Key benchmark indices witnessed volatility in early trade. At 9:24 IST, the barometer index, the S&P BSE Sensex was down 15.40 points or 0.06% at 26,698.53. The Nifty 50 index was currently down 5.65 points or 0.07% at 8,174.30.
In overseas stock markets, Asian stocks were mixed. Japanese stocks declined as yen strengthened against the dollar. The Nikkei 225 Average was currently off 2.29%. A strong yen makes Japanese exports less competitive and cuts into the value of repatriated earnings. US stocks registered small gains yesterday, 1 June 2016, helped by an intraday recovery in oil prices and better-than-expected manufacturing data.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 572 shares rose and 492 shares declined. A total of 45 shares were unchanged. The BSE Mid-Cap index was currently off 0.03%. The BSE Small-Cap index was currently down 0.01%. The losses for both these indices were lower than the Sensex's decline in percentage terms.
Telecom stocks were mixed. Reliance Communications (up 1.02%), Idea Cellular (up 0.34%) and Mahanagar Telephone Nigam (up 0.52%) edged higher.
Bharti Airtel was off 0.58% at Rs 360.70. The company said that Airtel Payments Bank announced the appointment of Shashi Arora as the CEO & Managing Director of the company, subject to the approval of the Reserve Bank of India (RBI). He will replace Manish Khera, CEO, who has decided to pursue his entrepreneurial journey, Bharti Airtel said.
On 11 April 2016, Airtel Payments Bank received a payments bank license from RBI. The company plans to start rolling out its banking network in Q2 September 2016.
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Bharti Infratel was off 0.05% at Rs 384.70. Bharti Infratel is a telecom tower arm of Bharti Airtel.
Reliance Industries (RIL) rose 0.1% at Rs 954.30 after the company announced at the fag end of the trading session yesterday, 1 June 2016, that its wholly-owned subsidiary, Reliance Industrial Investments and Holdings, is investing $16 million in compulsorily convertible preferred shares of a technology start-up viz. NetraDyne Inc., USA. The US-based entity is involved in high-end technology driven product development of deep learning solutions and vision based analytics targeted at industries such as fleet management, automotive, security and surveillance. The entity is currently in advanced stages of product development. It is yet to commence commercial operations, RIL said in a statement. NetraDyne Inc's line of business has potential synergies with telecom and digital business initiatives of RIL apart from commercialization benefits in India, RIL added.
RIL further said that 50% of the investment in NetraDyne has been done on 31 May 2016. The balance 50% investment is likely to be completed by 31 March 2017. Upon conversion of the investment, Reliance Industrial Investments and Holdings will get about 15 million equity shares at $1.0613 per share. This translates to 40% equity stake.
Tata Motors rose 0.79% at Rs 452.75 after the company announced that its total commercial and passenger vehicles sales rose 1% to 40,071 units in May 2016 over May 2015. The company's domestic sales of Tata commercial and passenger vehicles rose 2% to 35,643 units in May 2016 over May 2015. Exports declined 5% to 4,428 units in May 2016 over May 2015. The company announced the monthly sales volume data after market hours yesterday, 1 June 2016.
Hero MotoCorp (HMCL) dropped after reporting muted growth in two-wheeler sales in May 2016. The stock was down 0.34% at Rs 3,076.90. The company reported 2.32% rise in total two-wheelers sales to 5.83 lakh units in May 2016 over May 2015. Market demand was expectedly subdued in May 2016, due to the heavy retail offlake that happened in April on account of the marriage season and regional festivals in different parts of the country during that month, the company said in a statement. However, a good monsoon after two consecutive years of sub-normal rains could lead to a change in sentiments in the rural markets, which may lead to a positive turn-around in the industry in the second half of this fiscal, it added. The announcement was made after trading hours yesterday, 1 June 2016.
In the month of May, Hero MotoCorp forayed into the world of motorcycle rally racing, through a strategic alliance with Speedbrain GmbH, the German off-road racing specialist. The newly formed 'Hero MotoSports Team Rally' made its debut at the Merzouga Rally, a Dakar series race that recently concluded in Morocco.
