure. After receiving all necessary approvals, the transaction was concluded on 30 March 2016 with a stake transfer of 74%. Divestment of the stake has assisted Madhucon Group to pare down its debt by Rs 212 crore. This is the first major strategic sale in Madhucon's highway portfolio. The sale proceeds from the transaction will be used to complete the under construction infrastructure projects of the group, it added.
The India Meteorological Department (IMD) said in its initial monsoon forecast that the southwest monsoon is likely to be 106% of the Long Period Average (LPA) during the four-month period from June to September 2016, with an error margin of plus/minus 5%. According to the weather office, there is 34% probability of above normal rains, 30% probability each of excess and normal rains, 5% probability of below normal rains and 1% probability of deficient rains. The IMD's announcement hit the market after trading hours yesterday, 12 April 2016.
As the sea surface temperature conditions over the Pacific and Indian Oceans, particularly the ENSO conditions over the Pacific (El Nino or La Nina) are known to have strong influence on the Indian summer monsoon, IMD is carefully monitoring the sea surface conditions over the Pacific and the Indian oceans. The latest forecast from the Monsoon Mission Coupled Climate Model points to El Nino conditions weakening to moderate to weak levels during the first half of the monsoon season and ENSO neutral conditions likely to get established thereafter, the weather office said in a statement.
The IMD will issue an updated monsoon forecast in June 2016 as a part of the second stage forecast. Along with the updated forecast, the IMD will issue separate forecasts for rainfall in July and August and the distribution of rainfall over the four geographical regions of India.
On the macro front, the latest data showed that inflation based on consumer price index (CPI) dipped to six-month low of 4.83% in March 2016, with the index easing for second straight month. The CPI inflation for February 2016 was revised slightly upward to 5.26% from the provisional figure of 5.18% reported earlier. The core CPI inflation fell to 4.54% in March 2016 from 4.79% in February 2016.
Another data showed that industrial production rose 2% in February 2016 over February 2015, snapping consistent decline for last three straight months. The mining output posted healthy 5% growth, while electricity generation improved 9.6% contributing to the overall growth in industrial output in February 2016. The output of the manufacturing sector improved 0.7% in February 2016. Both the CPI and industrial production data were announced after market hours yesterday, 12 April 2016.
The latest rally on the domestic bourses comes ahead of a long weekend. India's stock market remains closed tomorrow, 14 April 2016, on account of Dr. Baba Saheb Ambedkar Jayanti and again on Friday, 15 April 2016, on account of Ram Navami.
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