Key benchmark indices further extended gains triggered by the 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. At 11:30 IST, the barometer index, the S&P BSE Sensex, was up 413.76 points or 1.65% at 25,559.35. The Nifty 50 index was currently up 123.85 points or 1.61% at 7,832.80. The Sensex hit fourteen-week high and the Nifty hit its highest level in more than 14 weeks.
The Nifty rose 134 points or 1.73% at the day's high of 7,842.95 in mid-morning trade, its highest level since 4 January 2016. The index rose 63.25 points or 0.82% at the day's low of 7,772.20 in early trade. The Sensex jumped 433.58 points or 1.72% at the day's high of 25,579.17 in mid-morning trade, its highest level since 6 January 2016. The barometer index gained 212.83 points or 0.84% at the day's low of 25,358.42 in early trade.
The broad market depicted strength. There were more than two gainers against every loser on BSE. 1,674 shares rose and 626 shares fell. A total of 109 shares were unchanged. The BSE Mid-Cap index was currently up 1.24%. The BSE Small-Cap index was currently up 1.32%. Both these indices underperformed the Sensex.
In overseas stock markets, Asian stocks gained as rising crude prices buoyed energy producers and a weaker Japanese currency boosted shares in Tokyo. In Japan, the Nikkei 225 Average was currently up 2.77%. Chinese stocks edged higher after trade data showed stronger-than-expected rise in exports in March. In mainland China, the Shanghai Composite was currently up 2.25%. In Hong Kong, the Hang Seng index was currently up 2.57%. Chinese exports expanded in March for the first time in nine months, the latest data showed. Exports rose 11.5% in March year-over-year in dollar terms. Imports declined 7.6%, compared with February's 13.8% drop.
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.
Bank stocks gained on hopes that the Reserve Bank of India could ease interest rates further after latest data showed that consumer price inflation eased to a six-month low in March. Among public sector banks, Punjab National Bank (up 1.74%), Bank of Baroda (up 1.95%), State Bank of India (SBI) (up 2.1%), Union Bank of India (up 2.56%), Canara Bank (up 1.97%) and Bank of India (up 2.77%) edged higher.
Among private sector banks, HDFC Bank (up 1.88%), ICICI Bank (up 4.79%), Kotak Mahindra Bank (up 2.97%), Yes Bank (up 1.37%), and IndusInd Bank (up 1.19%) edged higher.
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Axis Bank gained 1.02%. The private sector bank before market hours today, 13 April 2016, announced reduction in lending rates. The bank has reduced its Marginal Cost of Funds based Lending Rate (MCLR) by 15 basis points (bps) across tenors. The reduced MCLRs will be effective from 18 April 2016. The MCLR for overnight loans will be 8.95%, for one month will be 9.05% and for three months will be 9.25%. The MCLR on 6-month loans will be 9.3% and for one-year loans the rate would be 9.35%. MCLR on two-year loans is 9.45% and for three years loans it is 9.5%. Axis Bank also reduced base rate by 5 bps to 9.45% effective from 18 April 2016.
The cut in lending rate follows reduction in policy rates by the Reserve Bank of India (RBI) after a scheduled policy review on 5 April 2016. The RBI cut its benchmark policy rate viz. the repo rate by 25 basis points to 6.5% from 6.75% on 5 April 2016. At that time, the central bank also announced the fine-tuning of its liquidity management framework. While retaining the accommodative stance of the monetary policy, RBI Governor Raghuram Rajan indicated in his monetary policy statement that the RBI may cut the repo rate further in the coming months if macroeconomic and financial developments provide room for further rate cut.
Wipro rose after the company after market hours yesterday, 12 April 2016, announced that the board of directors will consider a proposal for buyback of equity shares of the company at its meeting on 20 April 2016. The stock rose 2.79%. Wipro is scheduled to announce its Q4 March 2016 results after trading hours on 20 April 2016.
Shares of companies whose business is related to the rural sector gained after India's weather department predicted good rains during the June-September 2016 southwest season. P I Industries (up 4.66%), VST Tillers Tractors (up 4.19%), Mahindra & Mahindra (up 5.04%), Monsanto India (up 3.31%), Insecticides (India) (up 6.84%), Rallis India (up 4.24%), Dhanuka Agritech (up 1.67%), Advanta (up 2.29%), Jain Irrigation Systems (up 1.9%), UPL (up 2.02%) and Escorts (up 1.03%) edged higher.
Kaveri Seed Company jumped 5.61% after the company said that it opened a new plant at Karimnagar district in Telangana. The company said that the plant has an installed capacity of 10 to 20 tonnes (paddy/maize) of production per hour based on the crop. The new plant is scheduled to commence operations in the first week of May 2016. G. V. Bhaskar Rao, Managing Director of Kaveri Seed said that the new plant will enhance the existing capacity of seed process to meet the growing demand from the markets. The announcement was made after market hours yesterday, 12 April 2016.
Shilpa Medicare jumped 10.74% after the company said that it received good manufacturing practice (GMP) compliance certificate for two active pharmaceutical ingredient (API) sites in Karnataka from Pharmaceuticals and Medical Devices Agency (PMDA), Japan. The announcement was made after market hours yesterday, 12 April 2016.
On the macro front, 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.
Another 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. Both the CPI and industrial production data were announced after market hours yesterday, 12 April 2016.
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 of excess rains, 30% probability of 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.
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