Bajaj Auto dropped after reporting muted growth in sales in May 2016. The stock was off 1.04% at Rs 2,575.65. The company announced that its total sales rose 1% to 3.47 lakh units in May 2016 over May 2015. Motorcycles sales rose 2% to 3.07 lakh units in May 2016 over May 2015. Sales of commercial vehicles declined 7% to 40,311 units in May 2016 over May 2015. Exports fell 10% to 1.43 lakh units in May 2016 over May 2015. The company announced the monthly sales volume data before market hours today, 2 June 2016.
Coal India rose 0.91% at Rs 299.60. The company and its subsidiaries on provisional basis achieved 95% of targeted production at 42.58 million tonnes in May 2016. Coal India and its subsidiaries on provisional basis achieved 89% of targeted offtake at 45.53 million tonnes in May 2016. The announcement was made after market hours yesterday, 1 June 2016.
Axis Bank was off 0.93% at Rs 508.60. The bank said it has signed tripartite share subscription agreement and shareholders agreement with A.Treds and Mjunction services. A.Treds is a subsidiary company of AXIS Bank. Mjunction services is a joint venture between Tata Steel and Steel Authority of India.
As per the agreement, Axis Bank purchased 1.65 crore shares of A.Treds for Rs 16.50 crore and Mjunction purchased 82.50 lakh shares of A.Treds for Rs 8.25 crore. Consequently, Axis Bank holds 67% stake and Mjunction holds 33% stake in A.Treds.
A.Treds is licensed by the Reserve Bank of India to engage in the business of trade receivables discounting systems (TReDS). The announcement was made after trading hours yesterday, 1 June 2016.
Separately, Axis Bank announced after market hours yesterday, 1 June 2016 that it has allotted senior fixed rate green bonds aggregating to $500 million under the MTN programme through its Dubai International Financial Centre (DIFC) branch. The notes will be listed at the Singapore Stock Exchange and London Stock Exchange. The notes have been priced at 160 basis points over the 5-year US Treasury Note, at a price of 99.479% to yield 2.988%. The notes will be denominated in US dollars, and will bear fixed interest of 2.875% per annum, with interest payable semi-annually in arrears.
Punjab National Bank (PNB) was off 0.65% at Rs 76.25. PNB announced revision to its lending rates based on marginal cost of funds to be effective from 1 June 2016. PNB's Marginal Cost of Funds based Lending Rate (MCLR) for overnight loans will be 9.15%, for one month will be 9.20% and for three months will be 9.30%. The MCLR on 6-month loans will be 9.35% and for one-year loans the rate would be 9.40%, the bank said. MCLR for three-year loans would be at 9.55% and loans with five-year maturity would carry an MCLR of 9.70%, the bank said. The announcement was made after market hours yesterday, 1 June 2016.
All rupee loans sanctioned and credit limits renewed with effect from 1 April 2016 are priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which is the internal benchmark of the concerned bank. Actual lending rates are determined by adding the components of spread to the MCLR.
On the macro front, the central government has announced increase ranging from 1.5% to 9.2% in the minimum support prices (MSPs) of Kharif crops for the 2016-17 season. The MSPs include a bonus of Rs 425 per quintal for pulses, namely Arhar (Tur), Urad and Moong, a bonus of Rs 200 per quintal for Sesamum and a bonus of Rs 100 per quintal for other kharif oilseeds namely, Groundnut-in-shell, Sunflowerseed, Soyabean, and Nigerseed. The government said in a statement that the decision to offer bonus over MSP on pulses and oilseeds is aimed at giving a strong price signal to farmers to increase acreage and invest for increase in productivity of these crops. There is an increasing gap between the demand and domestic supply of pulses and oilseeds and the reliance on import is increasing. The increase in cultivation of leguminous pulses and oilseeds will also have additional environmental benefits as these crops are less water consuming and help in nitrogen fixation in the soil.
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