Latest data showing recovery in India's economy and hopes that a wholesale cancellation of coal blocks may not be announced by the Supreme Court as it resumed a hearing in the coal blocks case sent key benchmark indices surging to fresh record high at the onset of the week. After remaining firm throughout the trading session, key benchmark indices extended gains in late trade after news reports filtered in that the Attorney General proposed to the Supreme Court that about 40 of the 218 coal mines it declared illegal should not be taken back from the companies that operate them as they were either producing or were close to producing. The 50-unit CNX Nifty hit record high above the psychological 8,000 level. The barometer index, the S&P BSE Sensex, and the Nifty hit record high on closing basis as well as on intraday basis. The Sensex jumped 229.44 points or 0.86% to settle at 26,867.55. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index rose 1.57%. The BSE Small-Cap index rose 1.3%. Both these indices outperformed the Sensex. India's gross domestic product (GDP) grew 5.7% in Q1 June 2014, its fastest pace of growth in two-and-half years.
Realty stocks edged higher. Tyre stocks gained on lower rubber prices. Banking stocks rose. Metal stocks surged in late trade on reports that the Attorney General (AG) proposed to the Supreme Court that about 40 of the 218 coal mines it declared illegal should not be taken back from the companies that operate them as they were either producing or were close to producing.
Data showing improvement in economic growth in Q1 June 2014 triggered a firm opening on the domestic bourses and took indices to record high.
European stocks edged lower after the latest data showed euro zone's manufacturing sector slowed more sharply than first estimated in August. Asian stocks rose as investors weighed whether Chinese policy makers will add stimulus after reports showing slower manufacturing growth in China in August 2014. Brent crude prices dropped after reports showing slower manufacturing growth in China in August 2014.
The S&P BSE Sensex rose 229.44 points or 0.86% to settle at 26,867.55, a record closing high. The index jumped 262.19 points at the day's high of 26,900.30 in late trade, a lifetime high. The index rose 94.28 points at the day's low of 26,732.39 in early trade.
The CNX Nifty rose 73.35 points or 0.92% to settle at 8,027.70, a record closing high. The index hit a high of 8,035 in intraday trade, a lifetime high. The index hit a low of 7,984 in intraday trade.
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The market breadth indicating the overall health of the market was strong. On BSE, 1,923 shares gained and 1,010 shares fell. A total of 137 shares were unchanged.
The BSE Mid-Cap index garnered 145.69 points or 1.57% to settle at 9,444.59. The BSE Small-Cap index garnered 133.14 points or 1.3% to settle at 10,397.59. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 2906 crore, lower than Rs 3010.11 crore on Thursday, 28 August 2014. The stock market was closed on Friday, 29 August 2014, on account of holiday.
The S&P BSE Metal index (up 2.79%), the S&P BSE Capital Goods index (up 2.75%), the S&P BSE Realty index (up 2.72%), the S&P BSE Power index (up 2.60%), the S&P BSE Bankex (up 1.79%), the S&P BSE Consumer Durables index (up 1.63%), the S&P BSE Oil & Gas index (up 1.61%) and the S&P BSE Auto index (up 1.32%) outperformed the Sensex.
The S&P BSE Healthcare index (up 0.18%), the S&P BSE IT index (up 0.38%) and the S&P BSE Teck index (up 0.73%) and the S&P BSE FMCG index (off 0.67%) underperformed the Sensex.
Among the 30 Sensex shares, 22 rose and the remaining shares declined.
Metal stocks surged on reports that the Attorney General (AG) proposed to the Supreme Court today, 1 September 2014, that about 40 of the 218 coal mines it declared illegal should not be taken back from the companies that operate them as they were either producing or were close to producing.
Jindal Steel & Power (JSPL) (up 6.56%), JSW Steel (up 5.94%), Sail (up 4.38%), Hindalco Industries (up 3.59%), Sesa Sterlite (up 2.07%), Tata Steel (up 2.01%), Hindustan Zinc (up 0.82%) and NMDC (up 0.65%), edged higher.
The suggestion by Attorney General Mukul Rohatgi sent shares of some of the big companies that hold coal blocks sharply higher on speculation this could lead to the court avoiding a wholesale cancellation of blocks as feared earlier. Rohatgi also reportedly told the Supreme Court that the government was open to re-auctioning the coal blocks if their allocations are revoked. The court has reportedly asked the government to submit a list of operational mines. The next hearing on the case will be held on 9 September 2014.
The apex court had last week said that the entire allocation of coal blocks from 1993 till 2010 was illegal, arbitrary, non-transparent and without application of mind and guidelines.
Bank stocks were in demand. Among PSU banks, Union Bank of India (up 4.34%), Bank of India (up 3.98%), Canara Bank (up 3.78%), Punjab National Bank (up 3.09%), Bank of Baroda (up 2.12%), Axis Bank (up 2.04%), IDBI Bank (up 2.04%) and State Bank of India (up 1.75%), edged higher.
Among private banks, IndusInd Bank (up 4.50%), Yes Bank (up 4.36%), Federal Bank (up 2.94%), ICICI Bank (up 2.72%) and Kotak Mahindra Bank (up 1.26%), edged higher. However, HDFC Bank fell 0.17%.
