Recovery during the latter part of the trading session helped the two key benchmark indices clock modest gains. The barometer index, the S&P BSE Sensex, rose 129.79 points or 0.49% at 26,843.72, as per the provisional closing data. The Nifty 50 index rose 39 points or 0.48% at 8,218.95, as per the provisional closing data. A strong rebound for key benchmark indices during the latter part of the trading session materialized after media reports said India Meteorological Department (IMD) expects the onset of the monsoon at the Kerala coast in the next 4-5 days. The Sensex and the Nifty, both, hit their highest level in more than 7 months as the two key benchmark indices extended gains in late trade.
The Sensex rose 171.23 points or 0.64% at the day's high of 26,885.16 in late trade, its highest level since 30 October 2015. The barometer index lost 72.91 points or 0.27% at the day's low of 26,641.02 in early afternoon trade, its lowest level since 31 May 2016. The Nifty rose 49.55 points or 0.6% at the day's high of 8,229.50 in late trade, its highest level since 27 October 2015. The index lost 25.20 points or 0.3% at the day's low of 8,154.75 in morning trade, its lowest level since 31 May 2016.
The arrival of the rains at the Kerala coast marks the onset of the June-September southwest monsoon season in India. The IMD reportedly expects favourable conditions for monsoon advance in the Bay of Bengal in the next 48 hours. The IMD on 15 May 2016 predicted a delay of 6 days for the onset of the monsoon rains in Kerala this year from the normal onset date which is 1 June. The IMD will issue the 2nd stage long range forecast for the 2016 southwest monsoon season at 16:00 IST today, 2 June 2016. The IMD forecast good rains this year in its first stage forecast issued on 12 April 2016. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture.
In overseas stock markets, European equities edged higher after the latest data signalled the US economy is recovering. The US economy is the world's biggest economy. The key event of the day is the European Central Bank's (ECB) policy meeting later in the global day. The ECB is widely expected to keep its monetary policy unchanged but will probably raise growth and inflation forecasts. The central bank's President Mario Draghi will hold a press conference after the policy decision is announced.
Earlier during the global day, Asian stocks witnessed a mixed trend. Japanese stocks edged lower as the yen strengthened against the dollar. The Nikkei 225 Average settled 2.32% lower. A stronger yen hurts the competitiveness of Japanese exporters. Japan's Prime Minister Shinzo Abe yesterday, 1 June 2016, said that a sales-tax increase will be postponed until 2019 from April 2017.
US stocks eked out minuscule gains yesterday, 1 June 2016, following an intraday recovery in oil prices and better-than-expected manufacturing data. The Institute for Supply Management said its manufacturing index rose to 51.3% last month from 50.8% in April. The data showed that manufacturers are expanding their businesses at a very slow pace.
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Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,260 shares rose and 1,364 shares declined. A total of 162 shares were unchanged. The BSE Mid-Cap index was provisionally up 0.66%, outperforming the Sensex. The BSE Small-Cap index was provisionally up 0.29%, underperforming the Sensex.
The total turnover on BSE amounted to Rs 2176 crore, lower than turnover of Rs 2534.96 crore registered during the previous trading session.
Metal and mining stocks edged higher on renewed buying. Hindalco Industries (up 2.67%), Tata Steel (up 2.92%), Vedanta (up 1.67%), Jindal Steel & Power (up 1.45%), Steel Authority of India (up 0.48%), JSW Steel (up 0.09%) and National Aluminium Company (up 0.24%) rose. NMDC (down 0.23%), Hindustan Zinc (down 0.36%) and Hindustan Copper (down 0.96%) declined.
Copper edged lower in the global commodities markets. High Grade Copper for July 2016 delivery was currently off 0.14% at $2.07 per pound on the COMEX.
Index heayweight and cigarette major ITC was down 0.76% at Rs 358. The stock hit a high of Rs 361 and a low of Rs 353.35 in intraday trade.
Index heavyweight and housing finance major HDFC rose 1.5% at Rs 1,260. The stock hit a high of Rs 1,263 and a low of Rs 1,232.50 in intraday trade.
Index heavyweight Reliance Industries (RIL) rose 0.26% at Rs 955.75. 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 1.07% at Rs 454 after the company announced monthly sales volume data for commercial and passenger vehicles. Tata Motors' total commercial and passenger vehicles sales rose 1% to 40,071 units in May 2016 over May 2015. 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.
Maruti Suzuki India (MSIL) was up 0.58% at Rs 4,185.90. The company today, 2 June 2016, announced that it has advanced the regular bi-annual maintenance closure of its plants, earlier scheduled from 27 June to 2 July 2016 to 6 June to 11 June 2016. This will enable the closure period to be utilized for arranging supply of components, both from Subros as well as from other sources, and result in higher production volumes after the closure, MSIL said. Manufacture of cars, to the extent of component availability, is continuing at the Gurgaon plant from the second half of 1 June 2016, MSIL said. The announcement was made at the fag end of market hours today, 2 June 2016.
Meanwhile, the central government yesterday, 1 June 2016, 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.
With a view to stabilize prices of pulses, the government is also creating buffer stocks of pulses through both domestic procurement and import.
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