Key benchmark indices trimmed intraday gains in early afternoon trade. At 12:15 IST, the barometer index, the S&P BSE Sensex, was up 103.27 points or 0.39% at 26,771.23. The Nifty 50 index was currently up 29.55 points or 0.36% at 8,189.65. Data showing acceleration in growth in India's gross domestic product in Q4 March 2016, a sharp pick up in growth in core sector in April 2016 and fiscal deficit meeting the target for fiscal year 2015-16 aided the upmove on the bourses.
The market breadth indicating the overall health of the market was positive. On BSE, 1,327 shares rose and 965 shares declined. A total of 106 shares were unchanged. The BSE Mid-Cap index was currently up 0.16%, underperforming the Sensex. The BSE Small-Cap index was currently up 0.49%, outperforming the Sensex.
On the macro front, the latest data showed that India's gross domestic product (GDP) growth accelerated to 7.9% in Q4 March 2016 compared with a revised reading of a growth of 7.2% in Q3 December 2015. For the fiscal year 2015-16, GDP grew 7.6%, which was higher than 7.2% growth recorded in 2014-15. The government released the GDP data after market hours yesterday, 31 May 2016. Another data released by the government after market hours yesterday, 31 May 2016, showed the output of eight core infrastructure industries carrying 38% of the weight in the Index of Industrial Production (IIP) increased at 18-months high pace of 8.5% in April 2016.
Meanwhile, the finance ministry said that as per the provisional accounts for 2015-16, the fiscal deficit in 2015-16 stands at 3.9% of GDP, meeting the target set by the government. This is a significant improvement over the fiscal deficit of 4.1% in 2014-15 and 4.7% in 2013-14. Revenue deficit has also shown significant improvement due to a sharp increase in capital expenditure of the central government. Revenue deficit improved to 2.5% of GDP in 2015-16 from 2.9% in 2014-15. There was also an increase in the Plan Expenditure in 2015-16 despite substantial increase in share of tax devolution to the States.
Meanwhile, the outcome of a monthly survey today, 1 June 2016, showed slight expansion in growth in India's manufacturing sector in May 2016. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) edged higher to 50.7 in May from 50.5 in April. The rate of growth in output as well as new orders was well below trend. New export orders fell for the first time in 32 months. Sub-sector data highlighted intermediate goods as the best performing category in May, where growth rates for new orders and output were stronger than those seen among consumer goods producers. Investment goods firms, in contrast, saw further declines in new work and production.
Although firms passed on to their clients part of the additional increase in costs by way of raising selling prices, the rate of charge inflation eased to the weakest in the current three-month sequence of increases despite cost inflation climbing to a 14-month high.
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In overseas stock markets, Chinese stocks witnessed a mixed trend after the release of the monthly manufacturing and nonmanufacturing data. In mainland China, the Shanghai Composite index was currently up 0.09%. In Hong Kong, the Hang Seng index was currently down 0.09%. An official measure of China's manufacturing sector held steady in May while a private gauge edged down slightly. China's official purchasing managers' index for manufacturing remained at 50.1 last month, the same level as in April and the third consecutive month the index kept above 50, the line separating expansion from contraction. The competing private Caixin manufacturing PMI index slipped to 49.2 in May from 49.4 in April, the fifteenth consecutive month of contraction. Another data showed that China's official nonmanufacturing PMI fell to 53.1 from 53.5 in April.
US stocks ended mostly lower yesterday, 31 May 2016, as investors turned cautious ahead of key economic reports this week for indications on the pace and timing of the next interest rate hike. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016. The Federal Reserve has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
Aviation stocks declined after a steep 9.2% hike in aviation turbine fuel (ATF) price. InterGlobe Aviation (down 2.14%) and Jet Airways (India) (down 1.73%) declined. SpiceJet (up 0.51%) edged higher.
ATF price in Delhi was increased by Rs 3,945.47 per kilolitre, or 9.2%, to Rs 46,729.48 per kilolitre with effect from 1 June 2016.
Jet fuel or ATF constitutes over 40% of an airline's operating costs. Prices of jet fuel are directly linked to crude oil prices. Public sector oil marketing companies (PSU OMCs) review jet fuel prices on the last day of the month based on the average imported oil price in the preceding month.
Realty stocks witnessed a mixed trend. D B Realty (up 1.73%), Unitech (up 0.77%), Sobha (up 0.85%), Oberoi Realty (up 0.81%) and Godrej Properties (up 0.27%) edged higher. Prestige Estates Projects (down 4.15%), Indiabulls Real Estate (down 1.08%), DLF (down 0.85%) and Housing Development and Infrastructure (down 0.26%) edged lower.
Dr Reddy's Laboratories (Dr Reddy's Lab) was down 0.07% at Rs 3,182.05. The stock hit a high of Rs 3,219 and a low of Rs 3,181 so far during the day. Dr Reddy's Lab announced that its US subsidiary Promius Pharma, LLC, US launched Sernivo (betamethasone dipropionate) spray, 0.05% in the US. Sernivo spray, a prescription topical steroid approved by the Food and Drug Administration (FDA) in February 2016, is indicated for the treatment of mild to moderate plaque psoriasis in patients 18 years of age or older. The announcement was made during market hours today, 1 June 2016.
Tata Steel dropped in volatile trade. The stock was down 0.28% at Rs 333.50. The stock hit a high of Rs 339.40 and a low of Rs 333.20 so far during the day. Tata Steel UK announced the completion of the sale of its Long Products Europe business to Greybull Capital LLP. The announcement was made after market hours yesterday, 31 May 2016. Tata Steel said that during the last twelve months, the Long Products Europe business has implemented a transformation plan including a portfolio restructuring of assets, underpinned by committed support from employees and their trade unions. This has focused the business on higher-value markets supported by a more competitive cost base. The Long Products Europe business, which in the UK includes the Scunthorpe steelworks, two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, and associated distribution facilities, as well as a rail mill in northern France, will trade under the name of British Steel. All together the business employs 4,800 people - 4,400 in the UK and 400 in France. The sale follows an accelerated process of negotiations between Tata Steel UK and Greybull Capital.
Bimlendra Jha, Executive Chairman of the Long Products Europe business and CEO of Tata Steel UK said that Tata Steel hopes that under Greybull ownership, the business will continue the momentum of the improvement program that has been initiated in the last 12 months.
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