Bharti Airtel gained 1.69% to Rs 375.95 after the company announced before market hours that, consequent upon approval from the Communication Authority (CA) of Kenya, Airtel Networks Kenya (Airtel Kenya) -- a wholly owned subsidiary of Bharti Airtel International Netherlands BV -- has signed a definitive agreement with Essar Telecommunications Kenya, which operates under the brand name 'yuMobile', to acquire its over 2.7 million subscribers. This transaction is subject to approval from Competition Authority of Kenya (CAK) and is likely to be concluded by fourth quarter of 2014.
ONGC rose 1.01% to Rs 439.55 after the company after market hours on Thursday, 28 August 2014, said that it will be investing Rs 5219 crore towards Daman Development project to enhance production of natural gas and condensate in its Tapti Daman Block in Arabian sea. The project is located about 90-100 km from Daman coast and includes additional development of C-24 field and monetization of B-12 marginal fields (B-12-11, B-12-13 and B-12-15), ONGC said in a statement.
TVS Motor Company rose 3.78% to Rs 193.40. The company after market hours today, 1 September 2014, said its total sales jumped 46% to 2.27 lakh units in August 2014 over August 2013. The company's total exports jumped 28% to 35,074 units in August 2014 over August 2013.
Maruti Suzuki India rose 4.71% to Rs 2,915.50 after the company reported strong sales in August. The stock hit record high of Rs 2931.10 in intraday trade. The company said during market hours that its total sales rose 26.9% to 1.1 lakh units in August 2014 over August 2013. Domestic sales rose 29.3% to 98,304 units in August 2014 over August 2013. Exports rose 10.3% to 12,472 units in August 2014 over August 2013.
Mahindra & Mahindra (M&M) fell 0.22 % to Rs 1,403.80. The stock reversed direction after hitting record high of Rs 1,418 in intraday trade. M&M's farm equipment sector's (FES) total sales 6% to 15,006 units in August 2014 over August 2013. Domestic sales rose 1% to 13,733 units in August 2014 over August 2013. Exports jumped 107% to 1,273 units in August 2014 over August 2013. The sales figures were announced during market hours.
M&M separtely said during market hours that its total automobile sales fell 7% to 35,175 units in August 2014 over August 2013. Domestic sales declined 6% to 33,146 units in August 2014 over August 2013. Exports dropped 26% to 2,030 units in August 2014 over August 2013.
M&M after market hours on Thursday, 28 August 2014, said it would make an additional investment at its Chakan plant in Maharashtra. As part of its expansion plans, the company will invest additional Rs 4000 crore over a 7-year period taking the total investment in Chakan to Rs 8000 crore. A total of Rs 4000 crore will be utilized towards infrastructure development, product development and capacity expansion for vehicles to be rolled out from the Chakan plant.
Tyre stocks gained on lower rubber prices. Apollo Tyres (up 8.44%), JK Tyre & Industries (up 5.96%), MRF (up 5.21%), Dunlop India (up 4.50%), CEAT (up 3.06%) and Falcon Tyres (up 1.45%), edged higher. Lower rubber prices will boost profitability of tyre makers. Rubber is a key raw material in manufacture of tyres
Realty stocks edged higher. Unitech (up 9.20%), Peninsula Land (up 6.74%), Indiabulls Real Estate (up 5.22%), D B Realty (up 4.97%), Prestige Estates Projects (up 4.90%), Parsvnath Developers (up 4.33%), Anant Raj (up 2.91%), Housing Development and Infrastructure (HDIL) (up 2.88%), Phoenix Mills (up 1.91%), DLF (up 1.32%), Sunteck Realty (up 0.27%), Oberoi Realty (up 0.25%) and Godrej Properties (up 0.07%), edged higher.
HCL Technologies gained 0.36% to Rs 1,636.30. The company during market hours clarified with respect to media report titled "HCL bags $200 million deal from BOfA - Merrill Lynch", that the media story is speculative and based on rumours. As a policy, the company does not respond to market rumours.
Jindal Steel & Power clocked a highest turnover of Rs 53.95 crore on BSE. State Bank of India (Rs 51 crore), Tata Motors DVR (Rs 41.61 crore), Larsen & Toubro (Rs 41.34 crore) and Tata Steel (Rs 37.49 crore), were the other turnover toppers on BSE in that order.
Avance Technologies reported highest volumes of 5.27 crore shares on BSE. Unitech (1 crore shares), Yantra Natural Resources (52.41 lakh shares), SpiceJet (38.41 lakh shares) and Birla Cotsyn (India) (37.22 lakh shares), were the other volume toppers on BSE in that order.
The Sensex gained for the seventh straight trading session today, 1 September 2014. The barometer index has risen 553.26 points or 2.10% in seven trading sessions from a recent low of 26,314.29 on 20 August 2014. The Sensex has gained 5,696.87 points or 26.91% in calendar year 2014 so far (till 1 September 2014). From a 52-week low of 18,166.17 on 3 September 2013, the Sensex has risen 8,701.38 points or 47.90%.
