Gains in auto and banking stocks and index heavyweights Infosys and HDFC triggered strong gains on key benchmark indices today, 6 September 2016 as trading on the domestic bourses resumed after a local holiday yesterday, 5 September 2016. The barometer index, the S&P BSE Sensex jumped 445.91 points or 1.56% at 28,978.02, as per the provisional closing data. The Nifty 50 index surged 133.35 points or 1.51% at 8,943, as per the provisional closing data. The Sensex provisionally settled below the psychologically important 29,000 mark after hitting an intraday high above that level in late trade. Positive global stocks underpinned sentiment. The latest rally on the bourses was also triggered by outcome of a monthly survey showing that August saw a solid rebound in the rate of expansion in Indian service sector business activity.
Domestic stocks saw a gap-up opening, as trading resumed after a local holiday yesterday, 5 September 2016. The Sensex hit its highest level in over 16-1/2 months. The Nifty hit 18-month high. The Sensex jumped 481.29 points or 1.69% at the day's high of 29,013.40 in late trade, its highest level since 16 April 2015. The barometer index rose 99.16 points or 0.35% at the day's low of 28,631.27 in opening trade. The Nifty surged 141.20 points or 1.6% at the day's high of 8,950.85 in late trade, its highest level since 5 March 2015. The index rose 38.80 points or 0.44% at the day's low of 8,848.45 in early trade.
In overseas stock markets, European stock markets rose following gains in Asian equities. Asian shares gained as prospects for a US interest-rate increase this month remained subdued. Low US interest rates could support demand for emerging-market assets. Data on Friday, 2 September 2016 showed US employment growth slowed more than expected in August after two straight months of robust gains. US markets were closed yesterday, 5 September 2016 for Labour Day holiday. Meanwhile, the Group of 20 major economies (G20) wrapped up their annual summit, held in Hangzhou, China, yesterday, 5 September 2016 with a stronger commitment to coordinate policies to support growth and promote trade liberalization.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,621 shares rose and 1,130 shares declined. A total of 205 shares were unchanged. The BSE Mid-Cap index was provisionally up 1.84%, outperforming the Sensex. The BSE Small-Cap index was provisionally up 0.95%, underperforming the Sensex.
The total turnover on BSE amounted to Rs 3792.27 crore, higher than turnover of Rs 3735.02 crore registered during the previous trading session on Friday, 2 September 2016. The stock markets had remained closed yesterday, 5 September 2016 on account of Ganesh Chaturthi holiday.
Bank stocks saw across the board gains. Among private bank stocks, HDFC Bank (up 1.14%), RBL Bank (up 2.01%), Kotak Mahindra Bank (up 0.62%), ICICI Bank (up 4.25%), IndusInd Bank (up 3.21%) and Yes Bank (up 3.85%) gained.
Axis Bank gained 6.14% to Rs 635.95. The stock hit a high of Rs 637.60 in intraday trade so far, which is 52-week high for the counter. The stock hit a low of Rs 600 so far during the day.
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Among PSU bank stocks, Indian Bank (up 7%), State Bank of India (SBI) (up 2.01%), Punjab National Bank (up 5.19%), Bank of Baroda (up 1.83%), Canara Bank (up 2.04%), IDBI Bank (up 0.89%), Bank of India (up 2.01%) and Union Bank of India (up 3.96%) rose.
Index heavyweight and software major Infosys rose 1.45% after the company announced that it has entered into a joint venture (JV) agreement with Saudi Prerogative Company (SPC) in the Kingdom of Saudi Arabia to conduct IT services for customers located in the Kingdom of Saudi Arabia. Infosys holds 70% while the rest 30% will he held by SPC in this JV. Infosys' 70% in this JV is at a cash investment of $312,671 (SAR 1,172,501) by the company in the equity share capital of the proposed JV company. The agreement is subject to the approval of Saudi Arabian General Investment Authority (SAGIA). The announcement was made after market hours on Friday, 2 September 2016.
Index heavyweight and housing finance major HDFC rose 1.29% after the company announced that it has closed the third issue of rupee denominated bonds to overseas investors, aggregating up to Rs 1000 crore. The yield to investor from the bonds is 7.5% per annum payable semi-annually. Maturity date for these bonds is 9 January 2020. The announcement was made after market hours on Friday, 2 September 2016.
Meanwhile, Urjit Patel assumed charge as the 24th governor of Reserve Bank of India (RBI), succeeding Raghuram Rajan whose three-year controversy-ridden tenure ended on Sunday, 4 September 2016. Patel has assumed charge effective from Sunday after serving as deputy governor since January 2013, RBI said.
On the macro front, the outcome of a monthly survey showed that August saw a solid rebound in the rate of expansion in Indian service sector business activity. Data released yesterday, 5 September 2016 showed that the seasonally adjusted Nikkei India Services Business Activity Index rose to 54.7 in August, up from 51.9 in July, posting its highest level for over three-and-a-half years. The headline index has now signalled expansion in each of the past 14 months. With growth of manufacturing production also ticking higher, the seasonally adjusted Nikkei India Composite PMI Output Index climbed to a 42-month high of 54.6 in August, from 52.4 in July highlighting a stronger improvement in private sector economic activity.
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