Brent crude prices dropped after reports showing slower manufacturing growth in China in August 2014. Brent for October settlement was off 13 cents at $103.06 a barrel. The contract rose 73 cents to settle at $103.19 a barrel on Friday, 29 August 2014.
Geopolitical developments remained in focus. European Union leaders on Saturday, 30 August 2014, warned Russia to reverse course in Ukraine within a week or face a new round of sanctions. On the same day, Ukrainian President Petro Poroshenko warned a full-scale war was imminent if Russian troops continued to advance in support of pro-Moscow rebels.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 60.4850, compared with its close of 60.52 on Thursday, 28 August 2014. Indian financial markets were closed on Friday, 29 August 2014, for a holiday.
Markit Economics said today, 1 September 2014, that the seasonally adjusted HSBC India Purchasing Managers' Index (PMI)-a figure designed to give an accurate overview of business conditions in the manufacturing sector -dipped slightly from July's 17-month high of 53 to 52.4 in August. Nonetheless, the reading was consistent with a solid improvement in operating conditions. The latest PMI data highlighted a tenth consecutive monthly improvement in operating conditions in August, as solid output growth was supported by strong expansions in total new orders and business from abroad. Purchasing activity continued to rise, although a second consecutive decline in employment was recorded. Meanwhile, input cost pressures eased slightly following the acceleration seen in July.
India's gross domestic product (GDP) grew 5.7% in Q1 June 2014, its fastest pace of growth in two-and-half years. The GDP growth has shown sharp improvement from 4.6% in Q4 March 2014 and 4.7% in Q1 June 2013. The Central Statistical Office (CSO) released quarterly estimates of India's GDP on Friday, 29 August 2014, when Indian financial markets were closed for a holiday. The improvement in the GDP growth was facilitated by rebound in industrial sector growth after two sequential quarters of decline. More importantly, the GDP data showed that domestic investment demand has exhibited strong growth of 7% in Q1 June 2014.
Finance Minister Arun Jaitley said at a press briefing on Saturday, 30 August 2014, that he expects the country's economic growth to accelerate as inflation moderates and government measures aimed at making it easier for companies to do business take effect. Mr. Jaitley also expressed confidence that the government would be able to achieve the 4.1% of GDP fiscal deficit target that the government set in the annual budget presented in July.
The Finance Ministry expects India's economy to grow at 5.7% to 5.9% during the current fiscal year. In a statement issued on 30 August 2014, the Finance Ministry said it expects India to reclaim the high growth rate of 7% within 2-3 years. The Finance Ministry further said that with a view to ensure macroeconomic stability, the current account deficit will be contained within 2% of GDP and fiscal deficit will be contained within 4.1% of GDP during the current fiscal year.
Reserve Bank of India (RBI) Governor Raghuram Rajan said in a newspaper interview published on Sunday, 31 August 2014, that India is better prepared to handle the impact of interest rate increases in the United States as foreign funds are less likely to desert the country due to signs of an upturn in economic growth. Rajan said that his commitment to cool surging prices will also support the rupee when US rates finally do rise.
Prime Minister Narendra Modi is in the midst of his five-day trip to Japan to bolster security and business ties with Japan in the face of an assertive China.
European stocks edged lower today, 1 September 2014, after the latest data showed euro zone's manufacturing sector slowed more sharply than first estimated in August. Key benchmark indices in UK and France and were down by 0.05% to 0.18%. However, Germany's DAX index was up 0.02%.
Euro-area manufacturing output expanded less than initially estimated in August, adding to signs that the region's economic recovery may need another boost of European Central Bank stimulus. A Purchasing Managers' Index fell to 50.7 last month from 51.8, London-based Markit Economics said today. While the number remains above 50, indicating expansion, it's less than the Aug. 21 preliminary reading of 50.8. In Germany, the currency bloc's largest economy, the index fell to 51.4, down from a preliminary reading of 52.
A UK manufacturing index fell to the lowest in more than a year in August as geopolitical risks combined with weak euro-area demand to curb growth. Markit Economics said its factory gauge dropped to 52.5, the lowest since June 2013, from 54.8 the previous month
Data released today, 1 September 2014, showed that Germany's exports 0.9% in the second quarter from the first three months of the year. Imports jumped 1.6%.
Asian stocks rose today, 1 September 2014, as investors weighed whether Chinese policy makers will add stimulus after reports showing slower manufacturing growth in August 2014. Key benchmark indices in Indonesia, Hong Kong, China, Japan and Taiwan were up 0.04% to 0.83%. Key benchmark indices in Singapore and South Korea were off 0.03% to 0.39%.
Growth in China's large factory sector slipped to a three-month low in August as foreign and domestic demand cooled, a private survey showed on Monday, raising concerns that the economy is faltering after a bounce. The final HSBC/Markit Purchasing Managers' Index (PMI) retreated to 50.2 in August, roughly in line with a preliminary reading of 50.3 and only a shade above the 50-point mark that demarcates an expansion in activity from a contraction.
China's official manufacturing PMI for August, reported today, 1 September 2014, was 51.1, compared with July's 51.7.
US markets remain closed today, 1 September 2014, for Labor Day holiday.
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